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Rural marketing
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Rural marketing






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Rural marketing Rural marketing Document Transcript

  • ReferenceNew Perspective in Rural & Agricultural MarketingY RamkishenRural Marketing Book – Pradeep Kashap & Siddhartha RautCases In Rural Marketing – An Integrated ApproachCGS Krishnmacharyulu & Llith Ramkrishnan
  • What is RuralGovernment agencies like IRDA (Insurance RegulatoryAnd Development Agency and NCAER (National Councilfor applied Economic Research) define Rural as villageswith a population <5000 with 75% male population engagedIn agriculture etc” Towns are actually rural areas but satisfy Census The following criteria Minimum Population>=5000 75% of the mail population engaged in Non –agri activity Location with population up to 10000 RB1 Considered Rural Semi Urban 10000 to 100000 All locations upto a population of 10000 NABARD Will be considered Rural All locations having shops/establishments’ Sahara Upto 10000 (not population related) are Treated as Rural The rural and semi urban area is defined LG Elect. As all cities other than major metrosConcept of Rural from the perspective of marketing hasIndeed been dynamic.- gradually changed over the timesWas not India a so called Village/Rural for the world acouple of decades back NABARD National Bank for Agriculture & Rural Dev
  • What is Rural MarketingDeveloping of the market in the area as defined as RuralHence it could be aptly said that it encompasses theActivities such as developing the process to meet thisObjective – Right product at the right price to the right peopleat the right time. Exchange between rural and Urban is aFactor . Could be Urban to Rural: Rural to Urban, Rural toRural
  • Size of the market Largely Untapped Too crowded Urban Market Income on the rise/disposable incomeReasons Income from other than for agricultureGoing Rural Income flow from urban /abroad Better exposure - media Great success stories HLL 50% Colgate 50% LG 50% Asian Paints 60% Dabur 40% Videocon 40% Cadbury’s 25% Hero Hona 40% Sorce ORG Marg and Fransis Kanoi
  • Points to Note with Regard to Rural MarketsExtremely Diverse Market Villages – Size, Population, Spread, Income Literacy levels , awareness level, languagesUrban Market – scope and saturationFlow of funds – from Urban National /InternationalLiteracy levels on the riseMedia Penetration
  • Encouraging Indicators/Initiatives for Rural Market GrowthScientific methods – major impetus to Production of food grainsExport on the rise – Increase in agriculture and handicraftsInitiatives taken by banks for more branches and Kisan credit card to buy seeds, fertilizers, consumer goods on installment basisReputed Companies helping in changing lifestyles – Levers Britania ,Dabur, LG, Honda,VideoconMedia creating an impact-creating awareness levelsGovernment Policies – White Revolution – Milk products Yellow Revolution (poultry and edible oils) Blue Revolution – Aqua cultureEmployment Schemes – JRY(Jawahar Rojgar Yojna, PMRY,Small Industries Training,Ruiral Electrification, Spend on Health and Sanitation, Medical and Health, Primary Education,Credit card for farmersWaiver of Loans Initiatives by leading organization in spreading awareness Hindustan Levels Shakti, ITC Reliance etc
  • Move to Rural Market …encouraging DataRural India buysSoft Drinks approx 45% of all soft drinksAlmost 50% motor cyclesApprox 55% of cigarettesHalf the total market for TV, Fans, pressure cooker, bicycles Washing soap, tea, blades, salt, toothpowderCoca Cola is growing over 35% in Rural areas compared toOver 22 % in UrbanAccording to Hasna Research , a market research farm thatHas published a Guide to Indian Markets 2006Consumer durables in Indian Villages risen sharplyTV Sales up by 200%Motorcycle by 77%There are 3000 households in rural area that earn > 50 lakhs We have come some way ahead – but there is a long way to go
  • Low per capita income Low disposable income Inadequate fixed income (daily wages)PROBLEMS Majority – depends on Agricultural Income IN Acute dependence on monsoon Consumption linked to harvest RURAL Infrastructure problemsMARKETING Roads, power Low awareness Communication- difficult & expensive Too many languages Geographic Spread Digging for Diamond
  • Urban & Rural Markets Key DifferencesPer capita IncomeDisposable IncomeLiteracy levelsInfrastructureCommunicationGeographical SpreadCustomer has many choices
  • Profile of the Rural Consumer
  • Profile of the Rural Consumer>Low Literacy Level>Low Income Level>Massive Geographic Spread Urban population concentrated 3200 cities town Rural scattered over 630000 villages>Reference Group Health Workers Doctors Teachers Panchayat Members Rural Bank Managers District ManagersOccupation – Principal Farming Trading Handicrafts Cattle & Poultry Farming>Media Habits Fond of music T.V Radio Video FilmsGenerally they have a lot of reservation/inhibition rigid in their behaviour
  • RURAL CONSUMER CLASS The Affluent Class The Middle Class The Poor RURAL CONSUMER BEHAVIOR How does an individual decide to spread his Available resources (time,money effort) on Consumption-related products. That is – what they buy why they buy when they buy where they buy it how often they buy it how often they use it Very Rich Well Off Climbers AspirantPoor
  • Simple Model of Rural Consumer Behaviour Need Recognition Pre Purchase Search Evaluation of Alternatives Purchase Decision Post purchase behaviour
  • Factors that Influence Rural Behaviour Stimuli Attitude >Consumer belief Inputs to any senses Consumer feelings Products Package Commercials Brand image Reference Information cues about the characteristics of the product Perception Depends on Exposure InterpretationEg IFB had not adequately Educated Iodex – muscular pain farmers about the Washing machine Reliever used on animals-they thought It was a churn for making After hard days work in MP large quantities of lassi (prosperous Godrej hair dye on Buffaloes village of Punjab) To make them look better in Village haats in Raichur
  • Awareness Key Affordability Challenges Availability 4A Acceptability 4 Ps 4 AsPromotion AwarenessPrice AffordableProduct AcceptablePlace Available
  • Marketing Research is a formalized means of obtainingInformation to be used in making marketing decisionsMarket research Issue Information Required to address Design Method of Collecting Information Manage The data collection process Analyze The results Communicate Finding and implication
  • Primary Sources Retail shops/STD booths Tea Stalls Playgrounds/schools Chaupals (meeting point SOURCES old/middle aged/ FOR influential) Haats & MelasCONDUCTING Influence Group RURAL MARKET Secondary SourcesRESEARCH Government website www.censusindia.com www.indiastat.com www agroindia.com Private bodies (market research advertising agencies Indian Market Research Bureau Thompson Rural Index Guide to Rural Markets Publications
  • Tool Kits Used for Rural Market Research
  • Tool Kits Used for Rural Market ResearchFaces Happy ………Sad Same Color – Different shadesColor Wheel Different ColorNumber of CoinsLadderPlaying Cards
  • Remember …Build Rapport - ***Greet – need to be informalSpeak local languageDo not jump to survey –speak of other matters of interestGradually lead to the objective of the interviewExplain the benefit of the survey – how it will gainInterviewer should be aware of the rural areaNever make the respondent uneasy – if he offers tea do not refuse
  • SEGMENTATIONVery Varied –hence proper segmentation very essentialGeographic:Region North, East, West and SouthVillage sizeClimateDemographicAgeFamily SizeGenderIncomeOccupationEducationCastePsychographics(consists of psychological: sociology: anthropological)Lifestyle Rigid ,changing attitude, urban influencePersonality Authoritarian, AmbitiousBehavioralOccasions Regular, special occasionBenefitsUser status regular user, first time user, non userUsage rate Light, medium, heavyLoyalty None, medium, strongAttitude to ) positive, negative, hostileProduct )Different variables could be used.. multilevel segmentation
  • 1995- Class Rural Consumer Classification 96 2006=2007 The Affluent/Very Rich Households owning 1.60% 5.60% personal cars/jeep with other products The Well Off Household owning any/all of the foll. 2.70% 5.80% A.C/Motorcycle/scooter/washing m/c color TV with other durable (No car/jeep) The Climbers Households owning any/all of the foll 8.30% 22.40% VCR/VCP,mixer grinder sewing m/c audio equip, B/W TV,geyser with other durables (not those mentioned in above 2 categories) The Aspirants Households owning any/all of the foll 26.00% 44.60% bicycle,electric fans, electric iron with other durab (not those mentioned in above 3 categories) The Destitutes/Poor Households other than those classified above 61.40% 20.20% Households owning any/all of the foll wristwatch,pressure cooker,cassette recorder transistor/radioSource - NCAER
  • DEVELOP THE PROFILESelect the Target MarketEvaluate the MarketEvaluate the Segment size growth rate profitability accessible compatible with firm’s resources & capabilities High Value to Rural Customer Low Easy Hard Ease of Implementation
  • TARGETING>Select Target Segment>Formulate Market a marketing strategy for the target marketPOSITIONINGOne shoe fits all !!!! …….Everything for Everyone !!!It is “Something for Someone”How to PositionUSP of the product – uniqueness of the productSpecial needs – either address partially/ unaddressedNoticeable gap in the products availablePositioning ConceptStudy the possible motives of the rural customerThen figure out how to appeal to them(USP, Price Quality Uses, Class, Culture etcSelect & Develop the ConceptBridge gap between the product and the target market.Communicate the ConceptAdvertise and Reach (Media)Offer ProductAfter STP (Segmentation, Targeting and Positioning)Post Sales Feedback & After Sales Service
  • New Entrant Company starts Rural Market first & then ventures in Urban Market (eg Cavin Kare Chik & Meera Shampoo) ENTERINING Mid- Entrant THE Company starts Rural RURAL Market after success in Urban Market MARKET (eg HLL, LG) Late - Entrant Company starts Rural Market after success in Urban Market for long (eg Cadbury) R RetainPurpose G the market Grow A Add
  • RURAL MARKETING STRATEGY P Profile the Rural Market L A Profile the Consumer 1 N N Market Behaviour & MR I N Segmentation Targeting Positioning G--------------------------------------------------------------------------------- E Rural Product X E Rural Pricing 2 C Rural Distribution U T Rural Sales Force Management I O N Rural Communication--------------------------------------------------------------------------------- F Monitor the Rural Strategy E 3 E D Feedback & Control B A C K
  • DEVELOPMENTAL MARKETINGDevelopmental marketing is a process through whichawareness is created>could be demonstration>could be presentation>Free samples>could be through up eg tie up with Bank tie up with Petrol/Diesel pumps(Hyndai did with IOC and PNB and SBI subsidiaries >30% sale of Hyndai from Rural/Semi Urban areas) Awareness Trial Purchase Post-Purchase SatisfactionColgate – program Operation JagrutiSwitch from Charcoal to Colgate tooth powderHLL - Free samples of LifebuoyCavin Kare – Free sample of Chik ChampooMarico Industries – Parachute coconut oil“Sudhata ki pehchan” –smell to differentiate between real andspurious
  • Rural ProductProduct to be marketed with the requirements of the Rural Consumershould not be an extension of urban offerings(Philips launched Free Power Radio – does not requireBattery/electricity you wind it with a lever and radio runsFor approximately 30 min. FMCG (HLL, Dabur, Marico, Colgate=Palmolive Coke, Pepsi)Classification Consumer Durables TV ,Fridge, Fan, Presssure Cooker, Of Cycle, Two wheelers, Sewing machines, watch, mixer grinder, radio, music system, Rural Fans, Washing machines (Philips, LG, Videocon, Onida ) Products Services Telecom, Banking, Health care ,Insurance (Airtel, BSNL, SBI, PNB,Dena bank,) Agri-inputs Seeds, pesticides, tractors (Rallis India, Bayer,) Maturity Product Life Take Off Cycle Decline (PLC) Launch
  • Points to note Rural Products Easy to Use After sales support Conveniently packed- success of Sachets Product literature to be simple Have a logo – easy to identify eg Thums Up Rural Packaging Packaging material –plastics, poly packs, unbreakable materials Looks - attractive colors (like all tea companies) Size and convenience- small is beautifulRural Branding1. Brand Name2 Create Brand Identity3 Enhance Recognition4 Build a Brand Image5 Countering Spurious brands Look alike Spell alike DuplicatesEnhancing Brand Strategies with Social PerspectiveSoaps for HygieneCooking gas for environmentCreating need by more awarenessPartnering with a long term perspective requires total belief andCommitment - to the people, to the processes, to their own employee.Need to work for a cause – ITC, Hindustan Petroleum, HLL ,Colgate Palmolive , Several Banks are a few such examples
  • RURAL PRICEPricing In Rural Market plays a key role in the success of a productRURAL PRICING OBJECTIVES Have a long run perspective Idea is to penetrate first Increase Volume Make using the product a habit Volumes to take care of the Margins Keep eye on Competition Price The following may help in addressing the issue Low cost –less amount (small packages- sachets) Simple but colorful packaging – eg. success of biscuits Refill packs Value engineering – eg soya protein in place of milk proteinMETHODS OF PRICING1. Cost –Plus Pricing = cost of product +distribution +profit2. Value Pricing (VFM-Value for Money) High Benefit3. Power Price – eg Re 1, Rs 2, 3, 5,104. Penetration Price – Introduce at low and hike price after success5. Differential Pricing –Different price for different market6. Price Gap – Comp prices – range
  • RURAL DISTRIBUTION Physical Distribution Channel of Distribution PHYSICAL DISTRIBUTION Transportation Warehousing CommunicationTransportation Railways, Roads ,Waterways, AnimalsCommunication ITC using internet, Mobile users by fishermanWarehousing (Three Tier Rural Warehousing Set Up) Central/State Warehousing Cooperatives Rural Godowns
  • WHY CHANNELS OF DISTRIBUTIONGeographical SpreadDealers are few – hence required to bank on a number of resourcesFinancial ViabilityInadequate Bank and Credit FacilitiesTO ADDRESS THE ABOVE CHALLENGESRely on Private Village ShopsSupply Chain StoresRural Super MarketSmall companies tie up with large companies – Leverage/Syndicate Distribution network of Marico to sell Tide by P&GSatellite Distribution SD SD R D SD SD SD SD SD SD Whole- SD D Saler D Town SD SD SD SD SD SD D D-dealer SD- Sub Dealer SD SD R-Retailer
  • TRAITS OF A RURAL SALESPERSONHardworkingHave EmpathyEnthusiastic Common to both Urban & Rural Sales personPerseveranceKnowledgeAttitudeSkillsAdditional traits for making it Big in Rural AreasWillingness to work in Rural AreasAdopting to cultural differencesDown to earth approachFluent in local languageDevelopmental approach – Create not only Communicate
  • The Success of Organizations depends on lot on the Sales ForceThey are the face of the Organization – the AmbassadorThey are the ones who have direct interaction with The Potential Consumer/Customer The Users The Dealers The Distributors The RetailersThey are a major link to the chain and establish the linkThey are the ones who help in building Trust They need to break the rigid ideas and preconceived notions
  • RURAL COMMUNICATIONEffective Communication goes a long way in establishing the rightMessages and thereby more interaction with Potential CustomersCommunication, however, is not complete if there is no feedbackIt is very important to re enforce messages in Rural areasFactors Affecting Rural CommunicationLiteracy levelMedia HabitsTraditional approachHigh resistance – more so initiallyLavish at occasions (eg Marriage)Purchasing power also depending on weather- the cropsInequitable distribution of wealthToo many languagesCulture
  • RURAL MEDIA Mass Media Traditional Media (Conventional) (Non Conventional) T.V /Cable network Puppet Shows Satellite Channels Folk Theatre/Opera Radio Demonstration Print Cinema/ Haats and Mela Theatre Wall painting Word of Mouth Post card and posters Video on Wheels Booklets/CalendarAdvantages Advantages>Excellent Reach >High involvementLess expensive ,wider High Interest coverage Localized administered at low costDisadvantagesAt times unnecessary Disadvantages coverage CoverageNo customized messages Repeat /Re enforcement Skill of performerCompanies using this mediumLevers, Onida, Videocon Companies using this mediumMahindra Tractors, Eveready Bajaj, Levers, HUL, ITC
  • You are the Marketing Director of A Company dealing in Consumer Durables (TV, Fridge, Washing Machine Music System, Microwave etc). Your business has been growing steadily in the Urban Market – however, you are aware that the Business will grow manifold if you also cater to the Rural market. (Present growth rate has been 8%. You are targeting a growth of 14%) Present your case to the Managing Director and the Board – How you intend going achieving the desired Objective – with your plans for opening up the Rural MarketTake into account the followingThe Target AudienceThe Product propositionDistribution Strategies and Sales ForecastPricing StrategiesPromotional StrategiesHow the above strategies will help in achieving theBusiness Objectives.While making the presentation – you need to be clear on1. Why you chose to launch the particular product2. Why did you chose the particular location (Opportunity Assessment)