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A Study on

“To analyze the marketing of consumer products(both durable and non durable products)

in rural areas”

A Dissertation report submitted to the National Institute of Technology,

Kurukshetra.

In partial fulfillment of the requirement for the award of the degree of

“MASTER OF BUSINESS ADMINISTRATION”

Submitted to:- Submitted By:-

Dr.P.J.Philip Rahul Saini

CHAIRMAN 309392 9729799462

DEPARTMENT OF BUSINESS ADMINISTRATION

National Institute of Technology, Kurukshetra (136118)

2009-2011



Acknowledgement

Writing a project of this kind is very difficult job. But it could be

completed because of the help and support from many corners. It is mydesire to mention my fillings about support sources here.

Every research, in any field, needs proper guidance of experts and

knowledgeable person. I feel immense pleasure in expressing whole hearted

thanks towards my project guide for his outstanding guidance, enthusiastic

suggestions immensely valuable encouragement throughout the course of the

study. Without the pillars of his support and co-operation I could not have

even taken a single step towards completion of this project.

I would like to express my deepest sense of gratitude toward

Chairman Dr.P.J.Philip for their sincere help and constant encouragement.

I shall be failing in my duty if I don’t acknowledge enormous support

and assistance received from my family members throughout this endeavors.

Their kind blessings lead me to see these days of achievement and

satisfaction.

I am also thankful to all my dear friends who motivated me in

accomplishing this project work.

Last but the foremost important I would like to thank God for sending

so many people in my life to help me.

Rahul Saini

MBA (Final year)

NIT (Kurukshetra

3



INTRODUCTION

“India lives in her villages”.As described by Adi Godrej, Chairman , Godrej

Group – “The rural consumers is discerning and therural market is vibrant . At the current of growth , it will soon outstrip the urban market. The rural market is no longer sleeping but we are”. Before gamboling into issues like where the Indianrural market stands and the opportunities for corporate’s toexplore there... let's look at the definition of urban and ruralIndia. The Census defined urban India as - "All the placesthat fall within the administrative limits of a municipal

corporation, municipality, cantonment board etc or have apopulation of at least 5,000 and have at least 75 per centmale working population in outside the primary sector andhave a population density of at least 400 per squarekilometer. Rural India, on the other hand, comprises allplaces that are not urban!"

In our country over 70%of the total population live invillages. There are states like U.P, M.P, Bihar, Rajasthan andOrissa where rural population varies form 8 to9 percent.



6

In 2000, ITC took

an initiative to

develop direct

contact with

farmers who lived

in far-flung

villages in Madhya

Pradesh. ITC's E-

choupal was the

result of this

initiative.

Clearly the main challenge that one faces while dealing withrural marketing is the basic understanding of the ruralconsumer who is very different from his urban counterpart.Also distribution remains to be the single largest problemmarketers face today when it comes to going rural."Reaching your product to remote locations spread over600,000 villages and poor infrastructure - roads,telecommunication etc and lower levels of literacy are a few

hinges that come in the way of marketers to reach the ruralmarket," says MART managing director Pradeep Kashyap.



7

INDIA INFRASTRUCTURE The best barometer of country’s economic standing is

measured by its GDP. India, the second most populated

country of more than 1100 million has emerged as one of

the fastest growing economies. It is a republic with a federal

structure and well-developed independent judiciary with

political consensus in reforms and stable democratic

environment .In 2008-09 India’s economy-GDP grew by 6.5%

due to global recession.The Indian economy is expected

sustain a growth rate of 8% for the next three years upto

2012. With the expected average annual compounded

growth rate of 8.5%, India's GDP is expected to be USD 1.4

trillion by 2017 and USD 2.8 trillion by 2027. Service sector

contribute to 50% of India‘s GDP and the Industry and

agriculture sector 25% each.



Investment Opportunities In Indian Infrastructure

8

The robust current growth in GDP has exposed the grave

inadequacies in the country’s infrastructure sectors. The

creation of world class infrastructure would require large

investments in addressing the deficit in quality and quantity.

More than USD 475 bn worth of investment is to flow intoIndia’s infrastructure by 2012. No country in the world other

than India needs and can absorb so many funds for the

infrastructure sector. With the above investments India’s



infrastructure would be equal to the best in the world by

2017.

Rural MarketingRural marketing involves the process of developing, pricing,

promoting, distributing rural specific product and a service

leading to exchange between rural and urban market which

satisfies consumer demand and also achieves organizational

objectives.

It is a two-way marketing process wherein the transactions

can be:

• Urban to Rural: A major part of rural marketing falls

into this category. It involves the selling of products

and services by urban marketers in rural areas. These

include: Pesticides, FMCG Products, Consumer durables,etc.

• Rural to Urban: Transactions in this category

basically fall under agricultural marketing where a rural

producer seeks to sell his produce in an urban market.

An agent or a middleman plays a crucial role in the

marketing process.

9

• Rural to Rural: This includes the activities that take

place between two villages in close proximity to each



other. The transactions relate to the areas of expertise

the particular village has. These include selling of

agricultural tools, cattle, carts and others to another

village in its proximity.

Rural marketing requires the understanding of the

complexities. Indian agricultural industry has been growing

at a tremendous pace in the last few decades. The rural

areas are consuming a large number of industrial and urban

manufactured products. The rural agricultural productionand consumption process plays a predominant role in

developing the Indian economy. This has designed a new

way for understanding a new process called Rural Marketing.

Rural marketing scientists also term it as

developmental marketing, as the process of rural marketing

involves an urban to rural activity, which in turn is

characterised by various peculiarities in terms of nature of

market, products and processes. Rural marketing differs

from agricultural or consumer products marketing in terms

of the nature of transactions, which includes participants,

products, modalities, norms and outcomes. The participants

in case of Rural Marketing would also be different they

include input manufacturers, dealers, farmers, opinion

makers, government agencies and traders.

10

INDIAN RURAL MARKET:



Pha

seOrigin Function

Major

Products

Sourc

e

Market

Destinat

ion

Market

I Before

Mid-1960

(from

ind.to

greenrevolu)

Agricultur

al

Marketing

Agricultur

al

Produce

Rural Urban

II Mid-

Sixties

(Green

revolu to

Pre-lib

period)

Mkting Of

Agr.Inputs

Agricultur

al

Inputs

Urban Rural

III Mid-

Nineties

(Post-

liberaliz

period on

20th

century)

Rural

Marketing

Consuma

bles And

Durables

For

Cons.&

Productio

n

Urban

&

Rural

Rural

IV 21st

century

Developm

ental

marketingAll

products

& services

Urban

&

Rural

Urban &

Rural



Phase I ( from Independence to Green

Revolution):

Before the advent of the Green revolution, the nature of

rural market was altogether different. Rural marketing

then referred to the marketing of rural products in rural

& urban products.

Phase II (Green Revolution to Pre-

liberalization period):

During these times, due to the advent & spread of theGreen Revolution, rural marketing represented

marketing of agriculture inputs in rural markets &

marketing of rural produce in urban areas.

Phase III (Post-liberalization period on 20th

century):

The third phase of rural marketing started after the

liberalization of the Indian economy. In this period, rural

marketing represented the emerging, distinct activity of

attracting & serving rural markets to fulfill the need &

wants

Phase IV (21st century): Learning from its rural

marketing experiences after the independence, the

corporate world has finally realized the quick-fix

solutions & piecemeal approaches will deliver only

limited results in the rural markets.



The rural market is the one of the best opportunity for theFMCG sector in the India.It is wider and less competitivemarket for the FMCG.As the income level of the ruralconsumers increasing,the demand of FMCG is

increasing continuously.

Top Players in FMCG Sector1.Hindustan lever limited (HLL)2.ITC (Indian Tobacco Company)3.Nestle India4.GCMMF (AMUL)5.Dabur India

13

Secondary Players1.Colgate-Palmolive (India)Ltd.2.Godrej Consumers Product Ltd.3.Nirma Ltd.4.Tata Tea Ltd.5.Parle Agro

Rural consumers spend around 13 per cent of their income,the second highest after food (35 per cent), on fast moving

consumer goods (FMCG), as per a RMAI study. The FMCG sector saw rural markets post 20 per cent growth,ahead of the 17-18 per cent growth from urban India, aidedby three years of good monsoon, higher prices of farmproduce and farm-loan waiver.

Retail

The rural retail market is currently estimated at US$ 112billion, or around 40 per cent of the US$ 280 billion retail

market. Major domestic retailers like AV Birla, ITC Relianceand many others have already set up farm linkages. HariyaliKisan Bazaars (DCM) and Aadhars (Pantaloon-Godrej JV),Choupal Sagars (ITC), Kisan Sansars (Tata), Reliance Fresh.

Pharmaceuticals



According to a report by McKinsey, the rural and tier-IIpharma market will account for almost half of the growth till2015. The tier-II market will grow to 44 per cent by 2015,amounting to US$ 8.8 billion.

This growth will be further augmented with the governmentincreasing the allocation under National Rural Health Mission(NRHM) by US$ 424.3 million over interim budget estimate2009-10 of US$ 2.49 billion.

.

Telecommunication

A Gartner forecast revealed that Indian cellular servicesrevenue will grow at a compound annual growth rate (CAGR)

of 18.4 per cent to touch US$ 25.6 billion by 2011, with mostof the growth coming from rural markets.

14

In a bid to acquire rural subscribers, most Indian telecomoperators have started investing in infrastructure to roll outtheir services in these areas. Realising this as a hugepotential, small Indian handset manufacturing companies,including Micromax, Intex Technologies and Karbonn, have

lined up a marketing spent of around US$ 21.02 million forthe financial year 2009-10.



Automobiles

For the auto industry, semi-urban and rural markets

contribute close to 40 per cent of sales, led by demand fortwo-wheelers, entry-level cars and tractors. Significantly, carsales grew 8.3 per cent in June 2009, aided by rising demandin semi-urban and rural markets. Mahindra & Mahindra isbullish on the rural and semi-urban markets, with its utilityvehicle, Scorpio clocking 60-65 per cent sales from the ruralmarkets as against 20 per cent earlier. TVS Motor alsoregistered around 50 per cent of its sales from the rural andsemi-urban markets.

15

Consumer durables

A survey carried out by RMAI has revealed that 59 per centof durables sales come from rural markets.

Whirlpool, is eyeing rural markets in India for its next phaseof growth. The company is set to tap markets with apopulation between 100,000 and 500,000 in the first phase,and in the next phase, will look at expanding the base in

villages with a population of 50,000.



Nature of Rural Market

• Large, Diverse and Scattered Market

• Major Income of Rural consumers is from

Agriculture

• Standard of Living and rising disposable

income of the rural customers

• Traditional Outlook

16

•

Rising literacy levels• Diverse socioeconomic background

• Infrastructure Facilities



Some Myths:

• Myth-1: Rural Market Is a HomogeneousMass

Reality: It’s a heterogeneous population. Various Tiers arepresent depending on the incomes like Big Landlords;

Traders, small farmers; Marginal farmers: Labors, artisans.State wise variations in rural demographics are present viz.Literacy (Kerala 90%, Bihar 44%) and Population belowpoverty line (Orissa 48%, Punjab 6%).

• Myth-2: Disposable Income Is Low

Reality: Number of middle class HHs (annual income Rs45,000- 2, 15,000) for rural sector is 27.4 million ascompared to the figure of 29.5 million for urban sector. Ruralincomes CAGR was 10.95% compared to 10.74% in urbanbetween 1970-71 and 1993-94.

• Myth-3: Individuals Decide AboutPurchases

Reality: Decision making process is collective. Purchaseprocess- influencer, decider, buyer, one who pays can all bedifferent. So marketers must address brand message atseveral levels.Rural youth brings brand knowledge toHouseholds (HH).

17



Is rural marketing transactional or

developmental in its approach?

It is true, rural markets have become an attractiveproposition for commercial business organizations.

The role of rural marketing as such is more developmental

than transactional. It is more a process of delivering better

standard of living and quality of life to the rural environment

taking into consideration the prevailing village milieu.

Transactional Vs Developmental: For better

comprehension of this role let us distinguish development

marketing and transactional marketing. Table brings out the

differences in brief.

Transactional Vs Development Marketing

S.N

o

Aspect Transactional Development

1. Concept Consumer

orientation,

Marketing concept

Society orientation,

societal concept

2. Role Stimulating and

conversional

marketing

Catalytic and

transformation agent

3. Focus Product-market fit Social change

4. Key task Product Social innovations and



innovations and

communications

communications

5. Nature of

activity

Commercial Socio-cultural,

economic

6. Participants Corporate

enterprises,

Sellers

Government,

voluntary agencies,

corporate enterprises,

benefactors

7. Offer Products and

services

Development,

projects/schemes/prog

rams

8. Target group Buyers Beneficiaries and

buyers

9. Communicati

on

Functional Developmental

10. Goal Profits, Customersatisfaction

Brand image

Market development

Corporate Image

11. Time-Frame Short-medium Medium-Long

12. Motivation Profit-motive

Business policy

Service-motive

Ideological or Publicpolicy

19



Model : The model of rural marketing represents a

combination of the transactional and developmental

approaches.

• Rural marketing process is both a catalyst as well as an

outcome of the rural development process. Initiation

and mgt of social and economic change in rural sector

is core of rural marketing process

• Innovation is the essence of marketing. Innovative

methods of social change for successful transformation

of traditional society are virtual. Such a change narrows

the rural-urban divide.

• The process of transformation can be only evolutionary

and not revolutionary. The growth of the rural market

can be a planned evolutionary process based on

strategic instruments of change rather than constitute

just short-term opportunities for commercial gains.

• The exposure of ruralites to a variety of marketing

transactions during the change process puts them in

the role of beneficiaries than of just `buyers' of modern

inputs and infrastructural services.

• Communication is the vital element of rural marketing.

It should serve to resolve social conflicts, encourage

cooperation and strengthen competitive spirit during

interactions between rural and urban as well as within

rural areas.



20

Classification of rural consumers

The rural consumers are classified into groups based on

economic status:

• The Affluent Group: They are cash rich farmers

and a very few in number. They have affordability but

not form a demand base large enough for marketing

firms to depend on.

• The Middle Class: This is one of the largestsegments for manufactured goods and is fast

expanding. Farmers cultivating sugar cane in UP and

Karnataka fall in this category.

• The Poor: This constitutes a huge segment.

Purchasing power is less, but strength is more. They

receive the grants from government and reap thebenefits of many such schemes

Roadblocks of Indian Rural Market

The major problems are listed below.

• Standard of living

• Low literacy levels

• Low per capita income

• Transportation and warehousing

• Ineffective distribution channels



• Many languages and diversity in culture

• Lack of communication system

• Spurious brands

21

• Large Population

• Rising Rural Propensity:

Income

Group

2000-

01

2005

-06

2008-

09

Above Rs.

100,000

1.6 3.8 5.6

Rs. 77,001-

100,000

2.7 4.7 5.8

Rs. 50,001-

77,000

8.3 13.0 22.4

Rs. 25,001-

50,000

26.0 41.1 44.6

Rs.25,000 & 61.4 37.4 20.2



below

22

Thus we see that population between income level of

Rs. 25,000- 77,000 will increase from 34.3% in 1994-95

to 67.0% in 2006-07. The rural consuming class is

increasing by about 3-4% per annum, which roughly

translates into 1.2 million new consumers yearly.

• Growth in consumption:

Per capita household expenditure (inRs.)

Level N

o.

States Expendit

ure

High

(Above Rs

382/-)

7

Punjab 614

Kerala 604

Haryana 546

Rajasthan 452

Gujarat 416

Andhra

Pradesh

386

Maharashtr

a

384

Average

(Rs. 382/-)

5 West

Bengal

382

Orissa 381



Tamil

Naidu

381

Uttar

Pradesh

373

Karnataka 365

Low

(Below Rs.

382/-)

3

Assam 338

Madhya

Pradesh

326

Bihar 289

Distribution household’s income wise

(projection in Rs Crore)

Income

groups

2001 – 02 2006 – 07

Rural Rural

Tot

alNo. % Tot

alNo. %

High 0.26 0.0

7

26

.9

0.52 0.1

2

23

.1

Middle 12.0

4

7.7

3

64

.2

16.7

2

10.

32

61

.8

Low 5.7 5.09

88.7

3.68 3.52

95.7

Total 18.0

4

12.

89

71

.4

20.9

0

13.

96

66

.7



Spending pattern (Rural Household’s in Rs.)

Item % Ric

h

Po

or

Avera

ge

Food Articles 4

4

14

773 95

Toiletries 2

067 33 43

Washing

Material

1

343 22 28

Cosmetics 1

033 17 21

Otc Products 4 13 6 9

Others 9 30 15 19

Total 33

3166 215

Average rural household spends on consumables excluding

food grains, milk & vegetables are Rs. 215/-.

• Life style changes:

Income vs. usage of packed consumer goods (%

of household using)

25

Goods Monthly household income

(Rs.)

Up to 351 – 751 – 150



y

• Market growth rates higher: Growth rates of the

FMCG market and the durable market are higher in

rural areas for many products.

• Rural marketing is not expensive: Conventional

wisdom dictates that since rural consumers are dispersed,

reaching them is costly. However, new research indicates

that the selling in Rural India is not expensive.

• Remoteness is no longer a problem:

Remoteness in a problem but not insurmountable. The

rural distribution is not much developed for the reasons,

• Lack of proper infrastructure such as all-weather

roads, electrification and sanitation, and

• Lack of marketer’s imagination and initiative.

Marketers have so far, failed in analyzing the rural side and

exploiting rural India’s traditional selling system- Haats &

Melas

Rural Vs Urban Marketing

N

o.

Aspect Urban Rural

1 Philosophy Marketing &

Societal

Concepts &

Relationship

Marketing &

Societal

Concepts,

Development



Marketing Marketing &

Relationship

Marketing

2•

Market• Demand High Low

• Competition Among Units In

Organized

Sector

Mostly From

Unorganized

UnitsConsumers

Location Concentrated Widely Spread

Literacy High Low

Income High Low

Expenditure Planned, Even Seasonal,

Variation

Needs High Level Low Level

Innovation/Ado

ption

Faster Slow

3 Product

Awareness High Low

Concept Known Less Known

Positioning Easy Difficult

Usage Method Easily Grasped Difficult To

Grasp

Quality

Preference

Good Moderate



4 Price

Sensitive Yes Very much

level desired Medium-high Medium-low

5 distribution

channels

Wholesalers,

stockists,

retailer,

supermarket,

specialty

stores, &

authorised

showrooms

Village shops,

“Haats”

Transport

Facilities

Good Average

Product

Availability

High Limited

6 Promotion

Advertising

Print, audio

visual media,

outdoors,

exhibitions etc.

few languages

TV, radio, print

media to some

extent. More

languages

Personal

Selling

Door-to-door,

frequently

Occasionally

Sales

Promotion

Contests, gifts,

price discount

Gifts, price

discounts



Publicity Good

opportunities

Less

opportunities

CONSUMER BEHAVIOR IN RURALMARKETS:

Promotion of brands in rural markets requires thespecial measures. Due to the social and backward conditionthe personal selling efforts have a challenging role to play inthis regard. The word of mouth is an important messagecarrier in rural areas.

Indian Marketers on rural marketing have two understanding(I) The urban metro products and marketing products can beimplemented in rural markets with some or no change. (ii)

The rural marketing required the separate skills andtechniques from its urban counter part.(i) The rural market has the opportunity for.

(ii) Low priced products can be more successful in ruralmarkets because the low purchasing, purchasing powers inrural markets.

(iii) Rural consumers have mostly homogeneous group withsimilar needs, economic conditions and problems.

30

RURAL CONSUMER PREFERENCES:

In order to assess the buyer behaviortowards certain critical aspects of marketing, thepreferences of consumers is directly related to:

• Price• Quality• Credit



• Variety• Dealer advice

PURCHASE BEHAVIOR:

Rural people can buy only from three places includes:• From the shop in the same village• Weekly bazaar• From the shop of nearby town.

Factors influencing buying behavior

The various factors that affect buying behavior of in rural

India are:

• Environmental of the consumer

• Geographic influences

• Family

• Economic factors

• Place of purchase

• Creative use of product

• Brand preference and loyalty

31

Cultural factors influencing consumer behavior

few cultural factors that influence buyer behaviour are:



• Product (colour, size, design, and shape): There

are many examples that support this point.

• For example, the Tata Sumo, which was launched

in rural India in a white colour, was not well

accepted. But however, when the same Sumo was

re-launched as Spacio (a different name) and in a

bright yellow colour, with a larger seating capacity

and ability to transport good, the acceptance was

higher.

• Social practices: There are so many different

cultures, and each culture exhibits different social

practices.

For example, in a few villages they have common

bath areas. Villagers used to buy one Lifebuoy

cake and cut it into smaller bars. This helped

lifebuoy to introduce smaller 75-gram soap bars,

which could be used individually.

• Decision-making by male head : The male in

Indian culture has always been given the designation of

key decision maker.

• Changes in saving and investment

patterns : From gold, land, to tractors, VCR’s, LCV’s

32



4 A’s approach of Indian Rural Market

The rural market may be appealing but it is not without its

problems: Low per capita disposable incomes that is half the

urban disposable income; large number of daily wage

earners, acute dependence on the vagaries of the monsoon;

seasonal consumption

The more daring MNC’s are meeting the consequent

challenges of availability, affordability, acceptability and

awareness (the so-called 4 A’s)

Availability

The first challenge is to ensure availability of the product

or service. India's 627,000 villages are spread over 3.2

million sq km; 700 million Indians may live in rural areas,

finding them is not easy

Affordability

The second challenge is to ensure affordability of the

product or service. With low disposable incomes, products

need to be affordable to the rural consumer, most of who

are on daily wages.

Acceptability

The third challenge is to gain acceptability for the product

or service. Therefore, there is a need to offer products

that suit the rural market. Awareness



Brand awareness is another challenge. Fortunately,

however, the rural consumer has the same likes as the urban

consumer

33

Evolving a New Marketing Mix for Selling to

Rural Indians

The marketing mix in the case of Indian rural marketsconsists of 4P’s i.e.Product, Price, Promotion, Place combined with 1 P that is

Packaging and one R i.e. Retailer as special focus areas.However, at the base of this marketing mix will be 2 E’s of Education and Empowerment.EMPOWEREMENT

EDUCATION

CUSTOMIZATION

The traditional marketing hypothesis tends to ignore therequirement of a developing country’s rural needs. Theconcept of marketing has to be taken in conjunction witheconomic, psychological and social implications. Hence, theconcept of Mega-Marketing where all such factors are takeninto consideration

12.2% of the world lives in Rural India. Put in a different

context, this works out to 1 in 8 people on Earth. Being able

to successfully tap this growing market is every marketer’s

dream. However, myths abound. India’s rural markets are

often misunderstood. A clear distinction needs to be made



with regard to the reality versus the image of rural India. If

such a distinction is not made, we will be unable to

distinguish between the serpent and the rope and the rope

and the serpent.

It is therefore essential to develop an accurate

Marketing Mix for selling to rural Indians.

34Product

“Authentic marketing is the art of identifying andunderstanding customer needs and creating solutionsthat deliver satisfaction to the customers, profits tothe producers and benefits for thestakeholders.” ................... Philip Kotler

The product offerings have to be not only customized butalso at a different plane altogether in case of rural markets.

The various product levels as outlined by Philips Kotler,namely Core Benefit, Basic Product, Expected product,augmented product and Potential Product should beadequately taken into consideration and the productofferings should be henceforth customized according to theneeds.

Pricing

A significant portion of the rural population is paid in daily

wages. Daily wage earners tend to have little stock of money, and therefore tend to make purchases only to meettheir daily needs. The implication is that pack sizes and pricepoints are critical to sales, and importantly, that ruralconsumers view the purchase-tradeoff dilemma across amuch wider range of product categories.

Promotions & Advertising



There are a lot of barriers that militate against homogenous

media and message delivery. These barriers stem from the

fact that rural markets vary immensely in terms of tastes,

habits and preferences leading to different expectations of

every segment of the population.

Another unique feature of rural markets is that the Decisionmaking process is collective. The persons involved in the

purchase process influencer, decider, buyer, one who payscan all be different.

35

So marketers must address brand messages in their

campaigns at several levels.There are other attributes in the

promotion strategy which are explained as under:

1. Mass media: In the present world mass media is a

powerful medium of communication. The following are the

mass media generally used:

• Television.

• Cinema.

• Radio

•

Print media: Handbills and Booklets, posters, stickers,banners, etc.

2. Personal selling and opinion leaders: In

personal selling it is required that the potential users are



identified and awareness is created among them about the

product, its features, uses and benefits. This can be

achieved only by personal selling by highly motivated sales

person. In fact the word of mouth information holds lot

validity in rural areas even today. This is the reason why

opinion leaders and word of mouth are thriving among rural

consumers

3. Special campaigns: During crop harvest and

marketing seasons it is beneficial to take up special

promotion campaigns in rural areas. Tractor owners (tonee)

conducted by MRF Limited is one such example. Brooks Bond

carries out marches in rural areas with band, music and

caparisoned elephants to promote their brand of tea.

36Mandi and Mela magic

At last count, India witnessed over 50,000 melas. Of these

25,000 meals are held to signify religious, cultural festivals

as well as local fairs and events. On an average, visitors at

these melas spend between Rs. 5,000 to Rs. 50,000 a

day.For example, 3 lakh people visited the annual mela at

Navchadi which lasts for 7 days in Meerut. The largest such

mela is the Maha Kumbh Mela which is visited by an average

of 12 crore people.

Place



place is the major reason behind the evolution of rural

marketing as a distinct discipline. A village as a place for

promotion, distribution & consumption is very different from

a town or city, thus the general marketing theories can’t be

applied directly in rural markets.

Significance of Distribution

No matter how well devised a company’s product, pricing or

promotion strategy, the most crucial link in ensuring the

success of rural marketing efforts is distribution. Distributionmust be strengthened and this would raise investment cost

barriers for new entrants. In Rural India, the selection and

use of distribution channels is a nightmare. The reason for

this is very clear when we consider that on an average,

Urban and Rural India both have approximately 3 million

retail outlets.

37



The distribution of outlets however shows that a marketer

need not be present in all markets at all times Rural wealth

and demand is concentrated typically at satellite towns,

assembly markets

Haats

Haats are the nerve centre of Rural India. They are a

readymade distribution network embedded in the fabric of

rural society for over 1000 years. They have been held on a

regular basis across the length and breadth of the country

for over 1000 years. Right from time of Chandragupta



Maurya, Haats are asplace for social, cultural and economic

interchange.

38

MARKETING STRATEGIES TO CAPTURE

RURAL INDIA

• SEGMENTATION OF RURAL MARKET

• BY PROPER COMMUNICATION IN INDIAN

LANGUAGE

• BY TARGET CHANGING PERCEPTION

• BY UNDERSTANDING CULTURAL AND

SOCIAL VALUES

• BY PROVIDING WHAT CUSTOMER WANT

• BY PROMOTING PRODUCTS WITH INDIAN

MODELS AND ACTORS

• BY ASSOCIATING THEMSELVES WITH INDIA

• BY PROMOTING INDIAN SPORTS TEAM

• BY TALKING ABOUT A NORMAL INDIAN

• BY DEVELOPING RURAL-SPECIFIC

PRODUCTS

• BY GIVING INDIAN WORDS FOR BRANDS

• BY ACQUIRING INDIAN BRANDS



• BY EFFECTIVE MEDIA COMMUNICATION

• BY ADOPTING LOCALISED WAY OF

DISTRIBUTING

• BY ASSOCIATING THEMSELVES WITH

INDIAN CELEBRITIES

39

Product Strategies

1. Small unit packing

2. New product designs

3. Sturdy products

4. Utility oriented products

5. Brand name

Pricing strategies

1. Low cost/ cheap products

2. Refill packs / Reusable packaging

3. Application of value engineering

4. Large volume-low margins (Rapid or slow

penetration strategy)



5. Overall efficiency & passing on benefits to

consumers

6. Low volume-low price strategy

7. Ensuring price compliance

40

Promotion strategies

The following strategies can be considered while developing

promotional campaigns for the rural markets:

• Think Global Act Local

• Think in Local Idiom

• Simplicity & Clarity

• Narrative Story Style

• Choice of Brand Ambassador

Distribution StrategyMany companies view the rural markets as great opportunity

for expanding their sales but find distribution as a major

problem it is almost impossible to transplant strategies



which work successfully in urban markets onto rural

markets.

The road blocks to reach the rural customers are:

• Lack of adequate transport facilities.

• Large distances between villages.

• Lack of pucca roads connecting villages to nearest

townships.

• Lack of proper retail outlets

• Lack of mass media infrastructure.

41

The following distribution strategies formulated for the rural

category.

1. Coverage of villages with 2000 and above

population

2. Segmentation

3. Use of co-operative societies

4. Utilization of public distributory system

5. Utilization of multipurpose distributioncenters by petroleum/oil companies

6. Distribution up to feeder markets

7. Shandies/Haaths/Jathras/Melas



8. Agricultural Input Dealers

9. Joint distribution by Non-competing

Companies

10. Personal Selling Network

42

RESEARCH METHODOLOGY OBJECTIVES OF THE STUDY:

Any task without sound objectives is like Tree withoutroots. Similarly in case of any research study undertaken,initially the objectives of the same are determined andaccordingly the further steps are taken on. A research studymay have many objectives but all these objectives revolve

around one major objective which is the focus of the study.In this study, the focus is on the emergence of Rural marketsas the most happening market on which every marketer hasan eye. And so this study will be based on studying theemergence of rural market in various contexts.



Data collection

Sample unit:1. working people (including men &women), basicallyfarmers.2. college students3. school students4. senior citizen

Sample size:

1. working people:32%2. college students:29%3. school students:23%4. senior citizens:16%

Sampling region:

• I have selected uttar pradesh, of Uttar Pradesh as thearea of study.

•

I have chosen BHOWAPUR, MORTI, SHAHPUR andATTOR as areas of research. The population status of these areas can be

shown in a tabulated manner, which is given asfollows:

44

Area Population

BHOWAPUR 2500

MORTI 3000

SHAHPUR 5000

ATTOR 4000



Data collection method:1.Primary data: it will be collected with the help of a self administered questionnaire. This questionnaire aims togather information related to various Branded products.

Questionnaire design:As the questionnaire is self administrated one, the survey iskept simple and user friendly. Words Used in questionnaireare readily Understandable to all respondent. Also technical

jargons are avoided to ensure that there is no confusion forrespondents.

2.Secondary data: it will be collected with the help of books, research papers, magazines, news papers, journals,Internet, etc.

45

FINDINGS AND ANALYSIS

• Which soap u prefer to use?



The reaction of people towards various SOAPbrandscan be tabulated in the following manner:

BRANDS LUX DETTOL LIFEBUOY OTHERS

PERCENTA

GE

36 18 22 24

In the survey, it could easily be concluded that LUX, theproduct of HUL was highly in demand. LUX, the product of HUL covers 36%of the market share. After LUX, the other

brands (EXCEPT LUX, DETTOL, LIFEBUOY) covers 24%of themarket share. This is then followed by LIFEBUOY, the productof HUL with a market share of 22%,which is then followed byDETTOL, the product of RECKITT BENCKISER with a marketshare of 18%.

This data can be graphically explained with the helpof the following bar graph:

• Which pack u prefer to use?



In order to determine the income pattern of theconsumers, it was necessary for the researcher to distributethe consumers on the basis of their demand for the various

packs of SOAP brands available in the market. However, thereaction of people towards various packs of SOAP can betabulated in the following manner:

PACK OF SOAPS SINGLE PACK FAMILY PACK ( 3 IN

1)

PERCENTAGE 56 44

In the survey, I tried to differentiate amongst people withbelow averagehousehold income, average household income &abovehousehold income. This classification can be done on thebasis of the daily expenditure that people make.56%consumers demand single pack.44% consumers demandfamily packs i.e.3 in 1 pack.

This data can be graphically explained with the help

of the following bar graph:



• Which tea u prefer to use?

The reaction of people towards various TEAbrands can be tabulated in the following manner:

BRANDS TATA TEA BROOKE

BOND

TAJ MAHAL OTHERS

PERCENTA

GE

32 28 18 22

In the survey, it could easily be concluded that TATA TEA,the product of TATA has a market share of 32%.This isfollowed by, BROOKE BOND, with a market share of 28%.Followed by other brands (EXCEPT TATA TEA,BROOKEBOND,TAJ MAHAL)with a market share of 22%.This is finallyfollowed by TAJ MAHAL, the product of HUL whichholds18%of the market share.




• Which tea pack u prefer to use?

In order to determine the income pattern of theconsumers, it was necessary for the researcher to distributethe consumers on the basis of their demand for the variouspacks of TEA brands available in the market. However, thereaction of people towards various TEA packs can betabulated in the following manner:

TEA PACKS SACHET MEDIUM PACK LARGE PACKS

PERCENTAGE 48 32 20

In the survey, I tried to differentiate amongst the people,with belowaverage household income, average household income &above household income. This classification can be done onthe basis of the daily expenditure that people make.However, it can be concluded that sachets are most



commonly used by the people .i.e. 48%consumers demandsachet packs. 32%consumers demand medium pack.20%consumers demand large pack.This data can be graphically explained with the help

of the following diagram:

• Which tooth paste u prefer to use?

In the initial years, the rural consumers preferred toothpowders, datoons etc. But from the last decade, thepreference of consumers towards toothpaste has beenchanged. A huge number of toothpastes of different companies are sold in rural market.

However, the reaction of people towardsvarious TOOTH PASTES can be tabulated as follows:

BRANDS PEPSODENT COLGATE CLOSE UP OTHERS

PERCENTAGE 27 35 22 16

In the survey that the researcher conducted, it could easilybe seen that COLGATE, the product of COLGATE PALMOLIVEis the market leader, which covers 35%of the total market.



After that, PEPSODENT, the product of HUL is demanded bythe customers, which covers 27%of the market share.Followed by CLOSE – UP, the product of HUL is demanded bythe customers, which covers 22%of the market share. Which

is then followed by others brands (EXCEPT PEPSODENT,COLGATE, CLOSE -UP), which covers 16%of the total marketshare.


• Which coffee u prefer to use?

The reaction of people towards various COFFEEbrands can be tabulated in the following manner:

BRANDS BRU NESTLE NESCAFE OTHERS

PERCENTA

GE

26 32 32 10

In the survey, it can be easily concluded that all the brandsare facing toughcompetition. NESTLE, the product of NESTLE S.A.& NESCAFE,another product of NESTLE S.A., shares equal market shareof 32%each.This means that they are in a very tough



competition. This is followed by BRU, the product of HULwhich holds, 26%of the market share. While the other brandshold only 10%of the market share.


• Which cream u prefer to use?

The reaction of people towards various CREAMbrands canbe tabulated in the following manner:

BRANDS PONDS FAIR &LOVELY

AYUR OTHERS

PERCENTA

GE

28 32 14 26



In the survey, that I conducted, it can easily be concludedthat FAIR &LOVELY, the product of HUL, holds the majormarket with a share of 32%.This is followed by, POND ’s,another product of HUL, which holds 28%of the market

share. This is followed by, other brands (EXCEPT, PONDS,FAIR &LOVELY &AYUR), which captures 26%of the marketshare. This is followed by AYUR, the brand of AYURACADEMY OF NATURAL BEAUTY (AANB) which holds 14%of the total market share.


which hair oil u prefer to use?

The reaction of people towards various HAIROIL brands canbe tabulated in the following manner:

BRANDS PARACHUT

E

DABUR

AMLA

DABUR

VATIKA

OTHERS

PERCENTA 37 29 19 15



GE

In the survey, it can easily be concluded that PARACHUTE,the product of MERICO captures 37%of the total market

share. This is followed by DABUR AMLA, the product of DABUR which captures 29%of the total market share. This isfollowed by DABUR VATIKA, another product of DABUR whichcaptures 19%of the market. And after that, followed byother brands (EXCEPT PARACHUTE, DABUR AMLA, DABURVATIKA) captures 15% of the market share.


• Which biscuits u prefer to use?

The reaction of people towards variousBISCUITS brands can be tabulated in the following manner:

BRANDS MARIE

GOLD

GOOD DAY PARLE G OTHERS



PERCENTA

GE

24 21 38 17

In the survey, it can easily be concluded that PARLE-G, theproduct of PARLE , holds a major market share of 38%.This isfollowed by MARIE GOLD, a product of BRITANNIA whichholds 24%of the market share. After that, GOOD DAY,another product of BRITANNIA, holds 21%of the marketshare. This is followed by other brands (EXCEPT MARIEGOLD, GOOD DAY, PARLE-G) which hold a market share of 17%.


• Which detergent u prefer to use?

The reaction of people towards variousDETERGENTbrands can be tabulated in the following manner:



BRANDS SURF RIN TIDE OTHERS

PERCENTA

GE

27 35 22 16

In the survey, it could be easily concluded that RIN, theproduct of HULcaptures 35%of the total market share. This is followed bySURF, the product of HUL which has a market share of 27%.This is followed by TIDE, the product of PROCTER &

GAMBLE which has a market share of 27%.This is finallyfollowed by other brands (EXCEPT SURF,RIN,TIDE)whichcaptures 16%of the market share.




Conclusions

Thus looking at the challenges and the opportunities which

rural markets offer to the marketers it can be said that the

future is very promising for those who can understand the

dynamics of rural markets and exploit them to their best

advantage. A radical change in attitudes of marketers

towards the vibrant and burgeoning rural markets is called

for, so they can successfully impress on the 230 million rural

consumers spread over approximately six hundred thousand

villages in rural India.

The rural market is very large in compare to the urban

market as well as it is more challenging market. The

consumer wants those products which are long lasting, good,

easy to use and cheaper. The income level of rural

consumers is not as high as the income level of urban

consumers that’s why they want low price goods. It is one of

the reasons that the sell of sachet is much larger in the rural

area in all segments. It is necessary for all the major

companies to provide those products which are easy to

available and affordable to the consumers. It is right that the



profit margin is very low in the FMCG products, but at the

same time the market size is much large in the rural area.

The companies can reduce their prices by cutting the costs

on the packaging because the rural consumers don’t need

attractive packaging. Application of 4A* is also a major task

for the major companies in this area.

56

Rural market has an untapped potential like rain but it is

different from the urban market so it requires the different

marketing strategies and marketer has to meet the

challenges to be successful in rural market.

In this report, it can very easily be concluded that HUL, holds

major portion of the FMCG market. It holds major shares in

the soap, detergent, shampoo & cream ’ s category. HUL’sproducts are mainly in demand, because they provide these

products in different packs. They consider the fact that rural

consumers do not have that much money to be spent on

these products. So, they prefer buying the small or the

medium packs. However, large or family packs are still been

bought by few consumers, who are from a well –off families.

In the case of TEA, TATA holds a major share. In

the case of COFFEE, NESTLE & NESCAFE holds the majorshare. Rural consumers favor TATA because it is an old

organization &it has gained a lot of BRAND EQUITY which

finally creates BRAND LOYALTY. In these products,

consumers do get brand loyal, because they do not want to

take a risk with their tastes. So they prefer sticking to one



factor, which is quite low in rural areas. Illiteracy is also a

main factor. For them there is no such thing – “status

symbol”. Although, there is a brand loyalty but the

percentage is very low.

58

Suggestions&recommendations

The researcher would like to suggest the

following points, so that the organizations can easily sell

their products to their consumers:

1.However,the demand of a product is also affected by its

life cycle. If the product is in the introduction stage, then itwill definitely take some time to capture the market,

because in the introduction stage, consumers are not much

aware about the product. Therefore, it is the responsibility of

the organization to create awareness amongst the

consumers.



2.They should adapt rigorous marketing strategies, in order

to sustain in the market.

3.There is immense competition in this sector. Therefore, the

organizations should try to gain competitive advantageagainst their competitor’s.

4.They should try to reach as many people as possible.

5.For the organizations that are not much popular amongst

the consumers, should adopt Sales Promotion, as their

marketing strategies.

6.Application of 4A ’ s has also become an important task for

all the organizations. (*4A=Availability, Affordability,Acceptability, Awareness)

59

APPENDIX

1. Some Facts about the rural market70 % of India’s population lives in 627000 villages in

rural areas. 90 % of the rural population is concentrated in

villages with a population of less than 2000. According to theNCAER projections, the number of middle and high-incomehouseholds in rural India is expected to grow from 80 millionto 111 million by 2007. In urban India, the same is expectedto grow from 46 million to 59 million.

Packaged consumer products: More than Rs. 2000 crores



Market for Non-food items: Rs. 20000 crores growing at2.5% p.a.Consumption of pesticides: 68,000 tonnes, growing at12%p.a.

Share of Rural market in overall consumption

Toiletries

Safety Razor Blades 48%Premium Soaps 24%

Tooth Paste 20%Hair Oil 20%

OTC products

Medicated dress 25%Cold Analgesic 42%Antiseptic Creams 28%

2.) Product Adoption: Hair products were introduced torural India in an attempt to capitalize on a culture where hairgrooming is taken extremely seriously by women. While ruralwomen may wear faded saris and little jewelry, few step outwithout ensuring that their hair is in place. Consumer goodscompanies introduced a transplanted product fromdeveloped markets, the 2-in-1 shampoo/conditioner

60used shampoo and did not value or understand the fullbenefits of conditioner. However, several years back,Hindustan Lever focused on product development strategiesfor rural consumers who still did not use shampoo in India.

Their research indicated that a prevailing consumer habit inrural India was to use soap for hair and body care. Ratherthan try to change instilled consumer behavior, productdevelopers focused on creating an opportunity. Consumerswanted a product that was convenient and low-cost. Theresult was a new 2-in-1 soap, a product that cleans the hairand body, and is targeted towards consumers in rural areas.



SOME STRANGE FACTS

Amazing innovator

With a queer psychology of purchase and usage, Indian ruralmarket is still a puzzle to marketers. In many a case, itstretches its imagination to find surprisingly different uses of some of the products. And the red-faced marketers admitthat they actually sell their products in areas they wouldotherwise find difficult, simply because there are other usesfor them. For instance,

• Buffaloes displayed at the haats for sale are dyed animmaculate black withGodrej hair dye.

• Horlicks is used as a health beverage to fatten up cattlein Bihar.

• In villages of Punjab, washing machines are being usedto make frothy lassi inbulk.

• Iodex is rubbed into the skins of animals after a hardday's work to relievemuscular pain.

3.) Communication Adaptation: Both, washing and fortaking bath - one requires water. Now for rural markets thereare three sources of water - wells, handpumps and ponds.For the first in the history of advertising - these werebranded. Special stickers were put on the handpumps, thewalls

61of the wells were lined with advertising tiles and tinplates

were put on allthe trees surrounding the ponds. The idea was to advertisenot only at the point of purchase but also at the time of

consumption. This case shows that the brand was some howrelating to the consumer. It was right there when theconsumer wants it and responds to his needs when wanted.



So the customer could also see the advertising when he wasbathing or washing. Now, the customers who bought thesebrands got a sense of satisfaction by seeing their choicebeing advertised in these places while a question was put in

the minds of the customers who had bought other brands.

62

Questionnaire

• name:• occupation:• monthly salary:• a.less than 10,000



• b.10,000 –25,000• c.25,000 –50,000• d.More than 50,000• address:

• Which soap u prefer to use?

• Lux

• Lifebuoy

• Dettol

• Others

• Which pack u prefer to use?

• Medium pack

• Family pack

• Which tea u prefer to use?• Taj mahal• Tata tea• Brooke bond• Others

• Which tea pack u prefer to use?• Sachet

• Small pack• Medium pack

• Which tooth paste u prefer to use?• Colgate• Close up



• Pepsodent• Others

• Which coffee u prefer to use?

• Nestle• Nescafe• Bru• Others

• Which cream u prefer to use?• Ponds• Fair and lovely• Ayur• Others

• which hair oil u prefer to use?• Parachute• Dabur amla• Dabur vatika• Others

• Which biscuits u prefer to use?• Good day• Marie gold• Parle G• Others

• Which detergent u prefer to use?• Surf • Rin•

Tide• Others

• Which shampoo u prefer to use?• Sunsilk• Head and shoulders• Clinic plus



• Others

• Which pack u prefer to use?• Sachet

• Small pack• Medium pack

• Which Television you prefer to use ?• Onida• Beltek• Crown• others

• Which bicycle you prefer to use?• Avon• Atlas• Hero• Others

• Which refrigerator you prefer to use?• Videocon• Kelvinator• Godrej• Others

• Which wrist watch you prefer to use?• Titan• Hmt• Maxima• Others

• Which fan you prefer to use?•

Local fans• Khaitan• Polar

66

BIBLIOGRAPHY



• UTTAR PRADESH DEVELOPMENT AUTHORITY

• http://business.mapsofindia.com/rural-economy/state-development/marketing.html

• http://www.ibef.org/economy/ruralmarket.aspx

• http://en.wikipedia.org/wiki/Rural_markets

• http://www.indianmba.com/Faculty_Column/FC213/fc213.html

• http://www.123eng.com/forum/viewtopic.php?p=76117

• http://ezinearticles.com/?Challenges-In-Rural-Marketing & id=1092597

• http://www.infibeam.com/Books/info/t-p-gopalaswamy/rural-marketing-environment-problems-strategies/9788125916178.html

• http://www.naukrihub.com/india/fmcg/

• http://www.naukrihub.com/india/fmcg/overview/

• http://www.naukrihub.com/india/fmcg/consumer-class/income/

http://business.mapsofindia.com/rural-economy/state-development/marketing.html


http://www.ibef.org/economy/ruralmarket.aspx

http://en.wikipedia.org/wiki/Rural_markets

http://www.indianmba.com/Faculty_Column/FC213/fc213.html


http://www.123eng.com/forum/viewtopic.php?p=76117

http://ezinearticles.com/?Challenges-In-Rural-Marketing&id=1092597


http://www.infibeam.com/Books/info/t-p-gopalaswamy/rural-marketing-environment-problems-strategies/9788125916178.html



http://www.naukrihub.com/india/fmcg/


http://www.naukrihub.com/india/fmcg/overview/

http://www.naukrihub.com/india/fmcg/consumer-class/income/


http://www.ibef.org/economy/ruralmarket.aspx

http://en.wikipedia.org/wiki/Rural_markets



http://www.123eng.com/forum/viewtopic.php?p=76117







http://www.naukrihub.com/india/fmcg/overview/





rahul dessert at ion report

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