RURAL MARKETING
PROF. SHEETAL CHHABRA
RURAL MARKETING
PROF. SHEETAL CHHABRA
What is Rural
Government agencies like IRDA (Insurance Regulatory
And Development Agency and NCAER (National Council
for applied Economic Research) define Rural as villages
with a population <5000 with 75% male population engaged
In agriculture etc”
Census
RB1
Towns are actually rural areas but satisfy The following
criteria Minimum Population>=5000 75% of the mail
population engaged in Non –agriculture activity
Location with population up to 10000 Considered Rural
Semi Urban 10000 to 100000
NABARD
All locations upto a population of 10000
Will be considered Rural
Sahara
All locations having shops/establishments’
Upto 10000 (not population related) are Treated as Rural
LG Elect.
The rural and semi urban area is defined
As all cities other than major metros
Concept of Rural from the perspective of marketing has
Indeed been dynamic.- gradually changed over the times
Was not India a so called Village/Rural for the world a couple of decades back
NABARD
National Bank for Agriculture & Rural Dev
What is Rural Marketing
Developing of the market in the area as defined as Rural
Hence it could be aptly said that it encompasses the
Activities such as developing the process to meet this
Objective – Right product at the right price to the right people
at the right time. Exchange between rural and Urban is a
Factor . Could be Urban to Rural: Rural to Urban, Rural to
Rural
Size of the market
Largely Untapped
Too crowded Urban Market
Reasons
for
Going Rural
Income on the rise/disposable income
Income from other than agriculture
Income flow from urban /abroad
Better exposure - media
Great success stories
HLL
50%
Colgate
50%
LG
50%
Asian Paints
60%
Dabur
40%
Videocon
40%
Cadbury’s
25%
Hero Honda
40%
Points to Note with Regard to Rural Markets
Extremely Diverse Market
Villages – Size,
Population,
Spread,
Income
Literacy levels ,
awareness level,
languages
Urban Market – scope and saturation
Flow of funds – from Urban National /International
Literacy levels on the rise
Media Penetration
Encouraging Indicators/Initiatives for Rural Market Growth
Scientific methods – major impetus to Production of
food grains
Export on the rise – Increase in agriculture and handicrafts
Initiatives taken by banks for more branches and Kisan
credit card to buy seeds, fertilizers, consumer goods on
installment basis
Reputed Companies helping in changing lifestyles – Levers
Britania ,Dabur, LG, Honda,Videocon
Media creating an impact-creating awareness levels
Government Policies – White Revolution – Milk products
Yellow Revolution (poultry and edible oils)
Blue Revolution – Aqua culture
Employment Schemes – JRY(Jawahar Rojgar Yojna,
PMRY,Small Industries Training,
Ruiral Electrification, Spend on Health and Sanitation,
Medical and Health, Primary Education,
Credit card for farmers
Waiver of Loans
 Initiatives by leading organization in spreading awareness
Hindustan Levels Shakti, ITC Reliance etc
Move to Rural Market …encouraging Data
Rural India buys
Soft Drinks approx 45% of all soft drinks
Almost 50% motor cycles
Approx 55% of cigarettes
Half the total market for TV,Fans, pressure cooker, bicycles
Washing soap, tea, lades,
salt,
toothpowder
Coca Cola is growing over 35% in Rural areas compared to Over 22 % in Urban
According to Hasna Research , a market research farm that
Has published a Guide to Indian Markets 2006
Consumer durables in Indian Villages risen sharply
TV Sales up by 200%
Motorcycle by 77%
There are 3000 households in rural area that earn > 50 lakhs
We have come some way ahead – but there is a long way to go
Low per capita income
Low disposable income
PROBLEMS
IN
RURAL
MARKETING
Inadequate fixed income
(daily wages)
Majority – depends on Agricultural
Income
Acute dependence on monsoon
Consumption linked to harvest
Infrastructure problems
Roads, power
Low awareness
Communication- difficult & expensive
Too many languages
Geographic Spread
Digging for Diamond
Urban & Rural Markets
Key Differences
Per capita Income
Disposable Income
Literacy levels
Infrastructure
Communication
Geographical Spread
Customer has many choices
Profile of the Rural Consumer
Profile of the Rural Consumer
>Low Literacy Level
>Low Income Level
>Massive Geographic Spread
Urban population concentrated 3200 cities town
Rural scattered over 630000 villages
>Reference Group
Health Workers
Doctors
Teachers
Panchayat Members
Rural Bank Managers
District Managers
Occupation – Principal Farming
Trading
Handicrafts
Cattle & Poultry Farming
>Media Habits Fond of music T.V Radio Video Films
Generally they have a lot of reservation/inhibition
rigid in their behaviour
RURAL CONSUMER CLASS
The Affluent Class
The Middle Class
The Poor
RURAL CONSUMER BEHAVIOR
How does an individual decide to spread his
Available resources (time,money effort) on
Consumption-related products.
That is – what they buy
why they buy
when they buy
where they buy it
how often they buy it
how often they use it
Very Rich
Well Off
Aspirant
Poor
Climbers
Simple Model of Rural Consumer Behaviour
Need Recognition
Pre Purchase Search
Evaluation of Alternatives
Purchase Decision
Post purchase behaviour
Factors that Influence Rural Behaviour
Attitude
Stimuli
Inputs to any senses
Products
Package
Commercials
Brand image
Reference
Information cues about
the characteristics of the
product
>Consumer belief
Consumer feelings
Perception
Depends on
Exposure
Eg IFB had not adequately Educated
farmers about the Washing machine
-they thought It was a churn for making
large quantities of lassi (prosperous
village of Punjab)
Interpretation
Iodex – muscular pain
Reliever used on animals
After hard days work in MP
Godrej hair dye on Buffaloes
To make them look better in
Village haats in Raichur
Key
Challenges
4A
Awareness
Affordability
Availability
Acceptability
4 Ps
4 As
Promotion
Awareness
Price
Affordable
Acceptable
Product
Place
Available
RURAL MARKET RESEARCH
Marketing Research is a formalized means of obtaining
Information to be used in making marketing decisions
Market research
Issue
Information Required to address
Design
Method of Collecting Information
Manage
The data collection process
Analyze
Communicate
The results
Finding and implication
Primary Sources
SOURCES
FOR
CONDUCTING
RURAL
MARKET
RESEARCH
Retail shops/STD booths
Tea Stalls
Playgrounds/schools
Chaupals (meeting point old/middle aged/
influential)
Haats & Melas
Influence Group
Secondary Sources
Government website www.censusindia.com
www.indiastat.com
www agroindia.com
Private bodies (market research
advertising agencies
Indian Market Research Bureau
Thompson Rural Index
Guide to Rural Markets
Publications
Tool Kits Used for Rural Market Research
Tool Kits Used for Rural Market Research
Faces
Color Wheel
Number of Coins
Ladder
Playing Cards
Happy ………Sad
Same Color – Different shades
Different Color
POINTS TO REMEMBER
FOR
RURAL MARKETING RESEARCH
Remember …
Build Rapport - ***
Greet – need to be informal
Speak local language
Do not jump to survey –speak of other
matters of interest
Gradually lead to the objective of the interview
Explain the benefit of the survey – how it will gain
Interviewer should be aware of the rural area
Never make the respondent uneasy –
if he offers tea do not refuse
RURAL MARKET
SEGMENTATION TARGETING & POSITIONING
SEGMENTATION :
Very Varied –hence proper segmentation very essential
Geographic:
Region
North, East, West and South
Village size
Climate
Demographic
Age
Family Size
Gender
Income, Occupation, Education,Caste
Psychographics
(consists of psychological: sociology: anthropological)
Lifestyle
Rigid ,changing attitude, urban influence
Personality Authoritarian, Ambitious
Behavioral
Occasions
Regular, special occasion
Benefits
User status
regular user, first time user, non user
Usage rate
Light, medium, heavy
Loyalty
None, medium, strong
Attitude to Product )
positive, negative, hostile
Class
Rural Consumer Classification
The Affluent/Very Rich
Households owning
1995-96
2006=2007
1.60%
5.60%
2.70%
5.80%
8.30%
22.40%
26.00%
44.60%
61.40%
20.20%
personal cars/jeep with other products
The Well Off
Household owning any/all of the foll.
A.C/Motorcycle/scooter/washing m/c
color TV with other durable (No car/jeep)
The Climbers
Households owning any/all of the foll
VCR/VCP,mixer grinder sewing m/c
audio equip, B/W TV,geyser with other durables
(not those mentioned in above 2 categories)
The Aspirants
Households owning any/all of the foll
bicycle,electric fans, electric iron with other durab
Source - NCAER
The Destitutes/Poor
(not those mentioned in above 3 categories)
Households other than those classified above
DEVELOP THE PROFILE
Select the Target Market
Evaluate the Market
Evaluate the Segment
size
growth rate
profitability
accessible
compatible with firm’s resources & capabilities
High
Value
to Rural
Customer
Low
Hard
Easy
Ease of Implementation
TARGETING
>Select Target Segment
>Formulate Market a marketing strategy for the target market
POSITIONING
One shoe fits all !!!! …….
Everything for Everyone !!!
It is “Something for Someone”
How to Position
USP of the product – uniqueness of the product
Special needs – either address partially/ unaddressed
Noticeable gap in the products available
Positioning Concept
Study the possible motives of the rural customer
Then figure out how to appeal to them
(USP, Price Quality Uses, Class, Culture etc
Select & Develop the Concept
Bridge gap between the product and the target market.
Communicate the Concept
Advertise and Reach (Media)
Offer Product
After STP (Segmentation, Targeting and Positioning)
Post Sales Feedback & After Sales Service
RURAL MARKETING STRATEGY
New Entrant
Company starts Rural Market
first & then ventures in Urban
Market
ENTERINING
THE
RURAL
MARKET
(eg Cavin Kare Chik & Meera
Shampoo)
Mid- Entrant
Company starts Rural Market
after success in Urban Market
(eg HLL, LG)
Late - Entrant
Company starts Rural Market
after success in Urban Market for
long
R
G
A
Retain (eg Cadbury)
Grow
Add
1
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N
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RURAL MARKETING STRATEGY
Profile the Rural Market
Profile the Consumer
Market Behaviour & MR
Segmentation Targeting Positioning
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Rural Product
Rural Pricing
Rural Distribution
Rural Sales Force Management
Rural Communication
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F
E
E
D
B
A
C
K
Monitor the Rural Strategy
Feedback & Control
DEVELOPMENTAL MARKETING
Developmental marketing is a process through which
awareness is created
Awareness
Trial
>could be demonstration
Purchase
>could be presentation
>Free samples
Post-Purchase Satisfaction
>could be through up eg tie up with Bank
tie up with Petrol/Diesel pumps
(Hyndai did with IOC and PNB and SBI subsidiaries
>30% sale of Hyundai from Rural/Semi Urban areas)
Colgate – program Operation Jagruti
Switch from Charcoal to Colgate tooth powder
HLL
Free samples of Lifebuoy
Cavin Kare – Free sample of Chik Champoo
Marico Industries – Parachute coconut oil
“Sudhata ki pehchan” –smell to differentiate between real and spurious
RURAL PRODUCT
RURAL PRICE
RURAL DISTRIBUTION
RURAL SALES FORCE MANAGEMENT
RURAL COMMUNICATION
Rural Product
Product to be marketed with the requirements of the Rural Consumer should not be an
extension of urban offerings
(Philips launched Free Power Radio – does not require
Battery/electricity you wind it with a lever and radio runs For approximately 30 min.
FMCG
(HLL, Dabur, Marico, Colgate=Palmolive
Coke, Pepsi)
Classification
Of
Consumer Durables
TV ,Fridge, Fan, Presssure Cooker,
Cycle, Two wheelers, Sewing machines,
watch, mixer grinder, radio, music system,
Fans, Washing machines
(Philips, LG, Videocon, Onida )
Rural
Products
Services
Telecom, Banking, Health care ,Insurance
(Airtel, BSNL, SBI, PNB,Dena bank,)
Agri-inputs
Seeds, pesticides, tractors
(Rallis India, Bayer,)
Product
Life
Cycle
(PLC)
Launch
Take Off
Maturity
Decline
Points to note
Rural Products
Easy to Use
After sales support
Conveniently packed- success of Sachets
Product literature to be simple
Have a logo – easy to identify eg Thums Up
Rural Packaging
Packaging material –plastics, poly packs, unbreakable materials
Looks
- attractive colors (like all tea companies)
Size and convenience- small is beautiful
Rural Branding
1. Brand Name
2 Create Brand Identity
3 Enhance Recognition
4 Build a Brand Image
5 Countering Spurious brands
Look alike, Spell alike, Duplicates
Enhancing Brand Strategies with Social Perspective
Soaps for Hygiene
Cooking gas for environment
Creating need by more awareness
Partnering with a long term perspective requires total belief and
Commitment - to the people, to the processes, to their own employee.
Need to work for a cause – ITC, Hindustan Petroleum, HLL ,
Colgate Palmolive , Several Banks are a few such examples
RURAL PRICE
Pricing In Rural Market plays a key role in the success of a product
RURAL PRICING OBJECTIVES
 Have a long run perspective
Idea is to penetrate first
Increase Volume
Make using the product a habit
Volumes to take care of the Margins
Keep eye on Competition Price
The following may help in addressing the issue
Low cost –less amount (small packages- sachets)
Simple but colorful packaging – eg. success of biscuits
Refill packs
Value engineering – eg soya protein in place of milk protein
METHODS OF PRICING
1. Cost –Plus Pricing = cost of product +distribution +profit
2. Value Pricing (VFM-Value for Money) High Benefit
3. Power Price – eg Re 1, Rs 2, 3, 5,10
4. Penetration Price – Introduce at low and hike price after success
5. Differential Pricing –Different price for different market
6. Price Gap – Comp prices – range
RURAL DISTRIBUTION
Channel of Distribution
Physical Distribution
PHYSICAL DISTRIBUTION
Transportation
Warehousing
Communication
Transportation
Railways, Roads ,Waterways, Animals
Communication
ITC using internet, Mobile users by fisherman
Warehousing
(Three Tier Rural Warehousing Set Up)
Central/State Warehousing
Cooperatives
Rural Godowns
WHY CHANNELS OF DISTRIBUTION
Geographical Spread
Dealers are few – hence required to bank on a number of resources
Financial Viability
Inadequate Bank and Credit Facilities
TO ADDRESS THE ABOVE CHALLENGES
Rely on Private Village Shops
Supply Chain Stores
Rural Super Market
Small companies tie up with large companies – Leverage/Syndicate
Distribution network of Marico to sell Tide by P&G
Satellite Distribution
SD
SD
R
D
SD
SD
SD
WholeSaler
Town
D
SD
SD
SD
SD
SD
D
SD
SD
SD
D
SD
SD
SD
SD
D-dealer
SD- Sub Dealer
R-Retailer
PLANNING FOR SALES FORCE MANAGEMENT
SET THE PERSONAL SELLING OBJECTIVES
FORMULATE THE SALES POLICIES
STRUCTURE THE SALES FORCE
SIZE OF THE SALES FORCE
ASSIGNING SALES TARGETS
CREATING SALES FORCE- SELECT, RECRUIT, TRAIN
SALES FORCE COMPENSATION, MOTIVATION, SUPERVISION
SALES COMMUNICATION & REPORTING
SALES COORDINATION/SALES CONTROL
TRAITS OF A RURAL SALESPERSON
Hardworking
Have Empathy
Enthusiastic
Common to both
Urban & Rural Sales person
Perseverance
Knowledge
Attitude
Skills
Willingness to work in Rural Areas
Adopting to cultural differences
Down to earth approach
Fluent in local language
Developmental approach – Create not only Communicate
The Success of Organizations depends on lot on the Sales Force
They are the face of the Organization – the Ambassador
They are the ones who have direct interaction with
The Potential Consumer/Customer
The Users
The Dealers
The Distributors
The Retailers
They are a major link to the chain and establish the link
They are the ones who help in building Trust
They need to break the rigid ideas and preconceived notions
RURAL COMMUNICATION
Effective Communication goes a long way in establishing the right Messages and thereby
more interaction with Potential Customers Communication, however, is not complete if
there is no feedback It is very important to re enforce messages in Rural areas
Factors Affecting Rural Communication
Literacy level
Media Habits
Traditional approach
High resistance – more so initially
Lavish at occasions (eg Marriage)
Purchasing power also depending on weather- the crops
Inequitable distribution of wealth
Too many languages
Culture
RURAL MEDIA
Mass Media
(Conventional)
T.V /Cable network
Satellite Channels
Radio
Print
Cinema/
Theatre
Word of
Mouth
Video on
Wheels
Advantages
>Excellent Reach
Less expensive ,wider coverage
Disadvantages
At times unnecessary coverage
No customized messages
Companies using this medium
Levers, Onida, Videocon
Mahindra Tractors, Eveready
Traditional Media
(Non Conventional)
Puppet Shows
Folk Theatre/Opera
Demonstration
Haats and Mela
Wall painting
Post card and posters
Booklets/Calendar
Advantages
>High involvement
High Interest
Localized administered at low cost
Disadvantages
Coverage
Repeat /Re enforcement
Skill of performer
Companies using this medium
Bajaj, HUL, ITC
You are the Marketing Director of A Company dealing in Consumer
Durables (TV, Fridge, Washing Machine Music System, Microwave etc).
Your business has been growing steadily in the Urban Market – however,
you are aware that the Business will grow manifold if you also cater to
the Rural market. (Present growth rate has been 8%. You are targeting a
growth of 14%)
Take into account the following
The Target Audience
The Product proposition
Distribution Strategies and Sales Forecast
Pricing Strategies
Promotional Strategies
How the above strategies will help in achieving the
Business Objectives.
While making the presentation – you need to be clear on
1. Why you chose to launch the particular product
2. Why did you chose the particular location
(Opportunity Assessment)
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