RURAL MARKETING

1. RURAL MARKETING PROF. SHEETAL CHHABRA

2. RURAL MARKETING PROF. SHEETAL CHHABRA

3. What is Rural Government agencies like IRDA (Insurance Regulatory And Development Agency and NCAER (National Council for applied Economic Research) define Rural as villages with a population <5000 with 75% male population engaged In agriculture etc” Towns are actually rural areas but satisfy The following criteria Minimum Population>=5000 75% of the mail population engaged in Non –agriculture activity Census Location with population up to 10000 Considered Rural Semi Urban 10000 to 100000 RB1 All locations upto a population of 10000 Will be considered Rural NABARD All locations having shops/establishments’ Upto 10000 (not population related) are Treated as Rural Sahara The rural and semi urban area is defined As all cities other than major metros LG Elect. Concept of Rural from the perspective of marketing has Indeed been dynamic.- gradually changed over the times Was not India a so called Village/Rural for the world a couple of decades back National Bank for Agriculture & Rural Dev NABARD

4. What is Rural Marketing Developing of the market in the area as defined as Rural Hence it could be aptly said that it encompasses the Activities such as developing the process to meet this Objective – Right product at the right price to the right people at the right time. Exchange between rural and Urban is a Factor . Could be Urban to Rural: Rural to Urban, Rural to Rural

5. Size of the market Largely Untapped Too crowded Urban Market Income on the rise/disposable income Reasons for Going Rural Income from other than agriculture Income flow from urban /abroad Better exposure - media • Great success stories • HLL 50% • Colgate 50% • LG 50% • Asian Paints 60% • Dabur 40% • Videocon 40% • Cadbury’s 25% • Hero Honda 40%

6. Points to Note with Regard to Rural Markets • Extremely Diverse Market Villages – Size, Population, Spread, Income Literacy levels , awareness level, languages • Urban Market – scope and saturation • Flow of funds – from Urban National /International • Literacy levels on the rise • Media Penetration

7. Encouraging Indicators/Initiatives for Rural Market Growth • Scientific methods – major impetus to Production of food grains • Export on the rise – Increase in agriculture and handicrafts • Initiatives taken by banks for more branches and Kisan credit card to buy seeds, fertilizers, consumer goods on installment basis • Reputed Companies helping in changing lifestyles – Levers Britania ,Dabur, LG, Honda,Videocon • Media creating an impact-creating awareness levels • Government Policies – White Revolution – Milk products Yellow Revolution (poultry and edible oils) Blue Revolution – Aqua culture • Employment Schemes – JRY(Jawahar Rojgar Yojna, PMRY,Small Industries Training, • Ruiral Electrification, Spend on Health and Sanitation, Medical and Health, Primary Education, • Credit card for farmers • Waiver of Loans • Initiatives by leading organization in spreading awareness Hindustan Levels Shakti, ITC Reliance etc

8. Move to Rural Market …encouraging Data Rural India buys Soft Drinks approx 45% of all soft drinks Almost 50% motor cycles Approx 55% of cigarettes Half the total market for TV,Fans, pressure cooker, bicycles Washing soap, tea, lades, salt, toothpowder Coca Cola is growing over 35% in Rural areas compared to Over 22 % in Urban According to Hasna Research , a market research farm that Has published a Guide to Indian Markets 2006 Consumer durables in Indian Villages risen sharply TV Sales up by 200% Motorcycle by 77% There are 3000 households in rural area that earn > 50 lakhs We have come some way ahead – but there is a long way to go

9. Low per capita income Low disposable income Inadequate fixed income (daily wages) PROBLEMS IN RURAL MARKETING • Majority – depends on Agricultural • Income • Acute dependence on monsoon • Consumption linked to harvest Infrastructure problems Roads, power Low awareness Communication- difficult & expensive Too many languages Geographic Spread Digging for Diamond

10. Urban & Rural Markets Key Differences • Per capita Income • Disposable Income • Literacy levels • Infrastructure • Communication • Geographical Spread • Customer has many choices

11. Profile of the Rural Consumer

12. Profile of the Rural Consumer • >Low Literacy Level • >Low Income Level • >Massive Geographic Spread • Urban population concentrated 3200 cities town • Rural scattered over 630000 villages • >Reference Group • Health Workers • Doctors • Teachers • Panchayat Members • Rural Bank Managers • District Managers • Occupation – Principal Farming Trading Handicrafts Cattle & Poultry Farming >Media Habits Fond of music T.V Radio Video Films Generally they have a lot of reservation/inhibition rigid in their behaviour

13. RURAL CONSUMER CLASS • The Affluent Class • The Middle Class • The Poor RURAL CONSUMER BEHAVIOR How does an individual decide to spread his Available resources (time,money effort) on Consumption-related products. That is – what they buy why they buy when they buy where they buy it how often they buy it how often they use it Very Rich Well Off Climbers Aspirant Poor

14. Simple Model of Rural Consumer Behaviour Need Recognition Pre Purchase Search Evaluation of Alternatives Purchase Decision Post purchase behaviour

15. Factors that Influence Rural Behaviour Attitude >Consumer belief Consumer feelings • Stimuli • Inputs to any senses • Products • Package • Commercials • Brand image • Reference • Information cues about the characteristics of the product Perception Depends on Interpretation Exposure Iodex – muscular pain Reliever used on animals After hard days work in MP Godrej hair dye on Buffaloes To make them look better in Village haats in Raichur Eg IFB had not adequately Educated farmers about the Washing machine -they thought It was a churn for making large quantities of lassi (prosperous village of Punjab)

16. Awareness Key Challenges 4A Affordability Availability Acceptability 4 Ps 4 As Awareness Promotion Price Affordable Acceptable Product Place Available

17. RURAL MARKET RESEARCH

18. Marketing Research is a formalized means of obtaining Information to be used in making marketing decisions Market research Information Required to address Issue Design Method of Collecting Information The data collection process Manage Analyze The results Communicate Finding and implication

19. Primary Sources • Retail shops/STD booths • Tea Stalls • Playgrounds/schools • Chaupals (meeting point old/middle aged/ influential) • Haats & Melas • Influence Group SOURCES FOR CONDUCTING RURAL MARKET RESEARCH • Secondary Sources • Government website www.censusindia.com www.indiastat.com www agroindia.com • Private bodies (market research advertising agencies Indian Market Research Bureau Thompson Rural Index Guide to Rural Markets • Publications

20. Tool Kits Used for Rural Market Research

21. Tool Kits Used for Rural Market Research Happy ………Sad Faces Same Color – Different shades Color Wheel Different Color Number of Coins Ladder Playing Cards

22. POINTS TO REMEMBER FOR RURAL MARKETING RESEARCH

23. Remember … • Build Rapport - *** • Greet – need to be informal • Speak local language • Do not jump to survey –speak of other matters of interest • Gradually lead to the objective of the interview • Explain the benefit of the survey – how it will gain • Interviewer should be aware of the rural area • Never make the respondent uneasy – if he offers tea do not refuse

24. RURAL MARKET SEGMENTATION TARGETING & POSITIONING

25. SEGMENTATION : Very Varied –hence proper segmentation very essential Geographic: Region North, East, West and South Village size Climate Demographic Age Family Size Gender Income, Occupation, Education,Caste Psychographics (consists of psychological: sociology: anthropological) Lifestyle Rigid ,changing attitude, urban influence Personality Authoritarian, Ambitious Behavioral Occasions Regular, special occasion Benefits User status regular user, first time user, non user Usage rate Light, medium, heavy Loyalty None, medium, strong Attitude to Product ) positive, negative, hostile

27. DEVELOP THE PROFILE • Select the Target Market • Evaluate the Market • Evaluate the Segment size growth rate profitability accessible compatible with firm’s resources & capabilities High Value to Rural Customer Low Hard Easy Ease of Implementation

28. TARGETING >Select Target Segment >Formulate Market a marketing strategy for the target market POSITIONING One shoe fits all !!!! ……. Everything for Everyone !!! It is “Something for Someone” • How to Position • USP of the product – uniqueness of the product • Special needs – either address partially/ unaddressed • Noticeable gap in the products available Positioning Concept Study the possible motives of the rural customer Then figure out how to appeal to them (USP, Price Quality Uses, Class, Culture etc Select & Develop the Concept Bridge gap between the product and the target market. Communicate the Concept Advertise and Reach (Media) Offer Product After STP (Segmentation, Targeting and Positioning) Post Sales Feedback & After Sales Service

29. RURAL MARKETING STRATEGY

30. New Entrant Company starts Rural Market first & then ventures in Urban Market (eg Cavin Kare Chik & Meera Shampoo) ENTERINING THE RURAL MARKET Mid- Entrant Company starts Rural Market after success in Urban Market (eg HLL, LG) Late - Entrant Company starts Rural Market after success in Urban Market for long (eg Cadbury) R G A Retain Grow Add

31. RURAL MARKETING STRATEGY P L A N N I N G Profile the Rural Market Profile the Consumer 1 Market Behaviour & MR Segmentation Targeting Positioning --------------------------------------------------------------------------------- E X E C U T I O N Rural Product Rural Pricing 2 Rural Distribution Rural Sales Force Management Rural Communication --------------------------------------------------------------------------------- F E E D B A C K Monitor the Rural Strategy 3 Feedback & Control

32. DEVELOPMENTAL MARKETING Developmental marketing is a process through which awareness is created >could be demonstration >could be presentation >Free samples >could be through up eg tie up with Bank tie up with Petrol/Diesel pumps (Hyndai did with IOC and PNB and SBI subsidiaries >30% sale of Hyundai from Rural/Semi Urban areas) Awareness Trial Purchase Post-Purchase Satisfaction Colgate – program Operation Jagruti Switch from Charcoal to Colgate tooth powder HLL - Free samples of Lifebuoy Cavin Kare – Free sample of Chik Champoo Marico Industries – Parachute coconut oil “Sudhata ki pehchan” –smell to differentiate between real and spurious

33. RURAL PRODUCT RURAL PRICE RURAL DISTRIBUTION RURAL SALES FORCE MANAGEMENT RURAL COMMUNICATION

34. Rural Product Product to be marketed with the requirements of the Rural Consumer should not be an extension of urban offerings (Philips launched Free Power Radio – does not require Battery/electricity you wind it with a lever and radio runs For approximately 30 min. FMCG (HLL, Dabur, Marico, Colgate=Palmolive Coke, Pepsi) Consumer Durables TV ,Fridge, Fan, Presssure Cooker, Cycle, Two wheelers, Sewing machines, watch, mixer grinder, radio, music system, Fans, Washing machines (Philips, LG, Videocon, Onida ) Services Telecom, Banking, Health care ,Insurance (Airtel, BSNL, SBI, PNB,Dena bank,) Agri-inputs Seeds, pesticides, tractors (Rallis India, Bayer,) Classification Of Rural Products Product Life Cycle (PLC) Take Off Launch Maturity Decline

35. Points to note • Rural Products • Easy to Use • After sales support • Conveniently packed- success of Sachets • Product literature to be simple • Have a logo – easy to identify eg Thums Up Rural Packaging • Packaging material –plastics, poly packs, unbreakable materials • Looks - attractive colors (like all tea companies) • Size and convenience- small is beautiful

36. Rural Branding 1. Brand Name 2 Create Brand Identity 3 Enhance Recognition 4 Build a Brand Image 5 Countering Spurious brands Look alike, Spell alike, Duplicates Enhancing Brand Strategies with Social Perspective Soaps for Hygiene Cooking gas for environment Creating need by more awareness Partnering with a long term perspective requires total belief and Commitment - to the people, to the processes, to their own employee. Need to work for a cause – ITC, Hindustan Petroleum, HLL , Colgate Palmolive , Several Banks are a few such examples

37. RURAL PRICE • Pricing In Rural Market plays a key role in the success of a product • RURAL PRICING OBJECTIVES • Have a long run perspective Idea is to penetrate first Increase Volume Make using the product a habit Volumes to take care of the Margins Keep eye on Competition Price The following may help in addressing the issue Low cost –less amount (small packages- sachets) Simple but colorful packaging – eg. success of biscuits Refill packs Value engineering – eg soya protein in place of milk protein METHODS OF PRICING • Cost –Plus Pricing = cost of product +distribution +profit • Value Pricing (VFM-Value for Money) High Benefit • Power Price – eg Re 1, Rs 2, 3, 5,10 • Penetration Price – Introduce at low and hike price after success • Differential Pricing –Different price for different market • Price Gap – Comp prices – range

38. RURAL DISTRIBUTION Channel of Distribution Physical Distribution PHYSICAL DISTRIBUTION Transportation Warehousing Communication Transportation Railways, Roads ,Waterways, Animals Communication ITC using internet, Mobile users by fisherman Warehousing (Three Tier Rural Warehousing Set Up) Central/State Warehousing Cooperatives Rural Godowns

39. WHY CHANNELS OF DISTRIBUTION • Geographical Spread • Dealers are few – hence required to bank on a number of resources • Financial Viability • Inadequate Bank and Credit Facilities TO ADDRESS THE ABOVE CHALLENGES • Rely on Private Village Shops • Supply Chain Stores • Rural Super Market • Small companies tie up with large companies – Leverage/Syndicate Distribution network of Marico to sell Tide by P&G • Satellite Distribution SD SD R D SD SD SD SD SD SD Whole- Saler Town SD D D SD SD SD SD SD SD D-dealer SD- Sub Dealer R-Retailer D SD SD

40. PLANNING FOR SALES FORCE MANAGEMENT SET THE PERSONAL SELLING OBJECTIVES FORMULATE THE SALES POLICIES STRUCTURE THE SALES FORCE SIZE OF THE SALES FORCE ASSIGNING SALES TARGETS CREATING SALES FORCE- SELECT, RECRUIT, TRAIN SALES FORCE COMPENSATION, MOTIVATION, SUPERVISION SALES COMMUNICATION & REPORTING SALES COORDINATION/SALES CONTROL

41. TRAITS OF A RURAL SALESPERSON • Hardworking • Have Empathy • Enthusiastic • Perseverance • Knowledge • Attitude • Skills • Willingness to work in Rural Areas • Adopting to cultural differences • Down to earth approach • Fluent in local language • Developmental approach – Create not only Communicate Common to both Urban & Rural Sales person

42. The Success of Organizations depends on lot on the Sales Force • They are the face of the Organization – the Ambassador • They are the ones who have direct interaction with The Potential Consumer/Customer The Users The Dealers The Distributors The Retailers • They are a major link to the chain and establish the link • They are the ones who help in building Trust They need to break the rigid ideas and preconceived notions

43. RURAL COMMUNICATION Effective Communication goes a long way in establishing the right Messages and thereby more interaction with Potential Customers Communication, however, is not complete if there is no feedback It is very important to re enforce messages in Rural areas • Factors Affecting Rural Communication • Literacy level • Media Habits • Traditional approach • High resistance – more so initially • Lavish at occasions (eg Marriage) • Purchasing power also depending on weather- the crops • Inequitable distribution of wealth • Too many languages • Culture

44. RURAL MEDIA Mass Media (Conventional) Traditional Media (Non Conventional) Puppet Shows T.V /Cable network Satellite Channels Folk Theatre/Opera Radio Demonstration Print Haats and Mela Cinema/ Theatre Wall painting Word of Mouth Post card and posters Video on Wheels Booklets/Calendar • Advantages • >Excellent Reach • Less expensive ,wider coverage Disadvantages • At times unnecessary coverage • No customized messages Companies using this medium Levers, Onida, Videocon Mahindra Tractors, Eveready • Advantages • >High involvement • High Interest • Localized administered at low cost Disadvantages • Coverage • Repeat /Re enforcement • Skill of performer Companies using this medium Bajaj, HUL, ITC

45. You are the Marketing Director of A Company dealing in Consumer Durables (TV, Fridge, Washing Machine Music System, Microwave etc). Your business has been growing steadily in the Urban Market – however, you are aware that the Business will grow manifold if you also cater to the Rural market. (Present growth rate has been 8%. You are targeting a growth of 14%) • Take into account the following • The Target Audience • The Product proposition • Distribution Strategies and Sales Forecast • Pricing Strategies • Promotional Strategies • How the above strategies will help in achieving the • Business Objectives. • While making the presentation – you need to be clear on • Why you chose to launch the particular product • Why did you chose the particular location • (Opportunity Assessment)