RESEARCH PROJECT REPORT

On

Scope of rural marketing for F.M.C.G Company

This project report is prepared as a partial fulfillment of the PGDM

Program (2012-14)

SUBMITTED BY SUVRANSU SEKHAR PALA

(Regd. no. BIM0612BM012)

Under the guidance of Prof. T.N. Shukla (Vice principal)

Bhubaneswar Kendra

Bhavan’s Centre for Communication and Management

Kharvela Nagar, Unit-III Bhubaneswar – 751001, Orissa

DECLARATION

I hereby declare that this Dissertation Report entitled “Scope of rural marketing for F.M.C.G Company’’ submitted in the partial fulfillment of PGDM Programmed of

Bharatiya Vidya Bhavan (BCCM), BHUBANESWAR is based on secondary data found by me in various sources like books, magazines and websites & collected by

under guidance of Prof. T.N. Shukla .

SUVRANSU SEKHAR PALA

CERTIFICATE BY GUIDE This is to certify that the report entitled: “Scope of rural marketing for

F.M.C.G Company” Submitted by SUVRANSU SEKHAR PALA(Regd.

no. BIM0712BM012) BHARATIYA VIDYA BHAVAN,

Bhubaneswar Kendra, Orissa towards partial fulfillment of the

requirement for the award of the degree of Post Graduate Diploma in

Management (PGDM) bona fide record of the work carried out by her

under my supervision and guidance.

NAME: PROF. T.N. SHUKLA

PLACE: BHUBANESWAR

DATE:

CERTIFICATE OF APPROVAL

This is to certify that the report entitled:“Scope of rural marketing for

F.M.C.G Company”Submitted by Mr Suvransu sekhar Pala (Regd. no.

BIM0712BM012) BHARATIYA VIDYA BHAVAN, Bhubaneswar Kendra,

Orissa towards partial fulfillment of the requirement for the award of

the degree of Post Graduate Diploma in Management (PGDM) is a bona

fide record of the work carried out by me under the supervision and

guidance of PROF. T.N. SHUKLA Finance faculty, Bharatiya Vidya

Bhavan, Bhubaneswar Kendra, Orissa.

Vice Principal Director

(Academics)

ACKNOWLEDGEMENT

I would like to convey my heartiest gratitude to several people, for their support and

guidance, which helped me to complete this project.

I wish to acknowledge my thankfulness to PROF. T.N.SHUKLA for his valuable

suggestions and support in completion of this project. It is with the deep sense of

gratitude that I express my sincere indebtedness to him for his guidance,

supervision and encouragement the present study was undertaken and

completed. His sympathetic, accommodating and constructive nature

remained a constant source of inspiration for me throughout the

duration of this project. Last but not the least, my endless appreciation goes to my

family and my friends who has stood by my side and given me moral support

whenever I was low and boosted my will power.

Thank you!

Mr. SUVRANSU SEKHAR PALA

TABLE OF CONTENTS

1.0 Executive summary………………………………………………………… 00 2.0 Introduction to the Topic .………………………………………………….. 00 3.0 Introduction to the Organization/Industry………………………………… 00 4.0 Objectives of the Study……………………………………………………. 00 5.0 Scope of the Study………………………………………………………… 00 6.0 Literature Review………………………………………………………...... 00 7.0 Research Methodology…………………………………………………… 00

7.1 Universe of the study…………………………….…………………… 00 7.2 Sample Size…………………………………………….………........... 00 7.3 Sampling Method…………………………………………….……….. 00 7.4 Tools for Data Collection……………………………………..………. 00

8.0 Data Analysis & Interpretation……………………………………………. 00 9.0 Findings…………………………………………………………………….. 00 10.0 Recommendations & Suggestions………………………………………. 00 11.0 Conclusion…...…………………………………………………………… 00

12.1 Limitations of the Study……………………………………………..…… 00

12.2 Scope for further research………………………………………………. 00

Bibliography…………………………………………………………………...... i

Appendix [Questionnaire]……………………………………………………... iii

Executive summary

The purpose and objective of this project report is to find out the Where the rural

market does offer a vast untapped potential , it should also be recognized that it is

not that easy to operate in the rural market because of several attendant problems .

Rural marketing is thus time consuming affair and requires considerable investment in

terms of evolving appropriate strategies with a view to tackle the problems .

While the prospects of the rural sector are promising, the real challenge lies in cost-

effective andefficient distributing and delivering systems. The cost of developing

exclusive delivery systemsfor financial products would be prohibitive.“Recognizing

the fact that rural prosperity is the key to overall economic development,

severalmeasures have been t aken b y the Government of Ind i a for pov

er t y a l l ev i a t ion , genera t in gemployment and income in the rural areas

throughout the economy. Despite these measures, amajority of small

farmers and landless agricultural labourers are still living below the

povertyline and therefore, it is necessary to upgrade the policy measures

along with specific programsupport for raising the income level for this major

section of the rural community. Among other measures, there is an immediate need to

fill the information gap in respect of latest technology,market and other inputs

like new seeds, etc., for the betterment of the farming population. It isalso

necessary to help the small farmers and landless agricultural labourers by

enhancing their access to latest and useful technology, market information, and

expert advice and risk coverageoptions through knowledge connectivity at all levels.A

thorough understanding of the rural markets has become an inherent aspect of

marketing in theenvironment of Indian marketing today. This attraction

towards the rural markets is primarily because of the huge size of the varied

demands of the 700 million rural populations. In fact, therural markets are expanding

at such a rapid pace that they have overtaken the growth rates in theurban markets.

This rate of growth is however not the only fact that

hasdrivenmarketingm a n a g e r s t o g o r u r a l . T h e o t h e r f a c t o r i s t h e

f a c t t h a t t h e u r b a n m a r k e t s a r e b e c o m i n g increasingly complex,

competitive and saturated.The vast and untapped potential of the rural markets

is growing at a rapid pace. The policies of the government largely focus

on rural development programmes. This is clearly highlighted bythe fact that

the outlay of funds for rural development has risen from Rs 14,000 crores in the

8th plan to Rs 30,000 crores in the 9th plan period. These figures also prove that the

rural market isgetting stronger with a gradual increase in rural disposable

income. In addition to this, better procurement prices being fixed for the

various crops and better yields due to many research programmes have also

contributed significantly to the strengthening of the rural markets. Thus,wi th the

rura l markets expanding in both s iz e and volume, an y market ing

manager wi l l bemissing a great potential opportunity if he does not go rural.This

however raises a fundamental problem of identifying the differences

between urban andrural markets. This is of very important in the Indian marketing

environment as rural and urbanmarkets in our country are very diverse in nature such

that urban marketing programmes cannot be successfully extended to the rural

markets. The buying behavior of the rural Indian differstremendously when

compared to the typical urban Indian. Further, the values, and needs of

therural people vastly differ from that of the urban population.

INTRODUCTION

The rural market of India is fascinating and challenging at the same time. It offers

large scope on account of its sheer size. And, it is growing steadily. Even a modest

growth pushes up the sales of a product substantially, in view of the huge base.

It is attractive from yet another angle. Whereas the urban market is highly

competitive, the rural market is relatively quiet. In fact, for certain products, it is

totally virgin market. Simultaneously, the market also poses several problems and

hurdles. The firms have to encounter them squarely and put in a great deal of effort, if

they have to get a sizeable share of the market.

Efforts to capture the market with due thought and focus on the constraints with

streamlined strategies to overcome the same will tend to define the path ahead for

rural marketing in India.

A Hindi poet has rightly said, “ Bharat mata gram vasini” which means Mother India

lives in her villages.

According to the 1991 census, India’s population was 850 million, of which 75

percent lived in villages. This are average statistics. There are states like UP, MP,

Rajasthan, Kerala, Bihar and Orissa where the rural population varies from 80 to 90

percent. The spread of population in 4,200 cities and towns is to the extent of 25

percent, and of the remaining 75 percent is in 5,76,000 villages. This sheer base

defines the volume and scope of rural marketing.

Marketing in India has for a long time meant urban marketing. But now rural

marketing is being widely researched and discussed. If market potential is considered,

the rural market is big with approximately 70 percent of the population still residing

in rural areas and with 40 percent the Gross National Product emanating from

agriculture.

The following transactions, (which broadly outline the landscape of rural

marketing) , can be categorized as follows:

Marketing of agricultural inputs like fertilizers, pesticides, farm

machinery etc;

Marketing of products made in urban centers and sold to rural areas like

soap, toothpaste, television sets, etc;

Marketing of products made in rural areas sold to urban centers like

khadi cloth, hand crafted products etc; and

Marketing of products made and sold in rural areas like milk and milk

products, locally manufactured toothpowder, cloth etc.

OBJECTIVE

The over all objective of the thesis is to throw light on Scope of Rural Marketing for

FMCG Company in India.

SUB OBJECTIVE :

Rural marketing of FMCG Companies – Present and future.

Future growth potential of rural marketing of FMCG Companies in

India.

Different Strategies adopted by different FMCG companies to

increase our rural market share.

Challenges faced by different FMCG Companies.

Various opportunities for FMCG Companies in the future.

SCOPE OF THE STUDY

The Indian rural market with its vast size and demand base offers great

opportunities to marketers. Two-thirds of countries consumers live in

rural areas and almost half of the national income is generated here. It is

only natural that rural markets form an important part of the total market

of India. Our nation is classified in around 450 districts, and

approximately 630000 villages which can be sorted in different

parameters such as literacy levels, accessibility, income levels,

penetration, distances from nearest towns, etc.

The success of a brand in the Indian rural market is as unpredictable as

rain. It has always been difficult to gauge the rural market. Many brands,

which should have been successful, have failed miserably. More often

than not, people attribute rural market success to luck. Therefore,

marketers need to understand the social dynamics and attitude variations

within each village though nationally it follows a consistent pattern.

While the rural market certainly offers a big attraction to marketers, it

would be naive to think that any company can easily enter the market and

walk away with sizable share. Actually the market bristles with variety of

problems. The main problems in rural marketing are:

Physical Distribution

Channel Management

Promotion and Marketing Communication

The problems of physical distribution and channel management adversely

affect the service as well as the cost aspect. The existent market structure

consists of primary rural market and retail sales outlet. The structure

involves stock points in feeder towns to service these retail outlets at the

village levels. But it becomes difficult maintaining the required service

level in the delivery of the product at retail level.

One of the way 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.

As a general rule, rural marketing involves more intensive personal

selling efforts compared to urban marketing. Marketers need to

understand the psyche of the rural consumers and then act accordingly.

To effectively tap the rural market a brand must associate itself 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.

One very fine example can be quoted of Escorts where they focussed on

deeper penetration .In September-98 they established rural marketing

sales. They did not rely on T.V or press advertisements rather

concentrated on focused approach depending on geographical and market

parameters like fares, melas etc. Looking at the ‘kuchha’ roads of village

they positioned their mobike as tough vehicle. Their advertisements

showed Dharmendra riding Escort with the punch line ‘Jandar Sawari,

Shandar Sawari’. Thus, they achieved whopping sales of 95000 vehicles

annually.

RURAL MARKETING ENVIRONMENT

The rural market environment need a separate examination as it varies

significantly from that of the urban market. We shall deal with the subject

under the three headings :-

1. The rural consumer.

2. The rural demand.

3. Other aspects of the rural market environment.

(A)-THE RURAL CONSUMER : A Detailed Profile :-

Size of Rural Consumer Group

In numerical terms , India’s rural market is indeed a large one ; it consists

of more than 740 million consumers. 73% of India’s total population is

rural . The rural market consists of more than 12 crorer households,

forming over 70%of the total households in the country.

Characteristics of Rural Consumer Group:-

LOCATION PATTERN :-

Rural Market of India is a geographically scattered market. The rural

population is scattered across 5,70,000 villages . And, of them , only

6300 villages , have a population of more than 5,000 each . More than 3

lakh villages, are in the category of 500 people or less.

SOCIO-ECONOMIC POSITION :-

Rural Consumers continue to be marked by low per capita income/ low

purchasing power. Similarly, they continue to be a traditional -bound

community, with religion, culture and tradition strongly influencing their

consumption habits. Nearly 60% of rural income comes from agriculture.

Rural Prosperity and discretionary income with rural consumers are thus

linked to a sizeable extent with agricultural prosperity.

LITERACY LEVEL :-

Rural India has a literacy rate of 28% compared with 55% for the

whole country. The adult literacy programmes launched in the rural areas

are bound to enhance the rural literacy rates in the years to come . The

rate is certainly on the low side.

LIFESTYLE :-

The rural consumers are marked by a conservative and tradition-bound

lifestyles. But this lifestyle of a sizeable segment of rural consumers has

already changed significantly in recent years .The changes can be

attributed to several factors such as:

Growth in income and change in income distribution .

Growth in education.

Enlarged media reach ( particularly television).

Growing interaction with urban communities.

Marketers effort to reach out the rural market.

BUYING BEHAVIOUR :-

Buying behaviour of rural consumers have been effected by the following

factors:-

INFLUENCE OF CULTURE:-

Rural consumers perception of products are strongly influenced

by cultural Factors . For example-the preference in respect of colour, size and shape is the result of cultural factors.

GEOGRAPHIC LOCATION:-

Rural consumer behaviour is also influenced by the geographical location of the consumers. For example , nearness to feeder towns and industrial projects influenced the buying behaviour of the consumers in respective cluster of villages.

EXPOSURE TO URBAN LIFESTYLES:-

Extent of exposures of rural consumers to urban lifestyles also influences their buying behaviour. THE WAY THE CONSUMER USES THE PRODUCT:- The situation in which the consumers utilize their the product also their buying behaviour.For example – Lack of electricity automatically increase the purchase of batteries by rural consumers.: since the rural consumers cannot use washing powders /detergents powders that much, as they wash their clothes in streams or ponds , they go is more for washing bars and detergents cakes.

PLACE OF PURCHASE:-

Different segments of rural buyers buy their requirements from different places \ outlets. Some buy from the village , shopkeepers; some from village markets/ meals; other buy from the town that serves as the feeder to the rural area.

MARKETERS’ EFFORT TO REACH OUT THE RURAL

MARKET :-

Many corporate have been trying hard to develop a market their products in rural areas , investing substainlly in these areas. Developmental marketing has created discriminating buyers demand in the rural market. This has brought about some change in the way buyers purchase different product.

(B)- THE RURAL DEMAND :A Detailed Profile :- Steady growth Rural demand has grown steadily over the years. Not only has the market grown in quantitative terms , but qualitative terms too it has undergone a significant change. Change in the composition of Rural Demand The composition of rural demand has also been changing significantly in recent years Many new products have entered the consumption basket of the rural consumers. and the relative shares of the different categories of products in the consumption basket .The upper segments, in particular , have started buying and using a variety of modern consumer products, which were till recently unknown in the rural market. Several products already well established in the rural market Marketers cannot now assumes that rural India consumes only certain traditional/ essential products and that its share in other product category is meager. It is perhaps well known that products like packaged tea , bath soaps and washing products, including detergents/detergents cakes , are popular items of consumption in rural market .Products like shampoo ,toothpaste and talcum powder , and durables like electric irons , bicycles , mopeds, scooters and motorcycles have joined this category in recent years. The rural demand for electric irons , mopeds and motorcycles have note between 30 and 50 percent of the all-India demand. In many products , rural consumption accounts for a larger share than urban:- In many products , rural consumption now accounts for a larger share than urban . In washing soaps (cakes/bars ), the rural share is over 60 per cent . In popular bath soaps , it is more than 50 per cent and in batterie4s ,it is more than 56 per cent .similar is the case with packed tea and hair oils. Among durable, the rural market now accounts for a larger share of the total sales in

Sewing machines.

Radio/ transistors.

Tape Recorders.

Wrist watches.

Black and White Television sets.

Cassette recorders.

Bicycles.

Table Fans.

Pressure Cookers.

In Many Products, the rural markets has overtaken the urban

in growth rate:-

A survey by NCAER shows that the rural market is growing faster than

the urban market several products . These includes packaged tea,

detergent powder , washing shop, and detergent cake. Growth of

motorcycle too has been more in the rural market than the urban market.

Position of durables

According to NCAER survey , Rural India’s market for consumer

durables is estimated at Rs . 4500 crore , with an annual growth rate 8 per

cent .

OWNERSHIP OF DURABLES BY RURAL CONSUMERS

Product No. of owner per 100 households

Bicycles 53

Fan (ceiling) 19

Fan (table) 13

TV(B&W) 16

Pressure cooker 13

Wristwatch(mechanical) 76

Radio/Transistors 42

It can be seen from above table that now every other other rural

household has a bicycle, every third households has a fan , every sixth

has a black and white televisions set, and every seventh a pressure

cooker. Also , nearly 80 per cent of rural holds own a mechanical wrist

watch and 42 per cent a radio/transistor .Rural India now purchase a third

of the colour television sets, a fourth of the mixers/ grinders and fifth of

the refrigerators sold in the country.

Factors Behind the growth and Diversification in Rural Demand:-

Variety of factors , acting in concert , have brought about the big growth

and welcome changes in the rural demand, a few of them such as growth

in income , changes in income distribution , changes in lifestyles, and the

expectation.

New income due to agricultural /rural development:-

The technological break through ,popularly known as the GREEN

REVOLUTION, which took place in Indian agriculture from the mid

1970 onwards, has added to the prosperity of rural India considerably.

Moreover, in recent years , as part of the new farm policy , high support

prices are offered for farm products. As a result , there is now more

money in the hands of the owner-farmers in the rural areas.

The expectation revolution:-

The ‘rising expectations’ of the rural people have greatly influenced the

rural market environment . It has enlarged the desire as well as awareness

of the rural people ; it has strengthen their motivation to work ,earn and

consume. The rise income provide substance to the aspiration.

Rural Demand is More Seasonal:-

Rural demand is more seasonal compared to urban demand .The pre-

dominance of agriculture in the income pattern is one main reason for

this. The relatively greater influence of marriages and festival on the

purchase pattern is the another. After all, agriculture in many parts of

India is still depends on the vagaries of the monsoon.

TAPPING THE RURAL MARKETS :-

While rural India does constitute an attractive and sizeable market, firm

have to strive hard for securing a share of it. Practically in every task of

marketing , rural marketing poses some unique problems.

The major tasks that need unique handling in rural marketing are:

Segmentation and targeting.

Product management.

Physical distribution.

Channel management.

Marketing communications.

A. SEGMENTATION AND TARGETING :-

The rural consumers are not a homogeneous lot in economic conditions,

or literacy, or lifestyles, or buying behaviour. It would, therefore, firm to

assume that the rural market as a whole can be served by a single offer or

a single product -price-promotion combination. firm have to analyses the

consumers in –depth, carry out thorough market segmentation and select

relevant segments as target markets. And they have to develop a

distinctive positioning and a distinctive marketing mix for each target

segment.

Geographical Segmentation:-

The rural market can be segmented geographically, using different

geographical bases.

Climate and level of irrigation:-

Climate can be one of them; regions endowed with favorable climate are

usually more prosperous compared with climatically handicapped region.

Level of irrigation can be another base; irrigated areas and dry land areas

pose different economic and marketing environments.

Nearness to a feeder town:-

Firms can also segment the rural market using ‘nearness to a feeder

town’ as the base. Consumers located close to a feeder town visit it at

least once a month to sell their product and/or to buy their requirements,

and in buying habits , they differ from those living in the interior areas. It

will thus be meaningful to segment the rural market in to consumers

located closer to a feeder town and consumers located away from them .

Demographic segmentation:-

The rural market can be segmented demographically too. In fact, there are

many possibilities of segmenting the rural market demographically.

Population concentration:-

It can be one base. About 40 percent of the rural population live in 7

percent of the villages in the country and remaining 60 percent in the

other 93 per cent of the villages. Thus, the market can be segmented on

the basis of different size classes with regard to population.

Age:-

In particular, the youth in the rural areas can be picked up as a separate market. There is a population of more than 20 crore in the age group of 16-30 years in the rural market. Surveys have revealed that the younger generation dominates the purchase in the rural market. The rural youth differ from their elders in their buying behaviours .It will thus be meaningful to segment the rural youth as a separate market. Literacy level:- It can be another demographic base for segmenting the rural market.

Though rural India, is characterized by low literacy ,there are wide

variations in the matter of literacy within rural India . for example- The

rural literacy rate in Kerela is 80 Per cent , that in Bihar is only 15 per

cent.

Income:-

The rural consumers can be segmented in to different income classes. The rural consumers can also be segmented into regular income and demand .All rural consumers are not characterized by seasonality of income .There is a sizeable salaried class in the rural areas . There is also a sizeable self-employed group, consisting of shopkeepers and service providers. There is nothing seasonal about the income of such people .Obviously, those with regular income will differ in buying habits compared with those whose income is seasonal.

Buying behaviour segmentation:- Rural consumer differ in their buying behaviour from their urban counterparts as well as among themselves. This fact too could be factored in to segmentation exercise . firms should ,however , generate relevant data on the rural consumers and their buying behaviour , perception and attitudes ,and then segment them using their buying behaviour as the base.

Thompson rural index:-

Hindustan Thompson Associates have developed the ‘Thompson rural market index’

based on 26 variables , including area of the concerned district , demographic pattern occupational pattern , agriculture –related data , rural electrification data and commercial bank data . The index can be used in segmentation.

B. PRODUCT STRATEGY :-

The first decision to be made in product strategy in the rural context is

whether the product that is sold in the rural context is whether the

Product is sold in the urban market can be supplied to the rural market as

it is , or whether it must be adapted . it depends on the situation and the

nature of the product .Basically , the firm must find out what kind of

product is actually required by the rural consumer and then decide if it

should make an altogether distinct product or adapt the existing product.

Economic and income realities of the market should certainly be

considered while developing the product strategy for the rural market .

when products are designed reflecting both these influences ,the chance

of success is greater.

Lower priced product versions do help in many cases in the rural

market ,but no generalization can be made in this regard . Many

companies try to reduce the prices of their products for the rural market

by creating smaller size ,m or by decreasing the quality . The approach

works sometimes and with some products, but not all times, with all

products.

Specifically – Designed Products:-

Specifically –designed product to help in many cases

TRACTOR /TRAILEIER : -

The tractor /trailer is an apt example. It is a product specifically designed

for the rural market. It is designed as a replacement for the plough as well

as a vehicle for transporting both men an d material in rural areas.

EVEREADY’S JEEVAN SATHI TORCH:-

Eveready ‘s Jeevan Sathi brass torch is another example of suucesssful

rural specific product strategy. Initially Eveready’s brass torch was not

picking up well in the rural areas . Union carbide launched a market

research study for locating the reasons. The study by the ad agency OBM

found that the rural folks rejected the torch since all of its parts are not

made of brass .the design , developed abroad, had given the product

certain plastic parts, like the reflector. The Indian rural consumer felt that

the plastic parts would not durable . OBM also found that the rural people

were prepared to pay high prices for the same torch if it were made ’all

brass’. Eveready then introduced for the rural market the all brass torch

designed to last life long and positioned it ‘Jeevan Sathi’ as a ‘life long ‘

companion.

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 . Asian Paints introduced paints with bright colours for

the rural markets . Asian Paints also communicated the feature well

through its communication campaigns.

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 the 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 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:-

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 both 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 afew 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 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.

C. PHYSICAL DISTRIBUTION :-

The problems faced by the marketer in the Physical distribution in rural

context are as follows:-

The Problems in Transportation and Warehousing :-

It is well known that transportation infrastructure s quite poor in rural

India . Though the country has the fourth largest railway system in the

world , many parts of rural India remain outside the rail network . As

regards Road transport , nearly 50 per cent of the 570,000 – odd villages

in the country are still not connected by proper roads . While some

improvement is taking place on account of the various rural development

programmes, many areas still have only KACHA roads and most of the

interiors have hardly any roads worth mentioning .As regards transport

carriers , the most common ones are delivery vans and the animal drawn

carts. Because of the difficulty in accessibility, delivery of products and

services continues to be difficult in rural areas. In warehousing too, there

are special problems n rural context. Business firms find it quite difficult

to get suitable godowns in many part of rural India.

Cost –service Dilemma Becomes more Acute :-

The firms can not simply rely on ‘trickle down of stocks ‘to the rural

buyers. They need a network of clearing and forwarding (c&f) agents and

distributors at strategic locations for facilitating proper distribution of the

products in the rural market. They have to commit themselves to

servicing the villages will help not only the availability of the product,

but product promotion as well.

In the matter of transportation, combining different modes can

be cost –effective. Trucks for medium distance movement and delivery

vans and bullock carts for local haulage may serve the purpose better.

Water transport too has a role in specific areas Bullock carts have a

special role on rural distribution, especially in tertiary transport. They are

cheaper; they are available in plenty and are ideal for the rural roads.

The Delivery Van ;-

The delivery van has a key role in rural distribution The companies

concerned and their C & F agents /stockist / distributors operates these

vans. Companies like Hindustan lever and ITC , who are pioneers in

rural marketing in India, have a fleet of company delivery vans for rural

distribution . The van take the products to the retail shops in every nook

and corner of the rural market . It enables the firms to establish direct

contact with rural dealers and consumers. It also help the firm in

promotion . But the cost of operating such vans is quite high . Firms like

HLL and ITC had the resources as wells the wisdom to consider van as

initial investment in the market. Through the van , they were not only

solving their transportation problem of the rural market, but were also

developing the market for their products.

D. Channel Management :-

Organizing marketing channels is the second part of the distribution task .

Multiple tier add to the cost :-

The distribution chain in rural context usually requires more tiers,

compared with he urban distribution chain . The distance between the

production points and the rural market , and the scattered location of the

consumer make it necessary . At the minimum, the distribution chain in

the rural context need three tiers i.e. The village shopkeeper, the

distributor , and the Whole seller/ stockist/ C&F agent in the town .in

addition it involves the manufactures’ branch office operations in the

territory.

Producers who can reach the customers through the shortest

distribution chain can do better in this market.

Non-Availability of Dealers :-

Firms find that availability of dealers is limited and the scope for

appointment fresh / exclusive dealers of the company is equally limited in

view of the low demand and non-availability of suitable candidates.

Poor viability of the outlets :-

A good number of retail outlets in the rural market suffer from poor

viability . A familiar paradox in rural distribution is that on the one hand

the manufacturer incurs additional expanses on distribution and on the

other hand , the retail outlets find that the business is un – remunerative

to them. The additional funds the manufacturers pumps into the system

are used by the scattered nature of the market and the multiplicity tiers in

the distribution chain.

Inadequate banking and credit facilities :-

Distribution in rural markets is also capped due to the lack of adequate

banking and credit facilities. It is estimated that there is only one bank

branch for every 50 villages. Rural outlets need banking support for two

important purposes:

(1)- For remittances to principals and to get fast replenishment of stocks .

(2)- For securing credit.

Firms have been in search of a low- cost system of

distribution with the wholesaler serving all the retailers , including the

ones at the tail –end , and the latter servicing the consumer . This is the

strategy followed by Nirma to compete with HLL. Nirma relies on the

wholesaler network . HLL is trying to get around the problem by giving

credit to the distributors.

E. Marketing Communication:-

In marketing communication and promotion too, rural markets pose many

problems.

The literacy rate among the rural consumers being low, the scope

for using the printed word is rather limited. The traditional bound nature

of the people and heir cultural barriers add to difficulty of the

communication task. Marketing communication in the rural areas has to

be necessarily in the local language and idiom.

Rural communication is quite expansive. Rural communication has

to go through the time consuming stages of creating awareness, altering

attitudes and changing behavior. In addition, it has to break the deep-

rooted behaviour pattern.

Managing the communication task:-

The rural communicator will do well to choose a combination of formal

and non formal media. The possibilities are indicated in below table:-

POSSIBLE MEDIA MIX IN THE RURAL CONTEXT

Formal / organised Non-formal /Rural -Specific

media Media

TV Audio-Visual/Publicity Vans

Cinema

Rural specific art forms like

puppet

show and HARIKHATHA.

Radio Demonstrations

Print Media-Press

Meeting ,Announcements,

Processions

Other Print Media

Caparisoned elephants and

decorated

bullock carts carrying

advertisement panels

Outdoor Music records.

POPs

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.

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( print 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 significance . As a general rule ,the rural people love bright

colours. The effective Communicator utilize such cues.

Audio-visual / publicity vans :-

The AV unit or the publicity van is very useful for the rural

communication .The van is a comprehensive mobile promotion station at

the exclusive command of the concerned firm. The firm can exhibit its

films and other audio-visual presentations, such as slide shows, sound and

sight presentations, puppet shows etc. from the instant promotion station.

A potable shamiana or Platform often forms a part of the van. Even

public meeting can be organised using the potable shamiana . The van

can also be used for the sale campaign. It can also be used for Product

demonstration.

Naturally, the AV vans are quite popular with rural marketing

firms’ .Practically all firms in the agri – inputs business have their own

AV vans followed by those marketing consumer durables.

Colgate-Palmolive has supply vans that offer the free samples

and screen video films on oral hygiene. It has an on – going rural van

programme, which cover on an average 80 million rural consumers per

year. Vans are supplemented with bicycle vendors, who go to villages not

accessible by the vans.

Godrej has vans that play music and announce free gifts in the

village square. The van than goes to few shops in the villages to sell the

product.

Syndicated AV vans :-

In recent years, rural AV vans have become a sharable service. Firms

which can not afford to operate vans of their own, utilize syndicated AV

van service offered by independent agencies.

Multi-purpose vans: Jain TV’s Video -on-wheels :-

Recent years have witnessed the emergence of tools that are more

innovative than the AV van. Jan TV‘s Video – on- wheels is one of them.

Puppet shows, Harikhatha :-

Popular entertainment programmes like puppet show , dance, dramas, and

Harikathas , specially developed for the product- promotion purpose , are

now being used in rural markets. The traditional art forms readily render

for communication with rural society . Village fairs , festivals and melas

are ideal venues for projecting these programmes. In certain cases , public

meeting too many be used for rural promotion.

Music Cassettes :-

Music cassettes are another effective medium for rural communication. It

can be reached is an appealing and a comparatively inexpensive medium.

Different language groups can be reached with low budget. They can be

played in cinema houses or in other places where rural people assemble.

HLL rural specific communication for Surf :-

For propagating ‘Surf’, Hindustan Lever brought out separate

advertisement films for the urban and rural audience. In the film meant

for the rural audience, the company took particular care to demonstrate

step-by-step the method to be adopted in washing with surf for getting the

best whitening effect. The company knew that an elaborate demonstration

was essential for the rural audience.

RESEARCH METHODOLOGY

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 the selection of representative sample of

the universe or the general population ,application of the appropriate

research tools and the techniques.

There is an old saying in Spain “TO BE A BULLFIGHTER YOU

MUST LEARN TO BE BULL” means you never really understand a

Person until you consider things from his point of view . In the same

way to meet and satisfy the target customer the study of customers

behaviour of crucial important because he is king. Customer behaviour

studies , how individuals , groups and organizations selected buy use and

dispose of goods , services, ideas or experiences to satisfy their needs and

desires.

According to JAMES F. FUGAL, “Customers behaviour consists of the

acts of individuals in obtain and using goods and services including the

decision process that precede and determine these acts.

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 for FMCG

sector.

2 - COLLECT THE INFORMATION :-

The information is collected from secondary sources- websites ,

magazines , newspapers , and magazines.

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 in the end . .

INTERPRETATION

Rural Marketing Becomes Attractive To Corporate :-

A variety of factors have rendered the rural market quite attractive to

corporate in recent years.

The growing opportunity in the rural market is no doubt the prime factor.

The rural demand has been growing rapidly and its composition has been

changing for the better in the recent years. The increased income/

purchasing power of the rural consumer and the improved income

distribution has enhanced rural demand for several products. Better

access to many modern products/brands has added to this growth.

The heat of competition in the urban market actually serves as the

stronger driver behind the growing interest of cooperates in the rural

market. The fact that the rural market is still largely an untapped as well

as the early entrants can tap it without having to face intense

competition as in the case of the urban market, makes the rural market all

the more attractive to them.

Corporate have been finding the going increasingly tough in

the urban market , especially for the products in respect of which

penetration levels are already high . For example penetration level for the

toothpaste in the urban market has now reached close to 80 per cent. In

contrast, it is below 30 per cent in the rural market. Moreover in the urban

market many consumers have been using a toothpaste for quite some time

and have settle

down to the brand, its flavour , and other characteristics .They can not be

expected to switch their brand very easily . In contrast, in rural markets,

there a lot of first time users of toothpaste whom the company can tap

from the scratch.

Corporate find that the highly penetrated urban markets allow little

room for volume growths for most of what are called,’ necessity

products’ (toothpaste, bath soap, washing products, tea etc). Growth

opportunity for many of the ‘emerging products’ (coffee, shampoo,

talcum powder etc) too is rather low in the urban market . The rural

market thus becomes essential for companies with strong aspirations. Not

comprising in the rural market keep them out of about half of the

country’s market for the ‘necessity products’ and the one-third for the

‘emerging products’ by value .It is but natural that in these circumstances,

corporate set their sights on the rural market

Many company have already taken to the market in a Big Way

:-

EXTENT OF RURAL SALES BY SELECTED COMPANIES

Company Rural Sales(% share)

HLL 50

COLGATE 50

GODREJ 33

CADBURY 25

SMITHKLINE BEECHAN 25

HEINZ 20

GLAXO 25

CIPLA 18

RANBAXY 17

HERO HONDA 40

KINETIC 30

SOURCE:Economic times

EXTENT OF RURAL SALES BY SELECT INDUSTRIES

Company Rural Sales

AUDIO 40%

REFRIGATORS 24%

CTVs 22%

PHARMA 20%

CEMENT

10-

20%

PAINTS

10-

12%

WASHNG MACHINES 9%

SOURCE:Economic times

Above tables shows that the extent of rural sales by select

companies/Industries. Many companies/ Industries have already taken to

the rural market in a big way.

It can be shown from above table that in the FMCG Category, half of the

revenue of HINDUSTAN LEVER and Colgates Come from the rural

market . In the case of another companies too, the countryside accounts

for a substantial part (25-30) per cent of the total sales. It can also be seen

that about One-Fifth of Pharma sales occur in rural India . Kinetic sells

about 30 per cent of its scooters. Hero Honda 40 percent of its bikes.

STRATEGIES ADOPTED BY DIFFERENT FMCG COMPANIES

IN RURAL MARKETING

Strategies adopted for rural marketing by different FMCG Companies :-

ITC's e-choupal :-

ITC's e-choupal initiative is changing the lives of farmers on a scale no

other venture has ever done. The company is entering more than 30 new

villages a day, every single day of the week, 365 days a year.

. Take a remote village. Go to the smallest farmer there. Educate him in

the best farming techniques. Inform him of daily weather conditions and

price movements in the market. Make available to him at his doorsteps

the best possible seeds, pesticides and fertilizers at the most competitive

prices. And when his crop is ready, help him find the best buyer.

Imagine doing all of this in 30,000 villages across six

states season after season, year after year. Doing it at no cost to the

farmer and yet making money for yourself. Impossible, would be the

most obvious verdict to such a proposal.

Yogesh Chander Deveshwar, chairman of Rs 12,000 crore ITC, said

when S. Sivakumar, chief executive of its agri-business, approached him

with an equally ambitious idea in 2000. Knowing that he was asking for

the moon, Sivakumar initially requested Rs 50 lakh to test the idea among

soya farmers in Madhya Pradesh. Deveshwar granted him Rs 10 crore.

The rest, as they say, is history. ITC's e-choupal network has already

reached 3.1 million farmers, and is expanding into 30 new villages a day-

making it corporate India's most ambitious rural initiative ever.

Partnering ITC in the network are 37 companies, NGOs and state

governments, together creating a new ecosystem for villages and

establishing a direct link between what consumers eat and what farmers

grow.

THE POWER OF 'e'

The e-choupal redefines choupal, the Hindi word for village square where

elders meet to discuss matters of importance. The all-important letter in

the word is "e". It stands for a computer with an Internet connection for

farmers to gather around and interact not just among themselves but with

people anywhere in the country and even beyond. It begins with ITC

installing a computer with solar-charged batteries for power and a VSAT

Internet connection in selected villages. The computer's functioning is

freed from the notorious power and telecom facilities at the village level.

A local farmer called sanchalak (conductor) operates the computer on

behalf of ITC, but exclusively for farmers. The e-choupal offers farmers

and the village community five distinct services.

Farming methods specific to each crop and region, soil testing, expert

advice-mostly sourced from agriculture universities-all for free.

Purchase: Farmers can buy seeds, fertilisers, pesticides and a host of other

products and services ranging from cycles and tractors to insurance

policies. Over 35 companies have become partners in the e-choupal to

sell their products through the network.

Sales: Farmers can sell their crops to the ITC centres or the local market,

after checking the prices on the Net.

Development work: NGOs working for cattle breed improvement and

water harvesting, and women self-help groups are also reaching villages

through e-choupal. In some states farmers can even access their land

records online, sitting in their village. Access to health and education

services through e-choupal begins next month.

In many villages e-choupals have become the axis around which the local

community revolves. Be it for accessing newspapers online in the

mornings (many villagers have discontinued their newspaper

subscriptions) or checking the supply of products they ordered on the Net,

or watching movies on farming techniques in the evenings, farmers

frequent e-choupal at all times of the day. Each e-choupal covers between

five and six villages.

EMPOWERING THE SMALLEST

Indian farmers typically buy at retail prices and sell their produce at

wholesale prices, losing out on both ends of the deal. By virtually

aggregating them, e-choupal brings the power of scale to the smallest of

farmers. ITC ensures that there are at least two suppliers of all products

sold through the e-choupal. Farmers can pool their demand, compare

prices and place orders on the Net. Bargain and choice-two key virtues of

competition-are delivered to the farmers right on their doorstep.

When it is time to sell the produce, e-choupal helps the

farmers by breaking the monopoly of local markets that are controlled by

trade cartels. In most mandis, farmers are cheated at several stages-

arbitrary pricing, under weighing, delayed payments. In Uttar Pradesh,

farmers lose between 10 and 30 per cent of their income to such

malpractices. ITC is setting up its own purchase centres in the six states

covered by e-choupals. The farmers' response has been overwhelming. In

2001-2, the company purchased 60,000 metric tonnes of crop through e-

choupal. By 2003-4 the purchase increased to 2,10,000 tonnes and in four

months of 2004-5, the company picked up 1,80,000 tonnes of farm

produce.

For farmers it is a win-win situation. Sitting in their village, they can

check the prevailing purchase price at the mandi and the ITC centre

through e-choupal and sell wherever they wish to. ITC's entry into crop

purchase invariably means a rise in mandi rates too, benefiting even those

farmers who can't sell to ITC. In places where ITC rates aren't higher than

the mandi rates, farmers are drawn to ITC centres because the company

uses electronic weighing, better quality testing and ensures spot payment.

ITC'S E- choupal achievement

It's achievement :-

(1)- 5,050 choupals, 29,500 villages, 3.1 million farmers.

(2)- Using e-choupal to source a range of farm produce (foodgrains,

oilseeds, coffee, shrimps).

(3)- Marketing a variety of goods and services though e-choupal(agri-

inputs, consumer goods, insurance, market research).

(4)-Transactions:$100 in (2003).

STRATEGY ADOPTED BY HLL

Hindustan Lever to expand Project Shakti reachthe rural

market:-

FMCG major Hindustan Lever will take its Project Shakti, the rural

direct-to-home distributor model, national and reach out to 100 million

people in four years' time. The project is at present on in Andhra Pradesh

but will be soon be rolled out to other remote villages across the nation.

The target is to establish access with 100 million people in 3-4 years'

time.The importance of the project is rural economy had immense

potential and they were the consumers of tomorrow.

Supported by micro-credit, the women from self-help groups were HLL's

rural direct-to-home distributors.

The idea behind Project Shakti was to help the company reach, penetrate

and communicate with rural consumers. The initiative benefited women

in more than 4,750 villages.

VISION OF THE PROJECT:-

The vision was to change the lives of women in 100,000 villages by

making them Shakti dealers. This would provide economic opportunities

for the underprivileged while creating a distribution and communication

channel for brands to access untapped rural markets with a consumer base

of 100 million rural Indians.

STRATEGY ADOPTED BY COCO-COLA

Coca-Cola India doubled the number of outlets in rural areas from 80,000

in 2001 to 160,000 in 2003, which increased market penetration from 13

per cent to 25 per cent.

It brought down the average price of its products from Rs 10 to Rs 5,

thereby bridging the gap between soft drinks and other local options like

tea, butter milk or lemon water.

It doubled the spend on Doordarshan, increased price compliance from 30

per cent to 50 per cent in rural markets and reduced overall costs by 40

per cent.

It also tapped local forms of entertainment like annual haats and fairs and

made huge investments in infrastructure for distribution and marketing.

Result: the rural market accounts for 80 per cent of new Coke drinkers

and 30 per cent of its volumes.

The rural market for Coca-Cola grew at 37 per cent over the last year,

against a 24 per cent growth in urban areas. Per capita consumption in

rural areas has doubled in the last two years.

The launch of the Rs 5 pack has reaped rich dividends in terms of sales

and the bottles are expected to account for 50 per cent of the company's

sales in 2003.

Coca-Cola is just one example. A lot of fast-moving consumer goods and

consumer electronic companies are aggressively targeting rural

consumers. The necessity arose because the growth rates of consumer

products were slowing down not because the markets were getting

saturated in terms of penetration.

While overall volumes continue to grow reasonably well, there are too

many players eating into each other's market share.

The companies, therefore, reduce prices in urban areas and invest heavily

in sales promotion, intensifying the battle for market share.

The companies, therefore, reduce prices in urban areas and invest heavily

in sales promotion, intensifying the battle for market share.

Operating margins come under pressure and new growth markets have to

be explored. This is where the rural markets play an important role.

The rural market was tempting since it comprised 74 per cent of the

country's population, 41 per cent of its middle class, 58 per cent of its

disposable income and a large consuming class, Coca-Cola India CEO

Sanjiv Gupta said.

Today, real growth is taking place in the rural-urban markets, or in the

13,113 villages with a population of more than 5,000.

Of these, 9,988 villages are in seven states -- Uttar Pradesh, Bihar, West

Bengal, Maharashtra, Andhra Pradesh, Kerala and Tamil Nadu.

For manufacturers of consumer goods, these are the markets to look out

for. While the 1980s saw a boom in Class I towns with the spread of

television, the Class II towns showed strong growth in the 90s propelled

by reforms.

According to the National Council for Applied Economic Research, the

millennium belongs to the Class III and IV rural-urban towns.

It estimates that an average rural Indian household will have five major

consumer appliances by 2006, almost double of what it had five years

ago.

In order to efficiently and cost-effectively target the rural markets, the

companies will have to cover many independent retailers since in these

areas, the retailer influences purchase decisions and stock a single brand

in a product category.

In such an environment, being first on the shelf and developing a

privileged relationship with the retailer is a source of competitive

advantage to consumer good companies.

Most of the companies have started tinkering with pack sizes and creating

new price points in order to reach out to rural consumers since a

significant portion of the rural population are daily wage workers.

Thus, sachets and miniature packs, as in the case of shampoo sachets

priced at Re 1 and Rs 2 or toothpaste at Rs 10, have become the order of

the day in hinterland India and help improve market penetration.

Yet, driving consumption of goods in rural areas is not just about

lowering prices and increasing volumes but also about product innovation

and developing indigenous products to cater to their demands.

For example, soap makers use advanced technology to coat one side of

the soap bar with plastic to prevent it from wearing out quickly.

Also, the companies need to turn to innovative methods of advertising

like fairs or haats to reach their potential customer base.

Two years ago, many companies congregated at the Ganges river for the

Kumbh Mela festival, where about 30 million people, mostly from rural

areas, were expected to come over the span of a month.

The companies provided 'touch and feel' demonstrations and distributed

free samples. This proved to be extremely effective in advertising to the

rural market.

SWOT ANALYSIS FOR THE COLGATE IN RURAL AREAS: The swot analysis is very important tool for knowing the competitor strategy. The swot analysis for the Colgate in rural areas is given. STRENGTH:

(1) The qualified staff-as company is today dealing with best available staff having good selling techniques.

(2) Strong financial backup. (3) White gel-it provides maximum freshness in the mouth and also helps

in fighting against bacterial action. (4) White crystals provide instant freshness help in removal of plague. (5) It provides 12 hour protection help in prevention of tender germs.

OPPORTUNITIES:

(1) Large investment – as they are easily available with large investment due to their past sales, they can easily fulfill their financial needs or can make huge investment.

(2) Intensive distribution – product they are producing & of nature or the daily usable commodity so the company is using intensive distribution which provides opportunities for the company.

(3) Stable economic condition – company is having stable economic condition which helps in boosting the growth of the product.

(4) The technology factor being used by Colgate Company is at its BANG.

(5) Today the world is becoming a global village – so taking it is an opportunities.

WEAKNESS:

(1) Giant competitors like pepsodent and close up….The company has been

facing immense competition from organized as well as unorganized players. HLL is the closest rival of Colgate with a share of 34% with its pepsodent and Colgate.

(2) High taxes – due to highly taxation policy the prices of the tube rises which sometimes creates a hurdle in the growth of the company.

THREATS:

(1) Chance of failure – as the company produce different types of paste in Colgate brand like in gel form or in crystal form or the orange gel, so the product is new to the market may be the people accept .the new taste in the toothpaste field or maybe they may reject it . Company has no idea of success.

(2) Many companies are there to compete the same product in the market. There are high rate of the competition in the market.

(3) Sometimes due unstable political condition as the different government provides different subsidies.

RECOMMENDATION & SUGGESTION

1. Advertisements on rural media like radio, press media has been

increased .

2. Physical Distribution channel must be made strong.

3. Awareness about the product must be increased among the peoples.

4. Profit –margin percentage of the product for the retailers should be

increased.

5. 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.

6. 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, 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.

7. Infrastructure like- road, electricity facility must be improved

because most of the MNC’s tap the rural market due to such

difficulties.

8. In advertising local languages can be used to attract more and more

viewers.

THE CHANGING FACE OF FMCG MARKETING

IN RURAL SECTOR

FMCG (Fast Moving Consumer Goods) marketing is no more going to

be the same again! The changing consumer mindset thanks to more

knowledgeable and discerning customers coupled with changing

competition and saturated market is giving a tough time to the FMCG

marketers. The changed scenario not only demands a new game plan with

a sharp and decisive strategy but also a lot of creativity and insight. Some

of the players in Indian FMCG industry have already taken a lead and are

smartly moving to chart a success story for their brands. Some brands that

reaped magnificent dividend from adopting a new strategy are Fairever,

Ujala, Ghadi detergent, Chik, and Dandi namak.

The greatest challenge for managers is to visualize an active market when

what exists is abject poverty. These successful brands are just doing that-

focusing on untapped markets. Take the example of Dandi namak. Who

would have advised them to enter the branded salt market when Tata and

HLL virtually share the whole market among them? But they entered this

category when conventional wisdom said no. And they became a success

story overnight. .They entered the market not to compete with Tata and

HLL, but with the focus to take branded salt to rural and semi-urban

areas. With this narrow focus, they not only captured a large rural and

semi-urban market but also got some share of the urban market due to rub

off effect.

Moreover, these small players fully realize that in today’s world,

marketing needs money. So they don’t shy away from investing in

marketing. Again take the example of Dandi namak. They splashed out

money on their lengthy TV commercials to ensure that the message gets

ingrained in the mind of the prospect. Fairever and Ujala adopted the

same strategy. Of course they don’t spend as much as the MNCs do but

they do spend enough to get attraction.

One of the important aspects of the strategy being adopted is effective

communication about product. . Take the case of Dandi namak. The TV

advertisement was bland and uninteresting. However, without any glitz, it

was able to connect to its target customers because it talked in the

language of its target customers. These brands send a powerful message

to their target customers that they are made for each other.

ADVERTISING IN RURAL INDIA

Advertising in Rural India: -

A dramatic change is in progress. Villagers who used to crack open

peanut M & M candies, eat the nut and throw away the shell are now

demanding chocolate candies that will melt in their mouths, not in their

hands. Charcoal-cleaned teeth are a rare sight; so is the case with twigs of

niim (neem) and babul (babool) tree. Today, the ultra bright shine of

Colgate or some other international brand of toothpaste holds more

appeal than the traditional methods of cleaning teeth. Even the native

expressions of cleaning teeth, such as daatun karnaa and musaag

lagaanaa, are endangered to being replaced by new expressions such as

paste karnaa, 'to brush teeth with paste'.

Villages and small towns, which were once inconsequential dots

on maps, are now getting the attention of global marketing giants and

media planners. Thanks to globalization, economic liberalization, IT

revolution, Indian female power, and improving infrastructure, middle

class rural India today has more disposable income than urban India.

Rural marketing is gaining new heights in addition to rural advertising

because of the following reason:-

Various rural media (conventional and non-conventional) and

integrated marketing communication. In addition to rural market

discourse, media forms such as wall paintings, calendar advertising,

outdoor advertising, print, radio and television advertising

In particular, uniquely Indian media forms such as video van

technology, which has changed the face of not only marketing but also

political campaigning. Rural markets (haat) which are the mobile

McDonald's or Walmarts of India.

Targeting women and religious groups in addition to rural population.

Marketing taboo products such as 'bidi', cigarettes, sanitary supplies,

and other such products

Globalization and its effects on product naming, product monitoring,

rural discourse and media forms.

Creativity and deception, together with guidelines for advertisers and

marketers.

Information structures and logic of rural ads.

Ads as a social barometer of changing relationships and value

systems.

CONCLUSION

Where the rural market does offer a vast untapped potential , it should

also be recognized that it is not that easy to operate in the rural market

because of several attendant problems . Rural marketing is thus time

consuming affair and requires considerable investment in terms of

evolving appropriate strategies with a view to tackle the problems .

The major problems faced by manufacturing and marketing men in rural

areas are described below:-

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 technology is not felt

uniformly through out the country .while there are pockets- some districts

in punjab , Haryana or western Uttar Pradesh – where a rural consumer is

some what comparable to his urban counterpart , there are lager areas

and groups of people who have remained beyond the technological break

thorough .

Even today about 75 districts in county are drought prone and

none technology worth the name has percolated to in crease in the

standard of living of these people in addition ,the small agricultural land

holdings have unable to take advantage of new technological

breakthrough . the number of people below poverty line has not decreased

in any appreciable manner. Thus the rural markets, by large number, by

and large are characterized by underdeveloped market... a vast of the rural

people image old customs tradition habits, taboos and practices

2. Lack of proper physical communication facilities:-

Nearly 50% of the villages is the country do not have villages in the

country don’t 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:-

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 people 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 e mass media is 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 quarter for either selling the produce or for purchase of there

requirements. So town/ mandi centers with large hinterland villages

become the focal point thus depending upon the purchase habit of rural

people. The distribution network 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 lead to the problem of communication for promotion purposes.

Print medium becomes in effective and to an extent irrelevant in rural

areas since its 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.

Probable 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 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 fertilizers. 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 peek 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 realization 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.

7. Many languages and dialects: -

Even assuming that media are available for communication or the

company commit its own media vans the large number of languages and

dialects very wildly from statue to state and reason to reason. The

messages have to be delivered in local; languages and dialects. Even

though the number of recognized languages is only 16, the number of

dialects is estimated to be around 850.

8. Low per capita income:

Even though about 33 to 35 percent of gross domestic product is

generated by rural areas. It is shared 75% of population hence the per

capita income is low compared to urban areas. This apart the distribution

of income is highly is skewed. Since the land holding patterned itself is

skewed thus the rural population present a highly heterogeneous seen.

.Given the low per capita incomes and population spread in the villages,

what will be the off take of any product by rural consumer, say from a

village shop? What should be the inventory levels to be maintained by a

rural shopkeeper and how long will it take for the rural areas shopkeeper

to liquidate his stock? If a company opts to distribute the products up to

village these aspects require very careful consideration while evolving

distribution strategies for rural markets.

OPPORTUNITIES FOR DIFFERENT FMCG MNC’s

The Indian rural market with its vast size and demand base

offers a huge opportunity that MNCs cannot afford to ignore

:-

TO expand the market by tapping the countryside, more and more MNCs

are foraying into India's rural markets. Among those that have made some

headway are Hindustan Lever, Coca-Cola, LG Electronics, Britannia,

Standard Life, Philips, Colgate Palmolive and the foreign-invested

telecom companies.

Opportunity :-

The Indian rural market with its vast size and demand base offers a huge

opportunity that MNCs cannot afford to ignore. With 128 million

households, the rural population is nearly three times the urban.

As a result of the growing affluence, fuelled by good monsoons and the

increase in agricultural output to 200 million tons from 176 million

tonnes in 1991, rural India has a large consuming class with 41 per cent

of India's middle-class and 58 per cent of the total disposable income.

The importance of the rural market for some FMCG and durable

marketers is underlined by the fact that the rural market accounts for

close to 70 per cent of toilet-soap users and 38 per cent of all two-wheeler

purchased.

The rural market accounts for half the total market for TV sets, fans,

pressure cookers, bicycles, washing soap, blades, tea, salt and

toothpowder, What is more, the rural market for FMCG products is

growing much faster than the urban counterpart.

The 4A approach

The rural market may be alluring but it is not without its problems: Low

per capita disposable incomes that is half the urban disposable income;

large number of daily wage earners, acute dependence on the vagaries of

the monsoon; seasonal consumption linked to harvests and festivals and

special occasions; poor roads; power problems; and inaccessibility to

conventional advertising media. However, the rural consumer is not

unlike his urban counterpart in many ways. The more daring MNCs are

meeting the consequent challenges of availability, affordability,

acceptability and awareness (the so-called 4 As)

Availability

The first challenge is to ensure availability of the product or service.

India's 627,000 villages are spread over 3.2 million sq km; 700 million

Indians may live in rural areas, finding them is not easy. However, given

the poor state of roads, it is an even greater challenge to regularly reach

products to the far-flung villages. Any serious marketer must strive to

reach at least 13,113 villages with a population of more than 5,000.

Marketers must trade off the distribution cost with incremental market

penetration. Over the years, India's largest MNC, Hindustan Lever, a

subsidiary of Unilever, has built a strong distribution system which helps

its brands reach the interiors of the rural market. To service remote

village, stockiest use auto rickshaws, bullock-carts and even boats in the

backwaters of Kerala. Coca-Cola, which considers rural India as a future

growth driver, has evolved a hub and spoke distribution model to reach

the villages. To ensure full loads, the company depot supplies, twice a

week, large distributors which who act as hubs. These distributors appoint

and supply, once a week, smaller distributors in adjoining areas. LG

Electronics defines all cities and towns other than the seven metros cities

as rural and semi-urban market. To tap these unexplored country markets,

LG has set up 45 area offices and 59 rural/remote area offices.

Affordability

The second challenge is to ensure affordability of the product or service.

With low disposable incomes, products need to be affordable to the rural

consumer, most of who are on daily wages. Some companies have

addressed the affordability problem by introducing small unit packs.

Godrej recently introduced three brands of Cinthol, Fair Glow and Godrej

in 50-gm packs, priced at Rs 4-5 meant specifically for Madhya Pradesh,

Bihar and Uttar Pradesh — the so-called `Bimaru' States.

Hindustan Lever, among the first MNCs to realize the potential of India's

rural market, has launched a variant of its largest selling soap brand,

Lifebuoy at Rs 2 for 50 gm. The move is mainly targeted at the rural

market. Coca-Cola has addressed the affordability issue by introducing

the returnable 200-ml glass bottle priced at Rs 5. The initiative has paid

off: Eighty per cent of new drinkers now come from the rural markets.

Coca-Cola has also introduced Sun fill, a powdered soft-drink

concentrate. The instant and ready-to-mix Sun fill is available in a single-

serve sachet of 25 gm priced at Rs 2 and mutiserve sachet of 200 gm

priced at Rs 15.

Acceptability

The third challenge is to gain acceptability for the product or service.

Therefore, there is a need to offer products that suit the rural market. One

company which has reaped rich dividends by doing so is LG Electronics.

In 1998, it developed a customized TV for the rural market and

christened it Sampoorna. It was a runway hit selling 100,000 sets in the

very first year. Because of the lack of electricity and refrigerators in the

rural areas, Coca-Cola provides low-cost ice boxes — a tin box for new

outlets and thermocol box for seasonal outlets.

The insurance companies that have tailor-made products for the rural

market have performed well. HDFC Standard LIFE topped private

insurers by selling policies worth Rs 3.5 crore in total preemie. The

company tied up with non-governmental organizations and offered

reasonably-priced policies in the nature of group insurance covers.

Awareness:-

With large parts of rural India inaccessible to conventional advertising

media — only 41 per cent rural households have access to TV —

building awareness is another challenge. Fortunately, however, the rural

consumer has the same likes as the urban consumer — movies and music

— and for both the urban and rural consumer, the family is the key unit of

identity. However, the rural consumer expressions differ from his urban

counterpart. Outing for the former is confined to local fairs and festivals

and TV viewing is confined to the state-owned Doordarshan.

Consumption of branded products is treated as a special treat or

indulgence.

Hindustan Lever relies heavily on its own company-organized media.

These are promotional events organized by stockiest. Godrej Consumer

Products, which is trying to push its soap brands into the interior areas,

uses radio to reach the local people in their language.

Coca-Cola uses a combination of TV, cinema and radio to reach 53.6 per

cent of rural households. It doubled its spend on advertising on

Doordarshan, which alone reached 41 per cent of rural households. It has

also used banners, posters and tapped all the local forms of entertainment.

Since price is a key issue in the rural areas, Coca-Cola advertising

stressed its `magical' price point of Rs 5 per bottle in all media.LG

Electronics uses vans and road shows to reach rural customers. The

company uses local language advertising. Philips India uses wall writing

and radio advertising to drive its growth in rural areas.

The key dilemma for MNCs eager to tap the large and fast-growing rural

market is whether they can do so without hurting the company's profit

margins. Mr. Carlo Donati, Chairman and Managing-Director, Nestle,

while admitting that his company's product portfolio is essentially

designed for urban consumers, cautions companies from plunging

headlong into the rural market as capturing rural consumers can be

expensive. "Any generalization" says Mr. Donati, "about rural India could

be wrong and one should focus on high GDP growth areas, be it urban,

semi-urban or rural.

LIMITATIONS OF THE STUDY ;

The study is based totally on the primary data as well as secondary data

and such data relates to something of the past and not the exact present

scenario. Hence totally depending on such given data could at times be

misleading, that is no matter how good the report is one has to do certain

amount of homework before jumping to conclusions on the basis of such

study.

Marketing activity is something that is never stable and is constantly

changing with the changing circumstances, ever changing rules and

regulations that control these activities. Hence something which is very

up-to-date as of now might become obsolete in a very short span of time.

One has to be very cautious before taking any decision based on such

data and has to think beyond what is given. No amount of data can be

accurate enough to give the desired results.

Another major drawback with respect to the study of Scope Of Rural

Marketing For FMCG Company In India is that it is something that has

been here for the past few years only and hence trying to get much

information regarding it is also difficult, and whatever little that is

available has to be taken note of and believed into. Only a few studies on

the topic are available and hence very few facets of it can be seen.

A lot more can be known about it but at a later stage when it has

grown in proportions and is more frequently used by the various MNC’s

for increasing their market share and lot of competition increases among

the MNC’s and the urban market is saturated.

SCOPE OF THE FURTHER RESEARCH

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 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.

Price promotion

In an occasional effort to capture volume sale, multinational brands use

price promotions that often yield dramatic, if temporary, sales increases

in the rural areas. Their large volume increases reveal a potentially large

market in the villages that remains untapped, just below the actual price

points. To penetrate this market and generate sustainable volume sales, a

permanent product entry at the lower price point is required. Failure to

recognize the potentially huge market of the villages that lies below the

surface of international price points can even place the premium branded

business at risk

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 House hold penetration

HLL 86%

Nirma chemical works 56%

Colgate Palmolive 33%

Parle Foods 31%

Category % volume of local

brands/unbranded

Washing cakes/bars 86%

Tea 55%

Salt 33%

Of the expenditure on consumer goods in rurahousehold, 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.

Category Category

Penetration

Brand with highest

penetration

Toilet Soap 91% Lifebuoy

Washing cakes/Bars 88% Wheel

Edlble oil 84% Double Iran Mustard

Tea 77% Lipton Tazza

Washin powder /

liquid

70% Nirma

Salt 64% Tata Salt

Biscuits 61% Parle G

Focus on urban categories

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

Category Household Penetration

Skin Cream 18%

Talcom Powder 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 t he 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 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.

Brand Penetration of Category users

Surf 6.20%

Ariel 4.50%

Pantene 1.80%

Denim 1.80%

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 Dream flower talc and 18% of Pantene using households use

Clinic shampoo as well.

Income growth goes into consumption

In urban households there are a number of competing demands for ones

money. In rural households, they hardly change their house or go out on a

vacation. They save only a small fraction of his money and spend the rest.

And when there is a growth in their income, the money goes straight into

consumption.

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.

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

Quality consciousness

It will be unjustified to think that rural consumers are less bothered about

product quality. Even the village buyers desire to buy a quality product

and upgrade their quality of life. Marico, an Indian edible oil company,

has found the rural consumers in the interior of India willingly pay a

reasonable price premium for branded cooking oil, over community oil,

because they are certain of its consistent quality. Unbranded products are

often considered by some of them to be adulterated.

Travails in distribution

In spite of recognizing the potential of this vast market of 700 million,

marketers are often unable to cater to it because of lack of adequate

infrastructure. The distances between villages, the terrain and the lack of

pucca roads connecting the places act as impediments for them to reach

their customers. But once if they overcome these hassles and reach those

remote bazaars to be first on the shelf in the product category, they

develop a privileged relationship with the retailer that offers them a

tremendous competitive advantage. Rural retailers are far less specialized

than their urban counterparts and carry a wider range of products. Since

frequent delivery is not possible in their part of the world, they tend to

carry only a single brand in each product category. And, usually, the

brands that are first on the rural shelves become synonymous with

product category and are difficult to dislodge. For instance, Maggie

noodles, the brand that created the category of instant noodles, reached

the rural shelves before anyone else and remained the market leader ever

since. Thus, a drive down the rugged countryside, sans electricity and

other modern facilities, is, surely, torturous. But the pain is worth bearing.

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

launched in a big way in the village hats 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.

Channel power

The rural consumers interact directly with their retail salespersons who

has a strong conviction power and whose recommendations carry weight.

The owners’ relationship with customers is based on an understanding of

their needs and buying habits and is cemented by the retailer extending

credit. Some of the successful manufacturers creatively develop new

revenue activities for the rural retailer. United Phosphorous Limited

(UPL), an Indian crop protection company, realized that in its rural

markets small farmers were not applying pesticide at all, or applying it

inappropriately due to the lack of application equipment. The capital cost

of the equipment (mounted pumps and dispensers that cost up to $3000)

was placed out of reach of small farmers and most rural retailers. UPL

designed a program in which it arranged for bank loans for its rural

retailers to purchase application equipment and demonstrated to their

retailers the additional revenue possibilities from renting this equipment

to small farmers. The result was an added revenue stream for rural

retailers.

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 hat, Coca Cola

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

rural consumers consider as “treats”.

BIBLIOGRAPHY

Business magazines: Business Today

Internet: www.Indiainfoline.com

www.Google.com

www. Censusindia.com

www.HLL.com

Business Dailies: The Economic Times

Business Standard

Study books: Marketing Management- Philip kotler

Marketing Management- v s

Ramaswamy

S

Namakumari.

APENDIX (QUESTIONNAIRE):

QUS.1. which one you prefer for your teeth?

ANS. (1) Powder (2) Paste QUS.2. Which paste you like most? ANS. (1) Colgate (2) Pepsodent (3) Close-up (4) Others QUS.3. On which basis you like Colgate? ANS. (1) Price (2) Packaging (3) taste (4) Others QUS.4. what types of changes you want to do in your toothpaste? ANS. (1) Taste (2) Quality (3) packaging (4) others QUS.5. which type of way you are influenced for the purchase and to get the information about the product? ANS. (1) Radio (2) T.V (3) Newspaper (4) Hoardings (5) Others QUS.6. Are you satisfy with Colgate distributer? ANS. (1) Yes (2) No QUS.7. How you measure the performance of Colgate? ANS. (1) Quality (2) Brand quality (3) Packaging (4) All of the above QUS.8. which type of range you like? ANS. (1) 10 rs. / 40 gm (2) 25-30 rs. / 100 gm (3) 55-60 rs/ 150 gm QUS.9. Are the Colgate easily available in the retail shop? ANS. (1) Yes (2) No QUS.10. Are you satisfied with your current toothpaste? ANS. (1) Yes (2) No If no then why . . . . . . . . . . . . . . . . .