Introduction to rural markeing


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Introduction to rural markeing

  2. 2. 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 a couple of decades back NABARD National Bank for Agriculture & Rural Dev
  3. 3. 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
  4. 4. Size of the market Largely Untapped Too crowded Urban Market Income on the rise/disposable incomeReasons for Income from other than 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 Honda 40%
  5. 5. 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
  6. 6. 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
  7. 7. 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, lades, salt, toothpowderCoca Cola is growing over 35% in Rural areas compared to Over 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 lakhsWe have come some way ahead – but there is a long way to go
  8. 8. Low per capita income Low disposable income Inadequate fixed incomePROBLEMS (daily wages) Majority – depends on Agricultural IN Income Acute dependence on monsoon RURAL Consumption linked to harvest Infrastructure problemsMARKETING Roads, power Low awareness Communication- difficult & expensive Too many languages Geographic Spread Digging for Diamond
  9. 9. Urban & Rural MarketsKey DifferencesPer capita IncomeDisposable IncomeLiteracy levelsInfrastructureCommunicationGeographical SpreadCustomer has many choices
  10. 10. Profile of the Rural Consumer
  11. 11. 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
  12. 12. 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
  13. 13. Simple Model of Rural Consumer Behaviour Need Recognition Pre Purchase Search Evaluation of Alternatives Purchase Decision Post purchase behaviour
  14. 14. Factors that Influence Rural Behaviour Stimuli Attitude Inputs to any senses >Consumer belief Products Consumer feelings Package Commercials Brand image Reference Information cues about Perception the characteristics of the Depends on product Interpretation Exposure Iodex – muscular painEg IFB had not adequately Educated Reliever used on animals farmers about the Washing machine After hard days work in MP-they thought It was a churn for making Godrej hair dye on Buffaloes large quantities of lassi (prosperous To make them look better in village of Punjab) Village haats in Raichur
  15. 15. Key Awareness Affordability Challenges 4A Availability Acceptability 4 Ps 4 AsPromotion AwarenessPrice AffordableProduct AcceptablePlace Available
  17. 17. 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
  18. 18. Primary Sources Retail shops/STD booths Tea Stalls SOURCES Playgrounds/schools FOR Chaupals (meeting pointCONDUCTING old/middle aged/ influential) RURAL Secondary Sources Haats & Melas Government website MARKET Influence Group www.indiastat.comRESEARCH www Private bodies (market research advertising agencies Indian Market Research Bureau Thompson Rural Index Guide to Rural Markets Publications
  19. 19. Tool Kits Used for Rural Market Research
  20. 20. Tool Kits Used for Rural Market ResearchFaces Happy ………Sad Same Color – Different shadesColor Wheel Different Color Number of CoinsLadder Playing Cards
  22. 22. Remember …Build Rapport - ***Greet – need to be informalSpeak local languageDo not jump to survey –speak of other matters of interestGradually lead to the objective of the interviewExplain the benefit of the survey – how it will gainInterviewer should be aware of the rural areaNever make the respondent uneasy – if he offers tea do not refuse
  24. 24. SEGMENTATIONGeographic: Varied –hence proper segmentation very essential VeryRegion North, East, West and SouthVillage sizeClimateDemographicAgeFamily SizeGenderIncome,Occupation,Education,CastePsychographics(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 )
  25. 25. Class Rural Consumer Classification 1995-96 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 durabSource - NCAER (not those mentioned in above 3 categories) The Destitutes/Poor Households other than those classified above 61.40% 20.20%
  26. 26. DEVELOP THE PROFILE Select the Target Market Evaluate the Market Evaluate the Segment size growth rate profitability accessible compatible with firm’s resources & capabilities HighValueto RuralCustomer Low Easy Hard Ease of Implementation
  27. 27. TARGETING>Select Target Segment>Formulate Market a marketing strategy for the target market POSITIONING One shoe fits all !!!! ……. Everything for Everyone !!! It isHow to Position Someone” “Something for USP of the product – uniqueness of the product Special needs – either address partially/ unaddressed Positioning Concept products available Noticeable gap in the Study the possible motives of the rural customer Then figure out how to appeal to them (USP, Price Quality the Concept Culture etc Select & Develop Uses, Class, Bridge gap between the product and the target market. Communicate the Concept Advertise and Reach (Media) Offer Product After STP (Segmentation, Targeting and Positioning)
  29. 29. New Entrant Company starts Rural Market first & then ventures in Urban Market ENTERINING (eg Cavin Kare Chik & Meera Shampoo) THE Mid- Entrant RURAL Company starts Rural Market after success in Urban Market MARKET (eg HLL, LG) Late - Entrant Company starts Rural Market after success in Urban Market for long R G Retain(eg Cadbury) market thePurpose A Grow Add
  30. 30. P RURAL MARKETING STRATEGY L Profile the Rural Market A Profile the Consumer1 N N Market Behaviour & MR I Segmentation Targeting Positioning N E G --------------------------------------------------------------------------------- X Rural Product E Rural Pricing C2 Rural Distribution U T Rural Sales Force Management I Rural Communication O N --------------------------------------------------------------------------------- F E Monitor the Rural Strategy E3 D Feedback & Control B A C K
  31. 31. DEVELOPMENTAL MARKETING Developmental marketing is a process through which awareness is created >could be demonstration >could be presentation >Free samples >could be through up eg tie up with Bank Awareness up with Petrol/Diesel pumps tie (Hyndai did with IOC and PNB and SBI subsidiaries Trial >30% sale of Hyndai from Rural/Semi Urban areas) 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 and spurious
  33. 33. Rural ProductProduct to be marketed with the requirements of the Rural Consumer should not be an extensionurban offerings(Philips launched Free Power Radio – does not requireBattery/electricity you wind it with a lever and radio runs For approximately 30 min. FMCG Classification (HLL, Dabur, Marico, Colgate=Palmolive Coke, Pepsi) Of Consumer Durables TV ,Fridge, Fan, Presssure Cooker, Rural Cycle, Two wheelers, Sewing machines, watch, mixer grinder, radio, music system, Products Fans, Washing machines (Philips, LG, Videocon, Onida ) Services Telecom, Banking, Health care ,Insurance (Airtel, BSNL, SBI, PNB,Dena bank,) Agri-inputs Product Seeds, pesticides, tractors Maturity Life (Rallis India, Bayer,) Cycle Take Off Decline (PLC) Launch
  34. 34. 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 Rural BrandingPackaging material –plastics, poly packs, unbreakable materials1. Brand Name Looks  - attractive colors (like all tea companies) Size and2 Create Brand Identity convenience- small is beautiful3 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
  35. 35. 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
  36. 36. RURAL DISTRIBUTIONPhysical Distribution Channel of Distribution PHYSICAL DISTRIBUTION Transportation Warehousing Communication Transportation Railways, Roads ,Waterways, Animals Communication ITC using internet, Mobile users by fisherman Warehousing (Three Tier Rural Warehousing Set Warehousing Central/State Up) Cooperatives Rural Godowns
  37. 37. WHY CHANNELS OF DISTRIBUTION Geographical Spread Dealers are few – hence required to bank on a number of resources Financial Viability Inadequate Bank and Credit Facilities TO ADDRESS THE ABOVE CHALLENGES Rely on Private Village Shops Supply Chain Stores Rural Super Market SD Small companies tieSD with large companies – Leverage/Syndicate up R Distribution network of Marico to sell Tide by P&G D Satellite Distribution SD SD SD SD SD SD Whole- SD D Saler D TownSD SD SD SD SD SD D D-dealer SD SD- Sub Dealer SD R-Retailer
  39. 39. TRAITS OF A RURAL SALESPERSONHardworkingHave Empathy Common to both Urban & Rural Sales personEnthusiasticPerseveranceKnowledgeAttitudeAdditional traits for making it Big in Rural AreasSkillsWillingness to work in Rural AreasAdopting to cultural differencesDown to earth approach
  40. 40. 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
  41. 41. 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
  42. 42. 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 medium
  43. 43. You are the Marketing Director of A Company dealingin Consumer Durables (TV, Fridge, Washing MachineMusic System, Microwave etc).Your business has been growing steadily in theUrban Market – however, you are aware that theBusiness will grow manifold if you also cater to theRural market. (Present growth rate has been 8%.You are targeting a growth of 14%) Take into account the following The Target Audience The Product proposition Distribution Strategies and Sales Forecast Pricing Strategies Promotional Strategies How the above strategies will help in achieving the Business Objectives. While making the presentation – you need to be clear on 1. Why you chose to launch the particular product 2. Why did you chose the particular location (Opportunity Assessment)