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[Rural marketing]


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[Rural marketing]

  1. 1. [Rural Marketing]By Cru3L
  2. 2. Definitionof Rural Government agencies from IRDA & NCAER define „Rural‟ as “a village with a population of less than 5,000 with 75% of the male population engaged in agriculture etc.”
  3. 3. Definition ofRural Marketing According to National Commission on Agriculture “Rural marketing is a process which starts with a decision to produce a salable farm commodity and it involves all the aspects of market system, and includes pre and post harvest operations i.e. assembling, grading, storage, transportation and distribution”.
  4. 4. Features ofRural Market inIndia 1. Large and scattered market 2. Diverse socio-economic background 3.Changing demand pattern 4.Major income comes from agriculture 5.Saving habits 6.Traditional outlook 7.Low standard of living 8.Media reach Communication 9.Electrification.
  5. 5.  Large and scattered market: According to 2001 census rural populationis 72% of total population and it is scattered over a wide range ofgeographical area. Diverse socio-economic background: This is different in different partsof the country and brings diversity in rural markets. Changing demand pattern: Demand pattern of rural customer is fastchanging due to increasing in income and credit facilities offered by bankslike „kissan credit card‟. Major income comes from agriculture: About 60% of the rural incomeis from agriculture and hence the demand for consumer goods is highduring harvesting season. Saving habits: Rural consumer is now having saving habits due to theefforts of co-operative and commercial banks. Traditional outlook: Rural customer values old customs and traditions. Low standard of living: Rural consumer have low standard of livingbecause of low literacy, low per capita income and social backwardness. Media reach: The reach of pint media is 10% followed by TV 31%,radio 31% and cinema 33%. Electrification: About 88% of villages have been electrified and restwill soon get electricity by “Rural Electricity Corporation”.
  6. 6. Scope / Attractiveness of Rural Market Large Population: According to 2001 census rural population is 72% of totalpopulation and it is scattered over a wide range of geographical area Rising RuralProsperity: Average income level has improved due to modern farming practices,contract farming, industrialisation, migration to urban areas and remittance of money byfamily members settled abroad. Growth in Consumption: There is a growth in purchasing power of or ruralconsumers. The average per capita household expenditure is Rs. 382. Changing Lifestyle: Lifestyle of rural consumer changed considerably. Life Cycle Advantage: The products, which have attained the maturity stage inurban market, is still in growth stage in rural market. E.g. popular soaps, skin cream,talcum powder, etc. Market Growth Rate Higher than Urban: As per the survey made by NCAER thegrowth rate of FMCG market and durables market is higher in rural areas. The ruralmarket share is more than 50% for products like body talcum powder, toilet soapscooking oil, hair oil etc. Rural Marketing is not Expensive: To promote consumer durables inside a statecosts Rs one crore while in urban areas it will costs in millions.
  7. 7. Constraints in Rural Marketing Vastness and Uneven Growth: India has about 5 lakhs villages, which arescattered over a wide range of geographical area, and also they are not uniform insize. Transport Problem: Transportation infrastructure is very poor in rural India.Though India has the fourth largest railway system in the world, many villagesremain outside the railway network. Many villages have only kaccha roads whilemany of rural interiors are totally unconnected by roads. Because of this thephysical distribution is difficult in rural areas. Communication Problems:Communication infrastructure consisting of posts, telegraphs and telephones isinadequate. Warehousing Problems: Central Warehousing Corporation and StateWarehousing Corporation do not extend their services to the rural parts. Thewarehouses at mandi level are managed by co-operative societies who provideservices to members only. Many Languages and Dialects: The number of language and dialects varywidely from state to state, region to region and even from district to district.Though the recognized languages are only 16 the number of dialects is around 850. Market Organisation & Staff: Rural marketing needs large marketingorganisation and staff to have an effective control, which requires huge investment. Non-Availability of Dealers: It is not possible to have direct outlets in eachrural market; firms have to have service of dealers, which is not easily available. Hierarchy of Market: Rural consumers have identified market places fordifferent items of their requirements. Thus depending upon the purchase habit ofrural people, the distribution network of different commodities has to be different.
  8. 8. Factors Contributing to the Growth of Rural Markets Employment Opportunities: The income from new employment andrural development efforts has increased the purchasing power of ruralpeople. Green Revolution: Due to green revolution a technological breakthrough has taken place in rural India, which results into substantialwealth generation in these areas. Favourable Government Policies: Tax exemption in backward areas,subsidy, concession, incentives and heavy investment in ruraldevelopment programmes in has brought rapid growth of rural markets. Literacy Growth: Literacy rate is increasing in rural areas, nearly 45%of rural Indians are literate. This brings social and cultural changes inbuying behaviour of the rural customers. Rising Disposable Income: Good monsoons, green revolution andAdministered Pricing Mechanism (PAM) have raised disposable incomein rural areas. Attraction of Higher Standard of Living: Rural people have beenmotivated to change their lifestyles and have higher standard of living. Spread of Cable Television: The growth of satellite TV channels hasmade a major impact on villages. This has led to a change in lifestyle andconsumption pattern.
  9. 9. Market Segmentation in Rural Market Geographic Segmentation: Segmentation on the basis ofgeography is done depending on various factors such asRegion: North, South, East and West.Village Size: < 500 people, 501 – 2000 people, 2001 – 5000 people,> 5000 peopleProximity to the feeder town:Density: The number of people per sq. kmClimate: Moderate, rain fed or dry with scanty rainfall. Level ofIrrigation: Whether good, moderate, scanty or none at all. Demographic Segmentation: It is based on the population, agegroup, literacy level and income of the rural consumer. Psychographics / Behavioral Segmentation: Such segmentationis done using variables such as Lifestyle of the people, (whetherrigid, traditional or changing), Occasion, (whether on a regular day ora special occasion), Benefits sought from the product (such asQuality, Price and Service), and Loyalty to brands, (whether Low,Medium or High.)
  10. 10. Changing Pattern of Rural Demand/Recent Development in Rural MarketThe position in the rural market was totally different twenty years ago. At presetthere is a demand for products like TV, fans, oil engines, readymade garments,medicine, etc. New products like toiletries, baby care products and consumerdurables are now getting good demand. Demand pattern of rural markets arechanging due to the following reasons:1. Production of food grains has increased. This enhanced the ruralpurchasing power.Due to 2000 Exim policy, export of Indian agricultural products increased.Credit facilities extended by public sector banks by kisan credit cards helpsfarmers to buy agricultural and consumer goods on installments.Co-operative and public sector banks are extending loans to the rural people andcreating job opportunities for them.Cable TV has played important role in bringing change in lifestyle andconsumption habits of rural people.Liberalisation facilitated contract farming thus the farmer has ready market fortheir produce.
  11. 11. 4 A‟s of Rural Marketing Availability: The first challenge is to ensure availability of productsand services. India‟s 627,000 villages spread over 3.2 million sq. km,given the poor state road; it is not easy to reach 700 million rural Indians. Affordability: The second challenge is to ensure affordability of theproducts and services. With low disposable income products need to beaffordable to the rural consumers. Some companies consider it byintroducing small unit packs, e.g. Godrej introduced Fair glow in 50 gmpacks. Acceptability: The third challenge is to gain acceptability for theproducts and services. Therefore there is a need to offer products thatsuites the rural consumer needs and customs. E.g. LG developed acustomised TV for the rural market and promoted „Sampoorna”. Awareness: Events like fairs, festivals, haats etc. are to be used forbrand communication. Ideas like putting sticker on the hand pumps,walls of the wells, tin palates on trees surrounding the ponds etc. aresome of the innovative media used by soap companies like Lux, Lifeboy,Rin and Wheel. The idea is to advertise at the time of consumption.
  12. 12. Project“BHARAT” ofHUL Under project “Bharat” HUL vans visited villages and sold small packs of low unit price. It includes detergent powder, toothpaste, face cream and talcum powder for Rs. 15. During the sale the company representative also demonstrate the use of the products with the help of a video show. This created awareness about HUL product categories and availability of affordable packs.
  13. 13. PROFILE OF RURAL CONSUMER Size of the rural consumer Location pattern of rural consumer Low literacy level of rural consumer Occupation of rural consumer Income of rural consumer Savings of rural consumer Reference groups: Primary health workers, doctors, teachers, andpanchayat members. conscious customer: Though not educated, very conscious aboutvalue for money. Brand loyalist High degree of involvement: He checks and rechecksparticularly for purchasing expensive and durable products. Interpersonal communication: Its accounts 80% of thecommunication process in village. Hence word of mouthrecommendation by users has great influence. Media habits: TAMASHA in Maharashtra and NAUTANKI in UPis a popular form of entertainment which can be used as promotionalmedia
  14. 14. Classification ofRural Consumer Affluent Group: This group is very small and almost negligible. This group can afford luxury products. E.g. chilly merchants in Guntur (AP) and wheat farmers in Punjab. Middle Class: This class is about 300 million in size and continues goes on expanding. It forms the base for demand of manufactured goods in the country. E.g. jute farmers in West Bengal and sugarcane farmers in UP. Poor: This class is about 250 million in size. Their purchasing power is very low. E.g. poorest farmers of jawar and bajra of Bihar and Orissa.
  15. 15. Methods forMotivating RuralConsumers Mass Communication Education Sales Force Physical Distribution Live Demonstration
  16. 16. Rural Customer v/s Urban CustomerURBAN MARKET : RURAL MARKET : Widely spread and Mostly concentrated scattered High infrastructural level  Low infrastructural level High density of population per sq km  Low density of population per sq km PoorGood physical connectivity and high mobility physical connectivity and low mobility PeopleIncomes are more stable and permanent work in less certain environment MostlyOccupations are government employment, agricultural occupationbusiness.  A cute seasonality in income receipts Income received at regular income Less number of interactions with persons and Large number of interactions with persons more frequent between same personsand less frequent between same persons  Social norms influencing individuals Social norms are less visible  Cast influence direct and strong Cast influence indirect and less visible  Low exposure to variety of products High exposure to variety of products  Low brand awareness High brand awareness  Low exposure to marketing researchers High exposure to marketing researchers and limited source of information Lessand multiple source of information More convenient buying, less retail outlet per 1000convenient buying, more retail outlet per 1000 population.population.
  17. 17. 1 . Small Unit Packaging Small packs are preferred due to the following reasons: Small packs help the rural consumer to pick the product at affordable price. PRODCUT Individual use products like shampoo; toilet soaps, etc. are bought in smallerSTRETEGY size. Small packs are easy to display and they increase the visual appeal. Small packs are convenient to retailer to do his business. Example: Cavin Care introduced shampoo in 4 ml sachets at 0.50 paise. Rasna is now available in sachet at Re. 1 Ponds introduced 20 gm talcum powder Tiger biscuit is available in four biscuits pack at Re. 1
  18. 18. 2 . NewProduct Design The products are designed as per the rural lifestyle. Example: PVC shoes and chappals are designed to work in adverse conditions. LG electronics launched “Sampoorna” TV that can withstand power fluctuations. Philips introduced small refrigerators especially for rural consumers.
  19. 19. 3. SturdyProducts Sturdiness of a product is an important factor for rural consumers. The rural consumers believe that heavier the, higher he power and durability. Example: Bullet motorcycle is popular in village due to its ruggedness. Escorts has positioned their motorcycle “Rajdoot” as a tough vehicle. Rural consumer prefer dry battery cell, which are heavy.
  20. 20. 4. Utility Oriented Products Rural consumers are more concerned with the utility of the product and its appearance. Example: Philips introduced low cost radio “Bahadur” withonly medium wave receiver, which was failed and fund that rural consumer purchase radio not only for news but also for entertainment.
  21. 21. 5. Brand Name Rural consumers are more brand loyalists than urban consumer. The brand name should instantly be understood by the rural consumers. Rural consumers are unfamiliar with English and absurd names. More preferably rural brand is a symbol, logo or color. Example: Everyday battery with a cat symbol – rural consumers remember it as „billi wali battery‟. Lifebuoy soap – rural consumers remember it as „lal saboon‟ Mahindra tractor‟s brand „Bhumiputra‟ Slogan of Red Label Tea “jiyo mere lal” proved very effective to promote sale.
  22. 22. DUPLICATE ANDCOUNTERFEIT PRODUCTS INRURAL MARKET Spurious products are the copy of established brand name at a cost of few thousand rupees and sold it in the rural market. This duplication takes place in all sectors and especially in FMCG, food items and medicines. Counterfeiting is a kind of duplication where the fake products bear the identical name of the original product, its packaging, graphics, color pattern, design and even same name and address as the genuine manufacturer. A pass-off product is one that comes with a few minor changes from the original product. The slight changes are made to avoid legal problems. Example: Head and Shower – Head and Shoulder Sunmilk – Sunsilk Parla G – Parle G Vikas – Vicks
  23. 23. PRICING STRATEGY1. Low Cost ProductsRural customer is price conscious manly because of low income. The price can bekept low, by low unit packaging. This is a common strategy adopted by manycompanies marketing in rural areas. Example – same as of small unit packs.2. Application of Value EngineeringThe aim of value engineering is to reduce the value of the product so that a largersegment of population can afford it to buy.Example:Soya protein can be used instead of milk protein, nutrition content of both is samebut the soya protein is cheaper then milk protein.3. Refill / Reusable PackagingRefill packs benefits the rural consumers in terms of price and also the packagingmaterial should be reusable in rural areas.Example – Many farmers demand for fertilizers packed in LDPE or HDPE sacks.They feel that they get sacks free of cost by purchasing fertilizers.4. DiscountsIn order to motivate the rural retailer to sell more, a discount of 5-10% is given onthe MRP particularly in case of FMC goods.5. Promotional SchemesRural consumer normally buys household articles during festivals like Eid ,Diwali , and Pongal etc. special promotional schemes could be introduced on suchoccasions like exchange offers, special discounts, etc.
  24. 24. RURAL PRICING OBJECTIVES  Deeper penetration of market: Basically rural markets are adopted for deeper penetration and expansion because of its size. Hence the pricing objectives are different for rural and urban markets. E.g. VIM washing bar is Rs. 15 (400 gm) in the urban market but it is offered for Rs. 4 (200 gm) in rural markets. Long run profit maximization: A company enters in rural market should wait for success in long run. Hence penetration-pricing strategy is the best option. Recover distribution cost: The pricing objective of a rural marketer shouldrecover the costs involved in distribution along with production cost and dealer margin.  Competing pricing: Rural marketer should study the pricing strategy of its competitors and accordingly fix its prices.  Increaser sales and market share: The pricing objectives should be suchthat it boosts the sales in rural markets. E.g. Anchor white toothpaste launched with much lower price than the leading brands and captured the market
  25. 25. CONSUMER CATEGORIES Value Conscious Customers – Price Conscious Customers – They are of middle class and are They are climbers, aspirants andmainly concerned with functional destitutes. They watch for benefits and value for money promotional offers and purchase cheap or fake products. Pricing Methods: Pricing Methods: Penetration Pricing – Charging Psychological Pricing – low prices at initial level then Psychological pricing is one thatincreasing gradually when brand ends in an odd number e.g. Rs. name has been established. E.g. 99.95. It conveys two notions to Maggie noodles, Vicks, Rin consumer that there is a discount detergent. or bargain and it belongs to lowerValue Pricing – Setting the price price category. reasonably lower than the Promotional Pricing – It includes competitor‟s price. mini packs, price-off, special discounts, credit facilities etc.
  26. 26. PROMOTIONAL STRATEGY OF A PRODUCT Qualities Required for a Rural Sales Person Knowledge of local language Willingness to get located in villages Cultural Congruence: Rural salesman must have properacquaintance with the cultural pattern of rural life. Attitudes: Ruralsalesman must have patience as their customers are traditional andconscious, it will not be possible to clinch the sales quickly. He mayhave to spend lot of time with customer and make several visits to gainfavourable response. Capacity to handle number of products lines: Rural salesmanusually does not generate economic value of business if he handles fewproducts. He is required to handle much large number of products linesas compared to urban salesman. Greater Creativity: Rural marketing involves greater creativity. Ifthe product is very new in the rural context, He has to introduce it usingconsumption pioneers and opinion leaders.
  27. 27. ALTERNATIVE MEDIA FOR RURAL COMMUNICATION Newspapers and Magazines: Local language newspapers and magazinesare popular among educated rural families. E.g. Dina Thanthi in Tamilnadu,Punjab Kesri in North and Loksatta in Maharashtra. TV: About 77% ofvillages receive TV transmission and 27% of rural people actually watch TV.Regional channel is very popular like SUN TV in Tamilnadu and Asianet inKerala. Cinema: About 29% of rural people watch cinema as regular lifestyle.Short feature films with advertisement message, Ad-films and documentariesthat combine knowledge and advertisement are useful for ruralcommunication. Radio: It is a well-established medium in rural areas. Radio reaches largerural population at low cost. Point Of Purchase: Point of purchase or point of sale is popularpromotional tool used in rural market. POPs should be especially designed tosuit rural requirements. POPs. Colors, symbols and pictures should be usedmore than the written words. Outdoors: Outdoors such as hoardings, wall paintings, illuminations andother displays are also now being used for rural communication.
  28. 28. Rural SpecificMediaMusic Records: It is an inexpensive medium. On complete languagegroup can be reached on a low budget through cassettes that can beplayed in the place where rural people gathered.Puppetry: Puppetry is the indigenous theatre of India; it has beenmot popular form of entertainment available to the village people.The performer uses puppets as a medium to communicate, ideas,values and social messages.Example:Sounds and drama division of the government of India used puppetsto promote various government projects.LIC used puppets to educate rural masses about „jeevan beema‟ inLucknow.
  29. 29. Types of Puppet Theatre in IndiaStates Type of Puppet ContentRajasthan Kathputli Prithvi Raj Chauhan, Amar Singh RathodOrissa String Puppet Radha KrishnaBengal Rod Puppet Mahabharat, Radha KrishnaChennai & String/Rod PuppetAndhra RamayanaPradeshOrissa, Shadow Puppet Ramayana,kathakaliKerala,Karnataka
  30. 30. Folk Theater: Folk theatre is mainly short and rhythmic inform. It has been used as an effective medium for socialprotest against injustice and exploitation. Interpersonal Media: In many cases, rural people preferface-to-face communication than mass communication. Afirm can contact with audience through fairs & festivals,folk, etc. Group Meeting: It is a component of interpersonal media.Salesman can effectively convey the product message atthese meetings. Demonstration of products can also becarried out. House-to-House Campaign: In thesecampaigns, promotional staff makes house-to-house visitsin rural areas. This is different from door-to-door sellingcampaigns. Promotion staff does not sell the products, theyonly propagate the products.
  31. 31. Stalls, Haats, Meals: These are useful media of ruralcommunication to spread the message and to induce brandtrials.Wall Paintings: The speech or the film comes to an end but thepaintings stay as long as whether allows it to stay. The retailerusually paints its shops wall and name board which acts as astatus symbol .Use of Logos and Symbols: Illiterate villagers wouldremember brands only by picture, symbols more than thename.Use of Information Technology: ITC developed a web portalin regional languages to provide information to the farmersabout the products and services which they need in order toenhance farm productivity, information on whether, scientificpractices, market prices etc.
  32. 32. Constraints in Rural Communication Low Literacy Rate: Due to low literacy level, the written words have limited use in ruralcommunication. Low Spending Capacity: Due to low disposable income, they cannot buyradio & TV Joint Families and Strong Kinship Ties: Rural people live in joint families where femalesdepend on their males for information regarding various products. So it becomes difficult toreach female consumers directly. Linguistic and Socio-cultural Differences: Number of languages and different culturaland social norms creating problems for marketers in designing the messages, as mass media inone particular language doesn‟t work for entire rural population. Unique Media Habits: Media habits of villagers are such that the newspapers are foundmostly at groceries shop, tea stall etc. Magazines are not read at all. The household presssubscription is almost absent. Situation Based Leisure Time Activities: Farmers has to work during nighttime and oddhours also. It is difficult to find the leisure time for communication. Expensive Communication: For rural communication to be effective, repeat exposure is amust otherwise the message loss its effect during gap periods. This makes rural communicationmore expensive. Poor Infrastructure: Due to the lack of roads and telecom facilities reaching ruralaudience is very difficult. TV viewer-ship is affected by uncertain supply of electricity. Lack of Research Data: Decisions regarding messages and media mix for ruralcommunication depends only on sales force and distributors, which is insufficient. Selective Attention: Rural people select the messages that are have in their interest andignore others.
  33. 33. REGULATED MARKETS Definition A regulated market is one, which aims at the elimination of unhealthy and unfair practices, reducing marketing charges and providing facilities to producer-seller in the market
  34. 34. Objectives ofRegulated Market To prevent exploitation of farmers. To provide ethical environment for proper trade practices by prohibiting malpractice. To promote orderly marketing of agricultural produce. To provide incentive prices to farmers to induce them to increase production. To ensure that farmers get better prices for their produce and consumer get goods at reasonable prices. To avoid wide fluctuations in prices for agricultural produce.
  35. 35. Features of Regulated Markets Method of Sale: In a regular market the sale takes place either by openauction or by closed tender. These methods of sale ensure a fair andcompetitive price and prevent the cheating of farmers. Weighing of Produce:Weighing of produce is done by a licensed weighman with standard weightsand scale platforms. Grading of Produce: The produce in regulated market isexpected to be sold after grading but only 13 regulated markets have gradingfacilities. Market Charges: In regulated market, the unwanted market charges suchas dharmada, muddat, dhalta and kanda were abolished. Payment of Value: Inregulated market it is obligatory to make prompt payment. The muddat systemno more exists. Licensing of Market Functionaries: All market functionaries evenHamaal is working in regulated market are have to obtain license from marketcommittee. Settlement of Disputes: Disputes arises between sellers, producers andtraders are solved by sub-committee of market committee.
  36. 36. Defects of Regulated Markets Not Accessible to All Farmers: Most of the farmers are not aware ofthe benefits of the regulated markets and also not accessible to thefarmers in far villages. Presence of Commission Agents: Presence of commission agentsand their heavy charges are unfavorable to the regulated markets.Payment System: Farmers are not given prompt payment by traders;due to this they cannot meet their working capital requirements. Auction System: Auction system has a number of defects for whichthe farmer has to bear the number of losses. Improper of Representation: Small and marginal farmers are dinedto serve on the committee and also there are lots of politicalinterference in the committees. Lack of Incentives: Incentives provided are not sufficient also theilliterate farmers are not ware of the available incentives and subsidies. Defective Transactions: The business of regulated market isconfined only to a few fixed hours. The illiterate farmers find itdifficult to find out the exact dates and times of transaction.
  37. 37. Cru3LThank You