Product Innovation: An Effective Strategy To Penetrate Into Small Towns And Rural Markets

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Product Innovation: An Effective Strategy To
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Product Innovation: An Effective Strategy To Penetrate Into Small Towns And Rural Markets

  1. 1. 1Product Innovation: An Effective Strategy ToPenetrate Into Small Towns And Rural MarketsA PROJECT STUDY SUBMITTED IN PARTIAL FULFILLMENT FOR THEREQUIREMENT OF THE TWO YEAR (FULL-TIME) POST GRADUATE DIPLOMA INMANAGEMENT 2011-2013BY
  2. 2. 2Dated……………CERTIFICATECertified that has successfully completed Project Study entitled“Product Innovation: An Effective Strategy To Penetrate Into Small TownsAnd Rural Markets” under my guidance. It is his / her original work, and isfit for evaluation in partial fulfillment for the requirement of the Two Year(Full-Time) Post Graduate Diploma in Management.
  3. 3. 3AcknowledgementA project is never a work of a single person and during the course of workingon this project I was guided by the many people at the right time. Success ofthis project is an outcome of sincere efforts put in my many people, efficientsupervision and valuable professional guidance.Direct and indirect help and guidance was provided by many people andwithout them this project would not have achieved its purpose. They providedme with the necessary recourses and atmosphere conductive for healthylearning and training. I express my sincere thanks to……..for being my mentorand guiding me at every stage. Her constant support, cooperation andmotivation were critical for successful completion of this project. Without hercritical evaluation and suggestion at every stage, this project could not havereached its present form.Also, I would like to thank all the respondents from Amarpur and Khanpurvillages (District Bulandshahr), Tajpur village (Delhi) and Nowgaon and Tidhnivillages (District Chattarpur) that I visited, for providing me all the relevantinformation and being a part of this project. Lastly I would like to thank myfellow students at LBSIM for helping and supporting me at various stages ofthis study.
  4. 4. 4Executive SummaryThe aim of this study is to find whether Product Innovation as an effectivestrategy to penetrate into small towns and rural markets. This study also triesto find the factor responsible for success of a product in rural markets.This study tries to establish the effectiveness of product innovation as amarketing strategy to cater rural and small torn markets and break the myththat the needs of such markets are diverse and thus cannot be catered. Thisstudy analyses three products in detail which were innovatively designedespecially to cater to the needs of rural areas and small towns have beenstudied and analysed in great details. It can become a good source of learningfor other marketers who want to enter these markets and for those as wellwho think that the pockets of growths are concentrated in urban areas.Qualitative research was done in order to understand the needs of ruralmarkets and to validate the success of the three products chosen for in-depthanalyses.
  5. 5. 5Table of Contents1 Introduction and analysis of rural market and the need of innovation.............................11.1 Introduction.................................................................................................................11.2 Literature Review........................................................................................................51.2.1 Rural Marketing in India ......................................................................................51.2.2 Frugal Innovations and the Lead Market theory.................................................61.2.3 Frugal Innovations for the ‘Unserved’ Customer ................................................71.2.4 Capturing rural market with customization of market mix.................................81.2.5 Small is big............................................................................................................81.2.6 The Fortune at the Bottom of the Pyramid .........................................................92 Products analysis ..............................................................................................................112.1 Tata Swach ................................................................................................................112.2 Nokia 1100 ................................................................................................................142.3 Chik Shampoo............................................................................................................163 Qualitative Research and Analysis....................................................................................203.1 Research Objectives..................................................................................................203.2 Research Methodology .............................................................................................203.3 Pilot Study .................................................................................................................203.4 Research findings based on focus group: .................................................................213.5 Research Findings from semi-structured surveys.....................................................233.5.1 Respondent Profile ............................................................................................233.5.2 Price Sensitivity..................................................................................................253.5.3 Perception about Modern Products..................................................................273.5.4 In-depth analysis of Tata Swach ........................................................................293.5.5 In-depth analysis of Nokia 1100 ........................................................................30
  6. 6. 63.5.6 In-depth analysis of Chik Shampoo....................................................................324 Findings and Recommendations ......................................................................................344.1 Implication from in-depth analysis ...........................................................................344.1.1 Tata Swach.........................................................................................................344.1.2 Nokia 1100 .........................................................................................................344.1.3 Chik Shampoo ....................................................................................................344.2 Implication from Focus group...................................................................................354.3 Implication from semi-structured survey .................................................................355 Conclusions.......................................................................................................................376 Challenges and Limitations...............................................................................................38Bibliography .............................................................................................................................39Annexures ................................................................................................................................40
  7. 7. 7List of FiguresFigure 1: India income Pyramid .................................................................................................1Figure 2: FMCG growth rates in Rural and Urban India.............................................................2Figure 3: The Four As .................................................................................................................4Figure 4: Model for development at the Bottom of the Pyramid ...........................................10Figure 5: Choice of Shampoo in Focus groups.........................................................................22Figure 6: Choice of Sachet/Bottle in focus groups...................................................................22Figure 7: Gender Profile of respondents .................................................................................23Figure 8: Location Profile of respondents................................................................................24Figure 9: Age Profile of respondents .......................................................................................24Figure 10: Income Profile of respondents ...............................................................................25Figure 11: Price/Quality choice................................................................................................25Figure 12: Decision making process in buying a product ........................................................26Figure 13: Price Sensitivity of respondents .............................................................................26Figure 14: Perception about Daily Use Products.....................................................................27Figure 15: Understanding of Modern Products.......................................................................27Figure 16: Perception about Modern Products.......................................................................28Figure 17: Price Sensitivity for modern products ....................................................................29Figure 18: Awareness level of Tata Swach...............................................................................29Figure 19: Perception about Tata Swach.................................................................................30Figure 20: Awareness level of Nokia 1100...............................................................................30Figure 21: Reason of Awareness of Nokia 1100 ......................................................................31Figure 22: Perception about Nokia 1100.................................................................................31Figure 23: Awareness level of Chik Shampoo and usage form................................................32
  8. 8. 8Figure 25: Reason of Awareness of Chik Shampoo .................................................................32Figure 26: Perception about Chik shampoo ............................................................................33Figure 27: Quality Spectrum of Shampoo available in rural markets......................................35
  9. 9. 11 Introduction and analysis of rural market and the need ofinnovation1.1 IntroductionThe Indian EconomyIndia contains a diversified array of products, brands, lifestyles and cultures. For successfulmarketing and launching of a new product India portrays an array of challengers for theorganization entering the Indian subcontinent. One of these challenges portrayed to themarketers is that of understanding the changing psyche of the Indian consumer. Oneanother challenge was reaching out to the aspiration-based appeal of the Indian ruralconsumer. The aspiration based consumers were the non-users of the shampoo segment inthe rural markets, and reaching out to them was a marketing challenge, and their financialconditions prevented them from trying and exploring the consumerism phenomenon whichwas being experienced by the urban consumer. The products were unaffordable and therural population also demanded educating the consumer on product usage.The Bottom of the Pyramid in India consists of two classes of less than Rs.75000/- and inbetween Rs. 75000 – Rs.15000/- per year. This comprised roughly 25% of the Urban Indiaand 75% of the rural India.Figure 1: India income Pyramid
  10. 10. 2The rural Indian market has seen to have taken a slower troll in pace to change from thebottom of Pyramid, and It was expected to take another 30 years for the rural India to getthe same salience as that of urban India. Despite being such a large population of total ruralhouseholds (about 82%), The BOP contributed to about half the total income of rural India.The Rural IndiaThe rural Indian market consisted of around 800 million consumers with around 150 millionhouseholds, and contributed to 12.2 % of the world’s population. The market was growingat around 25%. The FMCG Market in Rural India: The FMCG category an adly split into threecategories, Household care, personal care and food & beverages care. The FMCG marketwas estimated to be around US$ 15billion and around 15-20% was contributed by ruralIndia. The contribution was evident from the fact that the urban market contributed to onlyaround 29% and the rest contribution came from the semi-urban and rural India. The BoPmarket has been seeing a lot of attention with big brands, rushing to make money on theopportunity by selling branded products to estimated 150 million consumers in India. A fewexamples of how big FMCG companies are reacting to the rural consumers can be HorlicksAsha (Low cost milk food), Coca Cola’s Vittigo (A powder based product), Pepsi Cos on goingwork on snacks, HUL’s Shaktimaan initiative to cover the entire rural India through cyclevendors and as a low cost distribution alternative to the rural markets are well soughtexamples. The goods available are spurious in nature, and are copies of the goods existing inthe urban market.Figure 2: FMCG growth rates in Rural and Urban India
  11. 11. 3The Rural Indian ConsumerRural India was a complete heterogeneous market, but it was homogeneous region wise,and thus it was bounded by cultural and traditional values of that region. They had a lowerlevel of traditional education but their awareness levels were moving up with the enteringof media and education of youth and their migration to urban areas. Rural Indian consumerswere believed to be conservative, thus it implied that they were high value conscious. Withlow per capita income, the rural consumer is more risk averse, thus does not spend unlessthe true value for money is perceived by the person. The increased movement of thebranded goods indicated that the consumer was ready to spend a little extra because hesaw a value added in the good, but was not open to change drastically, but was not limitingitself to being fully conservative.Rural households form 72% of the total households. This puts the rural market at roughly720 million customers. Total income in rural India (about 43% of total national income) isexpected to increase from around US$220 billion in 2004-2005 to US$650 billion by 2014-2015, a CAGR of 12%. Some 42 million rural households use banking services against 27million urban households. There are 41 million Kisan credit cardholders [credit cards issuedto farmers for purchase of agricultural goods] against some 22 million card users in urbanmarkets. Be it automobile, telecom, insurance, retail, real estate or banking, the futuredrivers of growth are rural. No marketer can afford to ignore the possibilities of rural India.Maruti Suzuki, Indias leading automobile manufacturer, today sells 7% of its vehicles in therural markets. The company expects this number to rise to 15% in the next three years.The urban markets have started saturating. Godrej, a family-owned conglomerate, saw itssales of white goods drop by over a tenth in big cities in the past fiscal year. But sales intowns of less than 100,000 people rose by 19%, and in villages by over 40%. Bajaj, anotherconglomerate, says small-town and rural sales have risen handily in recent years, to aquarter of its home-appliances business. Sales of motorbikes and mopeds have deceleratedmore gently than cars, an urban luxury. Be it FMCG (34% share in total FMCG consumption),Telecom (CAGR of 34%), Retail (40% market share), automobile(50% share of Hero Hondasales), the rural area is showing a huge growth. Such a huge market should not be left outdue to unavailability of data. This study, thus, tries to provide some information to themarketers on the factors that are important for success in these areas.
  12. 12. 4The future of marketing lies in the rural areas. The consumption pattern has startedchanging and the companies which do not adopt will find it hard to grow. This is becauserural areas have specific needs and thus new innovations would be required to cater them.Figure 3: The Four AsThe focus should now shift to 4As - affordability, awareness, availability and acceptability.Affordability and acceptability of the new products would be the key dimensions whichwould judge their success in rural areas. This study will try to establish the effectiveness ofproduct innovation as a marketing strategy to cater rural and small torn markets and breakthe myth that the needs of such markets are diverse and thus cannot be catered. This studystudies three products in detail which were innovatively designed especially to cater to theneeds of rural areas and small towns have been studied and analysed in great details. It canbecome a good source of learning for other marketers who want to enter these markets andfor those as well who think that the pockets of growths are concentrated in urban areas.Other than this, semi-structured surveys and focus groups approaches are also used tostudy the rural markets.Go Rural Decision
  13. 13. 5Urban Push Factors – Companies that have so far successfully operated in the urbanmarkets have found them no longer attractive for the following reasons:• Saturation Stage: Many products such as soap, detergents, shampoos, fairnessproducts and consumer durables such as water purifiers, refrigerators etc. haveachieved maturity in the urban markets on account of their high penetration levels.• Fierce Competition: Urban markets have become congested with too manycompetitors. Heavy expenditure on marketing has become necessary as there aretoo many brands fighting for a justifiable share. Sustaining brand image and growthin sales have become difficult and challenging tasks.Rural Pull factors – The rural pull factors that make rural markets attractive are as follows:• Rising affordability: Population, Income, Consumption and disposable income arerising steadily in rural areas.• Growing Acceptance: Increasing literacy, lifestyle changes due to media explosionand cinema have led to increasing demand for modern products in rural areas.• Improving accessibility: Infrastructure is improving rapidly in rural India thusproviding companies with the much needed accessibility.• Success stories of companies like ITC, HUL, Nirma, etc.1.2 Literature Review1.2.1 Rural Marketing in IndiaThis paper (Ajith, P. (2010). 3P Framework: Rural Marketing in India) coins and explains theterm "Urban Myopia," and attempts to present a frame work for rural marketing in India.The marketing firms are blind to the six lakhs villages in India, perhaps the largest ruralmarket, owing to urban myopia. The author suggests that these firms should adopt the 3PFramework of Rural Marketing. This model will not only help the marketing firm to developinnovative products for rural markets but will help to align the CSR activities to its marketingactivities. To tap the rural market potential in a sustainable way, the marketing firm willhave to adopt the 3P framework in toto. This will bring the rural consumers into the value-net of the firm and help create innovative and green products (nature friendly) even forurban consumers.The 3Ps -The Push marketing mainly aims at market penetration. Products sold in urban markets aremade available to rural consumers without any modification. Longer, multiple and hybrid
  14. 14. 6channels are adopted to reach the rural markets. Under this approach, though product issame across the country, the type and mix of channels vary from region to region. Pushapproach also involve partnering with many partners (Both for technology and logistics) toreach the remotest part of the country. Most of the firms adopt this approach to ruralmarketing.The Pull marketing mainly aims at communicating with the rural consumers and reducedisconnect between what marketing firms offer and what rural consumers want. Vernacularadvertisements, local opinion leaders and ambassadors are used to communicate with ruralconsumers. Products sold in rural markets under this approach are not the same? Theproducts sold in urban markets are modified as per the preferences of rural consumers invarious regions. Majority of the modifications are at the packaging level (smaller packs).Pullmarketing use media, melas and haats as the focal approach to target rural consumers - toattract, educate and make them brand loyal.The Pull Up marketing aims at -creation and innovation which involves collaboration withvarious organizations (both Govt. and NGOs) as well as close interaction with the ruralconsumers to understand their needs better, to empower them(create a source oflivelihood) and also to capture their knowledge, wisdom and innovative ideas in the form ofgreen products.1.2.2 Frugal Innovations and the Lead Market theoryThe authors (Tiwari R., & Herstatt, C.) of this paper (India – A Lead Market for FrugalInnovations? Extending the Lead Market Theory to Emerging Economies) have discussedhow India has emerged as a vibrant and versatile source for cost effective, “disruptiveinnovations” of various varieties. Price-sensitive consumers in a large and growing marketkeep inducing firms to apply “frugal engineering” for creating affordable products andservices without compromising excessively on quality. Such innovations are characterizedby high affordability, robustness, and “good enough” quality in a volume-driven market.Resource constraints motivate firms and entrepreneurs to think out-of-the-box. Theauthors say that the trick lies in creating solutions that are able to circumvent givenenvironmental constraints in a cost effective way. India’s large and enormously young
  15. 15. 7population faced with limited budgets, but well-endowed with high aspirations, according toauthors, provides an ideal experiment ground for many firms.Using two anchor-cases of product innovations aimed at price-sensitive segments in Indiathe authors have generated preliminary evidence to challenge some of the coreassumptions of the “lead market” theory and propose that lead markets can emerge indeveloping countries too because market attractiveness (e.g. volume of demand, exportpossibilities) and technological capabilities are able to offset many other deficiencies.Moreover such frugal innovations have huge consumer base especially in rural and smalltown markets.1.2.3 Frugal Innovations for the ‘Unserved’ CustomerThough this paper (Tiwari R., & Herstatt, C. (2012)- Frugal Innovations for the ‘Unserved’Customer: An Assessment of India’s Attractiveness as a Lead Market for Cost-effectiveProducts.) is based on India’s potential for frugal innovations and their impact and India’sAttractiveness as a lead market for cost effective products, this study has discussed 4products or innovations which have a great potential in rural and small town markets asthey have been designed for their specific requirements. The four products are:• Small Commercial Vehicle: Tata Ace• Water Purifier: Tata Swach• Solar-powered ATMs: Vortex• Battery-powered Refrigerator: ChotuKoolWhile one example involves the automobile industry, two are related to the homeappliances sector, and one is a solution from the banking industry targeted at businesscustomers (banks). All the products can be classified as “frugal innovations” since theyenabled significant reductions in price (30% and above) while concentrating on functionality(avoiding over-engineering). They can be also termed as “disruptive innovations” since theysought, and managed to, create new markets by reaching out to non-consumers. Theauthors have analysed the product characteristics, its development process and marketsuccess both at home, and where applicable, also abroad. The purpose is to identify factorsthat influence India’s lead market potential for this specific category of innovation.
  16. 16. 81.2.4 Capturing rural market with customization of market mixThe authors of this paper (Joshi, H.,& Srivastava, R.K.(2011)- Capturing rural market withcustomization of market mix ) say that the rural market functions in highly complexenvironment, therefore it is important for the marketers to formulate tailored strategies forrural areas. The formulation of strategies depends upon product category, targetedsegment, accessibility to the area etc. It is difficult to understand the mindset of ruralpeople and to develop products according to their needs. Nevertheless there are manycompanies which entered and captured the far flung rural markets and now have trail ofsuccess sagas behind them. They have set examples before their competitors that withproper understanding of the market and implementing innovative marketing ideas, it ispossible to trap the rural markets. The article explores the various successful marketingstrategies adopted by the companies and what new and revolutionary can further beintroduced.The paper also discussed various marketing mix strategies to capture rural markets like –• Product strategies which includes - Design of the product, Features of the products,Quality and its attributes, Brand name, Packing and packaging, Service- pre and postsales• Pricing strategies - Here the author says that there is a notion that rural folks morelikely, prefer products that are low priced. Instead what rural consumers seek is thevalue for money. The winner in the rural marketing is that marketer which reallyunderstands the needs of the rural people and provides means and value for moneyto meet those needs. Setting prices for the rural market involves prudence on thepart of marketer.• Promotion strategies like Personal selling in rural region, Proficiency in locallanguage, Acquaintance with the rural folks etc.1.2.5 Small is bigThis is an article from the book – Consumer India written by Dheeraj Sinha wherein theauthor has discussed the growth potential of rural areas and its implication. Power shift hasbeen discussed from India Shining to Bharat Nirman. The author has also discussed thedifference in the mindsets of the urban and small town-rural areas and impact it has onmarketing. Unlike earlier times, opportunities are not only present for those leaving villagesbut are coming to the villages. Many villages have benefitted from urban retailing anddeveloping market for agriculture based products. This has led to an increase in household
  17. 17. 9income of rural areas and thus correspondingly rural expenditure has increased. Thus thisarticle forms the base on which further study will be done in this research.1.2.6 The Fortune at the Bottom of the PyramidCK Prahlad in his ground-breaking book The Fortune at the Bottom of the Pyramid, speaksabout the need for companies to design and develop innovative products and services, andhelp the poor prosper by partnering and engaging with them. He goes on to say that there ishuge consumer potential in rural India and addressing this segment is a win-win partnershipfor both companies and the people. The companies benefit by widening their consumerbase and selling more products; the rural people benefit by getting quality goods andservices, which motivate them and raise their self-esteem.The book suggests replacing traditional notions of government-channeled aid with a newmodel for relieving poverty and stimulating development. The new model relies on profit-making businesses, especially multinational corporations (MNCs). The MNCs have aneconomic incentive to tap the great market that exists, all but hidden, at the bottom of theeconomic pyramid. The author demonstrates clearly that it is possible to develop businessmodels that allow the poorest of the poor to participate actively in their own economicdevelopment by becoming entrepreneurs. Although the individuals at the bottom of thepyramid (referred to as BOP) have little money, collectively they represent a vast pool ofpurchasing power. They welcome opportunities to escape their oppressive burdens,including predatory intermediaries, corrupt governments and the societal "poverty penalty"that requires them to pay more than the rich for similar services.The author says that the perception that the bottom of the pyramid is not a viable marketalso fails to take into account the growing importance of the informal economy among thepoorest of the poor, which by some estimates accounts for 40 to 60 per cent of all economicactivity in developing countries. Most poor people live in rural villages, or urban slums andshantytowns, and they usually do not hold legal title or deed to their assets (e.g., dwellings,farms, businesses). They have little or no formal education and are hard to reach viaconventional distribution, credit, and communications. The quality and quantity of productsand services available in these areas is generally low. Therefore, much like an iceberg with
  18. 18. 10only its tip in plain view, this massive segment of the population — along with its massivemarket opportunities — has remained largely invisible to the corporate sector.Figure 4: Model for development at the Bottom of the Pyramid
  19. 19. 112 Products analysis2.1 Tata SwachThe Tata Swach is a water purifier developed by Tata Chemicals, a part of the Tata group inIndia. Swach was designed as a low cost purifier for Indian low-income groups, who lackaccess to safe drinking water. Few advantages of it are:• Value for money: The Tata Swach Bulb that runs for 3000 liters (one of the longestlifespan in the category). It provides safe drinking water to consumers at nearly halfthe cost compared to other purifiers.• Simplest usage: Tata Swach is unique in its class for its simple and easy operations.It is effortless to operate, easy to clean and maintain.• No electricity, no running water needed: Tata Swach purifies and stores water; itdoes not require electricity or running water for its operation.The Tata Swach Silver Nanotechnology has been tested across multiple institutes nationallyand internationally against bacteria and virus for performance up to USEPA requirementswhich are among the most stringent in the world. In addition to world class technology, TataSwach also includes user-friendly features like Tata Swach Fuse – to auto shut and auto-indicate useful life and Tata Swach Lock to ensure the user genuine products. With Rs 15paise as the cost of purifying per litre of water, Tata Swach is amongst the most cost-effective water purifier in the world.Marketing StrategySince the product was mainly focused at rural consumers, the marketing honchos at thecompany decided to have a stronger focus on market activations (BTL) and PR. The strategywas that, since water purification is a latent need as opposed to a felt need product, hence,there was a need for strong advocacy to people on the usage for these products to expandthe market.One of the important BTL activities that really helped the brand make inroads to thehouseholds is ‘Society/School contact Programme’. The idea was to create awareness aboutwater borne diseases among the children. So, under this programme Tata Swach has itsvolunteers going to and conducting contests and essay writing competitions (on topicsrelated to water borne diseases). This programme really helped Tata Swach in getting itsfooting stronger in the market. In three months alone, Swach was able to reach 20,000households through this programme.
  20. 20. 12Apart from such programmes, the company has been reaching its target consumers throughparticipation in rural melas, haats, outdoors, activation vans and through road shows.There is an interesting pattern in the demand of Tata Swach that surfaced. Initially, TataSwach was launched with a primary focus at rural consumers. But, later on, it was foundthat there was a huge upsurge in the products’ demand from the urban market. Lot ofpeople from the lower socio-economic strata in the urban market were buying Tata Swach.When the marketing team at Tata Chemicals realised this, activation activities in the urbanareas were increased too.Tata Swach is also active on the social media space, especially through Facebook andTwitter. Now, the natural question that pops in one’s mind is that if the product is primarilytargeted at rural consumers or people from lower socio-economic strata, then how does apresence on social media helps the brand? Well, the larger idea behind this is to spreadawareness about water borne diseases and also invite volunteers to support the cause.Another important strategy that helped Tata Swach to reach more consumers has been itsdistribution network. Apart from the traditional direct sales to retailers, the companyfocused on the indirect channel to reach consumers. For this, it tied up with NGOs and MFIsto harness the potential of small level entrepreneurs at the village levels.Tata Chemicals’ new ad campaign for Tata Swach nanotech water purifier uses the famoustongue twister ‘Chandu ke chacha’ to highlight the benefits of its "advanced silvernanotechnology".The film begins with a man reciting his own version of the popular tongue twister ‘Chanduke chacha’ while he feeds a small baby (named Chutku) water from a silver bowl and spoon.He recites, “Chandu ke chacha ne Chandu ke Chutku ko chandi ke chamach se pani pilaya,bolo kyon?” Chandu answers that because Chutku is thirsty, while an older man says that it’sbecause Chachu has nothing else to do. Meanwhile, Chutku’s mother explains that it’sbecause silver purifies water and such pure water is healthy for the baby. She furtherexplains, “Ye naye zamaney ka chaandi hai, jo sach much swach paani deti hai.”Tata Swach combines technology, performance, design and convenience which makes itunique and one of the most innovative water purifiers in today’s age. The new ad campaignaims to connect with the consumers and make them aware about Tata Swach’s use of silver
  21. 21. 13nanotechnology- with silver being a well-known and effective purifying medium- forproviding safe drinking water. The communication through this ad campaign effectivelyconveys that Tata Swach is a smart choice for safe drinking water.STP AnalysisSegmentation: TATA SWACH classified the consumer market into rural and urbanhouseholds. According to 2010 stats, more than 75% of the households didn’t have accessto safe drinking water. Tata’s strategy was to enter into this segment since the marketpotential was high.Targeting: TATA SWACH targeted only the rural households. Basically they were more intorural areas where water borne diseases were very high.Positioning: TATA started with social awareness programs increasing education levelsamong people regarding disadvantages of impure water. TATA SWACH used the help ofNGO’s to spread the awareness levels and schools in rural areas, thus, positioning itself as aform of need creator.Comparison on the basis of 4 P’S of Swach, Pureit and AquasureProduct: TATA Swach purifies 3000L of water with capability to contain 19L of water. PUREITpurifies 1500L of water with the same capacity as Swach. On the other hand, Aquasure canpurify only 750L of water with capacity to hold 20L of water.Price: Aimed at providing the cheapest purifier after the world’s cheapest car, TATA Swachis priced at Rs. 999. In proximity to their need for accessing to the rural household, the pricedid full justification in terms of handling, usability and value to the customers (first timeusers). Aquasure is priced at Rs. 1500 offering more features like candle filtering, pre waterfiltering, justifying their technologically innovative offering. Relatively, Pureit is priced at ahigher price of Rs. 2000, which accounted for its 4 filter stages as its USP.Promotion: Through competitions in rural schools like essay competitions, role plays; TATAtook the help of NGO in first exposing the rural people to the need for safe drinking water.In the beginning they relied less on electronic media and more support voluntary groups.Eureka marketed aggressively in both print as well as electronic media pretty muchfollowing the Selling Concept. They also took the help of celebrity Smriti Irani to spread theword. HUL relied on its salesmen to convert cold calling into a sale.
  22. 22. 14Place: TATA started with schools and gradually increased the interest of rural peopletowards Swach. It chose the rural areas only and with time expanded this product offeringto urban areas due to interest by the lower income class. HUL first launched its product inTamil Nadu for testing its product whereas Eureka launched Aquasure on full India scale. Itcomes to no surprise that with huge advertising costs, Eureka had to start big.2.2 Nokia 1100• The Nokia 1100 is a basic GSM mobile phone produced by Nokia. Two hundredmillion 1100s have been sold since its launch in late 2003, making it the worldsbestselling phone handset and the bestselling consumer electronics device in theworld.• The 1100 achieved its popularity despite being made during a time when moremodern cell phones with more features (e.g., colour screen, internal camera etc.)were available in the market. It was targeted towards developing countries and userswho do not require advanced features beyond making calls and SMS text messages,alarm clock, reminders, etc.• It has been specifically designed for rural areas and small towns: its keypad and frontface have been designed to be as dustproof as possible and its sides are non-slip forhumid weather.Nokia had a market share of approx. 38% in 2011 compared to 49.3 per cent in 2010 inIndia. Its revenues were Rs 12,929 crore in 2010-11 and Rs 12,900 in the 2009-10. TheIndian market accounts for 12 per cent of worldwide sales for Nokia. For Nokia, simple issuccessful. Nokia 3210 was a hit too. It sold 160 million units.Marketing StrategyThe company launched Nokia 1100 after intensive research on the Indian customersspecific needs. The phones gave an integrated torch, a sheath covered keypad for dustprotection and a slip-free grip. The phones were also introduced in other markets in Asiaand Africa. Nokias first ‘Made for India’ model, the 1100, is the largest selling model in theIndian GSM handset market. UNLIKE MOST OTHER mobile phone makers, Nokiasadvertising strategies was aimed at the low end consumer. The Made for Indiaadvertisement for the Nokia 1100 was targeted at the entry-level phone user. It showed themobile tied to the fender of a truck that traverses the length of India. The implicit messageis that phone still works at the end of the long, hot, dusty, journey. Nokias advertisements
  23. 23. 15dwelt on the human angle of mobile technology, rather than emphasise their technicalaspects. The communication strategy of Nokia is to focus mainly on print and TVadvertisements highlighting the emotional aspect to touch the lives of all. Nokia usesstrongly integrated tools. Nokia has a brand personality which attracts customers who wantto project the similar personality. Nokia since years have kept the same tagline –CONNECTING PEOPLE. Nokia is having a big target audience and so have had many differentkinds of advertisement but never deviated from its main objective.Others brands like Samsung and LG have started gaining immense popularity but that theyare only restricted to urban. Micromax has in recent times grown into a brand for ruralareas and Nokia is facing stiff competition now. Samsung has also launched a new seriescalled “Rex” to compete in the lower category range.The “Nokia” BrandThe most fascinating aspect of this brand is the accessibility and affordability. Whether it isa beach or a remote hill station, brand “Nokia” is available everywhere. Nokia has plannedits products across all segments of the Indian demographics and they launch at least oneproduct in each quarter for all its segments. Each such quarter is prepared keepingdemographical, psychological or physiological factors in mind. Thus, Nokia has been ablecater to majority of the Indian population.Nokia 1100 was part of their connect range. Nokia divides its customers into ranges andtargets each range in a unique way. The connect range is defined by following parameters:• Income - Lower income families• Interests - Don’t spend money on frivolous purposes• Opinion - Strong followers of cultureNokia also launched an advertisement with the tagline – “For those without pockets” totarget the lower middle class and rural population.Nokia enjoys approximately 36 % market share and has over 200000 outlets with 700support centers across 400 towns and cities to ensure that their handsets are available totheir customers. In rural India it enjoys 45% market share considering its high image ofquality and after sales service. The most popular phone of Nokia in the rural market is theNokia 1100.
  24. 24. 162.3 Chik ShampooChik Shampoo is one of India’s oldest and most loved brands. It is the second largest volumebrand in the shampoo category. Chik shampoo is most remembered for one of the first everinnovations in the Indian personal care industry – sachet packaging.In addition to an early packaging innovation, Chik shampoo has also been credited with on-ground activities that were way ahead of their time. Live demonstrations of shampooperformance helped village dwellers – primarily comprising of shampoo proxy users –understand a distinctive before-after performance on softness and fragrance. After teachinghow shampoos were used, free samples were given which triggered need for a repeatexperience, pushing sales to approx 3 times.To the rural and semi urban population of India, it is the preferred daily shampoo.Marketing StrategyPositioning:Chik looked at a regional niche which the multinationals failed to look at thus, filled a gapfor an economical shampoo. They targeted rural and small towns where the consumerswere using bathing soaps to wash their heads; a large number of users were converted toshampoo users by the innovative strategies applied by CavinKare. These consumers werenot aware of the harmful effects that the soap could have had on the health of the hair.The strategy adopted by Chik cannot be limited to one purview but a branding, pricing,product and distribution strategy which took it to the rate of success of the organization ona whole. These different strategies adopted by Chik can be shown under the differentheads.Product Strategy:In order to get a competitive edge of the market CavinKare reduced the quality of theproduct, but increased its fragrance as opposed to the other shampoos was supplementedby French perfume, because of the rural Indian woman wears flowers in the hair, and thusthese fragrances were incorporated. It also launched two sized packages which were first ofits kind in the sachet market. Sachets a form of Low Unit Packs (LUPs) played an importantrole in capturing the market, initially with velvet and then with Chik. Single serve sachet
  25. 25. 17gave a boost to the consumption of shampoos in India and was typically suited for the ruralmarket, this launch brought in a high degree of acceptance in the rural and semi urbanmarket who could not afford buying a large bottle which was then considered a luxury. Thusthe daily wage earners believed in not stocking up the shampoos, but to use it as in andwhen required. Sachets also helped in minimizing the risk of trials and helped in correcting awrong decision process, sachets also played an important role for consumers who wantedto try out different brands.Pricing Strategy:The shampoo experience was offered at a price that incited the consumers of a very specifictarget audience group, of lower middle class (Sec B2, C, D), as it was observed that thetarget market was only buying the shampoo only if it was within the range. A shampoosachet of Rs.2 would make the monthly average budget of Rs.40 and thus won’t beaffordable. This led to the idea of creating a 50.p Shampoo which seemed impossible butwith good research and packaging it was launched and was a revolutionary pricing strategy.Thus Chik decided to launch a 4 ml sachet priced at 50.p, which led to the jump of marketshare of Chik from 5.61% in 1999 to over 23% in 2003.Chik made shampoo very affordableto the rural consumer. This led to the growth of the shampoo market in Rural India grow atdouble that of the Urban market. By 2002 the market had grown to 35% from a very lowlevel of 15%.The results of growth were almost twice than those of the urban centres.Promotion Strategy:The company had realized that other than distribution there were other obstacles whichwere in the way of adopting the usage of shampoo, because the product was perceived as aluxury rather than that of necessity. Many of these consumers used shampoo only onoccasions like those of weddings, festivals, functions etc. It was difficult for the marketers toconvince the customers that they should shift from using soap to shampoo. Compared toother consumer products, shampoos had a very low penetration rate. There was greatpotential for driving new users, and in spite of availability of low priced sachets, theconsumers were still finding it very difficult to afford them because of the perception theyhad. The advertising strategy was based on the popular appeal of cinemas amongst themasses, Innovative radio based ads on popular cinema dialogues rather than plain radio
  26. 26. 18jingles of competitors. Popular cinema stars endorsed the shampoo brand, Radio used themaximum ads, and annual spend. Direct media communication to build knowledge ofproduct, and also change the soap using habits of the consumers. Chik also used Frenchperfume in averse to the traditional fragrances used by the competitors. Vans were sent todistant villages and popular cinemas were organized to the rural consumers, sometimes theendorsed celebrities also visited villages as part of the road promotions.Clips were shown on shampoo usage and product benefits, the company understood thatthe rural consumers did not know how to use a shampoo, in order to educate theconsumers a trial campaign was introduced. In this campaign volunteers used to go to thevillages and hold on the school going boys and wash their hair and make the crowdassembled smell the boy and feel his hair. This demo included lather, wash and also combhair. This exercise had a great impact on breaking the ice and creating a positive approachby the consumers. These road shows and education campaigns had an impact on the salesof Chik from Rs.0.5 Million in 1984 to Rs. 3.8 Million in the next year.Chik also launched a novel promotional scheme, a consumer could return 5 used shampoosachet covers from any brand and exchange it with Chik sachet for free, after a few days thecampaign changed from any shampoo used sachet to only Chik shampoo sachet, thus anexchange of 5 used chick shampoo sachet would result in a Chik sachet for free.CavinKare discovered that soap usage was the biggest barrier and people did not see theneed for using Shampoo. Company tried to convey the message to the consumer that soapusage was bad for the hair and when a product exists specifically for hair it should be used.Distribution Strategy:Instead of using the conventional distribution route, they have created a `sachet sales forcethat sells only sachet packs to small retailers including cigarette and paan shops. Separatehawkers channel has been created that has moved from neighbourhood to neighbourhood.The hawker channels exist in all cities where they have a distribution network. CavinKarespersonal products division have moved towards post offices. They are placing products atpost offices, products such as shikakai powder, shampoo and hair dye. They are using suchchannels to expand product reach and gain accessibility. Because the unconventional routeit is not expected to become a major revenue generator in the coming years. Apart from
  27. 27. 19unconventional method, the company hired professionals for sales and distribution andexpanded its network beyond South India. CavinKare has its offices in Chennai, Pondicherry,New Delhi, Mumbai and Kolkata along with 2000 stockists, which supply to six lakh outlets.Apart from the service charges Cavinkare also gave retailers a Chik Sachet free for every 15empty sachets they get from the consumer. They give special gift if dealer sale moreproducts in a particular season. They also give discount on bulk purchasing.Innovation as a Strategy:• Focus on innovation was one of the main avenues of Chik, The most prominentinnovations were• Channel innovation of Periodic Markets like Haaths and Melas.• Pricing Chik at 50.p.• Introducing French fragrance to use as a product differentiator.• Introducing floral fragrances for the first time.• Creative marketing strategies• Using of local film stars.• Innovative radio Advertisements.Continuous and close engagement with the consumers made Chik a successful product, Chikunderstood the Indian consumer, spent time with the consumer in understanding the usageand apprehensions of the consumer giving it first-hand experience and understanding thegap even before the competitors could react to the market.
  28. 28. 203 Qualitative Research and Analysis3.1 Research Objectives1. Identify the factors responsible for the success of Tata Swach, Chik Shampoo, andNokia 1100.2. Identify the importance is price for the success of the product in small towns and ruralareas.3. Determine the potential of products which are sold in urban areas can have salabilityin rural areas without undergoing any modification.4. Determine whether marketers have been successful in understanding the pulse of ruralareas and small towns.3.2 Research MethodologyThis is an exploratory study where in the following methods have been used:1. Semi Structured survey –a. Sample Size of 100b. Sampling method – Convenient sampling2. Focus group –a. Number – 2b. Number of participants in each group – 8Region of study: North India and Central IndiaResponses will be collected from the following regions – 4 villages (2 villages – Amarpur andKhanpur in Bulandhshar district and 1 village – Tajpur in Delhi).The focus groups were conducted in Nowgaon and Tidhni villages, District Chattarpur, MP.3.3 Pilot StudyA Pilot study was done in order to evaluate feasibility, time, cost, adverse events, and effectsize (statistical variability) in an attempt to predict an appropriate sample size and improveupon the study design prior to performance of a full-scale research project. This study wasdone on a small sample size of 25 in Amarpur, District Bulandshahr, UP and thequestionnaire was modified to incorporate the changes that were felt necessary.
  29. 29. 213.4 Research findings based on focus group:Characteristics of the groupGender of the participants: all womenAge range: 21- 34 yrs.Occupation: all the participants were housewivesEducation: all were literate but maximum education was senior secondaryDuration of the focus group: 48 minutesFocus groupThe 1sttopic given was Tata Swach and the group was told to discuss the product and thediscussion on this continued for 10 mins. In the 2ndphase of the focus group the memberswere asked to participate in an activity wherein they were told to pick up one sachet from abasket containing sachets of shampoos and conditioners and then relevant questions wereasked. In the last activity 3 products (1 lifebouy Soap bar, 1 lifebouy liquid soap and 1 handsanitizer) were kept on a table and the members were asked to choose 1 product and tellwhy did they make that choice.FindingsThe popularity of Tata Swach stems from the following:• It is a product of the Tata group.• It does not require electricity as mentioned by one of the participants “ bijli raho kinahi yeh toh chalto raho hai”• Affordable (6 of the respondents were using Tata Swach that costed Rs 1000)• Most of them bought it because someone in the neighbourhood or extended familygot it and said good things about it.• The respondents expressed pride in owning the water purifier.• One of the members on being asked whether she owns the purifier or notmentioned “humara toh pura parivaar Tata Swach ka hi pani peeta hai”.The group had a sense of belongingness for the product and felt that taste of waterimproves, provides safe drinking water and overall the group was satisfied with the product.Findings of the activities• All the 8 respondents in focus group I and 7 respondents in focus group II, during thefirst activity picked up shampoo sachets (Chik and Clinic Plus).No one picked up theSunsilk conditioner sachets.
  30. 30. 22Figure 5: Choice of Shampoo in Focus groups• When asked whether they were aware about conditioners, they said they had seenthe ads on television.• The group was extremely price conscious and every rupee mattered.• They felt shampoo is sufficient for hair care and for nourishment of hair the home –made packs are the best. One of the members said “baal toh dahi aur amla se hi achehot hain, kon bekaar mei paise barbaad kare kondisner pe”.• 9 members expressed that they buy shampoos mostly in the form of sachet; theother 7 mentioned that they buy the 40 ml bottles for the entire family and eachsuch bottle lasts for around 20 days.Figure 6: Choice of Sachet/Bottle in focus groups• It was clear from the discussion that unnecessary expenses are avoided and thegroup was not very receptive to experimenting with new products• In the second activity all the members chose the lifebuoy bar.0123456Focus group1 Focus group 2ChikClinic PlusSunsilk0123456Focus Group 1 Focus Group 2SachetBottle
  31. 31. 23• They said they have been using it for ages and trust the product• They were not aware about the use of a hand sanitizer, when explained about theusage; they felt it was an unnecessary item. They felt it is better to wash hands withsoap.• They were not convinced that without using water, the sanitizer would make thehands germ free.• They also felt that the sanitizer was exorbitantly priced.• When asked that if the prices are reduced will they buy it, they said they won’t asthey feel that it is an unnecessary purchase.• The liquid soap was not picked up for the following reasons cited: “mehnga hai, jaldikhatam ho jata hai, bache khel khel ke khatam kar dete hain, sirf dabbe ke liye zyadapaise kyu den, sabun ki tikiya se hi kaam chal jata hai”.3.5 Research Findings from semi-structured surveys3.5.1 Respondent ProfileFigure 7: Gender Profile of respondentsAs seen from the pie chart, a large proportion of respondents were male. This has beenintentionally done as in rural areas male are more aware than female.Male86%Female14%Gender Profile
  32. 32. 24Figure 8: Location Profile of respondents46% of the respondents were from Tajpur village and 31% were from Amarpur village andthe rest 23% were from khanpur.Figure 9: Age Profile of respondentsMaximum respondents were from age group of 20-30 (37) and followed by age group 30-40with 25 respondents.Amarpur31%Khanpur23%Tajpur46%Location Profile0510152025303540<20 20-30 30-40 40-50 >50PercentageAge GroupAge Profile
  33. 33. 25Figure 10: Income Profile of respondentsAs income profile clearly shows, most of the respondents belong to low income group withmore than 71% of respondents earning less than Rs.10000 per month.3.5.2 Price SensitivityFigure 11: Price/Quality choiceThe first basic question that was asked in the survey was whether price or quality is themost important factor when you buy any product. As can be seen from the graph,approximately 2/3rdof the respondents preferred quality and didn’t mind spending someextra money for good quality.01020304050<5000 5000-10000 10000-15000 15000-20000 20000-25000 >25000PercentageIncome GroupsIncome ProfileQuality66%Price34%Most important factor in buying action
  34. 34. 26However, this doesn’t mean that rural consumers are not price sensitive. As discoveredfrom further questioning, rural consumers are quite price-sensitive. An overwhelming 82%of the respondents said they would at least try once the product which is cheaper.The surprising thing was once they have tried all the cheaper products and found onesuitable for their needs; a majority of them (51%) said that they won’t switch to newproduct if prices are increased.Thus the process of product selection is something like –Figure 12: Decision making process in buying a productFigure 13: Price Sensitivity of respondentsLook for allpossibleoptionTry thecheaperonesIf thecheaperone issatisfactory,stick to it.If it is not,then try acostly one.0102030405060708090If the price of the productyou use are increased youwill continue to use itIf most people switch to acostly product, you will alsoswitchYou may try a new productif it is cheaperPrice sensitivity of rural consumersYesNoNo Opinion
  35. 35. 27Figure 14: Perception about Daily Use ProductsWhen asked specifically about daily use products and their pricing and other features, mostof them were satisfied with the quality of the products that were available in the market,with the price and with the packaging of these products.3.5.3 Perception about Modern ProductsFigure 15: Understanding of Modern ProductsAs we can see from the above graph, most people in rural areas are not aware of whatexactly modern products are. More than 31% of the respondents said that there was no0102030405060708090100Most of the productsmeet yourrequirementsThe daily useproducts are aptlypricedThe daily useproducts areavailable in smallpacksThe products seemto be designed takinginto considerationyour needsPerception about Daily usage productsYesNoOpinionNo Difference31%Electronic17%Costly23%Shampoo, etc11%Misll17%Understanding of Modern Products
  36. 36. 28such segment like modern products and products which are sold in urban areas are alsoavailable in rural areas and another 17% said mobile phones and LCD TV are modern. Whatwas more surprising was that 23% of the respondents equated modern products with costlyones.Figure 16: Perception about Modern ProductsWhen people were asked a few question regarding whether they would buy these modernproducts (modern according to their understanding), most of them answered in affirmativeor said they have not thought about it.However, when they were given knowledge about some modern products like HandSanitizer, Liquid Soap, Face wash etc., a big proportion of them (66%) said they find theseitems useless and won’t buy them even if they were affordable.0102030405060Do you think they were overpriced? You would buy modern products if theirprices are affordablePerception about Modern ProductsYesNoNo Opinion
  37. 37. 29Figure 17: Price Sensitivity for modern products3.5.4 In-depth analysis of Tata SwachFigure 18: Awareness level of Tata SwachAs the above graph show, not many people were aware of Tata Swach and not even a singlerespondent was using it. Though many respondents were aware of Reverse Osmosis (RO)water treatment units, they were not aware about Tata Swach.Yes23%No66%No Opinion11%You would buy modern products if their pricesare affordableAware37%Notaware63%Awareness Level ofTata Swach0%100%UsageUse Tata Swach Don’t use Tata Swach
  38. 38. 30Figure 19: Perception about Tata SwachThose who were aware of Tata Swach, when asked about the price and availability of thesame responded in affirmative (61% and 76% respectively).The overall response to Tata Swach was not as expected. The findings go against3.5.5 In-depth analysis of Nokia 1100Figure 20: Awareness level of Nokia 1100As can be seen from the graphs, people are aware of Nokia 1100. (In many casesrespondents didn’t know about Nokia 1100 but were aware of Nokia brand and associated itwith good quality).Around 50% of the respondents have either used Nokia 1100 or were currently using it. Thisshows how very popular this phone is in rural markets.0102030405060708090Is the price of Tata Swach apt? Is the product easily available?YesNoNo OpinionAware89%Notaware11%Awareness LevelUseNokia110051%Don’tuseNokia110049%Usage
  39. 39. 31Figure 21: Reason of Awareness of Nokia 1100Word of mouth and Shop display were regarded as two major factors responsible for theknowledge about this phone (with these two factors accounting for 77%).Figure 22: Perception about Nokia 1100Not only people were aware of Nokia 1100 and were using it, they were highly satisfied withthe price, availability and quality of the product as seen in the above graph.TV14%Word of Mouth34%Shop Display43%Misll9%Reason of Awareness0102030405060708090Is the price ofNokia 1100 apt?Is the producteasily available?Does this productmeet yourrequirements?Are you Happy withthis mobile phone?Perception about Nokia 1100YesNoNo Opinion
  40. 40. 323.5.6 In-depth analysis of Chik ShampooFigure 23: Awareness level of Chik Shampoo and usage formChik shampoo has clearly established itself as a well-known name in rural markets. Morethan 94% of the respondents were aware of this brand and more than 60% respondentshave used the product one or more than one time.Sachet was the predominant form in which the rural consumers bought this product(approximately 71% bought it in sachet form).Figure 25: Reason of Awareness of Chik ShampooAs seen from the above graph, people in rural areas don’t get their knowledge of productsfrom conventional sources like TV or radio but rely more on word of mouth or shop display.94%6%Awareness of Chik ShampooAware Not awareSachet71%Bottle29%Usage formShop Display53%TV16%Word ofMouth22%Misll9%Reason of Awareness
  41. 41. 33By shop display one means that individuals buy what they see or rely on the advice of theshopkeeper.Figure 26: Perception about Chik shampooMost of the respondents (72%) believed that the price of this product was apt and that theproduct was easily available. However, only 32% of the respondents felt that this shampoowas better than other shampoos available in the market and about the same number werenot satisfied with its quality but used it because the alternatives were costly.Most of the respondents said they bought sachets on as-and-when-required basis ratherthan investing 30-40 rupees in buying a bottle.01020304050607080Is the price of ChikShampoo apt?Is the product easilyavailable?Does this shampoomeet yourrequirements?Is this shampoobetter than othershampoos?Perception about Chik ShampooYesNoNo Opinion
  42. 42. 344 Findings and Recommendations4.1 Implication from in-depth analysis4.1.1 Tata SwachThough available literature says that Tata Swach is the one of the most used water purifiersin rural areas, our study goes against this and as seen in the above section, neither manypeople were aware of Tata Swach nor many were using it.However, respondents were aware of RO based water purifiers, knew the importance ofwater purifiers and had heard the name of Pureit (a competitor of Tata Swach).4.1.2 Nokia 1100Our study findings reveal that Nokia 1100 is still one of the most popular mobile phones inrural areas and Nokia brand is associated with good quality in these areas. People trustNokia and the factors responsible for this are –• Price range of Nokia 1100• Sturdy design with high quality• Some features essential in rural areas like torch and dust resistant keypad• Easy availability in rural areasThus, as per our study, Nokia 1100 can be considered an ideal mixture of Price and qualityand this has made it the most successful model of Nokia.4.1.3 Chik ShampooMore than 94% respondents were aware of this brand and this was mainly due to followingfactors:• Availability• Low unit price (achieved through sachet packaging)• Decent quality
  43. 43. 35However, unlike Nokia 1100, not many people were happy with the quality of Chik Shampooand used it mainly because it was cheap.Figure 27: Perceived Quality Spectrum of Shampoo available in rural markets4.2 Implication from Focus group• Consumers seek value in their purchase i.e. product should be affordable, low pricedand fulfill its intended benefits and therefore, goods should be promoted on priceplank.• Modern/urban products won’t be successful in rural areas unless they are pricedaptly.• Robustness and ease of use would be two other main factors.• They look for multiple use of a single product so as to maximize their utility.4.3 Implication from semi-structured surveySemi-structured surveys provided many insights into the behavioural aspect of ruralmarkets. Some of the implications for marketers are -• Though price is a predominant factor in purchase behavior of rural people but theyaspire for quality and as soon as they are able to afford it, they switch. Thus, idealprices should be kept in an affordable range but different categories should becreated for those who want better quality.• Low unit price can be considered the most important factor in case of daily useproducts like soap, shampoo, toothpaste etc.• Modern products may be able to find a market in rural areas if they are aptly priced.This is true for electronic devices rather than daily use products as people in ruralareas find products like face wash, hand sanitizers, liquid soaps useless and may notuse them even if they are affordable.• People in rural areas don’t like specialized products which are marketed as beingproducts designed for rural population. They want to match the urban standards andif companies market a product as one especially designed for them, instead ofaccepting the product, they reject it as it doesn’t meet their aspiration even thoughit may be best suited for their needs.SunsilkClinic PlusChikLow High
  44. 44. 36• People in rural markets don’t think in long term and thus they avoid largeexpenditure in short run. This was seen in survey when the respondents said theybought 30-40 sachets of shampoo for the family over a period of one month butdidn’t buy a bottle of 100ml as it would mean an expenditure of Rs.30 in one go,though this was an economical option.• Many companies like CavinKare and Nokia have truly understood the need of ruralmarkets and successfully catered them. Their experience and innovative strategiesare examples worth emulating. In order to truly understand the pulse of ruralmarkets, there is a need to know their tastes and preferences, their aspirations andpsychology with respect to each product category.
  45. 45. 375 ConclusionsThis study has made an attempt to understand an untapped market and found a few basicparameters which play an important role in these markets. With the help of in-depthanalysis of few successful products, semi-structured surveys and focus groups, this studyconcluded that price and quality both play an important role though price has a slightlygreater weight in decision making.The study analysed Nokia 1100 and found that its success can be attributed to robustdesigning, low price, easy accessibility and strong marketing. Similarly, success of ChikShampoo can be attributed to low unit price and easy availability.The study concludes that price is not the most important factor in purchase behaviour ofrural people, quality is important too.The study also finds that unlike popular perception as observed in available literature, ruralpopulation doesn’t want specialised products for their markets, what they want are theurban products packaged in such a way to meet their financial conditions. Thus, low unitprice is important factor and innovative packaging not different product altogether isneeded to sell it in rural areas.Many companies like CavinKare and Nokia have truly understood the need of rural marketsand successfully catered them. Their experience and innovative strategies are examplesworth emulating. However, in order to truly understand the pulse of rural markets, there isa need to know their tastes and preferences, their aspirations and psychology with respectto each product category and each region. Case-in-point, people in rural areas closer tometropolitan cities or urban centres have different aspirations and mind-set than people invillages far away from urban centres.This study was an attempt in this direction and huge effort is still required to understandand cater the untapped market of rural India.
  46. 46. 386 Challenges and LimitationsChallenges:• Getting the right information from the respondents was a challenge especiallyregarding their income.• Sometimes people don’t give correct information and thus deciphering whichinformation is correct and which is not was a challenge.• As hypothesis designing, questionnaire designing, survey etc. were conducted by asingle person, removing experimenter bias was a challenge.Limitations:• The sample size of the study was 125 + 2 focus groups of size 8 each. Thus due to thesmall size generalization of the findings is a challenge.• The Study covered only three villages in two regions (UP and Delhi) but people’spreference changes from one region to another and thus findings cannot begeneralized across India.• The study was qualitative in nature and thus proper cause-effect relationship cannotbe established and weight cannot be attached to various factors responsible for saleof a product in rural markets.
  47. 47. 39Bibliography• Krishnamacharyulu, C.S.G. (2011). Rural Marketing: Text and Cases. DorlingKindersley, India• Prahlad, C.K. (2006). The Fortune at the Bottom of the Pyramid. Dorling Kindersley,United States• Sinha, D. (2011). Consumer India. John Wiley & Sons, India• World, B. (2012) Marketing Whitebook 2012-1. Business World, IndiaReferencesJournals• Ajith, P. (2010). 3P Framework: Rural Marketing in India. SCMS Journal of IndianManagement; Jan2010, Vol. 7 Issue 1, p54-67• Joshi, H.,& Srivastava, R.K.(2011). Capturing rural market with customization ofmarket mix. Asian Journal of Technology & Management Research Vol. 01 – Issue:02• Tiwari R., & Herstatt, C. (2012). Frugal Innovations for the ‘Unserved’ Customer:An Assessment of India’s Attractiveness as a Lead Market for Cost-effectiveProducts. Journal of Indian Business Research, Vol. 4, Issue 2, pp. 97-115• Tiwari R., & Herstatt, C. (2012). India – A Lead Market for Frugal Innovations?Extending the Lead Market Theory to Emerging Economies. Working Paper No.67, Institute of Technology and Innovation Management, Hamburg University ofTechnology, Germany.Internet• Retrieved from - “Why Companies See Bright Prospects in Rural India”http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4386• Retrieved from – “Reaching out to rural India”http://www.tata.in/company/articles/inside.aspx?artid=m73PWlDIJmU=• Retrieved from – “Seducing shoppers in Sticksville”http://www.economist.com/node/21558631• Retrieved from – “Innovation in Rural India”http://www.oifc.in/investing-in-india/investment-info/in-focus/innovation-in-rural-india-treasures-from-india-bottom-of-pyramid• Retrieved from – “Indian Rural Market: The Next Big Thing”http://www.mbaskool.com/business-articles/marketing/2329-indian-rural-market-the-next-big-thing.html• Retrieved from – “The Fortune at the Bottom of the Pyramid”http://www.strategy-business.com/article/11518?pg=all
  48. 48. 40AnnexuresQuestionnaire for in depth Survey (English Version)For the study on Product Innovation - An Effective strategy to penetrate into small townsand rural marketsName:Gender:MaleFemaleAge:<2020-3030-4040-50>50LocationOccupationMonthly income:<50005000-1000010000-1500020000-25000>25000Which one of the two - price and quality, the more important factor in buying a product?PriceQualityAnswer the following question:
  49. 49. 41Yes No No opinionIf the price of the productyou use are increased youwill continue to use it.If most people switch to acostly product, you will alsoswitchYou may try a new product ifit is cheaperViews:Answer the following question:Yes No No opinionMost of the products meet yourrequirementsThe daily use products are aptlypricedThe daily use products areavailable in small packsThe products seem to bedesigned taking intoconsideration your needs
  50. 50. 42Views:What do you understand by modern/urban products?Name at least two products that you think are modern/urbanHave you ever used any of these products?Why did you use these products?Answer the following questions:
  51. 51. 43Yes No No opinionDo you think they wereoverpriced?Did they satisfy you?Will you buy them again?From where did you come to know about these products?NewspaperTVRadioShop displaySomeone using itOther:Answer the following question:Yes No No opinionYou are aware of the newproducts available in urbanareasYou would buy such modernproduct only when you haveseen someone using itYou would buy modernproducts if their prices areaffordableModern products are designedkeeping you in mindViews:
  52. 52. 44Tata SwachAnswer the following questions:Yes NoAre you aware of the product?Do you own this product?Do you know how to use thisproduct?How did you come to know about this product?NewspaperTVRadioWord of mouthShop DisplayOther:Who do you think influenced your action of buying this product?YourselfFamily MemberNeighboursCo WorkersRetailerAdvertisementsOther:Answer the following:Yes No No opinionDo you think the price of thisproduct is apt?Is the product easily available?Does this product meet your
  53. 53. 45Yes No No opinionrequirements?Are you happy with the qualityof the product?More views:Nokia 1100Answer the following questions:Yes NoAre you aware of the product?Do you own this product?Do you know how to use thisproduct?How did you come to know about this product?NewspaperTVRadioWord of mouthShop DisplayOther:Who do you think influenced your action of buying this product?YourselfFamily MemberNeighboursCo WorkersRetailer
  54. 54. 46AdvertisementsOther:Answer the following:Yes No No opinionDo you think the price of thisproduct is apt?Is the product easily available?Does this product meet yourrequirements?Are you happy with the qualityof the product?More views:Chik ShampooAnswer the following questions:Yes NoAre you aware of the product?Do you use this product?How did you come to know about this product?NewspaperTVRadioWord of mouthShop DisplayOther:
  55. 55. 47In what form do you buy this shampoo?Sachet45ml bottle100ml bottle200 ml bottle400 ml bottleAnswer the following:Yes No No opinionDo you think the price of thisproduct is apt?Is the product easily available?Does this product meet yourrequirements?Is this product better than othershampoos available in themarket?More views:Any other questions asked during the survey:
  56. 56. 48Questionnaire for in depth Survey (HIndi Version)सा ा कार के लए नावलउ पाद नवीनता - छोटे शहर और ामीण बाजार म वेश करने के लए एक भावी रणनी तनाम:लंग:पु षम हलाउ :<2020-3030-4040-50>50थान:यवसाय:मा सक आय:<50005000-1000010000-1500020000-25000>25000एक उ पाद को खर दने म अ धक मह वपूण कारक या है?क मतगुणव तान न ल खत न का उ तर द:हां नह ं कोई राय नह ंआप एक नए उ पाद का उपयोगअगर वह स ता है.
  57. 57. 49हां नह ं कोई राय नह ंय द उ पाद क क मत म वृ कगई, आपके लए इसका इ तेमालजार रहेगा.य द यादातर लोग को एक महंगाउ पाद के लए ले जाते ह, तो आपयह भी उपयोग शु कर दगेि टकोण:न न ल खत न का उ तर द:हां नह ं कोई राय नह ंअ धकांश उ पाद आपकआव यकताओं को पूरादै नक उपयोग के उ पाद को उ चतक मत हदै नक उपयोग के उ पाद के छोटेपैक म उपल ध हउ पाद आपक आव यकताओं कोयान म रखते हुए तैयार कए ह.ि टकोण:
  58. 58. 50आधु नक / शहर उ पाद से आप या समझते ह?कम से कम दो उ पाद के नाम लख जो आपको लगता है क आधु नक/ शहर हैया आपने कभी इन उ पाद के कसी भी इ तेमाल कया?य आप इन उ पाद का उपयोग कया था?न न ल खत न का उ तर द:हां नह ं कोई राय नह ंया आपको लगता है क वे महंगेथे?
  59. 59. 51हां नह ं कोई राय नह ंया वे आप को संतु ट करने मस म थे?आप उ ह फर से खर द लगे?आपको इन उ पाद के बारे म पता कै से लगा?अख़बारट वीरे डयोदुकान म दशनकसी और ने आपको बतायाOther:न न ल खत न का जवाब:हां नह ं कोई राय नह ंआपको शहर े म उपल धउ पाद के बारे म पता हआप इस तरह के आधु नक उ पादखर द के वल जब आप इसकाउपयोग कसी को देखा होगाआप आधु नक उ पाद को खर दलगे अगर उनक क मत कम कोकया गयाआधु नक उ पाद के डजाइनआपको यान म रखते हुए होता हैि टकोणटाटा Swach
  60. 60. 52न न ल खत न का जवाब:हां नह ंआपको इस उ पाद के बारे म पता ह?या आप के पास यह उ पाद है?या आप जानते ह क इस उ पाद काउपयोग कै से कर?आपको इन उ पाद के बारे म पता कै से लगा?अख़बारट वीरे डयोदुकान म दशनकसी और ने आपको बतायाOther:आपको या लगता है इस उ पाद को खर दने क आपक कारवाई को कसने भा वत कया है?वयंप रवार के सद यपड़ोसीसह कायकताखुदरा व े ताव ापनOther:न न ल खत न का उ तर द:हां नह ं कोई राय नह ंया आपको लगता है क इसउ पाद क क मत उपयु त है?उ पाद आसानी से उपल ध है?यह उ पाद को आपकआव यकताओं को पूरा करता है?आप उ पाद क गुणव ता के साथखुश ह?
  61. 61. 53और कोई वचारनो कया 1100न न ल खत न का जवाब:हां नह ंआपको इस उ पाद के बारे म पता ह?या आप के पास यह उ पाद है?या आप जानते ह क इस उ पाद काउपयोग कै से कर?आपको इन उ पाद के बारे म पता कै से लगा?अख़बारट वीरे डयोदुकान म दशनकसी और ने आपको बतायाOther:आपको या लगता है इस उ पाद को खर दने क आपक कारवाई को कसने भा वत कया है?वयंप रवार के सद यपड़ोसीसह कायकताखुदरा व े ताव ापनOther:न न ल खत न का उ तर द:
  62. 62. 54हां नह ं कोई राय नह ंया आपको लगता है क इसउ पाद क क मत उपयु त है?उ पाद आसानी से उपल ध है?यह उ पाद को आपकआव यकताओं को पूरा करता है?आप उ पाद क गुणव ता के साथखुश ह?और कोई वचारChik शै पून न ल खत न का जवाब:हां नह ंआपको इस उ पाद के बारे म पता ह?या आप के यह उ पाद उपयोग करतेह?आपको इन उ पाद के बारे म पता कै से लगा?अख़बारट वीरे डयोदुकान म दशनकसी और ने आपको बतायाOther:कस प म आप इस शै पू क खर द करते ह?
  63. 63. 55पाउच45ml बोतल100ml बोतल200 ml बोतल400 ml बोतलन न ल खत न का उ तर द:हां नह ं कोई राय नह ंया आपको लगता है क इसउ पाद क क मत उपयु त है?उ पाद आसानी से उपल ध है?यह उ पाद को आपकआव यकताओं को पूरा करता है?यह उ पाद अ य बाजार म उपल धशपू क तुलना म बेहतर है?और कोई वचारकोई और भी अ य न सा ा कार के दौरान पूछा गया:
  64. 64. 56Remarks

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