4Ps in Rural Markets

Product

“ Anything that has a value in exchange” Product – price – place – promotion Challenges – Availability, affordability, acceptability & awareness

Marketing Tools Marketing Challenge

Product Acceptability

Price Affordability

Place Availability

Promotion Awareness

Source: The Rural Marketing Book- Kashyap. P & Raut. S

Cont’d

Appropriate Product Strategies

Existing & New Products Product features – service quality – price & performance relationship Simplicity is key “ Sense & Simplicity” – Phillips Global Campaign Urban market successes could be rural market failures Appropriate new product development processes

CORE BENEFIT

BASIC PRODUCT

EXPECTED PRODUCT

AUGMENTED PRODUCT

POTENTIAL PRODUCT

Product Levels

Cont’d

Product Level Characteristics Example Rural Vs Urban

Core Benefit Fundamental benefit/ services

Entertainment Same

Basic Product Benefit/service into tangibles

Television Set Same

Expected Product

Attributes & conditions buyers normally expect

Digital sound, flat screen

Appearance of differences in expectations

Augmented Product

Exceeding customer expectations

Battery Operated TV

Pleasant surprise for rural customer

Potential Product

Encompassing all augmentations & transformations

Jolly Startek TV Uniquely rural value proposition

Product Development Stages

Stage Marketing Activities

Idea Generation •Searching for new product ideas

Idea Screening •Select the most promising ideas and drop those with only limited potential. Study the needs and wants of potential buyers, the environment and competition.

Concept Testing •Describe or show product concepts and their benefits to potential customers and determine their responses. Identify and drop poor product concepts. Gather useful information from product development and its marketing personnel.

Business Analysis •Assess the product’s potential profitability and suitability for the market-place. Examine the company’s research, development, and production capabilities. Ascertain the requirements and availability of funds for development and commercialisation. Project ROI.

Product Development

•Determine technical and economic feasibility to produce the product. Convert the product idea into a prototype. Develop and test various marketing mix elements.

Test Marketing •Conduct market testing. Determine target customers’ Reactions. Measure its sales performance. Identify Weaknesses in product or marketing mix.

Commercialisation •Make necessary cash outlay for production facilities. Produce and market the product in the target market and effectively communicate its benefits.

FMCG Consumption Trends

Products Urban( 1000 HH) Rural ( 1000 HH)

Toilet Soap 998 992

Washing Cake 980 950

Cooking Oil 968 952

Hair Oil/ Cream 897 787

Tea 876 758

Toothpaste 822 449

Washing Powder 819 576

Electric Bulb 723 394

Shampoo 663 352

Biscuits 579 314

Health Beverages 324 67

Source: National Council for Applied Economic Research, 2002

Consumption Ranking

Rank Rural Product Urban Product Rural HH Consumption

grams / month

1 Toilet Soap Toilet Soap 268

2 Washing Powder Biscuits 950

3 Packaged Tea Washing Powder 268

4 Biscuits Packaged Tea 302

5 Detergent Cake Detergent Cake 893

Source: A.C Nielsen Retail Audit, MAT, July -2004 & ORG- MARG Retail Consumer Panel, 2001

Rural Durable Usage Trends

NCAER has classified durables into three categories

Group One( <Rs. 1000)

Group Two( Rs.1000- 6000)

Group Three( >6000)

In group one the growth is as high as 75 percent

Electrical goods show the highest urban- rural disparity,

why ?

Television( B & W) 195/1000HH in rural Vs 490/1000HH in

urban

Colour TVs 48/1000 HH in rural Vs 304/1000HH in urban

Packaging

Associated with affordability - Convenience -

Consumer recognition & product protection

Packaging material, size, convenience and

aesthetics

Example: Chik Sampoo

Corporate Responses to Fakes

Look-alikes- Spell-alikes & Duplicates

Prices range from MRP to 60 % of MRP

Margins range from 60 % to 300 %

Legal action – awareness programmes – New

Package Development

Fakes: Some Examples

Cont’d

Pricing

Issues in Pricing

Internal & external factors Selecting pricing methods Pricing adaptations Low price points – Simple packaging – utility around packaging material Highlighting value

Price Adaptations ( Indicative)

Product sharing services, Example: Tractors Product Bundle pricing, Example: HUL Operation Bharat Free gifts – may sometimes not work in rural areasSpecial event pricing- Hero Honda Rs. 500 campaign

Colgate- Cibaca

Place- Rural Distribution Challenges

Large number of small markets

Dispersed population and trade

Poor connectivity

Low availability of suitable dealers

Inadequate banking/ credit facilities

Poor product display and visibility

Poor communication of offers and schemes

Levels of Distribution

Level Partner Location

1 Company Depot/ C & FA

National/ State level

2 Distributor/ Van Operator/ Super Stockist/ Rural

Distributor

District level

3 Sub Distributor/ retail Stockist/ sub

stockist/star seller

Tehsil HQ, towns and large villages

4 Wholesaler Feeder towns, large villages, haats

5 Retailer Villages, haats

Distribution Adaption( Indicative)

Hub and Spoke Model, Example: Coca Cola Use of Affinity groups, Example: Project Shakti Haat Activation, Example: Colgate Syndicated distribution, Example: Cavin Care & Amrutanjan Use of marketing co-operatives, Example: Warna Bazaar in Rural Areas Mobile traders, Example: FMCG companies

Promotion- Adaptations for Rural Markets

Conventional Non- Conventional Personalised

Television Haat and Mela Direct mailer

Radio Folk Media( puppet and magic show)

POS (demonstration, leaflet)

Press Video Van Word of mouth

Cinema Mandi Interpersonal communication

Outdoor: Wall Painting, Hoarding

Animator

Melas & Haats

Melas Haat

1. 25,000 melas

2. Companies can concentrate

on the top 100 melas

3. Pushkar Mela in Rajasthan

4. Organised by the state

veterinary department

5. Product sales, promotion,

demonstration and database

generation

6. Cultural activities and rural

sports

1. Periodic markets located in larger

villages(> 40,000)

2. 10 – 50 villages are serviced

3. Sunday markets are most popular

4. Average number of outlets is 315

and average daily sales is about

Rs 2 lakhs

5. Traders participate in at least 4

haats

6. 81 percent of the visitors are

repeat customers

Types of Promotions

Advertising

Sales promotions – coupons, contests, demonstrations

and sampling, Example: Tata Shaktee Haat Hungama

Direct marketing, Example: Videocon

Publicity, Example: Project Shakti and AP Online

Using a direct selling through a sales force, Example:

Swasthya Chetna for Lifebouy

Cont’d

Push strategy – sales force and trade

promotion

Pull strategy – advertising and consumer

promotion

Close of Session

Thank You