Rural Marketing

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Rural Marketing

  1. 1. Rural marketingPlanning and implementation of marketing function for the rural areas.It is a two way marketingprocess, which encompasses the performance of business activities that direct the flow of goodsfrom urban to rural areas  Retail is primarily classified into two sectors as: organised and unorganised retail sector, depending on how it is undertaken.  Organised retail sector has a single organisation having large format retail stores providing wide varieties of goods in good number of locations.  Unorganised sector has large number of organisations having single, small retail outlets with limited variety at single location.Rural marketing: It is a distinct specialization of marketing discipline, which encompassescustomized application of marketing tools and strategies to understand the psyche of ruralconsumer in terms of needs, tailoring the products to meet such needs and effectively deliveringthem to enable profitable exchange of goods and services to and from the rural marketFactors differentiating rural market from urban market:Infrastructure Availability: electricity supply, media reach, availability of finance facility,education level, roads, connectivity, presence of organized markets; in rural market is verydifferent from that of urban markets.Income Streams: The pattern of income generation in rural areas based on agriculture isseasonal and highly unreliable unlike the fixed monthly income in the urban areas. This creates aconsumption pattern, which is different from urban oneLifestyle: The lifestyle and daily routine of consumers in two markets is markedly different. Thiscreates significantly different profile of consumers for the same product in these two markets.Context: Because of variation of infrastructure and income streams, the context in which anindividual exists in rural areas is very different from the one in urban areas. This createsdifference in nature and priorities of needs in two markets.Socio-cultural Background: Value system and thus perception toward goods /services andconsumption is different in two marketsAccessibility: The cost and logistics of accessing consumers in a highly widespread andheterogeneous rural market are very different from those involved in reaching urban consumers,concentrated in good number in single location. Thus, demanding two different types ofapproaches.
  2. 2. Media Reach & Habits: The reach of media vehicles and the media habits are very different inrural and urban markets. Requiring very different type of promotional strategy in these twomarkets.Nature of Competition: The nature and intensity of competition amongst the brands is verydifferent in the two marketsConsumer Behaviour: The response of consumers to marketing stimuli is very different in twomarkets. Rural consumer’s behaviour is quite different from that of urban buyer’s behaviour.Characteristic of rural market 1. Large and Scattered market 2. Heterogeneous market 3. Significant %age of Income from agriculture 4. Lack of Infrastructure Facilities Development indicators in rural India  India was ranked 138th as per Human Development Report (HDR) 1997.  India’s infant mortality rate of 75 per thousand live births is one of the highest in the world.  Access to potable water, health care, sanitation and shelter are a far cry, particularly in the rural sector.Developing a Target Marketing strategy  Step I: Define relevant market  Step II: Analysis of characteristics and wants of potential customers  Step III: Identify basis for segmenting the market  Step IV: Define and describe market segments  Step V: Analyse competitor’s position  Step VI: Evaluate market segments
  3. 3.  Step VII: Select market segment(s)  Step VIII: Finalise marketing mix (es)Factors for Identifying and Selecting Target Markets in Rural Areas 1. Socio-cultural, economic development and Infrastructural Environment of different districts. 2. Density of population of different villages 3. Heterogeneity and homogeneity of population 4. Mobility, Media availability, cost of access to an area System of interactionParameters Differentiating Urban and Rural Markets:  Infrastructure  Socio-cultural background  Accessibility  Media Reach & Habits  Rural Sales Promotion  Nature of CompetitionDifferences in Consumer Behaviour in Rural and Urban Markets 1. Need based Buyer Behaviour of Rural Consumers 2. Conscious Decision-making by Rural Consumers 3. More Value for Money Decision making 4. Consensus Decision Making by Rural Consumers 5. Innate Resistance to Change amongst Rural Consumers 6. Different Lifestyle and Product Usage Environment 7. Different Perception with regard to Marketing StimuliChallenges in Rural Marketing  High Distribution Cost  Understanding Psyche of Rural Consumer
  4. 4.  Limited knowledge of Rural Market  Communication  High Cost per Contact  Sale of Fakes and Spurious Products  Low Budgetary Allocations  Urban orientation and bias  Lack of right competence and commitment at frontline levelSome of the other major hurdles in tapping rural markets can be outlined as: 1. Low literacy levels of rural population 2. Traditional lifestyle 3. Low per capita income and poor standards of living, average size of farm is 1.5 hectare and 60% of farming is rain fed. 4. Backwardness of the rural masses 5. Low exposure to different product categories and brands 6. Vastness of spread: highly dispersed and thinly populated markets, 42% of villages have population less than 500 Variation in languages & dialects. 7. Seasonality of demand 8. Modification of Marketing Mix for rural market 9. High initial market development expenditure 10. Inability of small retailer to carry stock without credit facility 11. Communication problems; Mass media not enough for promotion 12. Banking and credit problems 13. Management and sales force managing problems 14. Inadequate infrastructure facilities (lack of physical distribution, roads, warehouses, poor connectivity, transportation Opportunities in Rural Markets
  5. 5. 1. Rising Rural Prosperity 2. Lesser Dependence on Agriculture & Monsoon 3. Increasing Rural Consumption 4. Increasing Rural Marketing Efforts 5. Increasing Sale of Branded Products 6. Large PopulationSources & Methods of Data Collection 1. Ensuring the support of opinion leader 2. Behaving in a manner to be liked by rural people 3. Being at right places:  Village choupal  Retail outlet  Fairs  HaatsData Collection Tools for Rural Market 1. Pictorial scales: Coins,Coloured wheel, Carom discs, Playing cards 2. Simplified scalesLimitations & Challenges in Rural Marketing Research 1. Nature of Rural Market 2. Paucity of Rural Marketing Research Budget 3. Lack of Uniformity in Secondary Data 4. Accessibility 5. Lack of Facilities in Rural Areas 6. Comprehension of Research Tools 7. Sensitivity of Rural People.
  6. 6. Factors that Influence Rural Consumers while Purchase of a Product 1. Socio-cultural factors 2. Group 3. Family 4. Role and status 5. Sociability 6. Economic Factors 7. Political factors Lifestyle of Rural Consumer 1. Rural consumer is very religious 2. Rural consumers prefer to work hard 3. Strong family ties and respect for family values 4. Likes to play cards and hangs out at choupal Profile of Rural Consumer 1. Traditional Outlook 2. Different Perception and its influence from urban consumer 3. Less Exposure to Marketing Stimuli 4. Conscious for Value for Money 5. Realistic Aspirations 6. Different Concept of Quality 7. Attitude towards prestige products 8. Suspects hype and fear of being cheated Rural Shopping Habits: Consumer Insights
  7. 7. 1. Preference for small or medium package2. Significant role of retailer3. Influential role of Opinion Leaders for purchase of durables Product Life Cycle (PLC)  PLC represents sequence of stages through which a product or product category passes through over a period of time from the moment when it is introduced in the market for the first time to a stage of a decline when it is withdrawn from the market.Conventionally, there are four stages of PLC: Introduction, Growth, Maturity, Decline Duration of PLC Duration of PLC is determined by following factors: Market conditions Growth of particular market segment Trends in buyer spending capacity Technological developments in the industry Company policy of planned product obsolescence. Characteristics of Different Stages of PLC and Marketing Mix Strategies Introduction Stage: – Growth is slow. – Sales volume is also low. – Product awareness is limited. – High marketing cost: launch and setting distribution network – Profits are unlikely at this stage. Focus: The focus at this stage is to: – Build awareness about benefits of product category – Establish distribution network
  8. 8. Marketing Strategies for Introductory Stage in the Rural Market  Product Strategies: – Smaller Packages, if it is possible  Place Strategies: – Creation of Distribution Networks  Promotion Strategies: – Edutainment – Reaching the Opinion-leaders – Targeting the Innovators or Early Adopters – Category Growth  Pricing Strategy: – Introductory Pricing – Penetration Pricing Strategy Characteristics of Growth Stage  Rapid growth in sales and profits  Economies of scales for the production  Even lower prices are possible on account of lower cost of production, which lead to additional growth  Seeing the growth in a product category the competitors move in the market Focus:  To build brand preference  To increase market shareMarketing Strategies for Growth Stage  Product Strategies – Brand Reinforcement – Modification or Value addition in the Product Design
  9. 9. – Making Product more Relevant for the Customers – Launching Medium Packaging Pricing Strategies: – Lowering the Price Place Strategies: – Strengthening Relationship with Distributor – Deepening the Penetration Promotion Strategies: – Increase in Promotional Budget – Highlighting Quality or Performance of the Product – Targeting the Early MajorityCharacteristic of Maturity Stage a) Intense competition b) Similarity or standardization of products and services c) Weaker or non-serious players gradually start withdrawing. d) This is the dream stage for sales and marketing professionals, as maximum sales and maximum profits comes at this stage and most of the brands tend to stay in this stage for a longer time than in other stages. Focus: – Defending the market share – Maximising the profit Marketing Strategies for Maturity Stage Elongate the Maturity Stage Product Strategies: – i. Revitalise the Product
  10. 10. – ii. Product Differentiation: To Avoid Brand Commoditisation – iii. R&D to Enhance features  Promotion Strategies – i. Modification in Promotion-mix – ii. Brand Repositioning – iii. Promote Product Differentiation – iv. Target Late Majority and Laggards  Place Strategies: – i. Deepen the Distribution Network: – ii. Incentives to channel partners  Price Strategy: – i. Lowering PricesCharacteristics of Decline Stage: 1. Sales starts dropping 2. Demand diminishes 3. Market for product category shrinks 4. Inventories start piling up 5. Overall profits start declining for entire industry Marketing Strategies for Decline Stage  Rejuvenate the Product  Harvest the Product  Offering the Product to Loyal Niche Segments  Find New Applications for the Product  Link the Product with other Products  Brand Harvesting
  11. 11.  Maximum Efficiency in Marketing and Production Liquidate the Product Application of Product Life Cycle in Rural Markets: A Critical Analysis Rural India is not single homogeneous market, which will be in same PLC stage for a product category through. Rural market for purpose of application of PLC is of three types: Developed, Developing and Under-developed rural. Each of them may be at very different stage of evolution for the same product category. Segmentation of rural market is pre-condition for application of PLC. PLC concept is related with product category. A brand can die when product category was just in introduction stage. Death of a brand does not necessarily mean the decline stage of PLC. Organisations need to make a realistic assessment whether the decline of sale of product is due to internal or competitive forces or it is really that the product category as such has entered the decline stage. Brand Building Strategies for Rural Market Customization Relevance Below the line media Slice of life message in local parlance Enabling recognition Word of mouth publicity e-Marketing refers to use of Internet as a channel for marketing activities to create relational exchanges in digital, networked and interactive environments.E-Marketing includes wide range of activities – advertising, customer communications, branding, fidelity programs, ease the business-making process etc. by using the internet Social Marketing: Design, implementation and control of programmes, seeking to increase acceptability of social idea or cause in target group(s).
  12. 12.  It utilizes concept of market segmentation, consumer research, concept development, communication, facilitation, incentives & exchange theory to maximize target group response. e-Governance Is the performance of the governance via the electronic medium in order to facilitate an efficient, speedy and transparent process of disseminating information to the public, and other agencies, and for performing government administration activities. It is generally considered as a wider concept than e-government, since it can bring about a change in the way how citizens relate to governments and to each other. It is a set of technology-mediated processes that are changing both the delivery of public services and the broader interactions between citizens and government. The fields of implementation of e-governance e-administration: refers to improving of government processes and of the internal workings of the public sector with new ICT-executed information processes. e-services: refers to improved delivery of public services to citizens. Some examples of interactive services are: requests for public documents, requests for legal documents and certificates, issuing permits and licenses. Benefits of e-governance Transaction costs can be lowered through e-Governance Government services can become more accessible. It can bring forth new concepts of citizenship, both in terms of citizen needs as well as responsibilities. It can engage, enable and empower the citizen.

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