A

RESEARCH REPORT

ON

“STUDY OF RURAL MARKETING IN PRESENT

SCENARIO IN INDIAN CONTEXT”

SUBMITTED BY: SUBMITTED TO:

Saurabh Kumar Mrs. Anjali Gupta

(MBA- IVth SEM)

Roll No. - 0921570048 SGIT Ghaziabad

(IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR)

MBA DEGREE PROGRAMME

OF U.P. TECHNICAL UNIVERSITY, LUCKNOW

Shree Ganpati Institute Of Technology (Ghaziabad)

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ACKNOWLEDGEMENT

Making any project is always an opportunity to learn something but this

project is of special importance because it has given me a chance to learn

many things,

I would like to pay my gratitude to Mrs. Anjali Gupta for her kind attention,

support and giving an opportunity to research work on “STUDY OF

RURAL MARKETING IN PRESENT SCENARIO IN INDIAN

CONTEXT.”

Again, I greatly appreciate the diligent support provided by all the faculty of

SGIT and my friends for their whole heart support and co- operation.

Saurabh Kumar

2

CONTENTS

Sr. No. Contents1 Objectives of the study

2 Introduction

3 Methodology Used

4 Rural Market Environment

5 Future Of Rural Marketing

6 Some Players In Rural Marketing

7 Marketing-Mix For Rural Marketing

8 Rural Media

9 Rural Small Scale Industries

10 Starting The E-marketing In Rural Market

11 Impact Of Power Brand In Rural Market

12 Cracking The Rural Market

13 Changes In Rural Marketing

14 Opportunities For Rural Market

15 Problems In Rural Marketing

16 Conclusion

17 Suggestion

18 Bibliography

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OBJECTIVE

The over all objective of the Dissertation is to know the whole scenario of

rural marketing in India.

To know the scope of rural marketing in India

Future growth potential in Indian Rural marketing

Different strategies for competing in rural India

opportunities in Indian Rural marketing

Scope:

It will help in understanding the whole marketing strategy about

Indian rural market.

It will also help in understanding, why Indian rural market is

booming.

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5

INTRODUCTION

"The rural market is a significant part of our marketing strategy which

enables us to help the consumer link with our product."

While we all accept that the heart of India lives in its villages and the Indian

rural market with its vast size and demand base offers great opportunities to

marketers, we tend to conclude that the purse does not stay with them.

Nothing can be far from truth. Rural marketing involves addressing around

700 million potential consumers, over 40 per cent of the Indian middle-class,

and about half the country's disposable income. According to a NCAER

study the consuming class households in rural equals the number in urban.

and awareness The recent NCAER publication "The Great Indian Middle

Class" further reveals that the Indian middle class consisted on 10.7 million

households or 57 million individuals of which 36 per cent lived in rural

areas. No wonder, the Rural markets have been a vital source of growth for

most companies. For a number of FMCG companies in the country, more

than half their annual sales come from the rural market.

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Although with the substantial improvement in purchasing power, increasing

brand consciousness, changing consumption pattern and rapid spread of

communication network rural India offers a plethora of opportunities all

waiting to be harnessed, the marketers lack the in-depth knowledge of the

village psyche, strong distribution channels and awareness that are indeed

the prerequisites for making a dent into the rural market.

Moreover, vast cultural diversity and vastly varying rural demographics,

poor infrastructure - be it inadequate roads and highways or the availability

of telephones and electricity, low income levels, low levels of literacy often

tend to lower the presence of the corporates in the rural markets.

Thus, although the rural markets must be alluring, tapping the vast potential

calls for a systematic psychographic analyses and an appropriate marketing

mix to meet the consequent challenges of availability, affordability,

acceptability.

To achieve success, in rural India, companies will need to establish rural

market development programme. There is a need to innovate and adapt

products that suit rural operating conditions. The rural consumers need to be

educated of new concepts, relevant to the environment and usage habits that

will improve their quality of life.

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In addition to focusing on targeted promotions and advertising there is an

urgent need to work on economical packaging, dual pricing and special sizes

of FMCG and household products. IT can be considered as an important

marketing tool.

Moreover, the corporates need to place emphasis on retailers directly rather

than depending on the wholesalers for distribution in the rural market as this

has not proved to be very effective and a proactive marketing medium.

There is a need to generate superior data on rural marketing system, the

haats, melas, mandis and on village and small town income levels and

consumption patterns. They need to learn how to use existing market places

- haats, melas, and mandis - to arrange live demonstrations of products. The

ingredients for successful penetration into the hearts and wallets of village

consumers include long-term commitment, cost re-engineering and sustained

innovation and specialized strategies.

I would like to mention that despite the hurdles that Rural economy presents,

corporate-rural partnership can overcome these and bring about positive

results for both the entities. Partnership needs to extend beyond agribusiness.

It is not only the FMCGs but also the financial and insurance sector that

needs to come forward. We are glad that today we have senior

representatives from the Banking and Insurance sector to discuss their

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success stories and tailor-made financial products that have been introduced

by them to address the specific needs of the rural markets.

Characteristics of Rural markets

There are certain characteristics of rural India, which every prospective marketer needs to be aware of before unleashing his product:Low income influenced by seasonal fluctuationsLow literacyDiverse customs, languages and social structuresResistant to changePrice sensitiveHigh brand loyaltyInfluenced by traditionsModerate aspirational levelsQuality ConsciousLow to moderate risk taking abilityThese typical characteristics of the rural market make it evident that there are huge challenges, which a marketer will face. These challenges need to be tackled using appropriate strategies and proper planning. The major obstacles can be classified as follows:

.

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The major obstacles can be classified as follows:

Poor infrastructure facilities, which hamper the effective distribution of products and make the task of reaching the target consumer difficult.Traditional media is ineffective due to illiteracy and non availability.There is insufficient past research to provide some insight about consumer behavior.Disposable income is highly dependent on good monsoons and a rich harvest.Varying linguistic and socio-cultural norms compel the marketer to vary his marketing message for different parts of the same country.Role of women in buying process is still not independent of family constraints.Inadequate credit availability hampers the ability of rural retailers to carry stocks.Understanding the psyche of the rural consumer and gauging the complexity of the rural market has to be given utmost priority by marketer. Creative marketing solutions need to be devised to combat these barriers.

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Difference between rural customer & urban customer:

Not only today - but there has been a vast difference between the two

markets for a long time now. The difference is not only between urban and

rural but also within the rural areas -- between regions, states and districts.

There is a difference in the media reach, the education levels, in the culture

and the type of products that the two markets are exposed to and this leads to

a difference in the two markets.

The difference is in things like -- how do you celebrate New Year, how do

you celebrate birthdays? Small things like these are celebrated in a

completely different manner when the rural and the urban customers are

concerned. There is a vast difference in the lifestyles of the people in the two

regions.

The kind of choices of brands that a urban customer enjoys is different from

the choices available to the rural counterparts. The rural customer usually

has 2 or 3 brands to choose from whereas the urban one has multiple

choices. The difference is also in the way of thinking. The rural customer

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has a fairly simple thinking as compared to the its urban counterpart. The

biggest thing is that there is lack of any research into the consumer behavior

of the rural areas. There is considerable amount of data on the urban

consumer regarding things like -- who is the influencer, who is the buyer,

how do they go and buy, how much money do they spend on their

purchases, etc. but on the rural front - the effort has started to happen now.

So we need to understand the buyer.

Also, whatever little understanding we have is not for the entire industry.

There is no collective effort. Some people have spent time in the rural

markets, carried out studies and have understood the rural behaviour, but

their works have not been passed or known to the rest of the industry.

So, an in depth understanding of the consumer is one key area that the

industry needs to work on. Second is -- what appeals to him, what are the

right kind of products for him. For example - can I sell the same Lux or the

same Tata Tea that I sell to the urban customer to the rural as well? What

needs to be the difference in the marketing mix when we try to sell the same

commodity to the 2 different sections.

There are vast differences in the rural areas as well. There are some 5,60,000

villages and some 525 districts and each one is different from the other. The

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geographical spread is not as homogeneous as it is with the urban areas

owing to vast cultural differences.

METHODOLOGY USED

In order to carry out any research investigation there is a need of a

Systematic method and to adopt a well defined procedure for each and

every research there is also a need of methodology . Methodology of any

research constitutes ,application of the appropriate

research tools and the techniques.

The research involves the following steps:-

1 - DEFINE THE PROBLEM AND RESEARCH OBJECTIVE:-

If the problem is clearly defined ,it is half solved .The problem Objective

here to assess the scope of rural marketing

2 - COLLECT THE INFORMATION :-

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The information is collected from secondary sources- Internet, books,

magazines , newspapers , and journals

3- ANLAYZE THE INFORMATION :-

The next step in the marketing research process is to exact findings

from the collected data .

4-PRESENT THE FINDINGS AND CONCLUSIONS :-

As the last step ,the findings and conclusion of whole research

are presented . .

SOME PLAYERS ARE IN RURAL MARKET

Here the rain gods still play havoc with one’s dreams. The dusty village path

winds past a cluster of slumbering cottages and leads one to a weekly rural

bazaar or haat, brimming over with din, bustle and transaction. This is where

the real India resides. Telephone is a luxury here. Electricity, if at all, comes

here only in fits and starts. And a delivery by road may take any stretch of

time.

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However, things are changing fast now. Thanks to the increasing literacy

level and media explosion, people are becoming conscious about their

lifestyles and about their rights to live a better life. Brand consciousness is

on the rise. This, clubbed with increasing disposable income of rural

households, has made the rural consumer more demanding and choosier in

his purchase behaviour than ever before. And the dusky village damsel has

now learned to pine for a satin rose .

The rural India offers a tremendous market potential. A mere one percent

increase in India’s rural income translates to a mind-boggling Rs 10,000

crore of buying power. Nearly two-thirds of all middle-income households

in the country are in rural India. And close to half of India’s buying potential

lies in its villages. Thus for the country’s marketers, small and big, rural

reach is on the rise and is fast becoming their most important route to

growth. Realizing this Corporate India is now investing a sizeable chunk of

its marketing budget to target the rural consumers.

Increasing brand awareness

In the rural families, studies indicate a slow but determined shift in the use

of categories. There is a r Increasing brand awareness In the rural families,

studies indicate a slow but determined shift in the use of categories. There is

a remarkable improvement in the form of products used. For instance,

households are upgrading from indigenous teeth-cleaning ingredients to

tooth powder and tooth-pastes, from traditional mosquito repellant to coils

and mats. There is also a visible shift from local and unbranded products to

national brands. From low-priced brands to premium brands.

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FMCG CONSUMPTION

Organizations like Hindustan Lever Ltd., Nirma Chemical Works, Colgate

Palmolive, Parle foods and Malhotra Marketing have carved inroads into the

heart of rural markets. Various categories of products have been able to

spread their tentacles deep into the rural market and achieved significant

recognition in the country households. And, in the process, the regional

brands, local brands and the other unbranded offerings got displaced by the

leading brands.

Company Household penetration

HLL

Nirma Chemical

Company Household penetration

HLL

Nirma Chemical Works

Colgate Palmolive

Parle Foods

Malhotra marketing

88%

56%

33%

31%

27%

Category% volume of local

brands/unbranded

Washing cakes/bars

Tea

88

56

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Salt 33

Of the expenditure on consumer goods in rural household, approximately,

44% is on food articles such as biscuits, tea, coffee and salt, 20% on

toiletries, 13% on washing material, 10% on cosmetics, 4% on OTC

products and 9% on other consumables. A number of category products have

established themselves firmly in the rural households.

It is evident that in the villages low-priced brands are well accepted and one

might feel that a larger proportion of the purchases made in rural market can

be attributed to local/ unbranded players. Surprisingly, however, the

unbranded/local component contributes to a substantial portion of the

volume of only a few of the highly penetrated categories.

Focus on urban categories

CategoryCategory

Penetration

Brand with

highest

penetration

Toilet Soap

Washing cakes/Bars

Edible oil

Tea

Washin powder /

liquid

Salt

Biscuits

91%

88%

84%

77%

70%

64%

61%

Lifebuoy

Wheel

Double iran

mustard

Lipton Taaza

Nirma

Tata Salt

Parle G

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Though the commodity products have greater penetration, traditionally

urban categories such as skin creams and talcum powder have also made a

mark. While the urban talcum powder market suffered a de-growth, the rural

talcum powder market darted ahead. Similarly, growth of rural skin cream

market was at par with that of urban skin cream market. This clearly

indicated that after being considered urban for a long time, some categories

are now wearing a rural face. And, in many a case, it is the rural market that

is actually driving the growth of category.

Premium brands

Pond’s is the leader in the talcum powder category with a penetration of

65% and volume contribution of 56%. Its rivals viz. Nycil and Liril are

trailing far behind. Moreover, 60% of the Pond’s users have purchased no

other brand i.e. they are 100% brand loyal. This reflects the strength of the

brand in rural bazaar.

CategoryHousehold

Penetration

Skin creams

Talcum Powders

18%

15%

In the skin care category, Fair & Lovely fairness cream, with a penetration

of 75%, accounts for 60% of the skin care market in rural India. It also

enjoys the undistinguished patronage of 58% of its user households. Both

Pond’s and Fair & Lovely are enjoying a monopoly in the rural markets in

their respective categories.

Rural India is not averse to trying out the premium brands at high prices. A

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study indicated that a majority of the premium brand users are using the

brand for the first time. Similarly 0.9% of the talcum powder-using families

have started using Denim talc and 0.7% of the shampoo using households

started using Pantene. Surveys also reveal that trials are not restricted to the

more affluent echelon of the villages. The experimenting households are

more-or-less evenly spread across the various socio-economic clusters of the

rural market. This should further encourage the marketers to focus their

attention on rural buyers.

BrandPenetration of

category users

Surf

Ariel

Pantene

Denim

6.2%

4.5%

1.8%

1.8%

The rural youths are more open to fresh concepts as against their elderly

family members. Their difference in choice of products/brands with the

seniors of the households often leads to a “dual-usage” of product

categories. As an instance, 20% of the households using tooth powder also

use tooth paste. Similarly, many of the households using premium brands

also use mass market brands. For example, while 15% of Surf and 12% of

Ariel using families also use Nirma detergent, 3% of Denim users use

Pond’s Dreamflower talc and 18% of Pantene using households use Clinic

shampoo as well.

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MARKETING MIX FOR RURAL MARKETING

Product

The strategy revolves around what attracts the rural customer to a product.

For example - Packaging. Now the rural customers are usually daily wage

earners and they don’t have monthly incomes like the ones in the urban areas

have. So the packaging is in smaller units and lesser-priced packs that they

can afford given their kind of income streams. Then a thing like the colour

that attracts him is also important.

Another important factor is Convenience. An example is what Colgate did to

its tooth powder packaging. Firstly - it made sachets as was required by their

income streams. Secondly - since many households don’t have proper

bathrooms and only have a window or things like that to keep such things --

it was wise to cap this sachet for convenience of storage while use. So this is

what they did.

There is also a difference in the kind of media mix that is used to convey the

messages to the rural customers. We need to use different models and means

to reach them as what appeals to the urban customer may not appeal to him

due to varying lifestyles. The communication and the design of it are also

different as what attracts one need not attract the other as well. So again,

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even if the media reaches him, there might not be an impact as it may fail to

attract him as fails to connect to it due to the lifestyles being different.

Then there is the case of product availability that again has different

strategies. The concept of supermarkets coming up in urban areas is not the

same as in rural areas. There the concept of Haats is more prevalent.

FOR all the management jargon associated with it, CRM has had grassroots

beginnings. Here's a classic example which illustrates this perfectly:

CavinKare's Chik shampoo in 50-paise sachets - a huge success which

redefined shampoo usage and forced giants such as HLL and P&G to follow

suit - saw the idea germinate from the grassroots. Literally.

Several years ago, CavinKare found that many rural consumers were using

bathing soap for washing their hair. The company field force found the

reasons - the rural consumer had not heard of soaps damaging hair, and in

any case, hair was being washed by soaps for generations by their

predecessors. Interestingly, the rural consumers were aware that a shampoo

cleansed hair better, but was expensive at Rs 2 per sachet. That's when

CavinKare began working on a shampoo for the rural consumer. The 50-

paise Chik shampoo was conceptualized then, and has since been a runaway

success in rural markets

Keep Products Simple and Functional21

Driving consumption of goods in rural areas is not just about lowering prices

and increasing volume sales. It is also about product innovation: developing

indigenous products that cater to the needs of rural consumers who demand

quality products at an affordable cost. This requires substantial R&D to

better understand consumer behavior and preferences.

A case in point is the rural market for shampoo. Hair products were

introduced to rural India in an attempt to capitalize on a culture where hair

grooming is taken extremely seriously by women. While rural women may

wear faded saris and little jewelry, few step out without ensuring that their

hair is in place. Consumer goods companies introduced a transplanted

product from developed markets, the 2-in-1 shampoo/conditioner.

Companies thought that women would be attracted to this product because it

was cost-effective; however, initial sales were dismal. What companies

failed to recognize is that most rural consumers had previously never used

shampoo and did not value or understand the full benefits of conditioner.

Several years back, Hindustan Lever focused on product development

strategies for rural consumers who still did not use shampoo in India. Their

research indicated that a prevailing consumer habit in rural India was to use

soap for hair and body care. Rather than try to change instilled consumer

behavior, product developers focused on creating an opportunity. Consumers

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wanted a product that was convenient and low-cost. The result was a new 2-

in-1 soap, a product that cleans the hair and body, and is targeted towards

consumers in rural areas.

MODEL VARIANT:-

Models developed specifically for the rural market have found more takers

in the market. For instance, Motorcycles that are designed to take on the rig

ours of rural roads have succeeded more in the rural market.

COLOUR VARIANT:-

The rural consumer differ from their urban cousins in colour preference . in

case of some products , colour may matter vary much . firms can exploit this

fact to their advantage. For example , ASIAN PAINTS understood the

substantial difference between the rural buyer in the colour preference .

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Different products/ models, Different brands, packing, pricing and

different positioning

By and large, the rural market can be tapped better through different

products / models , different brands, different packaging and different

positioning.

PACKAGE DESIGN AND PACK SIZE

In some case, the product can be the same, but the package and pack size

may have to be different for the rural target group. Package design and

colour help identification of brands by rural buyers. Many rural consumers

are not quite conversant with various brands .All the same, they manage to

pick the brand that they want . They recognize the brands by its packaging.

This reason why a number of local brands in rural areas imitate the

packaging of big national brands.

As regard pack size, as a general, it can be stated that smaller packs are more

suited to the rural areas. Low purchasing power and limited availability of

cash for shopping force the rural consumer to go in for smaller packs with

low unit price. In some cases, they also prefer small packs so that they can

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make a beginning on small scale and after trial and satisfaction go in for

regular purchases.

In recent years , sale of shampoo brands were priced at Re 1 or below per

sachet helped the trail and adoption. The 5-gram Vicks Vapourb tin and the

small –size Lifebuoy soap are other such examples.

HLL, has deepened coverage of many of its products in the rural market

through such combination. It has come up with a series of small pack

sizes/saches that specially cater to low –end consumers.

Logo , Symbols and Mnemonics :-

Image is far more potent the rural market , which in many cases is an

uninitiated market. Symbols, therefore , add value to brand recall and brand

personality in the rural market.

Asian Paints’ Gattu:

Asian Paints Gattu though equally well known in urban and rural market ,

has greater effectiveness as an identity tool in the rural market .Actually in

many rural parts of India , Asian Paints is referred to as the bahahawala or

chokrawala company.

The Nirma Girl:

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The Nirma Girl in Frock on the packs of Nirma washing powder has become

the mnemonic for effective and good value in washing powders.

The Dettol Sword and the Mortein Genie:

For the same reason , Reckitt& Colman has been focusing on the Dettol

Sword and the Mortein genie in its rural communication.

Brand Decisions :-

Branding too needs skillful handling in the rural market. The rural

consumers have already graduated from generic products to branded

products. Today, the brand name is the surest means of conveying quality to

rural consumers. In other words, brand is the key to confidence building

among the rural consumers. Besides quality, it conveys that the

manufacturer is going to show sustained interest in those products ands

markets. Whether the same brand is used in either urban and rural market, or

appropriate variants of the brand must be adopted for the rural market, is a

matter for conscious decisions by the individual firms depending on the

context. In quite a few cases, the ‘same brand’ is providing right and cost

effective. In some cases, however, the brand name that is suited to the urban

market may not be quite suitable to the rural market. Low priced variants

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seem to work better in majority of cases in the rural market. It will, however,

be incorrect to assume that rural consumers prefer local brands to national

brands.

Sell Value Brands, Not Cheap Brands;-

While brands specifically developed for the rural market and low – priced

variants may work better in many cases , the strategy should be one of

selling value brands . HLL’s Lifebuoy, for example, is a low –priced

carbolic soap that is often the first choice of bath soap by a rural

consumer .HLL, however , does not sell it as a cheap soap. Instead, sell it as

a hygiene brand. It communicates the value of the brand to the target market.

It also tries to enhances the value of the offer by giving suitable ‘add-

ons’ .for example, while targeting rural students for the soap , it distributed

height charts along with the soap and conveyed its concern for their health

and well being . Rural marketers would do well to add some value to their

products in this fashion if they are keen to secure the loyalty of the

consumers.

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Wider competition for a product

Many of the rural buyers tend to have little stock of money, only a flow.

Consequently, they tend to make purchases only to meet their daily needs

and have little capacity to build inventory. The marketing implications of

this are far-reaching. Not only are pack sizes and price points affected, but in

turns out that consumers have to make a selection from a much wider array

of product categories. Thus the nature of competition for any given

product is much broader. For instance, in a village haat, Coca Cola competes

not just with Pepsi, but with a broad set of purchases that the rural

consumers consider as “treats”.

Preference for Low Unit Packs (LUP)

Trial is often encouraged by Low Unit Packs (LUP) or sachets. The sachet

packaging strategy caught the popular FMCG imagination in the early 1990s

and it was considered as a breakthrough in the psyche of the rural

consumers. Today, the sachets are increasingly dominant on shelves.

Shampoo, for instance, has invaded the rural households with sachets at low

affordable prices. Sachets of tea, blues and washing powder are being

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launched in a big way in the village haats by leading manufacturers.

Companies like HLL and Marico are making concrete efforts to create and

then meet the demand of rural consumers by launching products in small

affordable packs.

Price:

According to Euromonitor data, the 2002 per capita income of India was a

mere $360. Marketing strategies in rural India must rely on large volumes

over fat margins to drive profitability in such a price sensitive market.

However, how can consumer goods companies drive volume growth when a

regular bottle of shampoo costs more than the average daily

rural wage? Hindustan Lever, a subsidiary of Unilever coined the term nano-

marketing in the early 90s when it introduced its products in small satchets.

In tiny pillow-like plastic packets that contain about 20 millilitres of product,

Unilever sells shaving gel, dishwashing liquid and toothpaste, to name just a

few items. The satchets answer the needs of rural consumers who cannot, or

are not used to, buying larger sizes and enables them to buy on a more

frequent basis.This strategy provides a viable entry-level price for many

rural consumers who want to try new products, and allows companies to

drive volume sales. Today, Hindustan Lever estimates its shampoo sachets

29

are sold in around 400,000 of India's 600,000 villages.Other multinational

companies, such as Coca-Cola, have learned the hard way. After being

thrown out by India’s earlier socialist government, Coca-Cola re-entered the

Indian market in 1993 and struggled to grow its business. Coca-Cola

overestimated the size of the market, misread consumer preferences and

underestimated Pepsi’s market penetration in India which had beene

stablished through its long-standing presence in the country. In 2000, the

company wrote down its Indian bottling assets by $405 million after

incurring years of financial losses.Since Coca-Cola recruited a local

Hindustan Lever veteran, Sanjeev Gupta, its Indian operations have started

to turn around. With a pulse on rural consumer needs and preferences,

companies introduced a new, smaller sized bottle in 2001. The 200ml Coca-

Cola bottle sells at 10c and is aimed at rural areas and lower-income urban

markets (the “Climbers” and the “Consumers”).Furthermore, this year Gupta

dropped the price of a 300ml bottle of Coca-Cola to 17c from 24c.These

price cuts have boosted volume sales and the smaller sized bottle has been

extremely successful and is expected to represent about half of Coca-Cola’s

sales by volume in 2003,turning Coca-Cola’s operations to profitability.

Distribution:

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Retailer Power

While independent retailers are a fragmented group, they have a substantial

amount of power in driving consumer purchases, particularly in rural areas.

Most rural stores are cramped providing little opportunity for consumers to

browse. The consumer interacts directly with the retail salesperson (usually

the owner) and services often include informal lines of credit and home

delivery in addition to personal opinions on goods. In rural areas, retailers

tend to carry only a single brand in a product category. In such a retailing

environment, being first on the shelf and developing a privileged

relationship with the retailer is extremely important and a competitive

advantage to consumer goods companies.One of the grey areas that needs to

be probed more into is the Trade -- that is the retailer. When an urban

consumer goes to shop -- he has many options in front of him(around 10 to

15 in some cases) as are displayed in the store. But for the rural customer

these choices are limited.

So the retailer plays a very big role here. The rural customer goes to the

same shop always to buy his things. And there is a very strong bonding in

terms of trust between the two. The buying behaviour is also such that the

customer doesn't ask for the things by brand but like -- "paanch rupey waali

chaye dena". Now it is on the retailer to push whatever brand he wants to

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push as they can influence the buyer very easily and very strongly on the

preferences.

Unfortunately, we have not spent enough money and time on understanding

the rural markets in a collective way. As we need to understand the

consumer, we need to do the same thing for the retailer as he is a chief

influencer in the buying decision.

Promotion

There is an example in innovative media. It was used to push products in

personal wash like Lux and Lifebuoy and fabric wash items like Rin and

Wheel. For both, washing and for taking bath - one requires water. Now for

rural markets there are three sources of water - wells, handpumps and ponds.

For the first in the history of advertising - these were branded. Special

stickers were put on the handpumps, the walls of the wells were lined with

advertising tiles and tinplates were put on all the trees surrounding the

ponds. The idea was to advertise not only at the point of purchase but also at

the time of consumption.

So the customer could also see the advertising when he was bathing or

washing. Now, the customers who bought these brands got a sense of

32

satisfaction by seeing their choice being advertised in these places while a

question was put in the minds of the customers who had bought other

brands. So this was an innovative strategy that worked quite well.

Therefore to understand the way the rural markets work -- we need to go to

these markets and spend time there in understanding them. We live in

surroundings where the things are completely different from what the rural

customer experiences. And we can't understand him unless we go and spend

time there. Things like what time does he get up, etc need to be studied and

customer needs to be understood. Also these studies need to be passed on so

others can also benefit from the ground works done and enhance them

further.

We need in depth studies of the market, the medium, the message and the

rural customer in center of all these to understand the rural markets

completely.

33

RURAL MEDIA

Urban consumers shop daily and have 365 opportunities a year to switch

brands while the rural purchasers who buy their goods in weekly haats have

only 54. Attempts to reach rural consumers, even once during the purchase

cycle to ensure repeat purchase, make point of purchase advertising and

trade push indispensable. This requires a significant reorientation in the

allocation of funds across media. For example, outdoor advertising accounts

for over 7% of all media expenditures in India, while it only accounts for

0.8% in USA.

Rural buyers living in small isolated groups distributed across vast distances

have limited access to the broadcast media. The existence of a multiplicity of

languages and varying level of illiteracy complicates the task of

communication further. To overcome some of these challenges, Unilever

pioneered the concept of video vans that travel from village to village

screening films in the local language, interspersed with advertisements for

Unilever’s products. The company also provides product usage

demonstrations to the captive audience because written instructions on the

pack may be illegible to the consumers who are either illiterate or do not

34

understand the dialect. Where mass media is used, variability can, at times,

back fire. On re-entering India in the 1990s, Coca Cola decided to reinvest

massively on a TV advertising campaign. It opted for slick commercials,

rich in colour, with high production values, but the effect was somewhere

lost on a market where 60% of all TVs are still black and white.

However, in the recent past, the improved technology has allowed the cable

and satellite networks to increase their reach across the countryside thus

exposing a rural consumer to a lifestyle that was beyond his dreams. And

this increasing awareness has led to a significant change in his buying

behaviour and consumption patterns. While the urban market is getting

increasingly competitive and saturated, the rural market is blooming with

increase in the disposable incomes of the households, thus promising a far

better scope for growth for marketers. Hence, with the shifting dynamics of

the present-day market situation, now it is the turn of the rural consumers to

dictate the terms. And this reinforces the need for marketers to formulate a

well-designed strategy to feel the pulse and to tackle the mystic rural

marketing.

35

Selecting The Media Mix :-

TV :-

With he increase in coverage and increase in TV ownership in rural areas ,

TV is gradually becoming the prime media for rural communication .

Cinema :-

The cinema is a useful medium in rural context . most large and medium

villages have one or more cinema house. Also, more than one-third of all

rural people do see cinema as a matter of regular lifestyle. Advertisement

films , short feature films, with disguised advertisement message, and

documentaries that combine knowledge and advertisements, can be

employed for rural communication.

It has been estimated that 33 per cent of the total cinema earnings in the

country come from rural India.

Radio:-

The radio is well -established medium in rural areas. A big expansion in

broadcasting facilities has taken place in the country over the years. The

availability of radio sets has also expanded. While radio as a medium cannot

match TV in potency and effectiveness, in the existing context ,it can

certainly play a significant role in rural communication.

36

Print media too has some scope :-

The role of print media is certainly limited in the rural context. Even the

remotest rural parts have a small group, which is literate. Moreover, while

the group may be numerically small , its member usually happen to be the

opinion leaders , influencing the purchasing behaviour of the large segment

of the rural consumers. so, it would be unwise to assume that the print media

has no scope at all in the rural areas . Moreover, the younger generation in

the rural areas is comparatively more literate. With the new trend of

increasing rural literacy , the scope for using print media in rural

communication will increase further.

Outdoor:-

The outdoors , which include hoardings, wall paintings, illumination and

other displays, also lend well for rural communication . In fact , many

companies are using the outdoors in the rural communication mix.

POPs ( point of purchase) :-

The POPs – Point of purchase promotional tools- are also quite useful in the

rural markets. The POPs meant for the rural market should be specially

designed to suit the rural requirements. Symbols, Pictures, and colours must

be liberally in POPs meant for the rural market. Colour is of particular

37

significance . As a general rule ,the rural people love bright colours. The

effective Communicator utilize such cues.

Credit Rating Scheme

A Credit Rating Scheme has been introduced to encourage the SSI Units to

get their credit rating done by the reputed credit rating agencies, with a view

to facilitating credit flow to them and enhancing the comfort-level of the

lending banks. 75% of the cost of the credit rating exercise, with a maximum

limit of Rs.40, 000 per SSI unit, is now reimbursed to the SSI units availing

of this one-time facility. The scheme is being implemented by the NSIC.

SME Fund

Looking to the credit needs of the SMEs in 1990, the Small Industries

Development Bank of India, (SIDBI) was launched to aid and finance for

small enterprises with a corpus of Rs. 2500 crores. To further improve credit

availability, a SME Fund of Rs. 10,000 crores has been operationalised

under SIDBI from April 2004. Credit to SSI

In order to facilitate smooth flow of credit to SSIs, the composite loan limit

for SSI entrepreneurs has been increased from Rs. 50 lakh to Rs. 1 crore.

Credit Cards

Laghu Udyami Credit Card (LUCC) Scheme has been liberalized by

enhancing the credit limit from Rs. 2 lakh to Rs. 10 lakh, for borrowers who

have a satisfactory track record.

SSI Clusters 16 new industrial clusters were identified and taken up under

Small

38

Industries Development Programme during this year. These are:

1. Food Processing, Muzaffarpur, Bihar

2. Steel Re-rolling Mills, Raipur, Chhatisgarh

3. Agricultural Implements, Karnal, Haryana

4. General & Light Engineering, Parwanoo, Himachal Pradesh

5. Readymade Garments, Bangalore, Karnataka

6. Gold Ornaments, Thrissur, Kerala

7. Readymade garments, Indore, Madhya Pradesh

8. Brass & Bell metal, Khurda, Orissa

9. Agricultural Implements, Moga, Punjab

10. Ball Bearings, Jaipur, Rajasthan

11. Leather Footwear, Agra, Uttar Rpadesh

12. Leather goods, Shaniniketan, Uttar Pradesh

13. Installation of Common Facility Centre in Brass/Bronze, Utensils,

Manufacturing Cluster at Pareb, Bihar

14. Development of Whiteware Cluster at Khurja, U.P.

15. Development of Auto Parts Clusters at Phagwara, Jallandhar and

Ludhiana

16. Development of Cane & Bamboo Cluster at Dimapur, Nagaland.

The development of these clusters is at various stages of

implementation.

39

STARTING THE E - MARKETING IN RURAL INDIA

Modern information and communications technologies (ICTs) and web

based marketing of agricultural produce hold great promise for the socio-

economic development of rural hinterlands in India. However, if they are to

serve the `unserved’ and spawn innovation at grass root level their

implementation must be carefully localised. This paper explores several

models of ICT deployment and information design issues which have been

tried in various parts of the developing world in the context of agricultural

marketing over the web and uses that learning with field experience from a

live project. The flexible systems framework is found appropriate and

useful to design the next action agenda.

The ‘anytime-anywhere’ advantage of e marketing leads to efficient price

discovery and offers economy of transaction for agricultural trading. This

attracts many rural developmental agencies to deploy websites for marketing

agricultural produce. But in spite of a core value proposition and significant

investment by the Indian government/NGOs and commercial agencies in

developing such portals, many have failed. Internet traffic on these websites

is either very limited or none at all. Yet there is a lack of empirical studies

on the modes of their failures.

This study using the sap-lap methodology examines the experiences of a

number of internet portals from India and other countries engaged in rural

marketing or disseminating rural development information, with usability

measures derived from farmers and traders and those suggested by

40

researchers. The findings are used in developing a conceptual framework for

e-marketing info design for agricultural market in rural northern India for the

portal (DM).

Situation

Common wisdom has it that the advent of modern information and

communication technologies (ICTs) such as telephony or the internet hold

unprecedented opportunities for rural development. Researchers,

policymakers and entrepreneurs alike frequently claim that ICTs represent

one of the most powerful tools in the struggle against poverty.

The significance of the Web in disseminating information and

communicating this effectively to the targeted user has been sufficiently

debated. Most experts agree to it that the Web will have a great impact on

the way rural marketing would be conducted in the future, yet there has been

little research towards exploring the effectiveness of the provision of

agriculture-related and rural marketing information in the electronic form.

This study set out to assess the current performance of agricultural websites

in some key areas of information provision through such websites

maintained by government departments and agencies, private profit-

motivated as well as non-governmental organizations (NGOs), and to

identify the barriers to communication. The results offer significant

implications for researchers and practitioners interested in development of

portal information structure for Web development, multi-dimensional

communication, electronic commerce networks and e-commerce trading

platforms for rural marketing.

41

There are a number of ways – some obvious and some not-so-obvious ones –

in which ICTs may serve the development process. For instance rural

entrepreneurs can benefit because ICTs help to improve access to markets or

supply chains and provide a broader base for decision-making, thus making

risk more calculable. Moreover, many local communities have experienced

that ICTs have increased bottom-up participation in the governance

processes and may expand the reach and accessibility of government

services and public infrastructure. In Andhra Pradesh, Internet-based

Integrated Citizen Service Centres allow for electronic bill payment, issuing

of certificates, permits and licenses; or access to public information. The

electronic village project of M.S.Swaminathan Research Foundation

(MSSRF) in Pondicherry received the Stockholm award for its promise.

However, there is as yet little systematic empirical evidence of the supposed

enormous ‘developmental’ impacts of ICTs. Moreover, in many – especially

rural – areas, the private sector is yet to invest significantly in ICT

experiments (except for a few like ITC or Tata Chemicals) because of lack

of experience with rural markets or low purchasing power of the local

population. This means that, if ICT access is to be expanded, public money

will have to be spent – which in turn means that there are important trade-

offs to be considered. In many areas, there are serious questions about how

much money policymakers should spare for the build-up of ICTs instead of

investing further in potable water supply, roads, electricity or other physical

infrastructure projects.

Given such trade-offs, there is a need to identify which kinds of ICT access

deliver the best value for money, and how the limited resources that can be

42

spent on it can be made to best suit the particular needs of rural India. A

number of `models’ have so far been tried.

One of the most famous projects of successful ICT application for

development is the Grameen Village Phone system, undertaken by Grameen

Telecom (a member of the Grameen Group). The project aims at ultimately

spreading phone access to the over 100 million inhabitants of Bangladesh

who are so far ‘unwired’, made possible by combining the Grameen Bank’s

expertise in village-based micro-enterprise and micro-credit with the latest

digital wireless technology. The aim is to have selected member borrowers

of Grameen Bank purchase the phones under a lease programme and make

the phones available to all users in the village on a fee-paying basis.

Another model of ICT provision in rural areas of developing countries, and

one which attempts to combine phone access with access to the Internet is

that of the so-called Telecentres or Information Kiosks or the recently

introduced Infothela of MLAKLH. An Infothela is a common point of

access for multiple users (often an entire community), providing a range of

ICT services including Internet, fax, phone, e-mail, word processing, and

even specialised information retrieval or applications (e.g. distance

education or matrimonial matchmaking).

Telecentres have been established widely in the developing world, and vary

in their service provision and means of funding. In Peru, the establishment

of numerous `Cabañas Públicas’ created one of the highest concentrations

of public internet access and a significant reduction in prices. Nevertheless,

the experience with telecentres has so far been a mixed one. In numerous

cases, usage, particularly of PCs, has been lower than expected or

43

commercial viability was not attained. Of the over 70 Community

Telecentres established since 1997 by the South African Universal Services

Agency, only 40 per cent remain open today, with only 3 per cent making

enough money to cover costs.

Buried at the end of the World Bank policy paper on the ‘Networking

revolution: opportunities and challenges for developing countries’ ( June,

2000) is an account of multipurpose community telecentres (MCTs) in

rural Mexico. It turns out that of twenty-three MCTs built in rural Mexico,

only five were working two years later. This is a failure rate of 80 percent.

The policy paper comments, “Problems encountered included insufficient

maintenance funding, inadequate political interest and will, and cultural

constraints which hamper community interest in the projects.” The paper

gives no hint why “political interest and will” might have been inadequate

and why community interest might have been constrained by that holdall

excuse for failure, “culture.”

The paper concludes that the Mexican case “underscores the importance of

participatory design and attention to sustainability issues in the development

of such programs.”

Actor

Internet and Information Kiosks exist in various kinds, each with their

respective merits. First, one might distinguish between the small private

sector cyber cafes on the one hand and bigger, donor-funded telecentres like

e-Seva in Andhra Pradesh or e-Village in Pondicherry on the other hand.

Smaller, privately run cyber cafes are often financially self-sustaining – but

44

are thus usually restricted to areas where they expect to be viable (usually

urban centers) and are usually neither within physical nor financial reach of

the poor. They are also unlikely to be able to provide local content. – By

contrast, larger, often externally funded telecentres are rarely financially

sustainable but can focus more on specific ‘development’ – aspects,

including access specifically targeted at rural communities and the poorest in

general, as well as a focus on training.

A second distinction is according to the institutional context they are

embedded in. This often has a significant influence on the ‘developmental

impact’ of telecentres. commercial telecentres and commercial franchises

(like e-choupals of ITC) are usually closest to commercial viability but, as

mentioned, are unlikely to have an impact on the poor outside the economic

circle of the e-Choupals. Telecentres run by or with the involvement of

developmental NGOs are more likely to target poor and marginalized

communities and focus on much-needed additional services like training,

content creation, provision of public goods without which ICT access would

be of limited developmental use. Telecentres in village schools for example

as another alternative have the significant advantage that for their

establishment an existing physical infrastructure only has to be extended and

some of the ICT-relevant training can be cost-effectively integrated into the

mainstream curriculum of the educational institution. This partnership has

successfully worked in the DM project.

One further idea for the Digital Mandi that evolved was Virtual Telephones

or village voice mail systems, as have been set up in Brazil. These can

provide individuals with their own telephone number and access to a voice

mailbox. In other words, the individual need not possess a telephone but can

45

receive calls to a voice mailbox using his/her personal PIN. Extending this

idea to text e-mail access, a South African company assigns e-mail addresses

to every Post Office box address in the country, thereby providing electronic

mail indirectly to around eight million South African households through

public internet terminals located in post offices which users can access with

a personal identification number. The Postal Department in India has now

taken up a similar programme. .

Thus there are a number of alternatives and apparently mutually exclusive

business models for ICT implementation in Rural India.

On one hand it appears that kiosks run by local entrepreneurs with localized

and targeted applications (like e choupals in Northern India or voicemail

service in Brazil or matrimonial matchmaking service in Tamil Nadu) will

succeed on the other hand following the success model of the world wide

web itself one may suggest that if an infrastructure is created and user

friendly appropriate interfaces are continuously accessible then local rural

folks will develop their own applications and Information Kiosks or

Infothela will survive.

The Digital Mandi Project conceived as an electronic trading platform for

agro-commodities of Northern India and meant to run as a core application

on the mobile Infothela faced additional problems.

Barriers to information access may be physical, economic, intellectual or

technological, that impede a user’s participation in the activities on a

website. The barriers may be actively imposed by the architects and website

designers or they may be allowed to continue simply through their lack of

action or lack of understanding of the critical user conditions. Such critical

user conditions may arise due to particular demographic, geographic,

46

cultural, social, psychological, economic or other factors. Issues related to

usability such as ease of use, usefulness (Davis, 1989), decision

effectiveness (Mason et al, 1973), user response, user satisfaction (Doll et al,

1988) and many other aspect of usability have been studied in great detail by

researchers. But interactions with focus groups at various agricultural market

places around Lucknow-Kanpur showed the need of a more detailed study

on Information communication barriers on a more localised set of priorities.

Learning

It is therefore, assumed that a website with relatively high-level of accurate,

up-to-date and pertinent content, deployed in a user-friendly way,

customized to particular user groups, and tailored to specific geographical

needs should be universally successful and hence, accepted in India too.

However many such efforts have apparently failed to achieve their targets.

The challenges to agricultural website usability for rural marketing in India

arise mainly because of the highly specific local needs and the great

diversity in local conditions. The major challenges are

Poor literacy rate – low use of textual information

Remote village locations - physical distances compounding

problems of lack of proper price information and habitual

dependence on middlemen.

Absence of alternate media for dissemination of info.

Absence of info in vernacular languages and multiplicity of

languages.

47

Cash crunch of farmers, immediate cash transaction system and

reluctance of banks to provide soft loans to farmers.

Economic, low-cost solutions - any technology solution aimed

at benefiting the masses in rural India must be affordable and

low-cost so that the perceived economic benefits of such an

endeavor are much more than the cost of switching over to a

different technological solution.

Action

The Digital Mandi project demonstrates that there are a number of features

pertaining to the ICT access projects that are particularly successful from a

‘developmental’ viewpoint

This means, for instance, to somehow convey the relevant (local) content

provided through internet access to the largely illiterate rural populations of

developing countries in local language may have far- reaching spin-offs.

It has a leased line connection to the Internet, and in the so-called process of

‘radio browsing’ programme presenters browse the Web in the studio on

behalf of listeners (who provide requests/input through phone or post).

Relevant ‘experts’ from the community then interpret the information for

listeners. Another good example of the creation of relevant local content are

the ‘Infoshops’ in Pondicherry, India. After information requirements are

identified during a trial period, volunteers from the village create a local

database comprising government programs for low income rural families;

cost and availability of farming inputs such as seeds and fertilisers, grain

prices in different local markets; a directory of insurance plans for crops and

48

families; pest managements plans for rice and sugar cane; a directory of

local hospitals, medical practitioners and their specialties; a regional

timetable for buses and trains; a directory of local veterinarians, cattle and

animal husbandry programs. All these preceding experiments contributed to

the Digital Mandi design.

Web site success depends on a number of factors the most important of

which is the ‘website design’, which encompasses both the content creation

and information design. All website design issues aim at providing certain

requisite features in the website. Jonathan Palmer (see references) has

contented that website success depends on such factors as website download

delays, navigation, content, interactivity and responsiveness. The inclusion

of these features into a good website can be addressed as

(a) content-related issues

(b) information design issues and

(c) communication design issues.

Traditionally, the basic work of a good website design has been considered

as addressing the content-creation and context-appropriateness issues only.

While website designing objectives for other purposes may be fulfilled by

creating a good fusion of relatively high-level content with fine design

features taking care of the issues mentioned above, they would certainly fall

behind their objectives when considering agricultural websites for rural

marketing. The reasons as has been listed earlier, can be found in the

inherent characteristics of rural markets in India. These websites are

therefore bound to fail unless delivery services for agricultural information

49

can be effectively integrated with good information design models and grass

root innovators/ social activists’ agenda.

Performance

The basic findings from our initial research at Digital Mandi has shown that

the presence of a number of desired features in a website leads to higher user

satisfaction. Such features are broadly aimed at satisfying one or the other

of the following immediate user objectives:

a) Ease of access.

b) Up-to-date content.

c) Layout, design, consistent themes.

d) Easy navigation.

e) Higher interactivity.

f) Access through multiple media.

g) Higher use of non-textual information.

h) Multiple languages.

i) Lower cost of transaction.

It was assumed that each of these factors contributed to higher user

satisfaction. The Digital Mandi project now wants to integrate an

ethnographic approach with flexible systems methodology to focus on the

communication design issues for web-portals specifically devoted to rural

marketing in India. The specific research questions are:

50

1. What are the major information design features for rural marketing in

India? Hypotheses (a), (b), (c), (d) and (e) are tested to find answer to

this question.

2. What are the major communication media tools to be used for

agricultural websites in India? Hypothesis (f) is tested against this

question.

3. What are the modes employed to transcend communication and cost

barriers for specific user groups?

What local language solutions are to be provided through which

media?

What non-textual solutions can be provided for the under-

educated, untrained user?

What makes ICT relevant for the unserved rural communities?

51

IMPACT OF POWER BRANDS

"With the implementation of the power brands strategy almost complete, we

have shown both topline and bottomline growth in this quarter." D

Sundaram, finance director, Hindustan Lever Limited, after announcing Q3

2005 results.

"We benefited by dropping brands with low profit margins or moving out of

categories that were not growing." Harsh Mariwala, chairman and managing

director, Marico Industries. Three men, one voice. Indian fast moving

consumer goods companies like HLL, Godrej Consumer Products Limited

and Marico Industries are completely sold on the concept of "power brands".

But in their rush to put their best brands forward, are these big companies in

danger of overlooking the potential offered by some of the also-ran brands?

It's been almost five years since these three FMCG giants opted to manage

their brand portfolios on the basis of the power brand strategy. How have

they fared? And what does the future hold?

Why power brands?

In 2001, HLL decided to put its marketing resources behind 30 power brands

out of a bouquet of 110. Of these select brands, the top five brands of the

company contributed more than Rs 3,000 crore (Rs 30 billion) to the

company's turnover (close to 30 per cent of sales). So what did it take to be a

power brand? In a nutshell - size, brand strength, uniqueness and growth

potential. The thinking in HLL? Helping brands grow under the prevailing

market conditions required scale.

52

Even in 2001, the Indian FMCG market was crowded. More than 3,000

advertisements were beamed on television every month, while stock-keeping

units at retail outlets had increased by over 40 per cent, in just three years.

Unfortunately, for the most part, shop sizes remained the same. Which

meant in-store displays - critical for impulse purchases - suffered. Even the

plethora of television commercials wasn't helping the FMCG cause: it was

difficult for brands to stand out amidst the clutter. For others like Marico,

GCPL or Dabur, too, "getting more from fewer brands" became the magic

mantra. In 2002, GCPL decided to focus on five brands in a bid to sustain

growth; since these five contributed more than 90 per cent of the company's

total sales, that strategy made eminent sense. Around the same time, Marico

decided to exit from slow-growth, low margin sectors such as Sweekar

edible oil and Sil jams. Instead, it chose to stick with brands like Parachute,

Saffola and Hair & Care. Was the approach correct? Arindam Banerjee,

professor and chairman, marketing area, Indian Institute of Management,

Ahmedabad, agrees cautiously. "Power branding counters brand dilution by

allocating organisation resources on lesser but more secured marketing

investments," he explains. Adi Godrej is more emphatic. "[Power branding]

is not to prevent dilution of brand, but to prevent dilution of the company's

focus. If a company has 10 brands and tries to support all of them, focus on

the important brands would be diluted."

Top to bottom

Has it worked out quite the way these companies anticipated? Global

marketing experts aren't too bullish about a power brands strategy's impact

on the balance sheet. "Power brands will have an impact on the bottomline

of companies, but not necessarily on the topline growth," says Nirmalya

Kumar, director, centre for marketing, and co-director, Aditya V Birla India

53

Centre, at London Business School. Jagdish Sheth, Charles H Kellstadt

Professor of Marketing, Goizueta Business School, has a slightly different

viewpoint. "You may have problems in the short run, but these can be ironed

out in the long run. Introducing brand variants will help." Consider some

numbers. Between 2001-02 and 2004-05, profits at GCPL increased 19.66

per cent, from Rs 41.98 crore (Rs 419.8 million) to Rs 86.07 crore (Rs 860.7

million). Over the same period, turnover went up less than 4 per cent, from

Rs 520.47 crore (Rs 5.2 billion) to Rs 603.46 crore (Rs 6.03 billion). "This is

clearly unsustainable," says an analyst. In sharp contrast, Marico has shown

significant hikes in both turnover and profit from 2002 to 2005. While sales

climbed from Rs 671.08 crore (Rs 6.71 billion) to Rs 953 crore (Rs 9.53

billion), profits increased from Rs 49.32 crore (Rs 493.2 million) to Rs 73.79

crore (Rs 737.9 million). For its part, HLL has been plagued by flat or

declining growth for some time now. Between 2001 and 2004, profits

plunged more than 22 per cent {Rs 341 crore (Rs 3.41 billion)}, while

turnover dropped by Rs 892 crore (Rs 8.92 billion).

The troubles magnify when specific categories are considered. Toilet soaps,

for instance, contributed 24 per cent of HLL's sales in 2004, with sales value

increasing marginally from Rs 2,089 crore (Rs 20.89 billion) to Rs 2,380

crore (Rs 23.8 billion). But sales volumes had actually declined, from

384,000 tonnes in 2001 to 368,000 tonnes, indicating that the growth was

mainly on the back of price hikes.

The story was repeated in reverse in the detergents sector, where HLL had

three power brands (Surf, Rin and Wheel). Sales volumes increased from

892,000 tonnes to 930,000 tonnes, but sales value crashed from Rs 1,975

crore (Rs 19.75 billion) to Rs 1,872 crore (Rs 18.72 billion), thanks to the

price wars with Procter & Gamble.

54

The lesson? Power brands may be "powerful" to the company or the retailer,

not necessarily to the consumer. Not everyone agrees. Counters a senior

HLL executive, "The impact was because of the migration phase to power

brands - sales of non-power brands declined." He adds that the company's

power brands strategy will boost both topline and bottomline growth in the

future.

It doesn't help that India isn't just one, big market: it's several hundred.

Brooke Bond tea may be a power brand for HLL, but it doesn't face the same

enemy in every market in the country: if Wagh Bakri rules in Gujarat, Girnar

and Sapat vie for the top honours in Maharashtra.

Making matters worse is the fact that rural India is an entirely different

nation when it comes to preferences. That's a problem GCPL, too, faces; at

present, rural sales account for just 30 per cent of the Rs 603.46 crore (Rs

6.03 billion) company's sales, but the company expects that figure to go up

substantially in the coming years. Marico's Mariwala agrees that penetration

is difficult to achieve with a power brands strategy. Consequently,

segmentation takes a hit, because you don't have 20 brands for 20 different

people. "As a brand grows larger, it simply cannot mean everything to

everybody," agrees London Business School's Kumar. There is a way out,

though. Kumar points out that a power brand strategy allows a company the

luxury of targeting fewer segments, but the more profitable segments.

HLL found another way. In addition to its 30 national superpowers, it also

has 10 regional jewels. HLL executives point out that with fewer brands on

which to focus, the company will be able to manage its marketing spends

better.

55

Godrej is attempting to beat regional diversity at its own game. For instance,

when toilet soap Godrej No.1 entered the sub-popular category in 1998-99, it

had only one offering: rose.

It soon also introduced its first variant, sandal, which has proved popular in

the southern markets. The rose variant finds takers in northern states such as

Uttar Pradesh, Bihar, Punjab, Madhya Pradesh and Rajasthan.

One, two, three, you go free

If the rural-urban divide cuts into the aspirations of power brands, the

changes in the urban shopping landscape renew hopes. Most analysts expect

shoppers to throng to malls and hypermarkets, for everything from

electronics and clothing to groceries.

As the shopping landscape changes in India and malls look down upon hole-

in-the-wall outlets, power brands could be an answer. According to HLL, at

present just 3 per cent of Indian customers shop through organised retail

outlets. The average in Asia -- 30 to 35 per cent. How will organised retail

help power brands? In developed markets, all brands, leaving aside the top

three sellers, have to buy space on retailer shelves. Since private labels get a

free ticket to the shelves as the third brand, it is important to be a No. 1 or

No. 2 in a category.

Marketing experts claim that large-format retailers have changed the destiny

of companies in foreign countries. Sheth refers to P&G's experience in

Canada. In that market, rival Unilever was a market leader with loyal

customers, while P&G wasn't doing all that well. When Wal-Mart entered

Canada, it changed the complexion of the market. Wal-Mart provided P&G

a much-needed distribution channel. In five years, P&G gained significant

market shares in Canada. "When a Wal-Mart happens to India, the power

branding companies will reap better benefits," says Sheth. That's because

56

organised retail formats will provide more display space to power brands,

their extensions and variants: and marketers believe that whatever gets seen,

gets sold. That's not happening at present. Remember, more than 90 per cent

of grocer shops in India are cubby-hole outlets.

So, what's the final take-away? Will a power brands strategy work in the

future in India? The answer: it depends on the category, the market and the

consumer. Now, where have we heard that before?

Power brands in perspective

Power brands as a concept came into existence by seeing the retailer as an

economic partner. When a P&G executive paid a visit to Japan, he saw the

respect and importance given to retailers -- something that was not

happening in the US where there were several layers in the distribution

channel.

Later, when Wal-Mart emphasised that it was the largest customer for P&G

and the company could work closely with the retail chain and reduce costs in

its supply chain, P&G started power brand projects with Wal-Mart, K Mart

and others.

The principle was simple. Brands were rationalised to support the super

retailer. In 1999, P&G's arch-rival Unilever decided to focus on 400 out of

its 1,600 strong brand portfolio.

Two years later, Unilever's Indian arm, too, adopted the same strategy.

Hindustan Lever decided to spend on only 30 brands and 10 regional brands

from its original basket of 110 brands.

Other Indian companies, too, decided to follow the power brands strategy,

including Godrej, Britannia, Dabur and Marico.

57

Recently, Vijay Mallya's United Spirits also joined this group by naming

Director's Special, Antiquity, Bagpiper, McDowell No 1, Signature and 10

other brands as power brands.

CHANGES IN RURAL MARKETING

Anugraha Madison has widely been credited with introducing the concept of

rural marketing in India. The company was one of the first marketing firms

to realise the potential of rural India and decided to focus on rural marketing.

R V Rajan, chief managing director, Anugraha Madison, shares his views

with Shobha Warrier on how rural India has changed over the last two

decades.

When marketing agencies concentrated only on urban India, why did you

decide to focus on the rural market?

My foray into the rural market was not deliberate. It so happened that when I

came to Chennai from Mumbai in 1974, I found that most of the clients

belonged to the agriculture and fertiliser sectors. So I had to deal with

farmers.

When Sam Balsara of Madison came down to Chennai looking for an

associate, we decided to have a joint venture and position ourselves as rural

specialists mainly because of my experience in the field.

Although I have been involved with rural communication and marketing for

the last two and a half decades, the positioning of Anugraha took off only

after the joint venture.

In the last two and a half decades, how much has rural India changed in its

aspirations, attitude and consumption? 58

Rural India has changed tremendously. The data published by the National

Council of Applied Economic Research shows that in the last ten years, the

income of rural India has grown several-fold. There is a definite shift from

middle to upper middle class and from lower to middle class segments.

Is the shift due to the growth in Indian agriculture?

For the last 10 consecutive years, we have had good monsoons. So,

agriculture is prospering. Of course, there have been setbacks in the last

couple of years.

Another interesting aspect is, today rural India is not 100 per cent dependent

on an agrarian economy. Unlike in the past where the ratio between those

who involved in agriculture and in other business was 75-25, today the

estimated ratio is 50:50, if not 60:40. So today, 50-60 per cent of the rural

population is involved in other businesses. A lot of people belonging to the

second generation are getting white-collar jobs in nearby towns. So, there is

a growing middle class with a monthly income in rural India and it is a

drastic change from the past where their income was totally dependent on

the monsoon, cropping season, etc. This has resulted in a definite growth in

the prosperity level in rural India. Of course, there are still a lot of poor

people, especially the agricultural labourers. But there is a growing middle

class with regular income and the rural rich are becoming richer.

Is the urban-rural divide in India thinning now?

The urban-rural divide is still there, but the divide between urban and rural

India is thinning among the top segment of rural India. The rural rich are

almost like urban India.

59

Rural India is like a pyramid. The top of the pyramid is occupied by the rich

farmers and businessmen. They may constitute around 5 per cent of the

population. The next level belongs to those with a regular income and the

base of the pyramid is occupied by the vast majority of the people who are

daily wage labourers.

So we cannot say that the urban-rural divide has melted. It is still there. But

there is hope with the growing emphasis on education.

How would you categorise different parts of rural India?

In India, we have the developed rural India and undeveloped rural India.

Punjab, Haryana, Tamil Nadu, Andhra Pradesh, Kerala and parts of

Maharashtra come under the developed rural India but the rest of the states

are undeveloped where power, infrastructure, etc are big problems. The

prosperity of Kerala has come from the NRI income and not from

agriculture. Today, there is hardly any village in Kerala.

Tamil Nadu is prosperous as power and good roads are available. All the

villages with proper infrastructure have developed. In such villages, people

also have better access to towns and cities. What are the major reasons for

the change in the lifestyle of the developed rural India?

Television has done wonders to rural India. Today, especially in the south,

the penetration of satellite television is very high, which is around 50 per

cent unlike 25-30 per cent in the rest of the country.

These people may not be literate in the true sense but they know what is

happening around the world because of television. They know how the rest

of the country live.

Do you television is driving the aspirations of rural India?

Definitely, the rural youth today is an important trigger in changing the

profile of rural India. About 40 per cent of the graduates coming out of

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Indian universities today are from mofussil areas. And, they are all doing

very well.

Their aspirations are similar to the urban youth, and it gets reflected in their

eagerness to earn more and live better. So, if there is a problem in

agriculture, they do something else. They ensure that they have steady flow

of income.

It has been reported that by 2009-10, the number of urban households is

projected to grow by 4 per cent, while rural households are expected to grow

by 11 per cent. Does this mean developmental initiatives are reaching rural

India?

The total expenditure of urban India is almost equal to what has been spent

by rural India. But what is being spent by urban India is being done by only

a small percentage of the population.

About 25 per cent of the urban India is spending as much as 75 per cent of

what rural India is spending. This shows the potential exists in rural India.

There is a huge market waiting to be tapped in rural India.

So the corporate world cannot ignore rural India?

Yes, they cannot afford to ignore rural India. Unfortunately, they are only

talking about it, they are not investing enough to get the maximum mileage

out of it. For them, rural India is an unknown entity even today, and it calls

for a lot of investment. Initially, the ratio between investment and returns

will not be the same as you see in urban India. For urban India, one

television spot is enough but it's not so in rural India. You have to slog it out

there. But eventually, you will get the returns. In today's corporate world, all

the managers, especially those working in the MNCs depend on their

quarterly results. They only look at what gives them immediate success.

61

Freebies have no meaning in rural India. You have to give value for money

for the brand you are selling.

How long can the corporate world ignore rural India?

You will not be able to survive without rural India in future. One company

that conquered the rural market 50 years ago and has consistently ruled is

Hindustan Lever.

About 50-55 per cent of their sales come from the rural market. Even today,

they are constantly innovating and improvising. And Hindustan Lever is

marketing directly in the rural markets.

The success of Cavin Kare has become a very notable case study. It is a

company that began in a small way. It started the Chic shampoo sachet for

50 paise when shampoo was available at Re 1, and it revolutionised the

market.

The sachet pack itself was a novel way of attracting the rural market. Now, it

has conquered the rural market all over India. They are giving a run for

Hindustan Lever's investments, as they have understood the local market

very well and communicate in their language. Now, Maruti is also seriously

looking at rural India.

According to a report, between June 2002 and December 2003, rural per

capita consumption expenditure grew by 11.5 per cent while the urban

expenditure grew by 9.6 per cent.

There is a tremendous potential for consumer durables like television sets,

refrigerators, air-conditioners and household appliances in rural India. After

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the basic needs of food, cloth and shelter, they are looking at how to live

better.

Television is the most sought after consumer item in rural India followed by

two wheelers. Gradually, they are moving to small cars like Maruti and that's

what Maruti is trying to exploit.

‘Creating Rural Business Hubs’ To strengthen, stched are often well

below the fair market price

The creation of a global trading network proposed by representatives

of grassroots producer

groups, governments and development agencies

Accenture Development Partnerships (ADP), UK commissioned to

conduct feasibility tudy. Recommendation: ‘The business case is

strong and establishment of the company should commence as soon as

possible’

Grassroots Trading Network (GTN) will be piloted in India in 2004-

05. GTN will then be expanded across Asia, moving into Latin

America in year 3 and Africa in year 6

Connect poor producers globally to wider markets

Provide support for the development, marketing and distribution of

products by mentoring + capacity building

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Facilitate collaborations between producer groups, businesses,

research and policy think tanks, advocacy groups, international

organizations, and governments

Campaign to improve international trade policies and tariffs that

hinder the poor

Aggregate best practice from the commercial sector and apply it to

grassroots producer organizations

‘Vibrant Centres of Commerce in rural areas with the right conditions to

accelerate grassroots entrepreneurship as well as to encourage the expansion

of businesses that have traditionally operated in urban markets into rural

markets’

Small rural entrepreneurs exist – need to expand for economies of scale

Their strength lies in production, not in marketing and distribution

With access to marketing and distribution, their volumes will grow

Distribution Houses is one solution

Distribution Networks should allow flow of products and services

out Small rural entrepreneurs exist – need to expand for economies of

scale

Their strength lies in production, not in marketing an

DISRIBUTION

With access to marketing and distribution, their volumes will grow

Distribution Houses is one solution

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Distribution Networks should allow flow of products and services of rural

markets as well as into rural markets

Out Small rural entrepreneurs exist – need to expand for economies of scale

Their strength lies in production, not in marketing and distribution

With access to marketing and distribution, their volumes will grow

Distribution Houses is one solution

Distribution Networks should allow flow of products and services of rural

markets as well as into rural markets

Over 95% of urban India does not know rural India

Corporate India realises the need for expansion into rural markets given

saturation of urban mkts + eroding margins. Over 70% of country’s

population–untapped consumer market + human capital

How? Presently, lack of knowledge, data and experience inhibit success

Result: Products and Marketing Strategies are not being adapted or created

with rural consumers in mind

Learn from 1. FMCG industries 2. NGOs 3. Others (e.g. IRMA) with

knowledge and experience of how things work at the grassroots

GTN’s Role: Demonstrate the poor are viable consumers+producers

The GTN Consolidator Model

Identify needs / benefits for involved partners to ensure a win-win situation

for all

With Globalisation, economies of scale is critical

If we can tap the production strength of this large rural population with its

small scale enterprises, consolidate it and provide larger players

with their requirements - we have an answer

GTN projects in agriculture demonstrate the model. Also being

extended to handicrafts/handlooms/textiles

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Sewa Graam Mahila Haat (SGMH), agricultural marketing arm of

SEWA, provides small and marginal farmers with technical, financial

and marketing assistance

Pilot between ITC & SGMH – for procuring sesame seeds, where

SGMH was positioned as the Consolidator

In 2003, ITC purchased 250 tonnes of sesame seed from SGMH who

procured this from 1450 poor farmers

Price realisation went up from Rs 18/kg in ’02 to an avg of Rs 29/kg

in ’03. Avg realisation/farmer: up by Rs 2,000

ITC now plans to procure amla, cumin, groundnut in ’04 + equip

SGMH to produce organic sesame

Creating a Rural Distribution Network -The Objectives SGMH &

HLL

A. Procure agricultural and cottage industry goods from SEWA rural

producer members

B. Employ SEWA women members to:

Process and pack the goods

Sell finished goods in a direct-to-home model, most effective

communication channel, given low literacy

Implement promotional campaign e.g., skits

SGMH, GTN & HLL established the business and implementation

plan:

Piloting in 84 Gujarat villages between Oct ’04 - Feb ’05

Brand name RUDI (Rural and Urban Development Initiative). Also,

means beautiful, pure + SEWA’s first woman member

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Bridging the Knowledge Gap

Partner with NGOs and others to leverage their grassroots experience

+ knowledge

Executive Training Programs to understand rural India

Expose small enterprises + NGOs to business practices

Financial Capital

Expand Micro Finance Schemes nationally

Micro Finance Schemes largely debt-based. Also need Equity Finance

Industry Chambers + Banks work with Government to devise new

ways to lend to the rural sector, safeguarding banks’ interests

Marketing and Distribution

Government Policy, incentivizing Distribution Houses

Reduce Entry Barriers

The Government and Industry Chambers need to work out the

modalities to make the process less cumbersome and more

transparent. This will also reduce rent seeking behavior

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COMMUNICATION

Dealing with two very different worlds

Initiatives breakdown because of lack of understanding of the other

world

Organizations aren’t on the same page

Market Linkages Sales & Distribution of GPO’s Branded Goods:

Promote ears-to-ground approach

Analyze sales data for understanding and directing production to the

market

Identify domestic and international markets for expansion

Identify products for markets based on GPO’s capability

Create responsibility/accountability for sales targets

Large Retailers:

Identify buyers based on GPO’s capability

Facilitate understanding of buyers’ requirements

Enhance GPO’s skills to supply to large buyers through domain

experts

Vendor Development:

Identify buyer interested in vendor development exercise

Map GPO products to buyer needs

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Define “gaps” where buyer and domain experts will work with GPO

to upgrade skills

Capacity-Building Support

Conduct “As Is” Analysis to determine gap between GPO’s status and

vision

Map business processes to identify bottlenecks in supply chain

Engage domain experts to work with GPOs to address critical problem

areas, develop or refine systems, and upgrade skills

Knowledge and Information Management

Host workshops bringing together experts from GPOs, businesses,

government, development and multilateral agencies for sharing

knowledge and best practices

Document and disseminate case studies based on hands on experience

with GPOs

Policy Analysis and Advocacy

Partner with international bodies/lobbies to promote interests of GPOs

Host multi-stakeholder consultations for GPOs to voice thei

OPPORTUNITY OF RURAL MARKETING

70

Urban consumers shop daily and have 365 opportunities a year to switch

brands while the rural purchasers who buy their goods in weekly haats have

only 54. Attempts to reach rural consumers, even once during the purchase

cycle to ensure repeat purchase, make point of purchase advertising and

trade push indispensable. This requires a significant reorientation in the

allocation of funds across media. For example, outdoor advertising accounts

for over 7% of all media expenditures in India, while it only accounts for

0.8% in USA.

Rural buyers living in small isolated groups distributed across vast distances

have limited access to the broadcast media. The existence of a multiplicity of

languages and varying level of illiteracy complicates the task of

communication further. To overcome some of these challenges, Unilever

pioneered the concept of video vans that travel from village to village

screening films in the local language, interspersed with advertisements for

Unilever’s products. The company also provides product usage

demonstrations to the captive audience because written instructions on the

pack may be illegible to the consumers who are either illiterate or do not

understand the dialect.

Where mass media is used, variability can, at times, back fire. On re-

entering India in the 1990s, Coca Cola decided to reinvest massively on a

TV advertising campaign. It opted for slick commercials, rich in colour, with

high production values, but the effect was somewhere lost on a market

where 60% of all TVs are still black and white.

71

However, in the recent past, the improved technology has allowed the cable

and satellite networks to increase their reach across the countryside thus

exposing a rural consumer to a lifestyle that was beyond his dreams. And

this increasing awareness has led to a significant change in his buying

behaviour and consumption patterns.

While the urban market is getting increasingly competitive and saturated, the

rural market is blooming with increase in the disposable incomes of the

households, thus promising a far better scope for growth for marketers.

Hence, with the shifting dynamics of the present-day market situation, now

it is the turn of the rural consumers to dictate the terms. And this reinforces

the need for marketers to formulate a well-designed strategy to feel the pulse

and to tackle the mystic rural market.

The above article has been condensed/abstracted from the following articles

with all their rights are reserved.

1. Rethinking marketing programs for emerging markets,

2. Growing brand awareness,

Concept:

In recent years, rural markets have acquired significance, as the overall

growth of the economy has resulted i.e. companies who see the poor as their

customers. substantial increase in the purchasing power of the rural

communities. On account of green revolution, the rural areas are consuming

a large quantity of industrial and urban manufactured products. In this

context, a special marketing strategy, namely, rural marketing has emerged.

72

But often, rural marketing is confused with agricultural marketing – the

latter denotes marketing of produce of the rural areas to the urban consumers

or industrial consumers, whereas rural marketing involves delivering

manufactured or processed inputs or services to rural producers or

consumers.

What makes Rural Markets Attractive?

Rural market has following arrived and the following facts substantiate

this.742 million people

Estimated annual size of the

rural market

FMCG Rs 65,000 Crore•

Durables Rs 5,000 Crore•

Agri-inputs (incl. tractors) Rs• 45,000 Crore

2 / 4 wheelers Rs 8,000 Crore•

In 2001-02, LIC sold 55 % of its policies in rural India.

Of two million BSNL mobile connections, 50% in small towns/villages.

Of the six lakh villages, 5.22 lakh have a Village Public Telephone (VPT) 41

million Kisan Credit Cards issued (against 22 million credit-plus-debit

cards in urban) with

cumulative credit of Rs 977 billion resulting in tremendous liquidity.

Of 20 million Rediffmail signups, 60 % are from small towns. 50%

transactions from these towns on

Rediff online shopping site

42 million rural HHs availing banking services in comparison to 27

million urban HHs.

Investment in formal savings instruments: 6.6 million HHs in rural and 6.7

million in urban

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Opportunities:

Infrastructure is improving rapidly.

In 50 years only 40% villages• connected by road, in next 10 years

another 30%. More than 90 % villages• electrified, though only 44%

rural homes have electric

connections.

Rural telephone density has gone• up by 300% in the last 10 years; every

1000+ pop is

connected by STD.

Social Indicators have improved a lot between 1981 and 2001

Number of “pucca” houses doubled• from 22% to 41% and “kuccha”

houses halved (41%

to 23%)

Percentage of BPL families• declined from 46% to 27%

Rural Literacy level improved• from 36% to 59%

Low penetration rates in rural so there are many marketing opportunities.

Durables Urban Rural Total (% of rural HH)

CTV 30.4 4.8 12.1

Refrigerator 33.5 3.5 12.0

FMCGs Urban Rural Total (% of rural HH)

Shampoo 66.3 35.2 44.2

Toothpaste 82.2 44.9 55.6

Marketers can make effective use of the large available infrastructure

Post offices 1,38,000•

Haats (periodic markets) 42,000•

Melas (exhibitions) 25,000•

Mandis (agri markets) 7,000•

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Public distribution shops• 3,80,000

Bank branches 32,000•

Proliferation of large format rural retail stores which have been successful

also.

DSCL Haryali stores•

M• & M Shubh Labh stores

TATA/Rallis Kisan Kendras•

Escorts rural stores•

Warnabazaar,• Maharashtra (annual sale Rs 40 crore)

Rural Consumer Insights:

Rural India buys.

Products more often (mostly• weekly).

Buys small packs, low unit price• more important than economy.

In rural India, brands rarely fight with each other; they just have to be

present at the right place.

Many brands are building strong rural base without much advertising

support.

Chik shampoo, second largest• shampoo brand.

Ghadi detergent, third largest• brand.

Fewer brand choices in rural: number of FMCG brand in rural is half that of

urban.

Buy value for money, not cheap products

Strategies to be followed:

Marketing Strategy: Marketers need to understand the psyche of the

rural consumers and then act accordingly. Rural marketing involves more

75

intensive personal selling efforts compared to urban marketing. Firms should

refrain from designing goods for the urban markets and subsequently

pushing them in the rural areas. To effectively tap the rural market a brand

must associate it with the same things the rural folks do. This can be done by

utilizing the various rural folk media to reach them in their own language

and in large numbers so that the brand can be associated with the myriad

rituals, celebrations, festivals, “melas” and other activities where they

assemble.

Distribution Strategy:

One of the ways could be using company delivery vans which can serve two

purposes- it can take the products to the customers in every nook and corner

of the market and it also enables the firm to establish direct contact with

them and thereby facilitate sales promotion. However, only the bigwigs can

adopt this channel. The companies with relatively fewer resources can go in

for syndicated distribution where a tie-up between non-competitive

marketers can be established to facilitate distribution. Annual “melas”

organized are quite popular and provide a very good platform for

distribution because people visit them to make several purchases. According

to the India n Market Research Bureau, around 8000 such melas are held in

rural India every year. Rural markets have the practice of fixing specific

days in a week as Market Days (often called “Haats’) when exchange of

goods and services are carried out. This is another potential low cost

distribution channel available to the marketers. Also, every region consisting

of several villages is generally served by one satellite town (termed as

“Mandis” or Agri-markets) where people prefer to go to buy their durable

76

commodities. If marketing managers use these feeder towns they will easily

be able to cover a large section of the rural population.

Promotional Strategy:

Firms must be very careful in choosing the vehicle to be used for

communication. Only 16% of the rural population has access to a vernacular

newspaper. So, the audio visuals must be planned to convey a right message

to the rural folk. The rich, traditional media forms like folk dances, puppet

shows, etc with which the rural consumers are familiar and comfortable, can

be used for high impact product campaigns.

PROBLEMS IN RURAL MARKETING

77

1. Underdeveloped people and underdeveloped market;

The agriculture technology has tried to develop the people and market in

rural areas . unfortunately ,the impact of the tectology is not felt uniformly

through out the country .while there are pockets- some districts in

punjab .haryana or western utter Pradesh – where a rural consumer is some

what comparable to his urban counterpart , there are lage areas and groups of

people who have remained beyond the technogial break throgh .

2. Lack of proper physical communication facilities;

Nearly 50% of the villages is the country does not have villages in the

country do not have all weather roads. Physical communication to these

villages is highly expensive. even today ,most villages is in eastern part

today inaccessible during monsoon

season. hence, distribution put in by manufacturer prove expensive and some

times of no consequences .to be effective the products have to be physically

moved to places of consumption or places to purchase.

3. Media for rural communication;

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Among the mass media, at some point of time, say in late 50s or early

60s ,radio was considered to be a potential ,medium for communication to

the rural families . Now the advent and expansion of telecast network

appears for easy communication with rural masses. The question is how

many peole access viewing television? There is a need to examine the

ownership pattern of television sets in rural areas to judge the potential reach

of this medium. Another mass medias cinema. it has been observed that

cinema viewing is fairly satisfactory ,where available . Mobile theaters are

also good medium but very expansive companies like HLL using these vans

found 10 to12 times higher in rural areas than urban areas due to bad roads

in areas

4. Hierarchy of markets.

Rural consumer has identified market places for different items of their

requirements. So there can not be uniform distribution pattern for all

products. It has been seen that 90% of farmers visited the nearest town ,

where an agricultural produces assembling market is situated at least once a

quatter for either selling the produce or for purchase of there requirements .

so town/ mandi centers with large hinterland villages become the focal point 79

thus depending upon the purchase habit of rural people. The distribution

netwpork for different commodities has to be different.

5. Low level of literacy:

the literacy rate is low in rural areas as compare to urban areas. This again

leads to the problem of communication for promotion purposes. Print

medium becomes in effective and to an extent irrelevant in rural areas since

ita reach is poor and so is the level of literacy. The dependent should be

more on electronic media cinema, radio and television. While the excess to

cinema and radio appears to be fairly easy and common. in not so in case of

television. Television advertising is very expensive. Probably it will be

prudent to take advantage of such professional rural advertising agencies.

The promotion of product along with distribution is also being resorted to by

many.

6, Seasonal demand:

the distribution of any product in rural areas either agricultural inputs ,

consumables or durable should necessarily follow a seasonal pattern. Since

75% of the rural income is generated through agricultural operation which is

seasonal so the demand pattern is also seasonal. A typical example is that of 80

fertilisers.the demand of fertilizers is always high during the start of kharif

and rabi system the fertilizers manufacturers have evolved a distribution

pattern so that the seasonal demand can be met. Like wise the demand for

consumables and durable will be high during the pek crop harvesting and

marketing season. . this is the time at which the rural people have substantial

cash inflows. Hence the distribution should be fairly intensive. During

harvesting season this arrangement would result in adequate sales realisation

vise versa in summer months the demand will be very low festivals seasons

like sankranti, poangal, vaisakhi or depawali are also demand seasons. So

the distribution of rural areas should be more and frequent during the harvest

and festival seasons as opposed to a fairly uniform demand pattern in urban

areas.

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CONCLUSION

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.

My research has attempted to explore the key opportunities and challenges

of marketing in rural India. To be successful, multinational consumer goods

companies need to be innovative, dogged and culturally sensitive in

developing rural marketing strategies. A direct transportation of traditional

marketing strategies that have worked in core “first world” markets will

likely need to be localized to cater to the substantially lower per capita

incomes, a lack of formal retail and distribution networks and the relatively

low cost of labor. It is a testament to both multinational and local consumer

goods companies that they have been able to innovate and address the

challenges offered by India’s rural market to bring goods, to and improve the

lives so many people. These successful marketing techniques may even be

introduced to other large emerging markets.

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SUGGESTION

Products must be specifically designed/modified for rural costomers

through industrial engineering excercises for transportation, storage,

performance, operation, packaging and servicing requirements.

thrusting urban technology down rural markets is not desirable. relate

technology to market development indexes.

Check primary, secondary, and transport packaging for rural oreintation.

Sales forecasting, positioning, inventory management, inter territory

transfers, pricing and credit management are functions of how the

agriculture in the area is faring. managers must learn to corelate and

respond to drought, floods, irrigation,good and bad monsoons,

harvesting and sowing seasons and impact of these on disposable

incomes of rural households.

Location, shop profile, dealer network, financial position, cash to credit

outlook, reputation, track record, allied lines, accounting, ability to

implement company policy, competitive products position, attitude and

partnership status – are some useful criteria.

Demand generation programs should be carried out through teams with

daily review by team leaders. dgp must result in brand awareness and

movement from dealer shelves.

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Brands must have visual identity, be regularly available, and promoted

with few price changes.

Make an it enabled system for reporting, informatiom, data

collection, and periodicity area wise, mandiwise.

Make market research an ongoing activity

territory wise rural development plus rural marketing should be done

companies should introduce good supply chain practices - deliver 24

hrs

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BIBLIOGRAPHY

Rural Marketing -S.L.Gupta

www.google.com

www.ciionline.org

www.msnsearch.com

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