Rural Marketing For FMCG

Rural Marketing for Fast Moving Consumer Goods
Project On
Rural Marketing for FMCG
CONTENTS
1
Particulars Executive Summary Introduction Rural Marketing Rural India Fast Moving Consumer Goods Consumer Behaviour Market segmentation Target Marketing Market Positioning Marketing Mix 4 Ps Rural Marketing Mix Rural Marketing Strategy Rural Market Strategy Brand Management Advertising Media Management Distribution Packaging Fakes Market Challenges & Opportunities Social marketing Bibliography
Page no. 6 7-8 9-10 11-16 17-20 21-26 27-31 32-33 34 35-40 41 42-46 47-49 50-53 54-57 58-59 60-64 65-67 68-69 70-72 73-75 76
EXECUTIVE SUMMARY
Rural Marketing for Fast Moving Consumer Goods It is often said that markets are made not found. This is especially true for the rural market in India. It is a market for truly creative marketer. Rural marketing is distinct specialization of marketing discipline, which encompasses a customized application of marketing tools & strategies to understand the psyche of rural consumers in terms of needs, tailoring the products to meet such need & effectively delivering them to enable a profitable exchange of goods & services to & from the rural market. Already rural market is proving to be vital for the growth of most companies. Take the largest FMCG Company in the country, Hindustan Lever more than half its annual sales of Rs.11, 700 crores comes from the rural market. The term rural marketing is synthesis of two words- Rural & Marketing. Rural India is evolving, is dynamic & has stood on its own for centuries Rural Indias population is more than one tenth of the world population, hence, important to India & the World. The rural market consists of more than 100 million households with a total population of about 740 million. In spite of being larger in size, rural areas are charaterised by low per capita income, low literacy, and average agricultural productivity & low level of indutrialisation. Only FMCG companies, with deep pockets, unflinching rural commitment & staying power can play this rural game at the market. But as stated by C.K. Prahlad, The future lies with companies, who see the poor as their customer. It is a high- risk area, but with the promise of a large customer following as a prize for those who succeed. The Key to reducing the risk is to understand the market, consumer needs & behaviour. The rural market is still an area of darkness for India entrepreneurs, an idea that is vast in size, but a amorphous in detail. & yet, it represents the largest potential market in the country, with over 75% of the population. It is a market with potential, but the marketers need to have a long term vision & commitment. The marketer can expect results in the time frame of 10 to 20 years. As these results are not going to come very fast, an approach of gradually building the rural market, in phases, is needed to be successful. Fast moving consumer goods (FMCG) have attracted Indian villagers when the urban demand for goods is getting saturated. The manufacturing companies look at this development as an opportunity. Large FMCG companies including Multinational companies (MNC,s) are planning their own strategies to enter this large & developing rural market. The marketing Strategies have to be tailor made to suit the rural condition. Leading companies in the FMCG sector in India have taken up a development approach to nourish this new market. The companies are Hindustan Lever Limited (HLL), Nirma, Godrej, Proctor & Gamble, Reckett & Colemn, Karnataka soaps & detergent limited. HLL has done considerable pioneering work in developing FMCG products for the rural market & initiating collaborative & innovative strategies.
INTRODUCTION
Rural Marketing for Fast Moving Consumer Goods The word Market is derived from the Latin word Marcatus meaning goods or trade or a place where business is conducted Kotler defines Marketing as a social & managerial process by which individual & groups obtain what they need & wants through creating, offering & exchanging products of value with others. American Marketing Association (AMA) defines Marketing is the process of planning & executing the conception, pricing, promotion & distribution of ideas, goods & services to create exchanges that satisfy Individual & organizational goals. The word rural means places for away from towns & cities. The census of India (2001) defines rural as that what is not urban & urban is All locations within a municipality/corporation, cantonment board or a notified town area committee All other locations satisfying all the following criteria:1) Min. population of 5000 2) At least 75% of male workforce engaged in non-agricultural activities & 3) A population density of over 400 persons per sq. km. RBI- DefinitionLocation with population up to 10,000 will be considered as rural & 10,000 to 1, 00,000 as semi-urban NABARD- Definition- All locations irrespective of villages or town, up to a population of 10,000 will be considered as Rural Planning Commission- Definition- Towns with population up to 15,000 are considered as rural. There are currently more than 20,000 villages in the 5,000-10,000 population strata as per the census of 2001, so any population cut off criteria should definitely include these villages as rural areas. Of the nearly 6.4lakh villages in India, only 20,000 villages have population more than 5,000.For consumer expendables/FMCG the rural market can be defined as all locations having population up to 20,000 irrespective of their status as villages or towns. As per national commission on agriculture, Rural marketing is a process which starts with a decision to produce a saleable farm commodity & involves all aspects of market structures or system, functional & institutional, based on technical & economic considerations & includes pre- & post-harvest operations, assembling, grading ,storage, transportation & distribution According to Thompson the study of rural marketing comprises all the operations & the agencies conducting them, involved in the movement of farm produced food, raw materials & their derivatives, such as textiles, from the farms to the final consumers & the effects of such operations on producers, middlemen & consumers
Definition of Corporate Rural Marketing:Rural marketing can be defined as a function that manages all activities involved in assessing, stimulating & converting the purchasing power of rural consumers into an effective demand for specific products & services & moving these products & services to the people in rural areas to create satisfaction & a better standard of living & thereby achieving organizational goals. Rural marketing has also been defined as the process of developing, pricing, promoting, distributing rural-specific goods & services leading to exchange between urban & rural markets, which satisfied consumer demand & also achieves organizational objectives. Marketing is all about getting to know your customer Although the per capita income in rural is less than half of urban, the rural sector already accounts for 53% of FMCG & 59% of durables brought in India. However, rural penetration & consumption levels for most product categories are much lower than urban because of limited purchasing power with villagers. Improved irrigation facilities, infrastructure, and better roads, free trading in agri produce, removal of excise duty on tractors, agri implements; & the insurance scheme for farmers announced in the budget should all give a boost to the rural economy & generate a greater demand for corporate products. However, to benefit from this new opportunity, urban markets will have to gain a better understanding of rural lifestyles, needs & aspirations & design appropriate products. Corporate will need to extend their distribution reach to service this new segment living in six lakh old villages, offer smaller packs at lower process points & communicate in the local Idiom to connect with rural audiences. A pan rural India marketing strategy will not work. Corporate will have to not only think local, but also act local. Adi Godrej, chairman, Godrej group. The rural consumer is discerning & the rural market is vibrant. At current rate of growth, it will soon outstrip the urban market. The rural market is no longer sleeping but we are
RURAL MARKETING
Villages are the heart of India. Approximately 75% of Indias population (equaling 12.2% of the Worlds population) lives in 6, 38,365 villages spread over 32 lakh square 5
Rural Marketing for Fast Moving Consumer Goods kilometers. Of this rural population, about 90% is concentrated in the villages having population less than 2000. As per the Census (2001), rural segment comprises 13.5 cr. households which constitute 72% of total households in India with 48 cr. Adults households. Phases of rural marketing:Phase Time period 1. From Independence to Green Revolution Green Revolution to preliberalisation period Postliberalisation period in 20th century 21st century Nature Agriculture marketing Marketing of agri-inputs Major production Agriculture produce Agricultural inputs Source marketing Rural Target Market Urban
2.
Urban
Rural
3.
Rural marketing
4.
Consumables & durables for consumption & production Developmental All products marketing & services
Urban & rural
Rural
Urban & rural
Urban & rural
Nature & characteristics of the rural market:Large & scattered market:-Indias rural market is large & scattered in the sense that it consists of approximately 75 cr. rural consumers who live in approximately 6,38,365 villages spread over 32lakh square kilometer area Heterogeneous market:-The rural market is not a homogeneous one. As many as 20,000 ethnic groups are present in rural India & this poses a formidable challenge to the marketer. There are 24 villages & 1642 dialects & the dialects (boli) varies every 100 km. or so, making it extremely difficult to develop a uniform promotional message. Rural India is thus a mosaic of markets & this heterogeneity is the hallmark of the rural market Standard of living: - Unreliability factor in case of rural income makes the rural customers extremely conscious in their purchase behaviour as they are not confident about their future earning as over 70% of the rural population is employed in small scale. Agriculture & the related occupations & the propensity to save for the future exigencies makes them spend less to improve their standard of living even when they have good income. Besides this low literacy, social backwardness, low saving, traditional attitude etc. also have contributed to lower standard of living.
Rural Marketing for Fast Moving Consumer Goods Infrastructural facilities: - The infrastructural facilities like roads, warehouses, communication systems & financial facilities are inadequate in rural areas. Roads do not connect nearly 50% villages in the country. Promotion & physical distribution thus becomes very difficult in the rural terrain because of inadequate infrastructural facilities over 50% rural households have access to electricity as main source of lighting but 46% still use kerosene for lighting According to the NCAER Indian Market Demographics Report 1998, the consuming class households (annual income between Rs.45,001 & Rs.2,15,000) in rural India equals the number in urban India . Rural India is generating more than half of the national income. Indias 58%disposable income comes from its rural parts where 41% of the countrys middle class homes are located. The 55.6% contribution to the national income by 74.6 cr. rural population is higher than urban Indias contribution of 44.6% by 25.4 cr. people. But the per capita income turns out to be significantly lower that in rural areas because of large population base. The importance of rural market can be understood from the fact that if Indias rural income grows by 1% there will be a corresponding increase of about 10,000 cr. in the villagers buying power. Rural India: - A fertile ground for marketing. 1) 70% of the villages to be connected by the road in the tenth plan 2) Procurement of productive asset is also on the increase in rural area, leading to increased disposable income & higher purchasing power. 3) A sum of Rs.7, 36,500 crore has been earmarked under the tenth plan for Agri institute credit. 4) A sum of Rs.86, 000 crore has been disbursed under the Kisan credit card scheme 5) India has the largest number of the tractors in the world 6) The 6.6 million rual people who have invested in formal Ages & stages of the life cycle Size of rural market Estimated annual size FMCG Durables Agri-inputs (incl. tractors) 2/4 wheelers Total Source: - Francis Kanoi 2002 Rural market Rs.65,000 crore Rs.5,000 crore Rs.45,000 crore Rs.8000 crore Rs.1,23,000 crore
RURAL INDIA
Rural population in India:Rural Year population Ratio percentage 7 Urban population Ratio percentage Total in million
Rural Marketing for Fast Moving Consumer Goods in million 1951 295 1961 360 1971 439 1981 508 1991 621 2001 736 Source: - Census of India, 2001 in million 62 79 109 160 215 285
82.2 82.0 80.1 76.0 74.3 70.2
17.4 18.0 19.9 24.0 25.7 27.2
357.0 439.0 548.0 668.0 836.0 1021.0
Location & concentration of rural population- Geographic factor:Sr. Population range Number Population to Population no. (No. of persons) of villages total percentage in millions 1. Less than 200 1,20,073 21.55 12.19 2. 200 to 499 1,50,722 27.05 51.31 3. 500 to 999 1,35,928 24.40 97.03 4. 1,000 to 1,999 94,486 16.96 131.57 5. 2,000 to 4,999 46,892 8.42 137.67 6. 5,000 to 9,999 7,202 1.29 47.24 7. 10,000 & above 1,838 0.33 30.99 8. Total 5,57,137 100.00 508.00 Source: - Census of India, 2001 Literacy level:Literacy level in percentage:Sr. no. Sex 1971 1981 Rural Urban Rural Urban 1. Males 34 61 41 66 2. Females 13 42 18 48 3. All 24 52 30 57 Rural market structure- Demographic Environment Household in million:Year Household (million) Family size number Rural 112 5.55 1991 Urban 40 5.32
Proportion to total percentage 2.4 10.1 19.1 25.9 27.1 9.3 6.1 100
1991 Rural Urban 58 81 31 64 45 73
2001 Rural Urban 61 82 32 67 50 75
Total 152
Rural 138 5.36
2001 Urban 54 5.31
Total 192
House Type Pucca Semi-Pucca Kuccha
1981 22 37 41
1991 31 36 33
2001 41 36 23
Rural Marketing for Fast Moving Consumer Goods 100 Literacy rate:Census 1991 Male Female Rural 57.87 30.62 Urban 81.09 64.05 Total 64.13 39.29 Source: - Census of India Socio-Economic Classification (SEC) R1 100 Census 2001 Male Female 71.18 46.58 86.42 72.99 75.85 54.16 100 % increase Persons 14.52 6.98 13.17
Persons 44.69 73.08 52.21
Persons 59.21 80.06 65.38
Rural Characteristics, Behaviour, Aspirations & Lifestyle Land lord farmers, educated, exposed to urban environment, children in school/colleges in nearby towns, aspiring to match urban lifestyle, technology adopters, experiment with modern farming methods, eager for additional source of income, socially & politically well connected, high spender on social occasions, own durables like tractor, 2 wheeler, TV, music system, steel almirah, LPG, refrigerator, mixer grinders Rich farmers with about 5 acres of land, may not be educated, but wants children get educated with friends & relatives in urban, consult them for technology adoption, conscious of status, aspires to be well known in social & political circles, own durables like tractor, 2wheeler, TV, LPG Average land holding 2-5 acres, manages small savings, children sent to village school, opts for time tested technology, low risk taker, owns durables like TV, tractors (self & rental) Has little or no land, agricultural labour, living below poverty line, a major purchase from public distribution system Total 934.2 1012.4 1094.1
R2
R3 R4
Distribution of Indian population by age (All India Rural Urban) in millions:Year Kids Children Adolescents Young Mid Aged adults aged 0-4 5-14 15-19 20-34 35-54 55+ 1996 119.5 233.2 90.7 224 178.1 88.7 2001 108.5 239.1 109.0 246.8 207.3 101.7 2006 113.5 221.2 122.4 279.1 239.2 118.7
Hardly any shops in 2.30lakh villages 17% of villages, 50% of rural population, 60% of rural wealth Distribution of Towns:9
Rural Marketing for Fast Moving Consumer Goods Class of town Class 1 Class 2 Class 3 Class 4 Class 5 Class 6 Population More than 1lakh 50,000-99,999 20,000-49,999 10,000-19,999 5,000-9,999 Less than 5,000 Total * 10lakh=27, 5-10lakh:42, 1-4lakh:354 Source: - Census of India 2001 Number of towns 423* 498 1386 1560 1057 237 5,161 Percentage of towns 8.6% 9.6% 26.9% 30.2% 20.5% 4.6% 100%
Indian villages according to population size Villages in size Population size groups,2001 Less than 200 200-500 501-1,000 1,001-2,000 2,001-5,000 More than 5,000 Total no. of inhabited villages Source: - Compiled from Census 2001 & 1999 Number 96,855 1,36,454 1,56,737 1,40,751 87,206 20,363 6,38,366 Percent 15.6 21.4 24.4 21.9 13.5 3.2 100
Villages in size groups,1991 Number 1,03,952 1,41,143 1,44,998 1,14,395 62,915 13,376 5,80,779 Percent 17.9 24.3 25.0 19.7 10.8 2.3 100
% of Total Population for 2001 1.2 5.9 14.5 25.9 37.5 15.0
Indian states (Number of villages) State/UT No. of villages All India 6,38,365 Jammu & Kashmir 6,652
Stae/UT Assam West Bengal 10
No. of villages 26,247 40,783
Rural Marketing for Fast Moving Consumer Goods Himachal Pradesh 19,831 Punjab 12,729 Chandigarh 24 Uttaranchal 16,805 Haryana 6,955 Delhi 165 Rajasthan 41,353 Uttar Pradesh 1,07,440 Bihar 45,113 Sikkim 452 Arunachal Pradesh 4,065 Nagaland 1,315 Manipur 2,391 Mizoram 817 Tripura 870 Meghalaya 6,023 Source: - Census of India, 2001 Rural Population Indian population overview As per Census Data Sr. No. Year 1. 2. 3. 4. 5. 6. 7. Jharkhand Orissa Chhatisgarh Madhya Pradesh Gujarat Daman & Diu Dadra & Nagar Haveli Maharashtra Andhra Pradesh Karnataka Goa Lakshadweep Kerala Tamil Nadu Pondicherry Andaman & Nicobar islands 32,615 51,352 20,308 55,392 18,544 23 70 43,722 28,123 29,483 359 24 1,364 16,317 92 547
200 1 Population in million 102 7 Density per square km 324 Person per household 5.5 Villages inhabited000 627 Rural population (million) 742 Urban population (million) 285 Rural population as % of total population 72.2
199 1 846 273 5.52 627 629 218 74.3
1981 683 230 5.55 579 524 159 76.7
Social Economic Classification (SEC) Rural:Education Illiterate Below SSC SSC/HSC Some college not graduate Grade/PG (General) Grade/PG (Professional) Pucca R4A R3A R2 R1 R1 R1 Type of house Semi pucca R4A R3B R3A R2 R2 R2 Kuccha R4B R4A R3B R3B R3A R3A
The allocation for rural development has increased from Rs.8, 900 crore in the seventh plan to Rs.34, 400 crore, Rs.89, 000 crore & Rs.1, 20,000 crore in the Eighth, Ninth & Tenth plans respectively. Human Poverty Index (HPI)
11
Rural Marketing for Fast Moving Consumer Goods Period Rural 1981 53 1991 44 Source: - Human Development Report 2001 Population below the poverty line (Rural) period No. of persons (million) Percentage of persons 1983 252 46 1993-94 244 37 1999-2000 193 27 Source: - Human Development Report 2001 Sectoral Allocations during the five year plans (Rs. Billion) Heads of Development Seventh plan Eighth plan 1985-90 1992-97 Agriculture 105 225 Rural Development 89 344 Source: - Planning Commission Urban 27 22
Poverty line (Rs.) 89.5 20.6 328
Ninth plan 1997-2000 372 890
Tenth plan 2002-07 589 1,219
Components of Non-food items Source NSSO 2001 By 2002, 5, 07,000 villages (i.e. 86% of total number of villages) had been electrified (Source:-Planning Commission, Tenth five year plan) Respondents Sampling- SEC categories R1- most prosperous R4- least prosperous SEC categories:R1- 3% R2- 9% R3- 36% R4- 52% SEC Rural R1 R2 R3 R4 Source: - IRS 2003-04 The purchase behaviour SEC is often different from other SECs. They generally make bulk purchases from nearby town markets as they look for more variety & better quality products. SEC R2 & R3 prefer to purchase from weekly haats which offer opportunities to bargain. Rural vs. Urban shops Urban 1.68 million outlets spread over 5,000 town Rural 3.5 million outlets spread over 6lakh 12 % of rural population 4 11 37 48 SEC Urban A B C D E % of urban population 10 17 21 23 28
Rural Marketing for Fast Moving Consumer Goods & cities Source: - ORG 2002 villages
Literacy level Census 1951- Literacy in rural area-25% Census 1991- Males-52% Female-39% Census does not include children below 5 years old 2001- Literacy rate-65.4% all India Rural area less than 60% male 45% for females Consumer expenditure in rural areas:Consumer expenditure in rural areas (Value in per person for a period of 10 days) Amount Percentage of total Food 110.25 64.10 Non-food 61.82 35.90 Total 172.00 100.00 Source: - Rural Development Statistics Rural Income Pattern- Economic factor:Source of Income Proportion to total percentage Pattern of rural income Census of India,2001 Agriculture 58.80 55 Agriculture wages 16.10 20 Business & Crafts 8.80 8 Non-Agricultural wages 7.20 8 Salaries 2.50 3 Current Transfer 1.90 2 Others 4.70 4 Total 100.00 100 Source: - Pattern of Rural Income & Census of India, 2001 Demographic Factors- Occupation Pattern:Sr. no. Occupation 1. 2. 3. 4. 5. 6. Agriculture Agricultural Labour Business Non-Agricultural Labour Salary Earners Not Gainfully Employed Total Proportion of Rural Population percentage 52 25 10 9 2 2 100
FAST MOVING CONSUMER GOODS
13
Rural Marketing for Fast Moving Consumer Goods A study by the Chennai based Francis Karoi marketing planning services estimated the total value of the rural market at a whooping Rs.1, 23,000 cr., divided into the categoriesFMCG Rs.65000 cr., durables Rs.5000 cr., tractors & agri inputs Rs.45000 cr. & two & four-wheelers Rs.8000 cr. Approximately 32.5 cr. Indians lived below poverty line (BPL), which is around one-third of the countrys population. The incidence of poverty in rural areas at 39.4% is much higher than 28.4% in urban areas, although, about 80% of the poor people in India lived in rural areas in 1995 but this does not mean rural population is above the poverty line & in actual terms it turns out to be a large number. The percentage of BPL families declined from 46% to 27%. But actual number remains more or less the same. The percentage of BPL population varies significantly from one state to other for ex., Orissa with 48% BPL population is poles apart from Punjab where which this figure is just 6%(planning Commission, Government of India) The rural FMCG market, comprising a basket of 20 products was worth Rs.44,000 cr. In 1998, accounting for over half of the all-India market then. The rural FMCG market grew at an annual average rate of over 12% between 1993 & 1998 The rural household spends Rs.3, 203 per years for 22 FMCGs, that is Rs.229 per month & this figure excludes cereals, pulses, vegetables & milk. The 1988-93 periods saw a good average annual growth rate of 5.8% in the FMCG sector. NCAER data shows that in this period the rural FMCG growth was greater than the urban increase. During the next five year (1993-98), the agriculture sectors average annual growth fell to 1.94% but the FMCG growth was around 12%. The formidable challenge in the FMCG sector is to maintain quality, build aspiration value & at the same time keep the prices lower to make the products affordable to Bottom of the Pyramid (BOP) customers FMCG are also termed as non-durable goods- a tangible item that is quickly consumed, worn out or outdated & consumed in single use or a few uses consumer products used for personal, family or household use are further classified as three types: Convenience, Shopping & Special categories. Characteristics/ Features of FMCG:a) The sector touches every aspect of human life, from looks to hygiene to palate. b) This industry is characterised by a strong focus on the floor Ps Product, Pricing, Place & Promotion. c) It is a high volume, low value driven industry in most categories. d) It is brand driven, rather than product driven. e) The capital investment is in the area of marketing: Brand building & Promotion. f) Distribution network is extremely vital for the success of an organization in this Industry.
FMCG sector is the cornerstone of Indian Economy. It has been in existence for a quite a long time, but it began to take shape only during the last fifty- odd years. FMCG, the fourth largest sector of Indian Economy which had an estimated market size of Rs.85,
14
Rural Marketing for Fast Moving Consumer Goods 000 cr. in 2003, is a significant direct & indirect employer out of the total spend of Rs.89, 000 cr. more than Rs.53, 000 cr. was attributable to rural areas. Launch cost is as high as 50-100 per cent of the revenue as the brand matures, gain consumer acceptance & as turnover rises. Around 60% of Indian FMCG market is unorganized. Local players had nearly 70% of the FMCG market. In the FMCG sector increasing competition is the main reason for loss of pricing poser in most brands. In the FMCG industry in India, companies distribute their products to over 10lakh retail outlets or point of sales. Cash poor & low level of income the poor consumer has to be accessed differently. Major Indian consumer product companies (Britannia, P& G, HLL, Colgate etc.) have a very sound presence throughout the Indian market with their strong brands. The leading companies make considerable investment in R & D to sharpen & maintain their edge in the business. Brand equity, therefore is an extremely important factor in FMCG Industry. Cavinkare gave HLL a run for money in the shampoo market; Anchor challenged the dominance of Colgate & HLL in the toothpaste market. Jyoti labs dislodged the Reckitt & Colemons long time leader Robin Blue with its Ujala Fabric Whitening. Flanking attacks make excellent marketing sense for smaller & regional players with limited resources. This is how the brainchild of Karsan Bhai Patel, Nirma detergent powder became a national brand & a household name as well. The phenomena the pricing war is very common in FMCG sector. Penetration of different FMCG product categories in rural market:Category Penetration (%) Highest Penetration Brand Toilet soap 91% Lifebuoy Washing cake/Bars 88% Wheel Edible oil 84% Double Hiran Mustard Tea 77% Lipton Taaza Washing powder/liquid 70% Nirma Salt 64% Tata Salt Biscuits 61% Parle-G Source-ORG-MARG R Panel, Strategic Marketing, July-Aug 2002. pp 32 Fast Moving Consumer Goods (FMCG) Product Basket:- Toilet soap, Washing cake, Tooth powder, Body talcum powder, Hair oil, Shampoo, Face cream, Lipstick, Nail polish, Packaged biscuits, Tea, Health beverages, Cooking oil, Vanaspati, Electric bulb, Electric tube, Footwear, Cigarettes. The major players in the FMCG category in rural market HLL, Dabur, Marico, Colgate-Palmolive, Nirma, Cavinkare, & Godrej Rural FMCG Market will boom Category Total Size+ % Growth ** Rural size 2001-02 * 2006-07 *
Urban + Rural
15
Rural Marketing for Fast Moving Consumer Goods Toilet soap 7,500 13.40 6,021 11,291 Body talcum powder 940 23.65 793 2,292 Toothpaste 2,080 23.50 1,441 4,140 Cooking medium 17,000 10.91 15,377 25,806 (oil) Cooking medium 3,900 7.63 2,844 4,108 (Vanaspati) Tea 6,500 10.97 4,955 8,337 Health beverages 908 28.54 601 2,110 Electric bulbs 750 9.40 354 555 Electric Tubes 158 10.15 74 121 Cigarettes 7,662 13.09 6,422 11,879 Packaged biscuits 2,500 6.79 1,323 1,837 Hair oil/cream 175 30.85 179 689 * Projections + figures in Rs. Crore for 1998-99 ** Annual growth rates compounded for last five years Source: - Business Intelligence Unit & National Council for Applied Economic Research (NCAER) Most popular consumables- Rural ranking, urban ranking Rural Ranking Ranks Urban Ranking Toilet soap 1 Toilet soap Washing powder 2 Biscuits Packaged tea 3 washing powder Biscuits 4 Packaged tea Detergent cakes 5 Detergent cakes FMCG companies targeting rural markets in India/ Rural Shop Window:Company Products Strategy Colgate Palmolive Dental cream Tapping 1.4 lack new villages in a year Dabur India Chawanprash digestive Creating awareness by lozenges taking bowling alleys to villages Godrej soaps Toilet soaps Setting task force to hike per capita usage HLL Personal products & Door to door selling in detergents & FMCG villages of population under 2000 Mahaan foods Pickles, ghee, vadies & Launched first TV ad papads campaign to enhance image in rural areas Marico Hair oil Selling low price sachets Contribution of rural market to all-India market (in terms of volume):Sr. Product category Name of product Contribution in no. percentage 16
Rural Marketing for Fast Moving Consumer Goods 1. Detergent, 45.5 Soap cake/Bars, 68.0 Washing powder 55.0 2. Toiletries Premium soaps, 26.0 Popular soaps, 50.5 Toothpaste, 39.0 Toothpowder, 24.5 Shampoos, 6.5 Safety Razor blades, 50.5 Shaving rounds, 31.0 Shaving creams. 5.0 3. Cosmetics Talcum powders, 43.0 Hair oils, 22.0 Acne preparations 23.0 4. Food/Beverages Packaged tea, 40.5 Coffee, 15.0 Milk foods, 20.0 Weaning foods, 18.0 Beverages 8.0 5. OTC products (over the Glucose powders, 42.0 counter) Rubefacients, 38.0 Cold/Analgesics 45.0 6. Miscellaneous Batteries, 56.0 Torches 33.0 Source: - Several sources like Business India, The Economic Times etc. Rural sales as proportion to total sales of some FMCG companies FMCG company Percentage rural share Hindustan Lever Limited 50% Colgate-Palmolive 50% Godrej (GCPL) 30% Cavinkare 33% Marico Industries 25% Cadbury India Ltd 25% Heinz 20% Nicholas Piramal 19% Source: - The Economic Times dated January 28, 2002 pg.1 Washing & cleaning material
CONSUMER BEHAVIOUR
Differences in consumer behavior in rural & urban markets
17
1) Need-based buyer behaviour: - When compared to the Indian urban society, which is turning towards consumerism; the rural consumer is likely to remain driven by his needs. First the will therefore be cost-conscious & thrifty in his spending habits. 2) Conscious Decision-making:- The urban consumer may be an impulse buyer; but the rural consumer is more discerning because of income limitation. The rural consumer is very suspect of being fooled & does not make the decision very fast. 3) Value for money: - Although all the four Ps apply in the rural market, price is an important determining factor. Therefore, the challenge for the marketer in the hinterland is to develop the right product proposition & to ensure that it is available at those places where the rural consumers actually buy it. Today sachets of shampoo, toothpaste, hair oils, & several other products are making it possible to tap the vast rural market. Companies come up with special rural packaging like Chic shampoo sachets @ Rs.1; Parle-G tikki packs @ Rs.2, Shanti Amla oil by marico. 4) Consensus decision making: - The urban buyers behaviour is individual or at the most family-driven, whereas in rural areas the decision making is a collective process. The rural buyer has to ensure social acceptance of his decision making & the products he is purchasing. Therefore, he prefers census decisions. Parties involved in the influencing or making a decision can be an opinion leaders, retailer & family members. 5) Innovative resistance to change: - Sociological distinctiveness & innate resistance to change make the rural consumers suspicious of all change as they have a strong fear of ridicule from others. 6) Different lifestyle & product usage environment: - The product-usage environment shapes the wants & consumers thus, solution to the different needs of consumers are different in many cases for urban & rural markets & understanding of this product use situation, which could be different in urban & rural setting, will unravel cost of opportunities for the marketer, but the lack of it will pose a serious challenge. 7) Different perceptions with regard to marketing stimuli: - culture influences the perceptions & behaviour; therefore preferences for colour, size, shapes & taste lead to a situation where the same products/promotion is perceived differently in different socio-cultural settings. 8) Brand Consciousness: - Ogilvy & mather rural communication networks head, O.K. Bose, says, branded goods comprise 65% sale in villages today, & the share of non-branded goods is shrinking dramatically. The rural consumer recognizes the package of Parle biscuits pack by its yellow stripes & Parle baby. Consumers refer to Nirma as the peela powder. The rural world values logos, colours & symbols for brand identification.
18
9) Brand loyalty:- Ponds is a leader in talcum powder category with a penetration of 65% & volume contribution of 56% moreover, 60% of Ponds users in rural India have purchased no other users in rural India have purchased no other brands i.e. They are 100% brand loyal, which reflects the strength of a brand in rural Bazaar. In the skin care category, fair & lovely fairness cream with the penetration of 75% accounted for 60% of the skin care market in rural India in 2002. It also enjoys the undistinguished patronage of 58% of its user households. Thus, both Ponds & fair & lovely were enjoying almost monopoly in the rural market in their respective categories. 10) Quality Consciousness: - The rural consumer wants a good product with consistent quality. The product must perform. The rural consumer may be illiterate but they have plenty of common sense & survival skills. 11) Rising aspirations: - The rural consumers are becoming conscious about their lifestyle & their right to live a better life. They are becoming more demanding & choosy in their purchase behaviour than ever before because of increase in awareness, aspirations & disposables income village girls are saving some money to buy fair & lovely at weekly haat. 12) Innovative uses of products: - Horlics was used in Bihar as a health beverage for fattening up cattle. Iodex is also rubbed into the skin of animals after hard days work to relieve them from muscular pain. In a market where hair dyes is used to paint the buffaloes. Consumer Behaviour:Consumer- buying behaviour models
Marketing Other stimuli Stimuli Product Economic
Buyers Buyers decision Characteristics process Cultural Problem recognition Price Technological Social Information search Place Politics Personal Evaluation Promotion Cultural Psychological Post purchase behaviour
Buyers decision Product choice Brand choice Dealer choice Purchase timing Purchase amount
Consumption by age & life-cycle stage: Rural vs. Urban Products & Services Age Life cycle stage Urban
Rural
19
Rural Marketing for Fast Moving Consumer Goods Below 12 13-19 20-40 Child Teenage Young Video games, Chocolates, Beverages/health drinks Cell phone, motorcycles, Internet Car, personal computer, branded clothing, alcohol, stores/malls Luxury car, credit cards, house, health insurance, holiday trips Clubs, theatre, parks Toys, ice candy, daliya Bicycle, television, cinema Motorcycle, telephone, LPG, tailored/unbranded clothes, country/local (haat bhatti)liquor, haat Tractor, kisan credit card, postal savings, mela Chaupal, playing cards, pilgrimage
40-60 Above 60
Middle aged Old
Comparison of Rural & Urban Lifestyles:Dimensions Urban Demographics Convent educated, salary earner, small nuclear family, large dense population, apartments Activities Office jobs, internet surfing, health club, shopping, club & party Interests Chinese, continental food, designer clothes, beauty saloons, holiday trips
Rural Govt school, self employed, large family, small/scattered population, Agriculture, physics, sports, gossip, playing cards, cinema, religious congregation Desi food, milk, bright coloured clothes, jewellery, visiting towns, markets/mela
Consumerism: - the shift Loose unbranded tea Home made sweets (jaggery) Open vessel wood fire looking cycle Earthen vessel for cool water Sharbat, nimbu paani Packaged, branded tea Branded biscuits Pressure cooker cooking on LPG Refrigerator for cold water Aerated drinks
Rural consumer classification percentage Rural consumer classification 20
1995-96
2006-07
Rural Marketing for Fast Moving Consumer Goods The affluent/ very rich The well-off Households owning personal car/jeep with other products Household owning any/all of these-airconditioners, motorcycle, scooter, washing machine, refrigerator, colour TV with other durables but not car/jeep Household owning any/all of these mopeds, VCR/VCP, mixer, grinder, sewing machine, audio-equipments, B/W TV, geyser with other durables but not these mentioned under first three categories Household owning any/all of these- bicycle, electric fans, electric iron with other durables but not those mentioned under first three categories Households other than those classified under categories 1 to 4 above (owning any/all/none of these- wrist watches, pressure cooker, cassette, recorder, transistor/radio 1.6 2.7 5.6 5.8
The climbers
8.3
22.4
The aspirants
26.0
44.6
The destitute
61.4
20.2
Source:- NCAER Buying Roles:Initiator: - One who suggests the idea of buying. Influencer: - One whose views influence the decision. Decider: - One who decides to buy or not. Buyer: - One who makes the actual purchase. User: - One who consumes or uses the product.
Type of consumer
Urban Profile
Rural Profile
21
Rural Marketing for Fast Moving Consumer Goods Innovator Young, public school educated affluent, in business, fun loving party goers, credit card holder Young progressive farmers (plans crop rotation, new crops), urban exposure (friends, relatives, children in school/college), Kisan credit card, additional income(part time service, agents) Rich farmer, high disposable income, urban exposure (children in school/college), high social status, conscious evaluator, kisan credit card Mediocre farmer, member of cooperative ready fro kisan credit card, willing to adopt technology product Member of cooperative society, hesitates to take agri-loans, adopts only time tested technology/product after approval from opinion leader Marginal farmers using traditional forms of cultivation Urban Uniform Concentrated High Adequate Very good Known Known Any media Known Timely Adequate Productive Not needed High Mostly yes Easily available
Early adopter
Early majority Late majority
Young, educated, affluent, employed in MNC, with exposure to media, credit card holder Young, educated, married, disposable income, self employed/in service Middle aged, in service/self employed, opts for consumer schemes Middle aged in service, shops in neighborhood Rural
Laggard
Demand: Rural vs. Urban Sr. Features no. 1. Demand pattern 2. Spread 3. Literacy level 4. Sources of supply 5. Physical communication Facilities 6. Product knowledge 7. Awareness of needs 8. Sources of information 9. 10. 11. 12. 13. 14. 15. 16. Product concept Timeliness of supply After-sales-service availability Expenditure pattern Guidance on usage Per capita income Product as status symbol Consumer protection
Seasonal Widely spread Low Inadequate Poor Not known Not known Word of mouth mostly rural Not known Untimely Inadequate Somewhat unproductive Needed Low Mostly no Rarely available
Status Symbol
22
Rural Marketing for Fast Moving Consumer Goods Rural Social/political status Tractor (50 HP +)/Jeep/Car Large pucca house with courtyard Childrens city education/Jobs Land Telephone Pilgrimage Levels of social interaction:Urban Parties, Social Gathering, House visits Once in while Almost every time Usually by phone Particulars Place of meeting Frequency of meeting Meeting people new to the circle Keeping in touch Urban Educational degree Car House wealth Children school/college Air conditioning Club membership Holiday abroad Rural Choupal, community meeting Almost daily Very rare Personal interaction
A.C. Nielsen Study:Differences & variation in climate affect the demand for some products for example; talcum powder & deodorants sell more in the hot & humid parts of south India. The sever winter in the north India leads to higher demand for Chyavanprash during this season. Development levels:- In east India, the poor electricity infrastructure aids sales of flashlights, batteries & mosquito coils. For product like Chocolates, butter & ice cream, refrigeration facilities are essential. Differences in food habits help identify gaps in portfolio or point to the need to develop alternative products & promotion strategies. People in south India extend their preferences for the coffee taste even to the toffees. Identifying regions with supply gaps help marketers to priorities their efforts. In eastern India, low milk availability aids sales of categories like milk powders. Water scarcity in the areas like Tamil Nadu leads to increased sales of packaged drinkin water. Cultural differences & profile of people: - people in north India tend to have large households, hence their preferences is for large economy packs. In the south India small packs sell more as the household size is smaller. Traditional ways of thinking & cultural habits aid sales of herbal/natural products & affect sales of colour cosmetics. Outgoing image: - conscious people in north India buy more high-end colour cosmetics.
MARKET SEGMENTATION
23
Definition of Market segmentation:According to Philip Kotler, Market Segmentation is the subdividing of market into homogenous sub-sections of customers, where any sub section may conceivably be selected as market segment to be reached with a distinct marketing mix According to W. J. Stalion, Market Segmentation consists of taking the total heterogeneous market for a product & dividing it into several sub-markets or segments, each of which tends to be homogeneous in all significant aspects Geographic factor, Demographic factor, Economic factor Benefits of market segmentation:Customer-oriented Philosophy: - As the marketing mix will be determined on the basis of the homogeneous market segments. It helps in serving the needs of customer in an optimum manner. Enables tailoring of marketing programmer: - As the marketer is aware of the consumer needs, he can develop customized & tailored marketing programmes that can delight the customers with benefits & the experience. It Enables development of strong positioning of brand as the organization is serving the customer needs in a highly customer-oriented manner. It establishes a strong image of the organization in the target market. Conditions for Effective market segmentation:Measurable:-The market segment must be measured in order to calculate the market potential. This will be there basis to develop marketing strategies to tap the potential Accessible:-The market segments need to be accessible by marketing efforts in a financially viable manner Profitable:-the market segments need to be large enough to be profitable Data availability: - Certain type of data must be available about the market of significantly important segmentation variable. Then only effective segmentation can be executed. Segmentation of rural market: - India has about 6, 38,000 villages, 50% of the villages are very small having a population less than 500 with a limited purchasing power & many of them do not have even a single shop. The next following categories with population of 501 to 2,000 numbering 2.5lakh villages have around five shops. These villages may not be good enough for a favourable distribution cost benefit equation to begin with, but can be tapped later after successful tapping the villages with a populating more than 2,000.
24
Rural Marketing for Fast Moving Consumer Goods Therefore the role of segmentation becomes extremely important in the rural market. Marketer has to implement market penetration effort in phase going step by step. The lower handing fruits need to be priced up first for revenue gains & for the learning that will come with it. These initial gains can form the basis for further expansion deeper into rural market. Companies therefore need to focus initially on villages with the population of 2,000 or more & there are 60,000 of them & also on high potential 501 to 2,000 population category villages. The larger villages are more urbanized & so are the peoples attitudes. Whereas those located in the remote areas are rooted in traditional values. FMCG companies can cover 1, 00,000 villages by appointing 2,000 stockiest in towns of population OF 20,000 each. Stockiest can conveniently distribute products to 50 locations around their town. Approaches for segmenting the rural markets of India Based on size of village population: - ORG-MARG has suggested the classification of the rural belt in there board & simple categories 1) class-1 villagers with population over 5,000 2) Class-2 villagers with population between 1,000-5,000 3) Class-3 villagers with population less than 1,000 For marketers who are entering the rural market for the first time, Class-1 villagers are an ideal target market. However the FMCG organizations, which were operating in the rural market for a long time, are now developing marketing & distribution strategies to move to class-2 targeting class-3 market with traditional distribution channels is not available as cost of distribution comes out to be higher than returns in this market. Therefore, organization like HLL are developing alternative channels like project Shakti to target market Based on location with respect to nearby town:Villagers near urban centers: - These villages because of their proximity to the urban areas are somewhat urbanized. Their residents education profile, shopping habits, & brand choices resembles to a great extent to make most of purchases from the nearby towns. Villages in developing districts: - These are somewhat developed villages with consumers being aware of various marketing promotion to some extent. The income profile of these villages is good enough to make them potential market for branded goods Immobile & self-sufficient Asiatic villages. These are the remote villages located in the less developed districts. The income & education profile of consumers in there villages is not very attractive from the marketing point of view. The connectivity & infrastructure availability is also very minimal. Most of these villages can be classified as media dark. Based on size of farmland:-The generally followed classification on basis of size of farmland like this
25
a) b) c) d) e)
Marginal farmer:- holding up to 1.0 hectare Small farmers:-holding 1.0-2.0 hectares Semi-medium farmers:-holding 2.0-4.0 hectares Medium farmers:- holding 4.0-10.0 hectare Large farmers:- holding 10.0 hectares & above
Based on income:-Rural rich consumer, concentrated rich customer, Scattered rich customer, Rural consumer around urban area, Rural consumer above poverty line, Rural consumer below poverty line, NCAER has also classified the Indian consumer into the following five classes on the basis of their propensity to consume. Destitute: Have income less than Rs.16, 000 p.a. (market for basic, economical & essential commodities) Aspirants:-Have annual income in the Rs.16, 000p.a.-Rs. 22,000 p.a. ranges (market for basic durables) Climbers:-Their income is between Rs.22, 000-Rs.45, 000p.a. (market for consumables & consumer durables) Consumer:-Their income is between Rs.45, 000-Rs.2, 15,000p.a. (Market for consumables & consumer durables) Very rich: - Those have income higher than Rs.2, 15,000p.a. (Market for international brands) Segmenting the markets: - Nirma Vs HLL Until about twenty years ago, the rural market in India was considered as homogeneous mass. The decade of the 1980s was a significant one for Hindustan Lever Limited (HLL), when the giant & undisputed market leader in the detergents (Surf) in India suffered significant losses at the hands of new & small firm, Nirma Chemicals, Nirma immediately caught the fancy of middle & lower-income customers, who were finding it difficult to make both ends meet with their limited monthly income. Nirma was the lowest priced branded washing powder available in grocery & cooperative stores. The middle class housewife was happy as she could now choose a lower priced washing powder against Surf, which was beyond her budget. Nirma also had an impact on upper-middle class & higher-income families, who choose Nirma for washing their expensive clothes. Around 1984, HLL decide to take a fresh look at the market. Research conducted across the country revealed that different income group of customers had varying expectations from detergents & washing powders. Thus to counter attack from Nirma, HLL launched Sunlight (Yellow), Wheel (green), & Rin (blue) detergent powders for different market segments. This strategy for segmenting the market helped HLL win back parts of its lost market. Nirma had won the first round by introducing a low-priced product, for the highly price-sensitive Indian market.
26
Mass marketing: - Initiated by leading FMCG companies HLL offered only one detergent powder, Surf, to all customers but when Nirma entered the market & grabbed a sizeable market share of low-income households, HLL woke up & introduced Wheel. Colgate-Palmolive successfully marketed the same Colgate toothpaste to all consumers in urban & rural markets till recent years. However as the rural market started to evolve & consumers became more demanding, Colgate introduced Cibaca. Colgate 10-gm sachet of toothpaste was designed in 2000 keeping the rural consumer in mind. Britannia introduced smaller packs sizes of Tiger biscuits in 1998 at Rs.4, Rs.2, and Rs.1 Micro marketing:Anmol-Mustard oil: - Dabur launched Anmol, mustard & amla-based hair oil, to target rural consumers in the northern markets who used loose mustard oil. A small 50ml. pack priced at Rs.10 was introduced. Basis of Segmentation:Geographic: - 1) Region: - East, West, North, South 2) Village size: - <500, 501-1000, 1001-2000, 2001-5000, 5000> 3) Density: - low, moderate, high 4) Climate: - summer, rainy, winter 5) Culture: - 56 socio-cultural regions (e.g. Avadh, Bundelkhand, Rohilkhand, Purvanchal & Braj in Uttar Pradesh Demographic: - 1) Age & life cycle: - children, teenager, young adults, elders, seniors 2) Family structure: - nuclear, joint 3) Gender: - male, female 4) Income: - destitute, climbers, middle, high 5) Landownership: - landlord, rich farmer, small or marginal farmers, agricultural labourer 6) Education: - illiterate, semi-literate, literate 7) House type: - pucca, semi-pucca, kuccha 8) Occupation: - farmers, wage earner, salaried 9) Religion: - Hindu, Muslim, Christian, Sikh, parsi 10) Caste: - upper caste, lower caste Psychographic: - 1) Social class:- upper, lower, middle 2) Lifestyles: - trendsetter, follower/adopter, tradionalist 3) Personality: - authoritarian, ambitious Behavioural: - 1) Occasion: - festival, mela, jatra, weekly haat 2) Benefit sought: - quality, convenience, value for money, service 3) User status: - non-user, ex-user, first time user, regular user, potential user 4) Usage rate: - light user, medium user, heavy user 5) Loyalty status: - strong, weak, non-loyal 6) Place purchase: - village shop, haat, nearby town, mela
27
Dabur has segmented its toothpaste market on the basis of economy & flavour positioning Lal Dant Manjan for low-income groups, red toothpaste for middle-income groups & Red Gel for relatively sophisticated & rich rural consumers. Rural market segmentation Segment coverage examples Segmentation Marketing type Zero Mass Substantial Segment
Coverage strategy undifferentiated Differentiated
Selective
Niche
Concentrated
Products examples Soaps, face powder, ,condoms, consumer goods Seeds, fertilizers, agri-implements, smaller packets of FMCG Internet, computer, mobile phones
For rural marketing of FMCGs the segments of rural market is Cash Starved. Hence tooth paste, shampoo, soaps, toothpowder are all required in smaller packets that can be sold in cities.
Segmentation of Biscuit market:Biscuit market segments
Sweet
Salty
Semi-sweet
Sweet & salty
Glucose
Milk Biscuits
Arrow root
Marie
Special segment would consist of 1) Creams/wafer cream 2) Calories 3) Health Estimated relative share of various types of biscuits:Glucose: - 35% Milk biscuits: - 17% Arrow root: - 18% Cream biscuits: - 12% Maries:-11% other:-07% About 60% of biscuit market is in the hands of the organized sector Source: - Probity Research report 28
TARGET MARKETING
Target Marketing Developing a targeted marketing strategy:1) Define relevant market 2) Analysis of characteristics & wants of potential customer 3) Identify the basis for segmenting the market 4) Define & describe market segments 5) Analyses competitors position 6) Evaluate market segments 7) Select market segments 8) Finalize marketing mix(es) Identifying & selecting target market:This is one of the toughest tasks of rural marketer. After he has segmented the rural market, he has to consider a combination of factors (for which the availability of authentic data is not easy even in the present day information age) to decide which rural market segments an organization would like to target % the ones which are not fit to be targeted some of the feature important for this analysis as follows:1) Social-cultural, Economic development & infrastructural environment of different districts. 2) Density of population in different villages. 3) Heterogeneity & homogeneity of population across regions. 4) Mobility, media availability & cost of access to the area. 5) System of attraction. Selecting the target marketing strategy:1) Undifferentiated marketing: - It is a marketing strategy created by the same marketing mix product, price, place & promotion for all markets. The firm considers the target market as one & the same. It requires extensive distribution in the maximum number of retail outlets for ex. Revlon, Pepsi & Sony. 2) Concentrated marketing: - It involves devising a marketing mix on one product, one segment principle. This strategy can be used by small companies also because small companies can create niches in one product, one segment for ex. Cosmetics Lakme. 3) Differentiated marketing: - It involves devising multiple marketing mix offerings For Ex. Unilever & Proctor & Gamble. Market targeting for different products:Company Brand Name Target Markets P&G Ariel Micro System All housewives, household income of Rs.8,000+ Godrej Soaps Evita Soap Women who care for their complexion HLL Fair & lovely lotion Skin care conscious urban women Coca-Cola Thums-up Youth market Coca-Cola Limca Thirst-quencher
29
Rural Marketing for Fast Moving Consumer Goods Coverage of segments:Segmentation Type of marketing Zero Mass Substantial Segment Selective Niche/Single segment
Coverage strategy Undifferentiated Differentiated Concentrated
Example Ghari, Medimix Vicco Vajradanti, Colgate Multiple brands of soaps of HLL
. Winning markets through effective segmentation & targeting:When Brooke Bond Lipton India Ltd. (now HLL) decided to expand its branded tea into the largely unbranded loose-tea segment in the rural market, the company explored the buying, consumption & other habits of all tea consumers in order to identify a cross section of people united by common behaviour traits only after conducting this extensive research did HLL conceive A1, the new brand for this market, as a bundle of benefits designed to meet the needs of this segment. Naturally, pain-vanilla demographic & usage data would not have helped in carving out a well defined niche so HLL created its own profile of would-be consumers, both urban & rural. HLL began by collecting photographs & video clips of people across the country who buys loose tea in order to study their lifestyle, in general & their tea-preparation & tea drinking habits in particular, including the times in the day when they drink tea, how they serve it, & the family members who are regular tea drinkers, alongside, HLL tracked other items of food & drink that those people consumed, the soaps & detergents that they used & how they spent their leisure so as to understand just where tea & its consumption stood in their matrix of the needs. The objectives were first to understand exactly what bases of segmentation could be used to differentiate consumers & second to identify the key issues for the consumer groups. It was crucial to come up with useful definition of the segment under review. It would have been too simplistic to use price as a factor to define the segment. As a result of this elaborate exercise, HLL found a simple but highly effective idea that it could use to define its segment: the desire for strong cup of tea. Cutting across geographical, cultural, income & age groups, this need emerged as a unifier for many tea drinkers. So HLL used this as the one overriding characteristic that would distinguish its chosen niche from characteristics that would distinguish its chosen niche from the rest of the market.
30
MARKET POSITIONING
Positioning is the act of designing the companys offerings & image so that it occupies a distinctive place in the mind of the target segment. Positioning involves:1) Identifying the unique feature of the product (USP) as well as the differences of the offer vis--vis the competitors offer. 2) Selecting the differences that have greater competitive advantages 3) Communicating such advantage to the target audience. Himani positions its Sona Chandi Chyavanprash on the two plat forms of the healthy body & a sharp mind. Thus it captures the pleasure of the contrast. Ghari detergent identified a gap in the low price- high quality quadrant & positioned its brand accordingly; as a result it quickly became a rural super brand, leaving behind rival brands like Wheel. Product differentiation: - Coke introduced the Chota Coke at Rs.5 for rural. Colgate introduced a herbal version of its toothpaste using the positioning of natural fee preferred in rural areas. Meswak, Neem, & Babool toothpastes also followed a similar positioning strategy. People: - the endorsement of Coca-cola by Amir Khan (addressed as villager) or of Sona Chandi Chyavanprash by Sunny Deol, brings huge differentiation to the product image & helps in pushing the sales of the product decides which positioning to promote:- for rural, the positioning statement should focus on the generic benefit(s) for the product Sprite bujhaye pyaas baki sab bakwas & handa matlab Coca-colaare two advertising line or jingles suitable for rural consumer. HLL plans rural campaign to reposition Lifebuoy:FMCG major Hindustan Lever Ltd Embarked on a massive rural campaign using the concept of hygiene as a platform to reposition its leading brand Lifebuoy. The repositioning of the 107-year-old Lifebuoy has been done in a bid to drive growth in a sluggish soap market.The new Lifebuoy is a completely new product with a new formulation, fragrance & lather profile. It also represents a shift in positioning from a male soap to a family soap. The repositioning of Lifebuoy was necessitated by a shift in market trends. Earlier consumers had little or no choice & needed a basic cleaning soap, but today consumers in rural India can choose from much wider section. The query of rural consumers is, Why do I need Lifebuoy when all soaps clean? It was indicative of decline of the brand, prompting HLL to launch Lifebuoy Active & Lifebuoy Extra Strong in mid 2001. Lifebuoy is no longer a carbolic soap with perfume. It is now toilet soap with a different health fragrance. With this launch, the carbolic segment has been wiped out, Lifebuoy previously accounted for 95% of this segment. In the process of making the switch, HLL changed everything that Lifebuoy had once stood for perfume, formation, size & shape. Every element of the communication strategy was also changed. The first phase of communication strategy was to tell customers that Lifebuoy has changed from an earlier focus on man. The concentrated has now shifted to the family, with the message that Lifebuoy is the right soap for effective protection against diseasecausing germs.
31
MARKETING MIX 4 Ps P for PRODUCT

The concept of marketing mix, A series of interconnected & interdependence marketing issues that need to be considered together was first developed by marketing academic, Neil Borden, in the 1950s. In 1960s, Jeriome McCarthy, Professor, Harvard Business School, elaborated the concept of four Ps (McCarthy 1960) Marketing Mix refers to the set of actions, tactics, tools or variable that a company uses to promote & sell its brand or a product in a market. Product refers to anything that is capable of or can be offered to satisfy a need or want. Product for the rural market must be built or modified to suit the lifestyle & needs of rural consumers. Rural consumers like to buy products for need-based consumption. The product must also prove to be useful & easy to use. In the past, FMCG products percolated into rural areas from urban areas automatically, but they were not specifically designed for rural areas. But if the organizations want to develop demand in rural areas significantly, then they need to modify the existing products to cater to the specific needs & tastes of the rural markets through innovative designs. New product development is a sequential process of finding ideas for new goods or services & then transforming them into commercially viable products or services that can be launched in the market for serving the needs of customers, at profit.Is there a need to redesign or modify products sold in urban areas to suit the rural consumers, or can the same products be sold as they are?. The answer to this question is both yes & no, since it depends upon the product & its characteristics while there may not be much maneuverability for redesign or modification in the case of some products, it is possible in the case of several others like Paisa packs of tea costing only 25ps. (which is reasonably sufficient for two cups of tea), 5gram Vicks vaporub tin, small size 75 gram Lifebuoy soap, 25grams pouch of Colgate toothpowder costing only 3 rupees, small denomination packets of some washing powders like Nirma, Sachet packs of shampoo costing a rupee, low priced cigarettes like Hero ( an ITC brand introduced in 1993 which was clearly positioned to upgrade beedi smokers), cough syrups in sachets, Vicks singles cough drops & others.The factor to be considered while redesigning or modification are: 1) the specific requirement of consumers 2) their habits of usage 3) their purchase habits 4) their income levels 5) customs, beliefs, taboos etc. a few years back, Colgate Palmolive introduced small tubes of toothpaste popularly known as Colgate ka chhota packet. Yet another example is that of a cigarette from ITC known as Hero. This was priced at at 15 paisa per sticks only. The purpose of this cigarette was to upgrade the beedi smoker to cigarettes while making the product available at a price comparable to that of beedi. Similarly Pepsi & Thums-up have introduced 200ml. bottles for Rs.5 only called Chhota Pepsi or a Thums-up. In fact the rational for introduction of 200ml. bottle is interesting. It was observed that two rural consumers shared a 300ml. bottle costing Rs.8 or 9. They could not afford a bottle each. By introduction of a 200ml. bottle costing only Rs.5, it bought the product within the reach of rural consumer as well as increased volume of sales. Two persons can now consume 400ml. between them instead of the earlier 300ml. at a nominally higher cost. New product Cadbury launched Chocobix, c chocolate-flavoured biscuit based on the consumers insight that rural mother opt for the more affordable biscuits rather that the more expensive chocolate bars for their children
32
MARKETING MIX 4 Ps P for PRICE

Price: - Rural consumers are price sensitive. They are price conscious & frugal. Village retailers charge more than Maximum Retail Price (MRP) by justifying that they spend time & money to fetch the products from distributors & wholesalers. Thus it helps to seek higher margin. Coca-Cola found that it was not just Pepsi that they are competing with in the rural market but also nimbu pani, jaljeera & other drinking option to refresh the customer. Therefore price of substitutes must be studied along with the price of competitor before & after the launch price of a product. Low Volume-Low Price: - This strategy of reducing prices by reducing the package size in order to make it appear more affordable, is delivering very good result for a large number of FMCG product categories, in the rural markets of India. Ensuring price compliance: - Rural retailer, most of times, charge more than MRP. The manufacturer has to ensure price compliance through promotional campaigns, as was done by Coca-Cola (The Ad campaign in which Amir Khan insists local retailers to charge Rs.5 not Rs.6 by saying Panch) or by ensuring the availability of products at the retail outlets directly. Pricing policies in rural areas:1) Odd pricing: - The term odd pricing is used in two ways. It may be a price ending in an odd number of prices just under round number. Odd pricing is adopted by sellers of specialty goods. For example A shoe manufacturer price his product at 99-95 etc. 2) Psychological pricing: - In this method of pricing the price is fixed at a full number. The people who set such pricing feel apparent psychological significance from the point of view of buyers. For example it is believed that are certain critical points at prices such 1.5 & 10 studies conducted proved that change of price over certain range has little effect until some critical point is reached. 3) Customary price: - Customary prices are fixed by custom. For ex, sweet manufacturer price their products in such a way that a particular variety of sweets or soft drinks are sold at approximately the same price. Usually such a pricing is adopted by chain stores. 4) Pricing at prevailing prices: - This type of pricing is resorted to meet competition. Such a pricing is also termed as Pricing at the market. This is because a price above those of competitors would sharply bring down sales while lower price would not significantly increase them. 5) Prestige price: - Some consumers are of the attitude that the quality of the product depends upon its price. Generally prestige pricing is applied to luxury goods, where the seller is successful in creating a prestige for his product. In such case sales would be less at lower prices. Customers may fear that at the low prices it can not be of good quality & will actually buy more at some what higher prices than they would at lower prices.
33
Rural Marketing for Fast Moving Consumer Goods 6) Price lining: - The policy of price lining is found among retailers. This type of pricing is related to both psychological & customary prices. There the pricing decisions are made only initially such fixed prices remain constant over long periods of time. Any changes in the market conditions are met by adjustments in the quality of merchandise. 7) Geographic pricing: - When the manufacturer serves a number of district regional markets. This policy is followed. He can adopt different prices in each area without creating any ill-will among customers. 8) Dual pricing: - If manufacturer sells the same product at two or more different prices, it is an example of dual pricing. This is possible only if in the same market different brands are marketed. Railways have adopted dual pricing. Here for the same distance of travel in the same vehicle. The services are sold to passengers at different prices under different classes. This is also referred to as discriminatory pricing. 9) Administered pricing: - here the products are priced for the market on the basis of the policy decision of the seller cost, competitive pressure, the law of supply & demand is not at all considered here. The administered prices usually remain unchanged for substantial periods of time. 10) Monopoly pricing: - New product pricing is in reality monopoly pricing; since competition is absent the seller has a true hand in fixing the price. The principle on which this pricing is based is What the traffic will bear 11) Skimming pricing: - This is also known as Skim-the-cream-pricing. The process involves in setting a very high price for a new product initially & to reduce the price gradually as competitor enter the market. In the initial period until the product is accepted by the customer this type of pricing is adopted; a) When sales volume of the product is very sensitive to the price b) When large volume of sales is to be affected. c) When the product faces a threat from competition. d) When stability of price is required. 12) Expected pricing: - Under this method, the price that will be accepted by the customers is found out. Usually a fixed price can not be decided in advance & hence price range is offered. The response of customers to price is analysed & later a price is fixed. 13) Sealed bid pricing: - This method is followed in the case of specific job works. Government contracts are usually awarded through system known as tenders. This would be contractors anticipate the expected expenditure & offer a price. The minimum price quoted is accepted & the work is awarded to the party. 14) Negotiated pricing:-Industry suppliers adopt this method. Manufacturer who require goods of highly specialized & individually designed nature often negotiate the only when fix the price for example in case of automobiles, various components required by manufacturer are entrusted to suppliers. Under such circumstance the prices are negotiated & fixed.
34
Rural Marketing for Fast Moving Consumer Goods 15) Mark-up pricing: - In order to establish a sale price, this method is adopted by wholesalers & retailers. When the goods are received, the retailer adds a certain percentage to the manufacturers price to arrive at the retail price e.g., an item that cost Rs.50 is sold for Rs.600. the mark-up price is Rs.10. Price: - There is a need for low priced products or redesigned/modified products whose unit cost will be low. Mostly, this has been achieved by reducing the package size (paisa packs in tea, smaller packaging of toothpowder or Vicks cough drops etc.). Similarly cheaper blends of tobacco have been used to make cheaper blends of cigarettes like Hero, Blue Bird, and Honey Dew & Cavenders. These cigarettes are priced low to make them an effective substitute for beedies. One of the brands of Hindustan Lever tea which contains tea, chicory & Tapioca flour illustrates this concept. Tea costs about Rs.100 per kg while chicory & tapioca flour costs only Rs.40 & Rs.10 per kg respectively. By substituting 30% of tea with lower cost material, the overall price can either be brought down or maintained at tomes of rising prices. Affordability: - Godrej recently introduced three brands of Cinthol, Fair Glow, & Godrej in 50-gm. Packs priced at Rs.4-5 meant specifically for Madhya Pradesh, Bihar, & Uttar Pradesh the so called BIMARU states. Hindustan Lever among the first MNCs to realize the potential of Indias rural market, has launched a variant of its largest selling soap brand, Lifebuoy at Rs.2 for 50gm, the move is mainly targeted at the rural market. Coca-cola has addressed the affordability issue by introducing the returnable 200ml. glass bottle priced at Rs.5. the initiative has paid off. Eighty percent of new drinkers now come from rural market. Coca-cola has also introduced Sunfill, a powdered soft drink concentrate. The instant & ready to mix Sunfill is available in a single-serve sachets of 25gm. Priced at Rs.2 & a multi-serve sachets of 200gm priced at Rs.15. Godrej Consumer Product, which is trying to push its soap brands into the inferior areas, uses radio to reach the local people in their own language. Price initiatives in rural market: - Nestle Nestles rural initiative have largely been based on price-led initiatives brands such as Maggie noodles & Kit Kat chocolates have been priced at Rs.5 & a few other candy & chocolate brand are priced at Rs.2 per unit. There prices point not only help Nestle reach more retail formats in urban market but also help in making inroads into rural markets, currently rural markets account for below 10% of the food majors revenues.
35
MARKETING MIX 4 Ps P for PLACE

Place: - Place, the third P, is the major reason behind the evolution of rural marketing as a distinct discipline. Distribution can make or break company. In the FMCG industry in India, specially, companies have to distribute their low value, high volume products to cover 10lakh retail Outlets or point of scale. The most successful FMCG companies have the biggest networks made up of stock points, distributors or C& Fs (Carrying & Forwarding Agents), redistribution stockiest, wholesalers & retailers. Along with the efforts of wholesalers & dealers, companies need to have direct point of contact with retailers & sub-retailers in rural areas if they want top have strong network. If you are bound to lose your market to competitor, says Sameer Singh, Wilkinsons Marketing Managers. A vast network of 1.38lakh rural post offices can be trapped imaginatively in order to target consumers in remote villages. Emami Ltd. has tied up with the Post & Telegraph department to place its product across 5000 Post Offices. The Pilot project has been initiated in Maharashtra & eventually, it wants to reach all the 1.05lakh Post Offices across India. Personal selling network is another very successful distribution channel being developed by companies like HLL. It adds a personal touch to the marketing, as the salesman is residents of the village & community itself, making it easier to sell the products & maximize sales for the company. In 1989 under Operation Harvest A van covered six villages a day, 36 villages a week or 144 villages in a month. This is because HLL assisted the Rs. In extending their distribution network beyond the villages already covered. The villages covered under the scheme of at least 2,000 person & those villages which generated consistently sales of at least Rs.2, 000 during the visits were included in the regular distribution programme under IDC. This was followed by Operation Bharat which concentrated on villages with at least 1,000 people & offered potential. Self Help Group (SHGs) is estimated about 6lakh SHGs are now functioning in the country with a heavy concentration in the south. HLL gives a margin of 10% to SHGs as opposed to only 8% to retailers. A village having a population of 1,000 persons is assumed to spend Rs.4 per head per month on products similar to HLL products. If 50% of Rs.4 spent goes to HLL products, the sales per month by a SHG will be Rs.2, 000. A 10% margin on sales will be Rs200 which will accrue to SHGs funds. This distribution programme is called Project Shakti In villages beyond the reach of distribution system, some shopkeepers make their own arrangement for the procurement. Most of them commute to the nearby town to get their supplies to make up for the expenses thus incurred; they charge the consumers more than maximum retail price.
36
MARKETING MIX 4 Ps P for PROMOTION

Elephant march:-The erstwhile Brooke Bond, March major tea making company, periodically arranges for an elephant march through the villages. The ITC also adopted an innovative promotion campaign for their low priced Hero blend of cigarettes- their promotion strategy was a three day affair. On the first day a person on a cycle, cycle rickshaw or auto rickshaw goes through the villages announcing on a public address system that Hero aa raha hai- Hero is coming. This is primarily to create interest & arouse the curiosity of the rural consumers. On the second day, an elephant dropped out a large sheet with the logo of Hero & a huge cutout of Hero. Cigarette packet went through the village distributing free samples of the product to induce trail. The third day saw a video van coming into the village playing popular movie songs to attract crowd. The message about the product was disseminated among the rural consumers. Rural van: - Colgate-Palmolive has been using van promotion in rural areas. Their main objectives were direct consumer contact, demonstration of the product, and sample to customers & spot sales. The campaign was more for selling the concept of Oral Hygiene to the rural consumer. In a way this could be called as generic promotion of toothpowder, toothpaste, & toothbrush apart from going to villages, they also selected places of mass gathering like shandies, where young children were asked to brush/clean their teeth with the paste/powder & tell others about the feeling of freshness they experienced. Simultaneously, salesman approached the village shops & motivated the shopkeeper to stock their products. The rural van promotion has been made simpler by agencies like Sampark Marketing & Advertising solutions, Video Express & Video-on-Wheels. POP Promotion: - Van promotion in rural areas by both owned & hired vans, is widely adopted by companies to create awareness for their products-consumables & consumer durables. Either POP materials are supplied to the shops when the distribution van visits the villages or they collect the same when they go for purchases. One can find wall posters, paintings & danglers in rural shops also. Interactive Games: - Thums up campaign by Video on wheels. The aim of campaign was to take Thums up deep into the rural markets. Participation in the snakes & ladders game was open only to those who bought a bottle of Thums up. This induced spot sales as well as trials among those people who had not tasted the soft drink before. Attractive gifts were offered to encourage audience participation. Daburs Pinball Game: - Dabur designed a pinball game in which the ball was in the shape of the Dabur Chyavanprash container & the pins represented germs which would be destroyed on taking the health tonic. People were invited to slip the ball in & see how many pins were punctured. Major rural sales promotion tools for FMCG products are Free samples Cash rebates or discounts Price packs or gift attached to packs Gift Contests, prizes, games Product warranties free trials Point of purchase or sales counter displays, demonstrations Promotion of brands & Trade promotion to stimulate wholesalers, retailers & field workers with gifts & awards 37
RURAL MARKETING MIX

Branding: - rural buyers seek value. They are equally conscious of loosing face in public. The Izzat notion is very important for them. Therefore rural audience is more cautious while purchasing a product that will be seen by others. Thus they like to stick with products & brands that have higher social acceptance. According to Harish Manawani the then Vice President of Hindustan Lever, International brands need to be relevant in terms of perceived image, performance & value if they are to succeed in India market. Higher brand loyalty among the villager; once a brand finds acceptance in a community, village, region or a state it becomes very difficult to replace that brand. Packaging: - The decision on packaging is influenced by characteristics of consumers, i.e. affordability, cultural preferences, usage conditions & ability to read. smaller packs provide the weaker sections with an opportunity to purchase same minimum quantity of product by paying a lesser amount of money. It helps in reaching those customers. Who dont have any savings but earns daily basis to meet their daily requirement. Colgate first made sachets of toothpowder, as required by the income stream. Since many households in rural areas dont have proper bathrooms & only have a window or a small space to keep such things- Colgate put a cap on the sachet for convenience of storage. Being illiterate rural population recognize its product by its packaging by watching on television. SKU: - Organization should maintain a smaller number of stock keeping units (SKU) for the rural market. As the rural retailer has a limited working capital, he might not be in position to stock all the SKUs in a particular product category. Deciding upon the optimum number of SKU is critical for achieving success in the rural markets. Reusable packages & small unit packages stand a good chance of acceptance in the rural market. In case of mass media when it comes to rural market, two out of five Indians are not reached by any media. TV, Press, Radio & Cinema put together. Doordarshan (DD) telecast network covers at least two third of entire country with coming of the DTH network facility, the rural rich can be targeted in a better way by television. Radio continues to be the primary source for entertainment in rural market. News programmed is widely listened to in rural areas. A radio can be played on without electricity, on batteries; it is a very effective medium in the rural areas. FM radio continues reach villages, towns, semi-urban areas surrounding cities, metro cities. The relevance of the print media for rural communication needs careful examination. The literacy level is low in rural areas as compared to urban areas. The Press advertisements can target opinion leaders who can carry forward the message to the masses. Almost three fourths of the rural adult population view cinema in the southern region, which also accounts for nearly half of the cinema viewers in the country. So it can be very effective media to promote products & services in the rural areas of the southern states.
38
RURAL MARKETING STRATEGY

Product strategy: - Value consciousness is a big driver for the rural market, consumers are extremely aware of the equation of price, quality & image. Understanding this fact, Britannia came with the concept, Eat Healthy, Think Better (Swasth khao tan man jagao.) This moved Britannia, from standing for biscuits & source of quality to a brand that stood for healthy food for health conscious Indian consumer. Small Size packing: - The low per capita income, non-availability of regular pay & cash forces the rural consumer to buy in small packets various products. The examples can be explained in plenty. FMCG: - Almost all FMCG goods manufactured have come out with smaller packets & low price varieties. Toothpaste is available in 10gm, 25gm & 50gm packets/tubes. Soap powder is available for Rs.2,Rs.5,1/4kg,1/2kg packets. Both soap cakes are available in small sizes of 25gm & 50gm in addition to the standard 75gm sizes. Even Vicks ointment & tablets are available in small boxes & small packets. Toothpowder is also available in small paper products for easy salability Low-priced package & product:-Big & small companies have adopted on unwritten policy to dump second grade quality to sell at loose prices in the rural market product like ghutka, cold drinks, biddies cigarettes, tea & coffee, powders came to the rural areas in smaller packets & lower rates than those sold ion cities the quality will be medium or lower level loose tea is packed and sold in different brand names suiting the rural public. The established brands cannot do this and hence they try to sell the quality product in very small packages. They can always make up marginal losses in rural areas by selling high priced product in cities Application of value engineering: - This is tried & tested technique adopted to evolve the cheaper products by substituting costly raw materials with cheaper ones. This technique has been successfully applied in the case of Hindustan Levers tea blend which contains tea, chicory, tapioca flour. Tea cost about Rs.100 per kg. Chicory costs about Rs.40 per kg & tapioca floor about Rs.10 per kg. By substituting chicory to the extent of 20% & tapioca flour to the extent of 10%, the price of tea blend is kept low. Chicory is well known adulterant in coffee powder & tapioca is starch & forms the staple food in certain region of the countries. In 70s Britannia Industries introduced biscuit called Probisk with Soya protein, which was for cheaper to other biscuits, while the nutrition content was the same. Their biscuits were slightly dark in colour than other because of their Soya content. Pricing strategy: - FMCG companies can cut cost to maintain the price points through reducing the net weight of the products or doing goody with freebies & promotions. Rupee 5 price point: - The current craze for Rs.5 positioning could be because of Cokes success in promoting the Paanch strategy. Brooke Bond pack was available earlier in 5 paisa, later 10 paisa, 25 paisa & 50 paisa & then with inflation it becomes Rs.1 pack. Now it is the time of Rs.5 pack. HLL sells for Rs.5 are Ponds talk, Ponds Cold creame, Rin, Taaza, Fair & lovely & Lux. The price point also helps branded FMCGs, which are 39
Rural Marketing for Fast Moving Consumer Goods battling fakes from unorganized sector. Rs.5 price point leads to growth in user base of brands & increased category penetration for those who have introduced such packs. Regionalisation of Advertising strategy: - Unique promotions need to be designed as what works in north may not in the south. At times even dubbing the commercials in local linguistics may not work. Emami has Madhuri Dixit & Amitabh Bachchan as brands ambassadors but for Andhra Pradesh, it signed Chiranjeevi for the same. The success of Thanda matlab Coca-Cola campaign, which was aimed at the rural market, is a case in point. Low priced shampoo: - Cavinkare realized that for a family a five members at Rs.2 per sachet & a minimum of four hair washes per person per month would mean an rs.40 send for shampoo alone. Many rural families can not afford this expense. The feedback was that of the cost of hair wash could be reduced to Rs.2 per person per month. Villages would not be averse to trying a shampoo, i.e. a 50 paisa pack. It was a challenge for the company to develop a formula & packaging to bring down the cost so radically. When the 50 paisa sachet was lunched in 1999 the Chic market share was 5.6%, this rose to 23% by 2003 out of the total sale of Chik today, 65% comes from rural. The pricing strategy of regional brands: - Ajanta clock manufacturing company has understood the nuances of pricing associated with a stagnant, category such as toothpaste & decided to adopt a discount pricing strategy akin to what most regional players seem to be doing. It has pegged its toothpaste price at a discount of roughly 60% compared to the bigger brands from Colgate & HLL. Distribution strategy: - According to Pradeep Kashyap,M.D., Marketing & Research Team(MART) success in rural marketing depends on getting the distribution & pricing right. Even expensive brands such as close up & Marie biscuits were doing well because of deeper distribution. Brand has to be present at the right place. jo Dikhta hai, wo Bikta hai.(What is seen, sells) Many of the brands are building stronger rural bases without much advertising support. Being first on a shelf in there product category & developing a privileged relationship with the retailer is a source of competitive advantage to consumer goods companies. And usually the brands that are first on shelves become synonymous with product category & are difficult to dislodge, thereafter. For example Maggi noodles reached the rural shelves before anyone & remains the market leader ever since. Delivery vans are provided by the organization like Coca-Cola, Pepsi, Amul to reach the rural masses for their products. Proctor & Gamble had tie ups with Godrej, Marico Industries & now it is planning one with Nirma for distribution of Camay soaps, Godrej tea has tied up with Jyoti lab to use its extensive distribution network to promote its soft drink concentrate in rural areas of Uttar Pradesh, Rajasthan, Maharashtra, Gujarat & Tamil Nadu. Fluency encouragement in local language & employment of rural youth play a role of word of mouth communication for FMCG companies. Harish Bijoor, renowned Marketing Consultant puts it Advertising is easy but the rural marketing is a donkeys work. Organisations like Vicco Vajradanti, Colgate toothpowder, Dabur Lal Dant Manjan that respected habits of the rural people by providing toothpowder as substitute to something they were putting on their palm & use their finger to clean teeth created a relatively a easy acceptability of the product.
40
Rural Marketing for Fast Moving Consumer Goods Coverage of villages based on the population strata a company decides to reach the villages with a population of 2,000 & above, then the number of villages to be covered work out to 76,291 (13%) & the proportion of the rural population covered will be 48%. Further reaching out to the villages with a population of 1,000 & above will increase the number of villages to 1, 90,686 (32.8%) but the population covered will sky rocket to 73.7%. In case it is decided to cover villages with a population of 500 & above, the number of villages will be 3, 35,684 (57.8%) but population covered will be whooping 99.4%. It is possible to run distribution vans to the villages with the increase in physical communication facilities due to programmes like Pradhan Mantri Gram Sadak Yojana. Some of the studies reveal that the bigger villages of above 5000 population are fairly covered by the marketing people of various companies, manufacturing consumable & durable products Small village: - In order to reach small villagers, two types of strategies have to be adopted i.e. reach all villages above 2000 population & reach all those within 50km. radius of big towns & cities. This will help cover about 50% of the rural population & even this extent of coverage means approximately 350 million populations & this is a massive coverage. Very small villages below 500 populations can be ignored at this stage as the output will not compensate the input. There should be distribution vans to cover villages on fixed period (at least once a week) so that the shopkeepers as well as the public are sure of supplies from the feeder centre, which will be nearby a town or city. The village shop keeper of 2000 population in towns should be used as distribution channel for shop keepers of very small villages around it. This is essential as some of the smaller villages are not having motoratage roads. Towns as Feeder centers: - Towns are frequently visited by rural people for education, cinemas, purchases, medical treatment, & various functions. It will be convenient if the town market is used as a distribution channel for various villages surrounding towns. One or two traders in town need to be used as feeders to villages stores & also to sell directly to villagers coming to towns. This method is already working in many places & can be further strengthened. Promotion strategies:Think Global Act Local, Think in local Idiom.. There is need of advertising professional who can think like the rural people. Then only can we have insights like Thanda matlab Coca-Cola, Anurag Madisons Chairman & Managing Director, R. V. Rajan says Brand ambassadors for rural markets need to be picked carefully as urban successes might not get replicated in the rural market that is why Govinda in the Mirinda ad boosted the sales of the drink in the rural markets. 4 As of rural marketing mix are Affordability, Availability, Awareness, and Acceptability Additional 4Ps are Passion a) Passion to earn Goodwill for the company. b) Passion to serve & educate the consumer. C) Passion to give 100% to the rural marketing effort. Place: - Whosever reaches the rural retailers shelf first is going to be successful in the rural market. A rural retailer can stock only one or two brands for each product category. His working capital & storing space do not allow him to store numerous brands. He also
41
Rural Marketing for Fast Moving Consumer Goods knows his bargaining power as consumers do not have any other option except to buy from him Chhota Coke: - In what Coca-cola India terms a major initiative, launched through its latest, Chhota Coke commercials, the company is taking its range of carbonated soft drinks to all corners of the country. The intention to make Coke available & affordable to all consumers, the strategy: pricing the 200ml bottle (Chhota) at Rs.5. the single-minded objective of some of the latest Coke commercials has been to communicate the price point. The company believes that the choice of Chhota, popular & endearing name meaning the younger one in India, will work well for its smaller sized bottle since it is also consumer speak for the 200ml bottle in the market. Since the predominant pack size across the country continue to be the 300ml. bottle. It was felt necessary to specify that the 200ml. pack is the new, smaller & younger offering from Coca-cola. The Chhota Coke (Rs.5 for 200ml.) strategy of Coca-cola saw a spurt in demand in villages & cities as well as increased penetration. It forced rival Pepsi to bring down the prices of its 300ml. packs & also introduce a 200ml. pack. Competitive strategy: - Suitable product: - A Very different substitutes of products & brands are available in the rural areas. Like Nimbu Pani is also a competitor to Coke along with Pepsi in rural market. Freely available Ash is also a competitor for vessel cleaning brands like Vim in the rural areas. Thus, competing with such like substitutes that do not exist in urban setting requires special approach & very different promotional message. Sahndies/ haats /jathras /melas: - Professional rural promotion van operators include Sampark marketing & advertising solutions, Video on wheels & Video express. Normally these mobile vans spend the daytime in shandies & then move to nearby village in the evening so that the nights can also be used effectively for promotion. This method of promotion is very popular with several companies these days. e) Special campaigns: Brooke- Bond carried out matches in rural areas with brand, music & caparisonal elephants to promote their brand of tea. Colgate-Palmolives rural promotion campaign on rural hygiene is another such example. Packaging strategy: - Velvette shampoo introduced in sachets helped develop rural market for shampoo & ushered in Sachets Revolution throughout India in all packaged goods category. In Muslim dominated areas of Uttar Pradesh it sold the hair oil in green packs but in Orissa, the same pack was sold in purple colour, whish is considered auspicious there. Hindustan Lever found that retailers in some villages were cutting its large 100gm. Soap into smaller pieces to sell & it introduced small 75gm. Soap. Branding strategy: - In the packaged goods industries (FMCG), reduction of number of brands & creating master brand to serve many segments by product variety or brand extension is a strategic option adopted by many players. The high cost of building many brands is significantly lowered if only few master brands have to be developed & promoted for different but related products.
42
Rural Marketing for Fast Moving Consumer Goods Emotional attachment strategy:- The consumer research conducted by HLL for the Lifebuoy brand found that there was need to change product or packaging since consumer felt products as old fashioned, meant for the people doing dirty job. Hence to connect emotionally; HLL came out with football team advertisement & emotional branding was given fillip, another example of this is advertisement of TATA Salt Maine desh ka namak khaya hai. Logos & Symbols- strategy: - Use of symbols like muscle man for MRF, Lightening for Rin, helps the rural consumers to identify brands at the time of purchase. Certain successful brands in rural market have numbers, symbols & animals as brands: 555 soap, Monkey brand toothpowder, Gemini tea (with elephant, Ghadi detergent etc. Tortoise Mosquito Coils is another brand. Which was able to succeed with its brand name & loge & which was well registered & received in the rural markets. Deeper penetration of the market:- Britannia launched Tiger biscuits at Rs.1, Rs.2 & Rs.4 price point, which are much lower than the price point of its products like Glucon-D & Marie Gold brands to make it more affordable in the rural market. Hoardings/wall paintings: - This is also highly suitable for rural areas since the hoarding or wall painting can include visuals with minimum write up. It has also been observed that rural persons have more time to see & watch the hoardings than urban person. The rule of the game: - To get a foothold in the semi-urban & rural markets, several regional & some national brands enter with the objectives of taking on the competition. They fight their marketing battles of selecting a particular brand often the market leader! Then they deploy their entire marketing arsenal against this selected competitor. Ujala used this strategy to full advantage against Robin Blue & now it commands nearby three fourth of the Rs.2 billion Ultramarine blue market. Fairever did the same to fair & lovely. Ghari detergent is doing the same thing now to Nirma & Wheel. Chiks share is close to that of Clinic plus, the market leader in shampoos. Even the advertising & distribution strategies are designed with an eye on the companys opponent. This hurts the big companies badly. HLL realized that its brand fair & lovely was in danger only after Fairever had garnered a healthy market share within months of launch.
RURAL MARKET STRATEGY

43
Market-Leader strategies in rural areas:1) Expand the total market strategy: - The market leader firms can normally gain the maximum when the total market expands. The focus of expanding the total depends on where the product is in its lifecycle. This strategy can be used when a product is in the maturity stage. 2) Defining the market share strategy: - When the leader firm tries to expand the total market size, it must also continuously defend its current business against enemy attacks. For ex. Coca-Cola must constantly maintain its guard against Pepsi- Cola. Six ways for a market leader to protect its market position:a)Position defense:- This strategy involve pouring maximum firms resources into its current successful brands for ex. HLL increased its ad-spend in Clinic & Sun silk shampoos & gave heavy promotion through price reduction. b) Flanking defense:- This strategy both guards the marketing position of leading brands & develops some flank market niches to serve as a defensive corner either to protect a weak front or to establish an invasion base for counterattack if necessary. c) Preemptive defense: - This defense strategy manoeuver involves the launching of an offence against an enemy before it stands on offence. d) Counter-offensive defense: - This is a strategy of identifying a weakness in an attacker & aggressively going after that market niche so as to cause the competitor to pull back its efforts to defend its own territory. e) Mobile defense: - This strategy involves the leader broadening & expanding its territories into new market areas by diversifying. Diversification into related areas is used in mobile defense. f) Contraction defense: - This strategy involves retrenching into areas of strength & is often used in later stage of a product life cycle or when the firm has been under considerable attack. For ex. HLL decided to concentrate on its core business areas, that is, soaps & detergents, & has emerged as the clear leader in the toilet industry. 3) Expanding the market share strategy: - Market leaders can improve their profitability through increasing their market share. Market leaders are successful at expanding their market shares, like HLL, Proctor & Gamble, and McDonalds Market-Challengers Strategies: - The firm that occupies second & third ranks in an industry can be called runner up or challenging firms for ex. Pepsi, Pepsodent. The following strategies can be adopted by market challengers. 1) Frontal Attack: - This strategy is used when the challenger masses its competitive forces right up against those of opponent by attacking its competitors strength rather than its weakness. For this to succeed, the challenger needs a strength advantage over its opponent. 2) Flank attack: - This strategy is used when the challenger set its sights on its targets weakest points 3) Encirclement attack: - It is used only by well financed firms. It involves an attempt to capture a wide slice of the competitors market through a grand offensive on several board fronts.
44
Rural Marketing for Fast Moving Consumer Goods 4) Bypass attack: - It avoids any belligerent move directed against the competitors territory. It involves bypassing competitors & attacking easier markets. 5) Guerilla attack: - It involves making small, intermittent attacks on different territories of the opponent. A guerilla attack uses both conventional & unconventional means of attacking the opponent. Market Follower strategy:The following broad strategies are useful:1) Following closely: -The follower appears a challenger. In many aspects, but does not muster too great a effort so as to block direct conflict. Such patterns are common in capital intensive, relatively differentiated industries, such as Steel, Fertilizers & chemicals. 2) Following at a Distance:- This technique is usually a safer, less conflict provoking, alternative to do this, the follower parallels the leaders general price levels, product innovations & distribution, but at a distance & without significant threat to challenger 3) Following selectively: - In this strategy, the firm follows the leader quite closely in some ways, goes its own way in other instances, & sometimes chooses not to participate at all. The firm might be quite innovative, & get it avoids direct competition in board fronts. Market- Nichers strategies:Successful market nichers own their success to using one of these strategies to gain a solid market presence. The nicher can play a role a specialist in the following ways; 1) Channel specialist: - for ex. A nicher can decide to make a very large size distribution network. 2) Service specialist: - The Company offers one or more services not available from other companies. An example would be a business management institute taking admissions on internet or telephones. 3) Product feature specialist: - The Company specializes in producing a certain type of product or product features. 4) Product line specialist: - The Company produces only one product line or product. 5) Geographic specialist: - The firm sells only in a certain locality, region or area of the country. 6) Specific Consumer specialist: - The firm limits its selling to one or few major customers. 7) Customer size specialist: - The firm concentrates on selling to small, medium or largesize customers. Many nichers specialize in serving small customers who are neglected by major firms. According to ORG (Operation Research group) survey, the rural market for packaged consumer products has shown a 184 per cent growth during 1984-89; as against the 96% growth in its urban counterpart during the same period. Firms like Hindustan Lever, Lipton Brooke bond, Tata etc. use their own sales vans for interior transportation, but the cost of operating such van is high Market entry strategy:-
45
Rural Marketing for Fast Moving Consumer Goods 1) Penetration pricing: - A penetration pricing policy involves setting prices of a product relatively low compared to those of similar products in the hope that they will secure wide market acceptance, which will allow the company to raise the price at later date for example Anchor White & Ajanta toothpastes used penetration pricing to enter the crowded dental cream market. 2) Economy pricing:3) Value pricing:- This approach is used in case when external factors such as economic recession or increased competition forces a company to provide Value products & services to retain sales for example Godrej No.1soap placed their offering containing rose, sandalwood & neem ingredients at a very economical price. Similarly Ajanta offered vegetarian toothpaste at a low price. 4) Coinage pricing: - Coinage pricing strategy is mostly used in rural markets for FMCG brands prices are set at coin value. These packs are small in size & are normally meant for one-time consumption. For example, Coca-cola has effectively used the communicated price point (Rs.5) of their small bottle to attract new segments. Some of the brands that HLL sells for rs.5 are Pepsodent, Ponds Dream flower Talc, Ponds Cold Cream, Rin, Taaza, Fair & Lovely, Clinic plus & Lux 5) Psychological pricing:6) Discount & Allowances Discounts: - A word of caution. Rural consumers very much like buying products at a discounted price, but the risk is that sometimes a perception is created among consumers that the reduced price is the actual price of the product & that earlier the company was charging a higher price! Quantity discount: - Providing more quantity for the same price, for example, offering a 125gm. Toothpaste at the price of the standard 100gm. Pack many companies also offer the 1+1 scheme (Good Knight Mosquito Coils) However, in the case of commodities such as flour & salt, the quantity-discount strategy is often not very successful because most people do not like to buy larger quantities of such goods even at lower prices. Many customers will tell the retailer to keep the extra quantity & instead give them the regular quantity after adjusting the price. Discriminatory pricing:1) Customer-segment pricing: - Retailers sell the products at the MRP to people who buy on credit whereas they will offer the same products at lower prices to people who purchase on cash. 2) Product from pricing: - Like pan shops selling loose cigarettes, this practice is common among the rural retailers with many FMCG categories. Mosquito repellent coils or mat packs are opened & sold piece by piece at a higher unit price compared to the pack price. 3) Location pricing: - People can buy the product at a lower price in nearby towns as compared to the price they would be charged by village retailer.
BRAND MANAGEMENT
Lifebuoy was one of the first soap with rural areas as the key target market. Its jingle Tandurusti ki raksha karta hai lifebuoy is still fondly remembered by a large number of 46
Rural Marketing for Fast Moving Consumer Goods rural people. Needless to say it commanded a great brand loyalty. Colgate, Dalda, Tata, Bajaj etc. have shown that it is perfectly feasible to build a brand in rural areas, provided the organization adopts right set of brand building tools & in committed to the rural market in the long term. The term Brand owes to its origin to the Norwegian word brandr which means to burn A brand is defined as a name, term, sign, symbol or special design or same combination of these elements that is intended to identify or differentiate the goods or services of one seller or a group of sellers. (American Marketing Association, Chicago) (Kotler, 1998) A branding process, if executed well, creates a brand that is equipped to handle changes in demographics, thinking, from & functional changes as well as competitors actions, 96% of new brands that are developed in the FMCG sector fails. This only goes to show that the market place is in unforgiving master. It suggests that branding is not a static phenomenon; rater a continuous change in product appearance & performance as well as the total value equation is must for survival of any brand. Brand loyalty can be defined as the degree of consistency in buying particular brand(S) as a definition of cognition, emotion, satisfaction, commitment, habit of positive attitude towards brand(s) Mass consumption products like tea, soap, detergent & dish washing powder have several regional brands with loyal customers. They are perceived to give value for money at a lower price Bhakar wadi a regional tea brand is savory relished in Maharashtra & has virtually no competition in markets of Gujarat & Maharashtra 555 & Chhokra soaps for washing clothes are strong regional brands in Punjab & adjoining states. Arun Ice Cream of Hatsun Foods is another example of successful regional brand in Tamil Nadu commanding nearly a third of market share. In FMCG sector, the next battle for a market share in rural areas would be between local or regional brand on one side & national brands on the other. The latter would vehemently fight using all means to retain their market share & service. In the FMCG sector, if we perform state by state analysis in India, the number two brand, in most of the cases, is a regional brand. Regional brands: Success stories. Anchor Toothpaste: - Anchor toothpaste has the backing of Rs.1000 cr. Business group dealing with electrical appliance. The 40- year- old Anchor group, realizing it had a stronger retail network, decided to enter the toothpaste. Business Company identified a unique selling proposition, which might have never, occurred to an MNC, Vegetarian toothpaste. Some of the standard ingredients in toothpaste are obtained cheaply from animal source & Anchor found an alternative in vegetable oil. Its Vegetation theme paid off with company making inroads in states such as Gujarat & Rajasthan with high concentration of purely vegetarian population. Anchor was Rs.150 cr. Toothpaste brand build by Company that was totally in unrelated business of electrical switches due to the extensive distribution network & understanding of market.
47
Rural Marketing for Fast Moving Consumer Goods Parakh Foods: - Parakh Foods, which shot up to the top of growth league tables with its Gemini Oil, is also backed by business group with good turnover. It started with the Dal & Besan mills in 1964. In the 90s, the business reached saturation point. Sensing little scope for expansion in existing businesses, they looked at new commodity based businesses. The company launched Samrat edible oil leveraging the existing brand & keeping its price low while maintaining the quality. Soon another brand Gemini was introduced for refined Sunflower Oil at Rs.36 a liter. It was 30% cheaper than the price of Rs.52 charged by established players. It now commands a significant market share in its category. The Cavinkare Strategy of providing the consumer with a free sachet of Shampoo if they bring in five used empty sachets of Chic Shampoo, made the customer conscious that he is buying only the Chic Shampoo; otherwise he will not be able to get the free sachets if the empty sachet he retunes is of other brand or fake brand. Rural consumer recognizes the Parles pack of biscuits by its yellow stripes of the baby. Brand loyalty:-The concept of stickiness. Rural consumer is now faced with a lot of choice & having to evolve evaluating parameters for making choices, as more brands appear on rural retail shelves (80% of all packaged FMCG sold in rural market are branded either national or regional source: ORG), still the number of FMCG brands available in rural markets is less than half of those available in urban shops. Some brands like Ghari, Parle-G, Lux, fair & lovely & Colgate were early entrants in rural markets & have gained high acceptance over period of time, with virtually no competitive brands present in the market, availability was the prime driver & what urban marketer interpret as brand loyalty is in fact brand stickiness in rural India, a phenomenon where the villager stays with the brand not out of the informed choice but because he does not know better. The phenomenal success of Ghari detergent in the rural Hindi belt is attributed to product performance matching promise, leading to customer satisfaction. The detergent is able to clean the while dhotis/pajamas at an affordable price which is what rural consumer expects from the product. Issues such as life span of clothes & protection of hands from harsh chemicals in detergents are not important criteria for the rural consumer. Markets have focused on creating awareness & making their brands available in rural market but have made little efforts to build relationship with their customers. This is very important aspect in the rural sector because villagers trust people with whom they have strong relationship (family, friends, neighbous). Marketer need to convey a feeling of an extended family with the trade & a sense of caring with consumers to build enduring relationship in the rural sector. For a brand to establish in rural India, marketers need to educate customer, develop their interest through interactive communication, trigger their desire to own new product & build confidence in the brand through live demonstration & post-purchase engagement with a customer. All of these measures help build long term relationship to succeed in the rural market. Brands must understand preferences of different customer segments rather than a attempt
48
Rural Marketing for Fast Moving Consumer Goods a mass pan-India marketing approach. Regional tea brands like Lamsa in maharashtra & Kala Ghoda in Rajasthan are examples of successful regional brands that have flavoured their tea with spices to cater to local tastes. This cusomised convinces local people that these brands care for them & creates a positive thinking towards the brand, the first step in building a strong relationship with customers. The emotional connect add extra value added to the products, resulting in regular purchase preferences & creating enduring brand loyalty. Branding in Rural India:Per cent <20% 21-40% branded Necessity Nonrefined oil Popular Coconut oil Premium Superpremium Refined oil Home insecticides 41-60% Iodised salt, Tea, Washing cakes 61-80% Biscuits Blues Vanaspati, bulbs, Hair oil 81-100% Toilet soap, Washing powder Analgesics, Safety-razor blades, Toothpaste, Shampoo Batteries, Rubs & balms, Skin cream, Toothpowder Toothbrushes, Antiseptic creams, Antiseptic liquids, Chyavanprash, Digestives, Mosquito repellents, Shaving preparations, Tube lights
Source: - Business World, April-1999 Branded consumption now accounts for 80% total sales in as many as 18 product categories; brands may be national, regional or local Association Brands Colours Lal Dant Manjan, Lal Sabun (Lifebuoy), Red battery (Everady) Numbers 302 Pataka bidi, 555 detergent bar, 502 Pataka chai Visuals Ghari detergent, Rath vanaspati, Chotiwala tel, Bagh Bakri tea, 3 Roses tea, Katchua Chhap Mosquito Coil Retailers play a major role in brand promotion in rural. Due to the strong bonding & trust between consumers & retailer, coupled with low brand awareness, consumers often do not ask for the product by brand but instead will request the retailer, paanch rupaye wali chai dena , that is Give me the five-rupee tea. Now it is up to the retailer to push the brand that he chooses since he is a strong & influential force in rural markets because consumers trust its recommendations.The first mover brand in rural hence became generic brands. Detergent powder came to be identified with Surf, vegetables oil with Dalda & Mosquito coil with Katchua Chaap.Also brands like Clinic plus, Lifebuoy, which were first movers at the national level in rural India, have became at the national level in rural India. Hence became the most successful brands despite being priced higher
49
Rural Marketing for Fast Moving Consumer Goods than competitions. Britannia Tiger biscuits created an identity associated with a smart, active & sharp child. Brand Spectrum in Rural Largest Rural Brands:Brand Category Growth (%) Parle- G Biscuits 8.2% Lifebuoy Active Toilet soap 6.4% Lux Toilet Soap 5.6% Ghari Washing powder 21.5% Nirma Washing powder -13.1% Figures are year on year growth for MAT July 2004 by value Source: - A.C. Nielsen Retail Store Audit, MAT July 2004 Brand Market Share (%) Growth (%) Alpen Liebe Candy 17 4.8 Tata Salt 11 9.0 Britannia Marie Gold 9 4.5 Britannia Tiger 5 16.9 Source: - A.C. Nielsen Retail Store Audit, MAT July 2004 (figures in volume terms) Brand Loyalty vs. Stickiness: - Loyalty level Category % Loyalty Category % Loyalty Chyavan Prash 77.3 Biscuits 22.8 Shaving Preparation 67.3 Batteries 17.7 Toothpowder 47.3 Toothpaste 12.6 Tea 25.3 Toilet soaps 3.1 Iodised Salt 24.2 Multiple brand users are those who have bought more than one brand in a category in the last month. The Retailer decides The Brand:In a small study conducted in 2004 in rural U.P. by MART for HLL. It was found that in the villages retail outlets, only regional & local brands were displayed on the shelves. Customer who purchased on credit were offered regional brands on which the retailer in turn gets a credit facility from the wholesaler when a cash-paying consumer entered the shop & asked for a HLL brand, the retailer pulled it out from his counter draw! So the retailer decided which brand is sold to a cash-paying customer & which brand to a Credit-paying customer. Regional/local brands dominate in rural & their MRP have no sanctity.
ADVERTISING
Rural communication: - AICDA Model
50
Rural Marketing for Fast Moving Consumer Goods Awarenes s
Interest
Conviction
Desire
Action
National Languages Hindi/English Scheduled languages Assamese, Bengali, Gujarati, Kannada, Kashmiri, Konkani, Malayalam, Manipuri, Marathi, Nepali, Oriya, Punjabi, Sanskrit, Sindhi, Tamil, Telugu, Urdu Languages with widespread use 47 languages used for primary education 98 used in print media 71 used on radio, 13 used in films Local vernaculars Over 114 recognised varieties 216 mother tongues with more than 10,000 speakers were recorded in 1991
Source: - Tej K. Bhatia, Advertising in Rural India. The Communication Process Model based on Schramm, 1969 Sender Encoding Message Media Decoding Receiver
Noise
Feedback FMCG category Advertisement:-
Response
51
Rural Marketing for Fast Moving Consumer Goods Babool advertisement: - Rural people had a problem comprehending the message as it is two quick, in the north, some respondents thought the advertisement was for a toothbrush/ shaving cream. Navaratna advertisement: - Rural people asked, Why should he be dancing when he has a headache? Most rural respondents in the south could not recognise Govinda. Similarly in the north the recognition of Rambha has very low. Dabur Janam Ghunti: - To market baby stripe water, Dabur Janam Ghunti, Dabur India profiled rural consumers at Haats & Malas. The exercise helped the company debunk the myth that the rural consumer will opt for tried & tested home recipes when it comes to baby care products. In addition, It was discovered that while it is the housewife who decides on product category, the man does the brand selection & purchase. These insights helped Dabur India to redesign its communication strategy. Lifestyles: - Shampoo advertisements that depict woman tossing around their own lustrous hair is a turn off for most rural women, as they tie up & cover their hair, instead of creating a marketing, the adventure is creating cultural barrier. Purchase needs: - During the pilot test launch of Vardaan bidi, the marketing team discovered that many rural people believe that tobacco smoking leads to impotency. The company decided to redesign its communication strategy, to stress the fact that Vardaan is a tobacco less bidi & does not cause loss of sexual vigour. While promoting Revital health capsules, it was found that farmers in rural Punjab seek power & vigour, whereas a rickshaw puller or a truck driver demands more energy & longer hours of concentration so as to increase his earning. Revital customized its one-to-one communication to address these differing expectations of consumers from the same product. TOMA: - Top of Mind Awareness Rational appeal: - economy theme of Babool toothpaste advertisement, Babool Babool, Paise Wasool Brand Lux Lifebuoy Ponds Dream flower Blue Wheel Functional element Pure & mild Health Body care Washing bright Aspirational element Glamour & escape Heroism Achievement, career women Achievement
Minto Fresh: - A television commercial for Minto Fresh, narrates the story of a Baniya, Khussat Lal whose beautiful young wife, Mainna is unhappy & miserable. Enter a young man, Challiya, riding a bicycle & chewing Minto Fresh dazzled & impressed by our glamorous & dashing young hero, Mainna runs away with him. The advertisement ends with the Line Karna ho Mainna ko impress to khao hamesh Minto Fresh. Pictorial presentation:- The use of Symbols (the muscle man logo of MRF tyres, the Plus symbol of Clinic plus shampoo in promoting the brand helps rura; consumers easily identify the brands at the point of purchase.
52
Rural Marketing for Fast Moving Consumer Goods Advertising: - Advertising is highly public mode of communication. Its public nature confers a kind of legitimacy on the product & also suggests a standardized offering. Advertising can be used to build & enhance a long term image for a company/product. The recent ITC advertisement Putting India First cleverly weaves the companys rural initiatives of e-Choupals & large format rural retail stores to position ITC as a fairly indianised company, concerned about the uplift of rural people & also to trigger quick sales. Direct House to house campaign:In 1998-99, Hindustan Lever implemented a major direct contact programme called Project Bharat, which covered 2.2 crore homes. Each home was given a box at a special price of Rs.15, comprising a low-unit pack of shampoo, talcum powder, toothpaste & skin cream, along with educational leaflets & audio-visuals demonstration. The project helped to eliminate barriers to trial & strengthened the salience of both particular categories & brand. Push vs. Pull strategy: - factors in setting the promotion mix A push strategy calls for using the sales force & trade promotion to push the product through the channel. A Pull strategy calls for spending lot of money on advertising & consumer promotion to build a consumer demand. For example, established players like HLL & Britannia with deep pockets & a national presence rely more heavily on Pull & small players like Ghari & Anchor with limited promotion & advertising budget, prefer the push strategy. Hoardings:-Hoardings on villages entry junction, writing, painting on wall of public building in villages, compound walls of private people will be more appealing & readable. The rural inputs like fertilizers & pesticides are advertised like this. The picture of product & catchy slogan are considered to be the best promoters. Various congregations like mela-Kumbha mela, Pushkar mela, Mysore Dussera, Shabarimalai (Kerala). Local deities & Jatra or Fairs along the festival type celebrations Marketing activities Push strategy Manufacturer Intermediaries End user
Marketing activities Pull strategy Manufacturer Intermediaries End user
General scheme for Rural Advertising Production:Global Positioning: - English
53
Regional Adaptation: - Four regions of India: North, South, East, and West. (E.g. Hindi for North, Tamil for South, Bengali for East, Marathi for west) Area-specific adaptation (e.g. Punjabi for Punjab Last- Destination, Adaptation: Rural dialects, Colour & Motif Source: - Tej K. Bhatia, Advertising in Rural India. Message Effectiveness:Meaning: - Words have differed meaning in different region & hence may cause distortion Simple: - Improved receptivity Pictorial presentation Improves recall Utilitarian: - Influences attitudes & preferences Form Message Narrative: - Increases refection through involvement Trustworthy: - Used for feedback on product performance Source Likeable: - Increases acceptance Expert: - Effectiveness increases in evaluation for complex products Associations Creates interest & improves comprehension
Language
Source: - Sanal Kumar Velayudhan, Rural Marketing
MEDIA MANAGEMENT
Media & Media Reach in Rural Markets:Percentage of Rural Adult Population 54 Total Number (Million)
Rural Marketing for Fast Moving Consumer Goods Press Radio TV Cinema Total Rural Media:Conventional Media Television Radio Press Cinema Outdoor:- Wall paintings, Hoarding 9 28 27 36 100 Non-conventional Media Haat & Male Folk media (Puppet show, Magic show Video van Mandi 32 113 108 125 352 Personalised Media Direct mailer Point of sale (Demonstration, Leaflet) Word of mouth Interpersonal communication Animator
Rural Adult viewers of TV & cinema & print media readership Rural adult viewers % Region TV Cinema East North West South All India 23 37 39 26 31 29 24 23 76 36
Print media readership 4 7 7 18 10
Radio- print media Region wise readership Region % Rural readership % share of total readership East 4.0 13.0 North 7.3 20.0 West 6.8 16.0 South 18.3 51.0 All India 9.8 100.0 State wise Kerala has the highest readership of rural people at 53% & Bihar has the lowest rural reader at 3%
Media Topology- Intrinsic Characteristics Media Reach Audience form involvement TV Mass Low
Type Urban
Accessibility Time/Place Limited in
Viewing Audience cost Exposure No Transient
55
Rural Marketing for Fast Moving Consumer Goods rural areas Cable Mass Low Urban Limited in rural areas Radio Mass Highest in Urban Highest in Mass media mass media Print Mass No Largely High in rural Urban areas Cinema Mass Higher than Mixed Somewhat TV limited in rural areas Video rath Personal/ Very high Mixed Highest/but Customised (When van not mass arrives)/ media/reaches Hands on where mass demonstrations media can not reach Wall Personal/ High Rural Highest in paintings Customised rural areas Calender Less than No Mixed Limited in Art print rural areas Haats/Oral Personal/ Highest Rural Highest/ but sales calls Customised (Hands on not mass demonstration) media/ reaches where mass media can not Source: - Tej K. Bhatia, Advertising in Rural India
Yes No Yes Yes No
Transient More lasting than TV Permanant Transient More lasting than TV/mass media Lasting Lasting More lasting than conventional media
No Yes No
Doordarshan: - The Doordarshan television channel has the maximum reach in rural India. The overall reach (urban rural) is 97% of the entire population of India. Classification of Indian housewives: - A separate classification has been suggested by pathfinders for Indian housewives, in which 8 categories have come up. The gregarious hedonist (east, Bengali speaking, liberal extrovert), contemporary, affluent, sophisticated (west, spender & open minded), tight-fisted traditionalist, troubled home-body (largely illiterate, low media exposure), anxious rebel (south, workaholic thrifty), contented conservative (optimist, efficient)
RURAL MARKETING-DISTRIBUTION
56
The Distribution Systems of FMCG companies from Study of Rural Distribution Channels, MART 2004 2 3
4 Wholesaler
5 Retailer
n operator, Super stockist, Rural distributor, Urban distributor C & dealerSub-distributors, Retail stockist, Sub-stockist, Star seller, Shakti
Distributor, Super distributor
Sub-distributors
Wholesaler
Retailer
Van Operator
Retail stockist,
Wholesaler
Retailer
Rural distributor, Urban distributor
Star seller, Shakti dealer
Wholesaler
Retailer
57 Sub-distributors Wholesaler Distributor Wholesaler Distributor Super stockist Sub-distributors Wholesaler Wholesaler
Rural distributor, Urban distributor
Retailer
Retailer
Retailer Retailer
Channels of Distribution:Layer Channel partner Layer 1 Company depot/ C & FA
Location National/ State level
58
Rural Marketing for Fast Moving Consumer Goods Layer 2 Layer 3 Layer 4 Layer 5 Distributor/ Van operator, Super stockiest/ Rural distributor Sub-distributor/ Retail stockiest/ Substockiest/Stall Seller/ Shakti dealer Wholesale Retailer District level Tehsil HQ, Town & large villages Feeder towns, Large villages, Haats Villages, Haats
Channel of distribution for FMCG:Company manufacturing plant C & FA Retail outlets Distributor Consumer Company depot Sub-stockist
Distribution model of FMCG companies:Company
C & FA Distributor (Rural) Distribution (Urban)
Sub-distributor
Wholesaler
Wholesaler
Retailer Rural .
Retailer Local
Retailer (Satellite Market Marketkt)
Retailer (Urban)
Retailer (Urban)
Distribution model 2 Wholesaler Retailer
59
Company
C & FA Depot
Distributor
Retailer Local
Nirma Distribution System:Nirma Ahmedabad Hyderabad, Kolkata, Kanpur
Depot
Direct Distributor At the district level Sub-distributor/ Big wholesalers At the Tehsil level Wholesaler Retailer
Covers 300-400 Outlets Directly
Wholesaler
Retailer
Per capita Sales= Annual Sales/Market Population M M C R C
M W R C
M W J R C
Fast moving consumer goods marketing channel Manufacturer
60
Wholesaler
Wholesaler Jobber
Retailer 1) Direct or
Consumer Retailer
Retailer 4) Three level channel
2) one level Channel 3) Two Level channel Zero level channels Amul distribution pattern organisation Federation (State level) Union (District level) Inputs DCS (Village level)
Outputs
Farmers Distribution: - Consumables are purchased in the village shops, shandies or in bigger villages, consumer durables are purchased only in mandi centers, large town or nearby cities. The distribution system of Proctor & Gamble covers every village or town, which has a population of at least 5,000 persons. Distribution strategy- Hindustan Lever:It is only some enlightened companies like Hindustan Lever Limited (HLL), which has recognised the great potential offered by the rural market & has been constantly trying to extend their distribution system beyond the villages they are already covering. In the early eighties, HLL had initiates a scheme called Operation Harvest to extend their distribution system to villages with a population of 2,000 & above Persons which offered sales of at least 2,000 per visit. In the nineties, HLL had Operation Bharat to cover the villages with a population of about 1,000 persons. In the late nineties or early Twentieth century, they again has programme called Project Shakti to cover villages with less than 1,000 populations. Thus HLLs presence is felt in very small villages also. Excellent distribution system:Carrying & Forwarding Agents (C & FAs) State wise one or two Redistribution Stockists 61
Covers specific area by vans Indirect Coverage (IDC)
Villages with Business Rs.15, 000/Visit every week Rural transport Distribution systems of Britannia: -
Others villages once a month
Production Centre (Company/owned & contract manufacturing)
Carrying & forwarding Agents (C & FA)
Authorised wholesalers (Distributors, redistribution stockiest) Wholesalers Smaller retailer Customer Retailers
PACKAGING
Pack size & convenience: - Sachet RevolutionChik Shampoo:- The success of the Velvet shampoo sachet was the harbinger of a revolution in the shampoo industry as conventional beliefs about it being an upper-class
62
Rural Marketing for Fast Moving Consumer Goods product were shattered. Cavinkares Chik shampoo was launched in southern India in 1983 to grab the opportunity to provide the consumer good-quality shampoo with appealing perfume at a price that will delight the consumer. Cavinkares team traveled extensively in rural pockets & caught hold of schoolboys for shampoo demonstration in order to make people comfortable about the idea. At the same time, consumer schemes such as providing free sachets in exchange for four empty ones were also used. These experiments gave the brand its identity of consequent popularity. In 1990, the brand introduced the concept of a variety of floral fragrances (thus offering a choice to consumers) & tripled its sales within a month. Encouraging by the response, Chik shampoo turned national with rural focus through innovative trade scheme & consumer offerings. By responding to consumers needs like offering attractive wrapping, by 1999 Chik had became the second largest brand in its category. Latter the company realized that reducing its price from current Rs.2 to 50paisa, it would be able to convert many non-shampoo users to its use & dramatic results were obtained as the market share increased from 5.61% to 23%. The sale of 50paisa sachets in the rural market is almost five times that of the urban market an Rs.100 crore brand with 65% of sales from rural markets, Chik shampoo today is number one in many states Source: - Compiled from the article in the praxis issue on managing rural markets; July 2003 conducted by Mr. C. K. Ranganathan, CMD, Cavinkare. This strategy of selling in smaller packs to enroll lower SECs was later followed by HLL, Godrej, Dabur & a large number of players at the price point of 50paisa, Rs.1 & Rs.2 in the FMCG market. Riding on the success of shampoo, sachets packaging was replicated in many other product categories (Tiger biscuits, Close up toothpaste, Parachute hair oil etc.) In the early 19990s, Rasna Industries introduced a soft drink concentrate sachet priced ar Rs.5, which makes six glasses (compared to the regular pack, costing Rs.27.50, which makes 32 glasses). This addressed the problem of cooling soft drinks in addition to the affordability factor. Several years late, Coca-cola introduced its Rs.1 single used Sunfill pack for rural markets. Companies introduced soaps, cosmetics, cold drinks, & toothpaste in small packs Beauty soaps (Lux, Breeze), Ponds Cold cream, fair & lovely cream, Chota Pepsi & Close up toothpaste were made available at Rs.5 in small packs. Tiger biscuits were introduced in transparent oropacts especially designed for small outlets like Paanwalla shops that do not normally stocks biscuits.
Convenience is another important factor in the decision to use a product. Colgate introduced its toothpowder in a small sachets & provided a cap for the packet as rural households often do not have a proper place to store things in the bathroom =. Other products also designed for convenience of use include Close-up toothpaste & fair & lovely cream with cap. Another recent innovation in the packaging has been undertaken
63
Rural Marketing for Fast Moving Consumer Goods by Marico, which introduced parachute coconut oil in Rs.1 plastic bottle that are easy to use at any time. If rural India today accounts for about half of detergent sales, this is because the industry has developed low-cost, value-for-money, branded products like Wheel & Nirma. Sachets today constitute 70% of HLLs sales. According to an ORG-MARG study lowunit-packs (LUP) have grown nearly 10% between 1995 & a1999. LUPs are driving sales in most categories like shampoo, beauty soaps, talcum powder, toothpaste & skin cream except categories like biscuits, sanitary napkins & milk powder. Packaging Aesthetics: - Lifebuoy is identified as the red soap. Tiger biscuit has an attractive red pack with an image of Tiger. Distinct altering of local languages on the pack & images or symbols that convey the products benefit influence consumer perception about the brand. The picture of lightening used on Rin detergent pack is distinct & communicates the brand benefit of whiteness easily & effectively to the illiterate consumer. In the case of ITC, which sales its Gold flake brand with a yellow cover in the south, where this colour is associated with prosperity & purity. In the north, the package colour is golden as in this region yellow is often associated with jaundice & ill-health. Year-wise launch of small unit packs:Sr. no. Product category 1998 1999 2000 2001 1. Washing Powder/liquid 27 21 19 25 2. Coconut oil 14 21 19 25 3. Hair oil 11 6 6 15 4. Shampoo 17 38 47 51 5. Toothpaste 1 5 9 05 6. Toothpowder 9 6 11 03 7. Talcum powder 8 21 17 25 8. Skin cream 7 5 4 1 9. Packaged tea 51 63 63 15 10. Coffee 4 5 2 6 11. Ketchup/sauce 0 3 2 1 12. Mosquito repellent 2 2 2 3 13. Biscuits 11 55 35 23 Source: - Small Talk, The Economic Times, Brand equity, March 20, 2002 pg.3
Product Biscuit Razor blades Shampoo
Most popular pack sizes:- Rural Pack sizes available Popular size (contribution) 5gm-7000gm 100gm (43%) 1-60 nos. Pack of 5 (63%) 3ml-1000ml 7ml (41%) 64
Rural Marketing for Fast Moving Consumer Goods Washing powder 20gm-5000gm 500gm (39%) Source: - A. C. Nielsen Retail Store Audit, MAT July 2004 Contribution of small packs (% of sale) to volume: rural & urban:Sr. Product 1998 1999 2000 2001 no category Rural Urban Rural Urban Rural Urban Rural Urban . 1. Washing 12.0 7.4 14.2 8.2 17.2 8.7 19.4 9.6 powder 2. Coconut oil 6.4 4.0 9.8 6.0 10.8 6.9 13.1 7.9 3. Hair oil 16.4 9.8 17.8 10.7 18.3 11.0 18.3 11.5 4. Shampoo 85.0 46.6 86.5 52.6 89.3 56.1 90.0 59.4 5. Toothpaste .08 0.9 1.4 1.4 2.0 1.8 3.4 2.7 6. Toothpowder 49.8 35.7 54.8 38.7 56.7 41.0 56.8 42.9 7. Talcum 22.3 13.0 28.5 16.2 34.3 18.2 31.8 18.1 powder 8. Fairness 1.8 3.2 1.2 3.5 1.0 3.5 0.5 2.5 cream 9. Packaged tea 65.8 38.0 66.4 41.5 66.8 40.4 64.7 40.7 10 Coffee 19.6 8.3 28.9 9.4 33.0 12.1 37.8 13.3 . 11 Mosquito 2.8 1.3 4.6 3.7 4.9 3.0 4.7 4.1 . repellent 12 Ketchup/sauce 0.0 0.5 0.1 0.7 1.1 1.4 2.5 1.3 . 13 Biscuits 1.5 1.4 1.7 2.0 3.1 2.9 5.2 4.4 . Source: - Small Talk, The Economic Times, Brand equity, March 20, 2002, pg.3 Low priced packaging: - A good example is that of Taj Mahal tea, a brand of the erstwhile Brooke Bond. Taj Mahal is a premium branded product, which is also available in sachets in rural areas is an inferior blend, qualified by the words Janata Blend. By evolving a blend & terming it as Janata Blend. The price is kept within the reach of rural consumers. Another recent example is the blend sold by Hindustan Lever, Which we discussed earlier. To keep the price of tea within the reach of rural buyers, they marketed a brand of tea which contained 70% tea, 20% Chicory & 10% Tapioca flour. When tea prices increase, blending the tea with low cost fillers like Chicory & tapioca makes sense. If one is interested in rural market similar is the case of Cigarettes where blends like Blue Bird, Honey Dew, Taj Chap, Passing Show, etc. are thriving. The basic objective of keeping the price low is to entice rural consumers to try. This may not be possible in all types of products. But wherever this can be resorted to, the market is bound to expand.
FAKES MARKET
65
Rural Marketing for Fast Moving Consumer Goods Some names of original & Imitation of products:Sr no. Original Products 1. Ponds 2. Rin 3. 501 Bar 4. Cadbury Eclairs 5. Brook Bond Paisa(Packs of Tea) 6. Nirma 7. Lifebuoy 8. Colgate(Toothpaste) 9. Fair & lovely (fairness cream)
Imitation Products pollons Run 509 Bar Choudhary Eclaires Benson Brand Paisa Nilima, Narima Lifejoy, Liteboy college Friends & Lovely
Fake brands:- An ORG-MARG retail audit found that for every 100 strips of genuine Vicks Action 500, these were 54 counterfeit strips sold in the market for example, Bonds (for Ponds talc), Fair & lonely (for Fair & lovely), Likeboy (for Lifebuoy), Clinic shampoo with clamic & Tiger biscuits with Fighter. Rural markets suffer from the problems of low penetration & poor availability of branded products. Hence, although there exists a huge demand for branded products, there are no distribution channels to make the product reach the customer. This has led to the growth of spurious brands to fill this gap in the demand. The fakes market:Look-alikes:- Look-alikes products where appearances (packaging material closely resembles) is similar to that of a popular brands in same product category for example, Shagun for Lifebuoy (150gm) & Lalita Amla for Dabur Amla. Spell-alike: - Spell-alike are fakes of original brands have names that are subtly & cleverly misspell for example, Paracute for Parachute, Fare & Lonely for Fair & Lovely & Pomes for Ponds. Duplicate: - Duplicates are exact replicas of original brands- colour, design & name on the package wrapper of the original brands i.e.- ingredients, brand name, manufacturer name.
Features
Duplicate
Spell-alike 66
Look-alikes
Rural Marketing for Fast Moving Consumer Goods Brand name Pack appearances Manufacturers address Price Margins Quality Intention of retailer Consumer Identify Offer Original Replica Original M.R.P. 200-300% Very poor To cheat Unaware None None Misspelt Identical Incomplete 40 % low 100-150% Poor To mislead Unaware Only literate Discounts Different Similar Own name 10-15% low 60-70% Reasonable To freeload Want cheaper product Majority Schemes
Strategy for counter fakes: - Action against fakes:Dabur: - Dabur replaced its plastic blow-moulded container with a premium four-colour shrink-sleeve packaging, which has a graining texture & water bubbles. The packaging is difficult to replicate. This resulted in a sales growth of 12% of original products. Others have assigned the task of checking counterfeits to their sales force. P & G initiates raid on brand pirates: - A research study by A. C. Nielsen introduced that sales of Vicks look-alike products equaled the sales of the genuine brands. P & G initiated action against the manufacturers of look-alike Vicks Vaporub & Lozenges. The company obtained an injunction from the court & with the assistance of court representatives & advocates. It conducted raids on the premise of the fake manufacturer & sized products valued at Rs.3.5 million. These included a look-alikes veporising rub being marketed under the brand name Vikas cough drops under the name Venus & a Menthol drop under the name Super plus 5 Coca-cola:- Coca-cola has put into place 48 consumer response coordination, who works with their team to redress the consumers complaints about overcharging & spurious bottling. In addition, they have a large network of route salesman, who have a one-to-one relationship with the retailers on their beat & hence are able to keep their ears to the ground.
CHALLENGES & OPPORTUNITIES

Opportunities in rural markets:67
There is an opportunity to make a lot of money in rural India. But, there are obstacles too. The biggest obstacles are that the rural consumer is still evolving. Thus we can conclude there are both challenge & opportunities in the rural market. But a responsive marketer, who makes a serious attempt to understand the rural market with regard to his product category, is more likely to succeed than one who has a piecemeal approach towards it. Rural markets remain untapped because of 3 Ds- Distance, Diversity & Dispersion, according to D. K. Bose, vice president, O & M Rural. Reaching your production remote location spread over 6, 00,000 villages & that too with poor infrastructure-roads, telecommunication, etc. & lower levels of literacy are a few hinges that come in the way of markets to reach the rural market, says MART Managing Director, Pradeep Kashyap. HLL gets 50% of its sales turnover of Rs.11, 700 cr. from rural India. FMCG have a market worth Rs.64800 cr. in rural India. Carbonated soft drinks worth Rs.1, 800 cr. are selling in rural India. As per FICCI estimates 1/3 of premium luxury goods were sold in rural markets in 2002. Sales of labeled goods have already overtaken those of nonbranded products in villages. The rural consumer is very religious: - A market can integrate the religious beliefs prevalent in an area into the marketing mix. The promotional material built around religious themes is not only going to last longer, but will be kept with care by the villagers. Keeping this in mind, Dabur developed religious calendars & gave a Hanuman Chalisa with their products. These gifts were kept by the rural consumers at important places of home, with care & were used for a long time, such an association with a brand is of a long term nature & adds to the image of a brand, both in quantitative as well as qualitative terms Products can be sold in the rural market provided the packaging & pricing are modified as per the needs of rural market. The success of Britannias Tiger biscuits, Cavinkares Chik shampoo & small cake for Rs.5 only are evidences of the phenomenon. The five rupee Coke in 200 ml bottles are conceived on basis of the insight of the shopping behaviour of the rural consumer. Mr Kartik Raina of Dalmia Consumer Care, Which has successfully experienced with a tobacco free beedi called Vardan articulates this as, The rural market is not for all but for those with the guts, the skin of an elephant & the mind of an evangelist.
Problems of rural marketing:-
68
Rural Marketing for Fast Moving Consumer Goods As stated by A. S. Ganguly (Chairman, Hindustan Lever), directs delivery of goods even the top 1 percent of the villagers costs twice as much as servicing urban markets 1) Transportation Problems: - Transportation infrastructure is quite poor in rural India. Marketing activities require transportation facilities. 80% of the villages in the country are not connected by roads. 2) Warehousing problems: - In the rural areas, there are no facilities for public warehousing as well as private warehousing 3) Packaging problems: - Packaging is the first important step of product processing. If the packaging cost is high, it will increase the total cost of products. It is suggested that the marketer should use cheaper materials in packaging for the rural market. 4) Media problems: - Media have lot of problems in rural areas. TV is good medium to communicate at message to the rural people but due to non-availability of power, as well as TV sets, Two third of rural population can not get the benefits of various media. 5) Seasonal marketing: - The main problem of rural marketing is seasonal demand in rural areas, because 75% of rural income is also seasonal. The demand for the consumer goods will be high during the peak-crop harvesting period, because this is the time at which the rural people have substantial high cash inflows. Rural marketing depends upon the demand of rural people & demand depends upon income & consumer behaviour. 6) Low per capita income: - Per capita incomes are lower in rural areas compared to those in urban areas again the distribution of rural income is highly skewed, since the landholding pattern, which is the basic asset, it is skewed. Thus the rural population presents a highly heterogeneous spread in villages. 7) Low level of literacy: - The literacy rate is low in rural areas compared to urban areas. This again led to the problem of communication for promotion purposes. Print medium becomes ineffective & to the extent irrelevant in the rural areas since its reach is poor & so is the level of literacy. As a nationwide study by Reserve Bank of India (RBI) on retail traders revealed that the retailers in rural areas & small town maintain a higher margin than the retailer in urban places. As per study retailers margin in rural areas is 8.7% as against 5.2% in urban areas. As per 1991 census, Rural market comprise over 575 thousand villages in the country, whose population range from less than 100 to 5,000 or more. About 78% of these villages have less than 1,000 populations about 15% have 1,000 to 2,000 populations. Only 1.1% has more than 5,000population.
Problems in Rural marketer:-
69
Rural Marketing for Fast Moving Consumer Goods Another mass media is cinema. It has also been observed that whatever available, cinema viewing habit in rural areas is fairly satisfactory. Again statistics indicate that rural areas account for hardly about 3,000 to 3,500 mobile theatres which is far less than the number of villages. Under such circumstance, a company is forced to use its own promotion vans. Companies like Hindustan Lever Limited, who use such vans, have found it to be very expensive in as much as the per viewer cost is about 10 to 12 times higher in rural areas as compared to per viewer cost in urban areas, the wear & tear on such promotion vans & their costly equipment is also high. Here again, a few companies like Video-on-Wheels, Sampark Marketing, & Advertising solution & & Video Express specialize in rural van promotion & this can be taken advantage by marketer. Many languages & dialects: - Message has got to be delivered in the local language & dialects. Even though the member of recognized languages is only 16, the number of dialects is estimated 850. Multi-dialect dubbing in AV presentation is a viable solution but again, cost is factor. Low per capita income:- Even though about 30% of gross income product is generated in rural areas, it is shared by 72% of population, hence per capita income are low compared to urban areas. Product positioning: - consumable product like tea. Very large tea companies like the Brook Bond Lipton have tea packets price from 25/50 paisa onwards so that all segments of population are taken care of. The very product positioning limits the market only to such segment of farmers. While positioning is possible in case of durables, positioning of consumables do pose problems. Vastness & uneven spread: - The number of villages in India is more than 5lakh again the villagers are not uniform in size. Nearly 67% of the villages have only a population of less than 500 persons, which account for 26% of rural population. About half of the rural population lives in villages with population size ranging from 1,000 to 5,000 persons, such villages being considered as medium sized only 18% of the population live in villages with population of 5,000 persons & above. Hence one can only think of tackling about 2lakh medium & large villages, which can be considered as having adequate potential. This type of distribution of population warrants appropriate distribution & promotion strategies to decide the extent of coverage of rural market. Marketing of consumables:- Probably, there is no village in the country where one can not find a toilet soap like Hamam or Lifebuoy or a detergent cake like Rin or cigarettes like Scissors, Bluebird, Charminar or small yea sachets from Hindustan Lever.
SOCIAL MARKETING
Social Marketing:70
Kotler defines Social Marketing as follows: Social Marketing is the design, implementation & control of programmes seeking to increase the acceptability of social idea or cause in a target group(s). It utilizes concepts of market segmentation, consumer research, concept development, communication, facilitation, incentives & exchange theory to maximize target group response. Colgate-Palmolives rural hygiene programme is rural areas full in the category of social marketing programmes. Another example is the National Egg Co-ordination Committee (NECC) advertisement about the nutritional value of eggs in which no specific company or brand is promoted. This is aimed at a change in consumption habits of people, resulting in adequate nutrition. Such programmes not only earn credibility for the organization & promote goodwill besides generating demand for product.The sanitary ware manufacturer can educate the rural consumers about the importance of environmental hygiene toilet soap manufacturer can advice about bodily hygiene. Thus it is possible for every FMCG company to choose a relevant theme for social advertising & marketing. It should be mentioned here that the federation of Indian Chamber of Commerce & Indian Industries (FICCI), New Delhi has instituted annual awards for companies engaged in excellent rural development work. This is an added incentive4s for the companies to take up social marketing. a) Frame a public affairs policy b) Choose a theme or a cause on a long term basis c) Choose an area to operate, which will enthuse people d) Take up the social communication programme on the theme chosen. e) The company decides the social product, price, distribution & promotion Social Marketing: Corporate Social Responsibility in Rural Market:You must have mindshare before you can have market share Christopher M. Knight Social marketing has been defined as design, implementation & control of programme, seeking to increase the acceptability of social ideas or cause in a target group(s). It utilizes the concept of market segmentation, consumer research, concept development, communication, facilitation, incentives & exchange theory to maximize target group responses. (Kotler, 1985) Social Responsibility initiatives place the brand names in the heart & minds of relationship seeking rural consumers. This is a bond which other will find difficult to beat in the marketing warfare For the community to actually experience technology & its benefit it was figured that a CSR programme would be most effective. Said Divakar Shukla,Consultant Ogilvy PR.
ITCs CSR initiative in rural areas:-
71
Rural Marketing for Fast Moving Consumer Goods ITC has taken a good number of social initiatives in rural areas around its plants, which are helping both the population of adjoining areas & the organization itself as a byproduct. These developmental efforts are providing meaningful employment opportunities in the village itself. They are also increasing overall income & productivity of people influenced by them 1) Sunehra kal (Better tomorrow) ITC has started comprehensive natural resource management initiative called Sunehra kal in the vicinity of couples, Sunehra kal is social forestry programme , launched by ITC in 224 villages in 14 man dais around its Bhadrachalam plant in Andhra Pradesh. It had provided earning opportunity to 6,405 households by the march 2005 after 4 years of its launch in 2001. This is a part of Triple Bottom Line concept of ITC covering economic, social, & ecological goal of the organization. This programme is targeted at economically backward communities; living below the poverty line involves a forestation, soil & water conservation, community development, health & sanitation, education & watershed management. It provides attractive land use alternative to both traditional farmers & wasteland owners. ITC had aimed to cover 5,000 hectares in 14 mandals with the plantation opportunity by the year 2005-06. Farmers of the villages can even grow these trees in the background of their homes. ITC is supplying planting stock & provides extension of services & market for the produce. The Programme is implementing through three NGOs which identify the beneficiaries organize them into forest user groups (Sanghas) & create a village development fund 2) Livestock Development Programme: - ITCs Livestock development programme, in collaboration with an NGO has created 32 battle development centers covering 635 villages in Bihar, Uttar Pradesh, & Madhya Pradesh by 2005 & had a plan to add 600 new villages every year to its ambit. The aim of the programme is to create the high yielding progenies through genetic improvements. It has set up artificial insemination center for cattle in the villages. These will provide the farmers with the livestock that can give ten to eleven liters of milk a day & that will certainly enhance the rural incomes because most of farmers have at least one milch cattle. 3) Other initiatives :- As a part of rural community development programme 40,000 women at risk & children under five have been covered under the mother & child health programme Rupee 1 from every classmate Notebook sold by ITC goes towards supporting rural development initiative including primary education in village. ITC has been conferred with Golden Peacock Award for corporate social responsibility in emerging economies for 2005. The award has been presented to the company for two of its initiatives that are impact fully transforming lives & landscapes in the rural India: ITC e-Choupal & social farm forestry
HLLs Vindhya Valley Project: - In the year 2000 HLL helped state owned khadi board through an advisory relationship with the Government of Madhya Pradesh. It helped the
72
Rural Marketing for Fast Moving Consumer Goods board to brand a local produce from villages & tribal areas such as natural honey collected from forests in the state under brand name Vindhya Valley. The products were made by groups under DWCRA (Development of Women & Children in Rural Areas) & distributed through their own outlets HLLs Swasthya Chetna Campaign: - HLL is positioning its largest selling soap brand Lifebuoy in the health & hygiene platform. In 2002, HLL launched Lifebuoy. Swasthya Chetna Campaign to build awareness about good health & hygiene & how simple habits like washing of hands regularly with soap could prevent transmission of diseases. HLL is also sponsoring World Health Organisation (WHO) recommended ORS save the children to fight diarrhea. Colgate Project Jagruti: - Colgate executes this rural oral hygiene drive along with the IDA (Indian Dental Association) in 1998, 60lakh people in 20000 villages were contacted under this project of which 15000 villages had no experience to the availability of toothpaste & toothpowder let alone toothbrushes. Though the aim of this drive is to promote the brand in rural areas, the overall strategy is also spreading the vital information on oral hygiene among the lesser aware rural folks. CRM- Indian Rural Market- Context Customer care is practiced by some of leading FMCG in India. Some examples are given as: - Recently Rockitt Colman Company for the first time in India has introduced. Tall free telephone number are made available to serve its customer better Lakme Lever employs Computer touch Screen to advice customer regarding use of cosmetics on the basis of the skin colour satisfaction of the customer. Beauty consultants are also there at the point of purchase to help hesitant customers. Ponds Institute has a customer response center to answer to reach & every letter & phone call received answered with empathy & responsibility. Recently HLL-SURF received open customer feedback on product defects & suggestions. New products Surf Excel was launched on the basis of suggestions given by customers.
BIBLIOGRAPHY
73
Rural Marketing for Fast Moving Consumer Goods Author Dr. S. L. Gupta R. V. Badi N. V. Badi T. P. Gopalaswamy Books Rural MarketingText & Cases Rural Marketing Rural MarketingEnvironment, Problems & Strategies The Rural Marketing Text & Practice Rural Marketing Targeting the Nonurban Consumer Advertising & Marketing in Rural India Rural MarketingConcepts & Practices Edition & Year of publishing First Edition 2004 First Edition 2004 Second Edition 2005 First Edition 2006 Second Edition 2007 Second Edition 2007 Edition 2008 Publications Wisdom Publications Himalaya Publishing House Vikas Publishing House Pvt. Ltd. Biztantra An Imprint of Dreamtech Press Response Books Sage Publications India Pvt. Ltd. Macmillan India Ltd TATA Mc Graw- Hill Publishing Companies Ltd.
Pradeep Kashyap Siddhartha Raut Sanal Kumar Velayudhan Tej K. Bhatia Balram Dogra Karminder Ghuman
74

Rural Marketing For FMCG

Enviado por

Dados do documento

Descrição original:

Título original

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Rural Marketing For FMCG

Enviado por

Direitos autorais:

Formatos disponíveis

Rural Marketing for Fast Moving Consumer Goods