ITC : e Choupal : Rural Marketing :Marketing StrategyBy: Yogin Vora on March 5, 2009 4 CommentsINTRODUCTIONIn recent years, rural markets of India have acquired significance, as the overall growth of theIndian economy has resulted into substantial increase in the purchasing power of the ruralcommunities. On account of green revolution, the rural areas are consuming a large quantity ofindustrial and urban manufactured products. In this context, a special marketing strategy,namely, rural marketing has emerged. But often, rural marketing is confused with agriculturalmarketing – the latter denotes marketing of produce of the rural areas to the urban consumers orindustrial consumers, whereas rural marketing involves delivering manufactured or processedinputs or services to rural producers or consumers.WHAT MAKES RURAL INDIA ATTRACTIVE?It is an upcoming market and the following facts substantiate this-? 800 million people? Estimated annual size of the rural marketâ€¢ FMCG Rs 65,000 Croreâ€¢ Durables Rs 5,000 Croreâ€¢ Agri-inputs (incl. tractors) Rs 45,000 Croreâ€¢ 2 / 4 wheeler vehicles Rs 8,000 Crore? In 2001-02, LIC sold 55 % of its policies in rural India.? Of two million BSNL mobile connections, 50% are in small towns/villages.? Of the six lakh villages, 5.22 lakh have a Village Public Telephone (VPT)? 41 million Kisan Credit Cards issued (against 22 million credit-plus-debit cards in urban) withcumulative credit of Rs 977 billion resulting in tremendous liquidity.? 42 million rural households are availing banking services in comparison to 27 million urbanhouseholds.? Investment in formal savings instruments: 6.6 million households in rural and 6.7 million inurban India.? Nano-Marketing or sachets worked well in rural India and there is ample scope for the productsto be accepted by consumers if the price is competitive.MARKETING STRATEGIES TO CAPTURE RURAL INDIA? BY COMMUNICATING AND CHANGING QUALITY PERCEPTIONCompanies are coming up with new technology and they are properly communicating it to thecustomer. There is a trade of between Quality a customer perceives and a company wants tocommunicate. Thus, this positioning of technology is very crucial. The perception of the Indianabout the desired product is changing. Now they know the difference between the products andthe utilities derived out of it. As a rural Indian customer always wanted value for money with thechanged perception, one can notice difference in current market scenario.? BY PROPER COMMUNICATION IN INDIAN LANGUAGE
The companies have realized the importance of proper communication in local language forpromoting their products. They have started selling the concept of quality with propercommunication. Their main focus is to change the Indian customer outlook about quality. Withtheir promotion, rural customer started asking for value for money.? BY TARGET CHANGING PERCEPTIONIf one go to villages they will see that villagers using Toothpaste, even when they can use Neemor Babool sticks or Gudakhu, villagers are using soaps like Nima rose, Breeze, Cinthol etc. evenwhen they can use locally manufactured very low priced soaps. Villagers are constantly lookingforward for new branded products. What can one infer from these incidents, is the paradigmchanging and customer no longer price sensitive? Indian customer was never price sensitive, butthey want value for money. They are ready to pay premium for the product if the product isoffering some extra utility for the premium.? BY UNDERSTANDING CULTURAL AND SOCIAL VALUESCompanies have recognized that social and cultural values have a very strong hold on the people.Cultural values play major role in deciding what to buy. Moreover, rural people are emotionaland sensitive. Thus, to promote their brands, they are exploiting social and cultural values.? BY PROVIDING WHAT CUSTOMER WANTThe customers want value for money. They do not see any value in frills associated with theproducts. They aim for the basic functionality. However, if the seller provides frills free of costthey are happy with that. They are happy with such a high technology that can fulfill their need.As “Motorola” has launched, seven models of Cellular Phones of high technology but none tookoff. On the other hand, “Nokia” has launched a simple product, which has captured the market.? BY PROMOTING PRODUCTS WITH INDIAN MODELS AND ACTORSCompanies are picking up Indian models, actors for advertisements as this helps them to showthemselves as an Indian company. Diana Hyden and Shahrukh Khan are chosen as a brandambassador for MNC quartz clock maker “OMEGA” even though when they have models likeCindy Crawford.? BY ASSOCIATING THEMSELVES WITH INDIAMNCs are associating themselves with India by talking about India, by explicitly saying thatthey are Indian. M-TVduring Independence Day and Republic daytime make their logo withIndian tri-color. Nokia has designed a new cellular phone 5110, with the India tri-colour and aringing tone of “Sare Jahan se achcha”.? BY PROMOTING INDIAN SPORTS TEAMCompanies are promoting Indian sports teams so that they can associate themselves with India.With this, they influence Indian mindset. LG has launched a campaign “LG ki Dua, all the best”.ITC is promoting Indian cricket team for years; during world cup they have launched a campaign“Jeeta hai jitega apna Hindustan India India India”. Similarly, Whirlpool has also launched acampaign during world cup.? BY TALKING ABOUT A NORMAL INDIANCompanies are now talking about normal India. It is a normal tendency of an Indian to try toassociate him/her with the product. If he/she can visualize himself/herself with the product, he/she become loyal to it. That is why companies like Daewoo based their advertisements on anormal Indian family.? BY DEVELOPING RURAL-SPECIFIC PRODUCTSMany companies are developing rural-specific products. Keeping into consideration therequirements, a firm develops these products. Electrolux is working on a made-for India fridge
designed to serve basic purposes: chill drinking water, keep cooked food fresh, and to withstandlong power cuts.? BY GIVING INDIAN WORDS FOR BRANDSCompanies use Indian words for brands. Like LG has used India brand name “Sampoorna” forits newly launched TV. The word is a part of the Bengali, Hindi, Marathi and Tamil tongue. Inthe past one year, LG has sold one lakh 20-inch Sampoorna TVs, all in towns with a populationof around 10,000.? BY ACQUIRING INDIAN BRANDSAs Indian brands are operating in India for a long time and they enjoy a good reputation in India.MNCs have found that it is much easier for them to operate in India if they acquire anEstablished Indian Brand. Electrolux has acquired two Indian brands Kelvinator and Allwyn thishas gave them the well-established distribution channel. As well as trust of people, as peoplebelieve these brands. Similarly Coke has acquired Thumps up, Gold Spot,Citra and Limca so that they can kill these brands, but later on they realized that to survive in themarket and to compete with their competitor they have to rejuvenate these brands.? BY EFFECTIVE MEDIA COMMUNICATIONMedia Rural marketing is being used by companies. They can either go for the traditional mediaor the modern media. The traditional media include melas, puppetry, folk theatre etc. while themodern media includes TV, radio, e-chaupal. LIC uses puppets to educate rural masses about itsinsurance policies. Govt of India uses puppetry in its campaigns to press ahead social issues.Brook Bond Lipton India ltd used magicians e_ectively for launch of Kadak Chap Tea in Etawahdistrict. In between such a show, the lights are switched of and a torch is flashed in the dark(EVEREADYs tact).? BY ADOPTING LOCALISED WAY OF DISTRIBUTINGProper distribution channels are recognized by companies. The distribution channel could be bigscale Super markets; they thought that a similar system can be grown in India. However, theywere wrong; soon they realized that to succeed in India they have to reach the nook and thecorner of the country. They have to reach the “local Paan wala, Local Baniya” only they cansucceed. MNC shoe giants, Adidas, Reebok, and Nike started with exclusive stores but soon theyrealized that they do not enjoy much Brand Equity in India, and to capture the market share inIndia they have to go the local market shoe sellers. They have to reach to local cities with lowpriced products.? BY ASSOCIATING THEMSELVES WITH INDIAN CELEBRITIESMNCs have realized that in India celebrities enjoyed a great popularity so they now associatethemselves with Indian celebrities. Recently Luxor Writing Instruments Ltd. a JV of Gillette andLuxor has launched 500 “Gajgamini” range of Parker Sonnet Hussain special edition fountainpens,priced at Rs. 5000. This pen is signed by Mr. Makbul Fida Hussain a renowned painter whohas created “Gajgamini” range of paintings. Companies are promoting players like BhaichungBhutia, who is promoted by Reebok, so that they can associate their name with players like himand get popularity.? MELASMelas are places where villagers gather once in a while for shopping. Companies take advantageof such events to market their products. Dabur uses these events to sell products like JANAMGHUTI(Gripe water). NCAER estimates that around half of items sold in these melas are FMCG
products and consumer durables. Escorts also display its products like tractors and motorcyclesin such melas.? PAINTINGSA picture is worth thousand words. The message is simple and clean. Rural people like the sightof bright colours. COKE, PEPSI and TATA traders advertise their products through paintings.ITC (Agri Business Division)ITC’s pre-eminent position as one of India’s leading corporates in the agricultural sector is basedon strong and enduring farmer partnerships, that has revolutionized and transformed the ruralagricultural sector. A unique rural digital infrastructure network, coupled with deepunderstanding of agricultural practices and intensive research, has built a competitive andefficient supply chain that creates and delivers immense value across the agricultural value chain.One of the largest exporters of agri products from the country, ITC sources the finest of IndianFeed Ingredients, Food Grains, Edible Nuts, Marine Products, Processed Fruits, Coffee & Spices.ITCâ€™s Agri Business Division, one of Indiaâ€™s largest exporters of agriculturalcommodities, has conceived e-Choupal as a more efficient supply chain aimed at deliveringvalue to its customers around the world on a sustainable basis.The e-Choupal model has been specifically designed to tackle the challenges posed by the uniquefeatures of Indian agriculture, characterised by fragmented farms, weak infrastructure and theinvolvement of numerous intermediaries, among others.Why into Rural Marketing?ITC entered into rural marketing because it understood the problems faced by the farmers andalso realized the vast opportunity it can capitalize using its mammoth reserves and surplus.The farmers basically suffered from 2 Dâ€™S? Deep Sea Institutional supporto Information of farming best practiceso Information on weathero Quality and Information on inputs? Devil â€“ Middle mano Price Discoveryo Quality and Weightmento Handling Lossâ€œeâ€• helps overcome 2 Dâ€™s in following ways â€“? Price discovery before deciding to sell.? Freedom of choice for transaction.? Payment â€“ cash on spot.? Knowledge on farming best practices.? Information on weather.? High quality products and solutions â€“ usage.? It provided power of scale to farmers.? It led to overall improvement in productivity.? Sanchalaks has built tremendous trust and credibility in villages.
RURAL MARKETING STRATEGY â€“ 4 Aâ€™SAvailability: It emphasizes on the availability of the goods and services to the end consumers. Inthe case of e-choupal the products are available continuously because sanchalaks maintainscontinuous inventory and maintains aggregate demnand.Affordability: It focuses on product pricing. ITC buys from farmers directly in the last daysclosing price and even pays them for transportation. Goods are weighted electronically and hencefarmers are no more cheated as they used to be previously. Hence it is a win-win situation bothfor farmers and the company.Acceptability: It focuses on convincing the customer to buy the product. ITCâ€™s e-choupalinitiative is proving the farmers with real time updated information on weather. It is providingthem customized knowledge in the form of farm management and risk management. It is alsoproviding them lower transaction cost. It is also providing them financial services in the form oflife, general, health and crop insurance.Awareness: It focuses on making people aware of the product. It is providing active servicing upto rural outlets. It is providing them with wide range of product categories. Moreover it has madeentrepreneurs out of farmers as they are managing most of the work, it instills in them the senseof ownership.This enthusiastic response from farmers has encouraged ITC to plan for the extension of theâ€˜e-Choupalâ€™ initiative to altogether 15 states across India over the next few years. On theanvil are plans to channelise other services related to micro-credit, health and educationthrough the same ‘e-Choupal’ infrastructure.CONCLUSIONITC e-Choupal, an innovative strategy which is elaborative and extensive in rural markets so far.Critical factors in the apparent success of the venture are ITCs extensive knowledge ofagriculture, the eort ITC has made to retain many aspects of the existing production system,including retaining the integral importance of local partners, the companies commitment totransparency, and the respect and fairness with which both farmers and local partners are treated.The concepts, which are becoming more important in every market, include color, productattractiveness visibility, and display quality. In addition, availability (meeting local demand byincreasing production locally), acceptability (building brand equity), and affordability (pricinghigher than local brands, but adapting to local conditions) are the key factors.