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Rural Products


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Rural Products

  2. 2. Rural product <ul><li>“ Anything that has a value in exchange” </li></ul><ul><li>Product to be marketed with the requirements of the Rural Consumer should not be an extension of urban offerings </li></ul><ul><li>( Philips launched Free Power Radio – does not require </li></ul><ul><li>Battery/electricity you wind it with a lever and radio runs </li></ul><ul><li>For approximately 30 min. </li></ul>
  3. 3. Product Goes to <ul><li>1. Urban to Rural: marketers in rural areas. These include: Pesticides, FMCG Products,Consumer durables, etc. </li></ul><ul><li>2. Rural to Urban: There generally are middlemen, agencies, government co-operatives, etc who sell fruits, vegetables, grains, pulses and others. </li></ul><ul><li>3. Rural to rural: These include selling of agricultural tools, cattle, carts and others to another village in its proximity. </li></ul>
  4. 4. Classification Of Rural Products FMCG (HLL, Dabur, Marico, Colgate=Palmolive Coke, Pepsi) Consumer Durables TV ,Fridge, Fan, Presssure Cooker, Cycle, Two wheelers, Sewing machines, watch, mixer grinder, radio, music system, Fans, Washing machines (Philips, LG, Videocon, Onida ) Services Telecom, Banking, Health care ,Insurance (Airtel, BSNL, SBI, PNB,Dena bank,) Agri-inputs Seeds, pesticides, tractors (Rallis India, Bayer,) Product Life Cycle (PLC) Launch Take Off Maturity Decline
  5. 5. Points to note <ul><li>Rural Products </li></ul><ul><li>Easy to Use </li></ul><ul><li>After sales support </li></ul><ul><li>Conveniently packed- success of Sachets </li></ul><ul><li>Product literature to be simple </li></ul><ul><li>Have a logo – easy to identify eg Thums Up </li></ul>
  6. 6. Product <ul><li>Product – price – place – promotion </li></ul><ul><li>Challenges – Availability, affordability, acceptability & awareness </li></ul>Marketing Tools Marketing Challenge Product Acceptability Price Affordability Place Availability Promotion Awareness
  7. 7. Cont’d
  9. 9. Cont’d Product Level Characteristics Example Rural Vs Urban Core Benefit Fundamental benefit/ services Entertainment Same Basic Product Benefit/service into tangibles Television Set Same Expected Product Attributes & conditions buyers normally expect Digital sound, flat screen Appearance of differences in expectations Augmented Product Exceeding customer expectations Battery Operated TV Pleasant surprise for rural customer Potential Product Encompassing all augmentations & transformations Jolly Startek TV Uniquely rural value proposition
  10. 10. Product Development Stages Stage Marketing Activities Idea Generation <ul><li>Searching for new product ideas </li></ul>Idea Screening <ul><li>Select the most promising ideas and drop those with only limited potential. Study the needs and wants of potential buyers, the environment and competition. </li></ul>Concept Testing <ul><li>Describe or show product concepts and their benefits to potential customers and determine their responses. Identify and drop poor product concepts. Gather useful information from product development and its marketing personnel. </li></ul>Business Analysis <ul><li>Assess the product’s potential profitability and suitability for the market-place. Examine the company’s research, development, and production capabilities. Ascertain the requirements and availability of funds for development and commercialisation. Project ROI. </li></ul>Product Development <ul><li>Determine technical and economic feasibility to produce the product. Convert the product idea into a prototype. Develop and test various marketing mix elements. </li></ul>Test Marketing <ul><li>Conduct market testing. Determine target customers’ Reactions. Measure its sales performance. Identify Weaknesses in product or marketing mix. </li></ul>Commercialisation <ul><li>Make necessary cash outlay for production facilities. Produce and market the product in the target market and effectively communicate its benefits. </li></ul>
  11. 11. Need-Product Relationships and the changes happening in Rural India Needs Old Products New Products BRUSHING TEETH Neem sticks, Charcoal, Rocksalt, Husk Toothpaste, tooth powder WASHING VESSELS Coconut fiber, Earthy materials, Brick Powder, Ash Washing Powders, soaps and liquids TRANSPORT Bullock Cart, Horses, Donkeys Tractors, LCVs, Mopeds, Scooters, Motor cycles IRRIGATION Wells, Canals, Water lifters, Wind Mills Bore-wells, Motors, Power Generators, Pump Sets HAIR WASH Shikakai powder, Retha, Besan Shampoos and hair care soaps
  12. 12. FMCG Consumption Trends Products Urban( 1000 HH) Rural ( 1000 HH) Toilet Soap 998 992 Washing Cake 980 950 Cooking Oil 968 952 Hair Oil/ Cream 897 787 Tea 876 758 Toothpaste 822 449 Washing Powder 819 576 Electric Bulb 723 394 Shampoo 663 352 Biscuits 579 314 Health Beverages 324 67 Source: National Council for Applied Economic Research, 2005
  13. 13. Product Strategies <ul><li>Small unit packeging-Red Label Rs. 3.00 pack has more sales as compared to the large pack. </li></ul><ul><li>New product design </li></ul><ul><li>Sturdy products </li></ul><ul><li>Utility oriented products </li></ul><ul><li>Brand name </li></ul><ul><li>Simplicity is key </li></ul><ul><li>“ Sense & Simplicity” – Phillips Global Campaign </li></ul>
  14. 14. Cultural factors influencing consumer behaviour <ul><li>Product (colour, size, design, and shape) </li></ul><ul><li>Social practices </li></ul><ul><li>Decision-making by male head </li></ul><ul><li>Changes in saving and investment patterns –e.g-From gold, land, to tractors, VCR’s, LCV’s </li></ul>
  15. 15. Affordable Products <ul><li>Nestle’s brands </li></ul><ul><ul><li>Maggi at Rs. 5 </li></ul></ul><ul><ul><li>KitKat at Rs. 2 </li></ul></ul><ul><li>CavinKare’s brand </li></ul><ul><ul><li>Chik at Rs. 17 for 100 ml. </li></ul></ul><ul><li>Godrej Consumer Product </li></ul><ul><ul><ul><li>Cinthol, Fairglow and Godrej No. 1 (50 gm at Rs.5) </li></ul></ul></ul><ul><li>Hamam at Rs. 3.25 </li></ul>18/03/2008
  16. 16. Small FMCG <ul><li>Shampoo </li></ul><ul><li>Detergent </li></ul><ul><li>Hair oil </li></ul><ul><li>Fairness cream </li></ul><ul><li>Toothpaste </li></ul><ul><li>Shaving cream </li></ul><ul><li>Soap </li></ul>
  17. 17. Packaging <ul><li>Associated with affordability - Convenience - Consumer recognition & product protection Packaging material –plastics, poly packs, unbreakable materials </li></ul><ul><li>Looks - attractive colours (like all tea companies) </li></ul><ul><li>Size and convenience- small is beautiful </li></ul>
  18. 18. Corporate Responses to Fakes <ul><li>Look-alikes- Spell-alikes & Duplicates </li></ul><ul><li>Prices range from MRP to 60 % of MRP </li></ul><ul><li>Margins range from 60 % to 300 % </li></ul><ul><li>Legal action – awareness programmes – New Package Development </li></ul>
  19. 19. Fakes: Some Examples
  20. 20. Cont’d
  21. 21. Pricing
  22. 22. Pricing strategies <ul><ul><li>Low cost/ cheap products- e.g Britannia’s Tiger Glucose Biscuit Cadbury’s Dairy Milk Chocolate Parle-G </li></ul></ul><ul><ul><li>Refill packs / Reusable packaging- </li></ul></ul><ul><li>Application of value engineering </li></ul><ul><li>Ensuring price compliance- Rural retailers, most of the times, charges more than the MRP. The manufacture has to ensure price compliance either through promotional campaigns. </li></ul>
  23. 23. <ul><li>Godrej recently introduced three brands of Cinthol, Fair Glow and Godrej in 50-gm packs, priced at Rs 4-5 meant specifically for Madhya Pradesh, Bihar and Uttar Pradesh — the so-called `Bimaru' States. </li></ul><ul><li>Hindustan Lever, among the first MNCs to realise the potential of India's rural market, has launched a variant of its largest selling soap brand, Lifebuoy at Rs 2 for 50 gm </li></ul><ul><li>Coca-Cola has also introduced Sunfill, a powdered soft drink concentrate. The instant and ready-to-mix Sunfill is available in a single-serve sachet of 25 gm priced at Rs 2 and mutiserve sachet of 200 gm priced at Rs 15. </li></ul>
  24. 24. Place- Rural Distribution Challenges <ul><li>Large number of small markets </li></ul><ul><li>Dispersed population and trade </li></ul><ul><li>Poor connectivity </li></ul><ul><li>Low availability of suitable dealers </li></ul><ul><li>Inadequate banking/ credit facilities </li></ul><ul><li>Poor product display and visibility </li></ul><ul><li>Poor communication of offers and schemes </li></ul>
  25. 25. RURAL DISTRIBUTION Physical Distribution Channel of Distribution Transportation Warehousing Communication PHYSICAL DISTRIBUTION Transportation Railways, Roads ,Waterways, Animals Communication ITC using internet, Mobile users by fisherman Warehousing (Three Tier Rural Warehousing Set Up) Central/State Warehousing Cooperatives Rural Godowns
  26. 26. Levels of Distribution Level Partner Location 1 Company Depot/ C & FA National/ State level 2 Distributor/ Van Operator/ Super Stockist/ Rural Distributor District level 3 Sub Distributor/ retail Stockist/ sub stockist/star seller Tehsil HQ, towns and large villages 4 Wholesaler Feeder towns, large villages, haats 5 Retailer Villages, haats
  27. 27. Distribution Adaption <ul><li>Hub and Spoke Model, Example: Coca Cola </li></ul><ul><li>Use of Affinity groups, Example: Project Shakti </li></ul><ul><li>Haat Activation, Example: Colgate </li></ul><ul><li>Syndicated distribution, Example: Cavin Care & Amrutanjan </li></ul><ul><li>Use of marketing co-operatives, Example: Warna Bazaar in Rural Areas </li></ul><ul><li>Mobile traders, Example: FMCG companies </li></ul>
  28. 28. <ul><li>e.g.To service remote village, stockists use autorickshaws, bullock-carts and even boats in the backwaters of Kerala. Coca-Cola, which considers rural India as a future growth driver, has evolved a hub and spoke distribution model to reach the villages </li></ul>
  29. 29. Media Vehicles Mass Media Local Media Personalized Media Radio Haats, Melas, Fairs Direct Communication Cinema Wall Paintings Dealers Press Hoardings Sales Persons TV Leaflets Video Vans Folk Media Animal Parade Transit Media Researchers
  30. 30. Choosing media vehicles <ul><ul><ul><li>High reach High frequency </li></ul></ul></ul>Low reach High frequency Jeep based advertising Wall painting Bus stand & bus panels Haats Hoardings Postal branding Co-operative notice board Shop front painting Tin plating – house Dealer boards Village boards Well tiles Calendars/labels <ul><ul><ul><li>High reach Low frequency </li></ul></ul></ul><ul><li>Van based advertising </li></ul><ul><li>Melas </li></ul><ul><li>Direct to home </li></ul><ul><li>Folklore group </li></ul><ul><li>Exhibitions/created events </li></ul><ul><ul><ul><li>Low reach Low frequency </li></ul></ul></ul><ul><ul><ul><ul><li>Tin painting – tree/shops </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Leaflets </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Posters & banners </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Streamers </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Danglers </li></ul></ul></ul></ul>
  31. 31. Promotion strategies <ul><li>Think Global Act Local </li></ul><ul><li>Think in Local Idiom- ‘ Thanda matlab Coca Cola’ </li></ul><ul><li>Simplicity & Clarity </li></ul><ul><li>Narrative Story Style </li></ul><ul><li>Choice of Brand Ambassador- Govinda in the Mirinda as boosted the sales of the drink in the rural markets </li></ul><ul><li>Using a direct selling through a sales force, Example: Swasthya Chetna for Lifebouy , Example: Tata Shaktee Haat Hungama </li></ul>
  32. 32. : Special Products for Rural Markets <ul><li>ICICI BANK customized their rural ATMs, so they can operate biometric authentication. ICICI rural ATMS are battery operated so that power failure is not issue. </li></ul><ul><li>Rural Transporter: Mahindra & Mahindra is busy developing the prototype of what it calls a ‘Rural Transporter’ – basically a hybrid between a tractor and a rural transport vehicle. The product at 20-25 HP will be targeted at those who cannot afford a normal tractor and would also fulfill the need of family transporter that could take in the rural roughs but would be much more comfortable and safer than the conventional tractor-trolley. </li></ul>
  33. 33. Cont… <ul><li>Sampoorna TV: LG Electronics, the Korean firm has rejigged the TV to appeal to local needs. It spent Rs. 21 Lacs to develop a set that would have on-screen displays in the vernacular languages of Hindi, Tamil and Bengali. The logic, rural consumers unfamiliar with English would still be able to use the TV without being intimidated. </li></ul><ul><li>Titan Watches: A recent NCAER study revealed that there is a great potential for watches in rural areas. In fact it is considered to be a high priority list. It was also found that a rural consumer looks for the ruggedness of the watch more than the urban consumer does. He prefers thick watches than slim watches. </li></ul>
  34. 34. CONCLUSION <ul><li>Rural market has an untapped potential like rain but it is different from the urban market so it requires the different marketing strategies and marketer has to meet the challenges to be successful in rural market </li></ul>