Unit IIntroduction to rural market : Rural market- profile- characteristics of a rural consumer Opportunities and challenges from rural markets- fake encounters in rural areas..

Rural marketingIt is often said that markets are made, not found. This is especially true for the rural market of India

Urban and rural marketWhat differentiates the two markets is not mere income, but a host of other infrastructural and socio- cultural factors.Thus, the rural market cannot be tapped successfully with an urban marketing mindset and would definitely require the thorough understandingIn India rural marketing has emerged as an important in marketing discipline

Meaning of RuralCollins cobuild dictionary describes the word rural as places for away from towns or citiesSociology point of view rural is defined as a group of people who are traditionalists inout look, rooted in the land and who resist change.

The census of India defines rural as that what is not urban and urban is locations with in a municipality/ corporationother location that satisfy the following criteria1.minimum population of 5,0002. at least 75% of male workforce engaged in non- agricultural activities3. a population density of over 400 person per sq.km.

Each experts comes with different definitionRural to Hindustan lever may not necessarily be rural to Philips or Electrolux or somebody else in terms of marketing and marketing communicationsLG electronics defines all cities other than the seven metros or rural/ semi-urban areas.Therefore, it various from company to company and is also based on the calculation of market potential valve (MPV)of a particular area.

Rural marketingIn simple words, is planning and implementation of marketing function for the rural areas.It is a two-way marketing process which encompasses the discharge of business activities that direct the flow of goods from urban to rural areas(for manufactured goods) and vice-versa (for agriculture produce)

R.Marketing has also been defined as the process of developing, pricing, promoting, distributing rural specific goods and services leading to exchange between urban and rural markets, which satisfies consumer demand and also achieves organisational objectives (Iyer)

Factors differentiating rural marketing from urban marketingInfrastructure availability :electricity supply, finance facility, education level, roads connectivityIncome streams : in rural areas in is seasonal and highly unreliable, consumption pattern is quite differentLife style: daily routine of consumers is different

Context : because of variation in infrastructure and income , an individual exists in rural areas is differentSocio cultural back ground :value system, goods/services and consumption in general is quite differentAccessibility : the cost and logistics is highMedia reach and habits: different types of promotional strategy in these two markets.

Nature of competition : the nature and intensity of competition amongst the brands is very different in the two marketsConsumer behaviour : the consumers response to marketing stimulate differs widely in two markets

Rural India : A Brief profileAdi Godrej, chairman, Godrej group . the rural consumer is discerning and the rural market is vibrant. At the current rate of growth, it will soon outstrip the urban market. The rural market is no longer sleeping but we are

Cont..

Villages are the heart of India75% of population lives in 6,38,365 villages90% is concentrated in the village having population less than 2000Rural segment comprises 13.5 crore households which constitute 72% of total households in India

But the rural market is not homogeneous across the countryThe consumer willingness to accept innovation also varies among the rural marketA brief description of rural IndiaRural income distributionMagnitude of poverty in rural IndiaPoverty alleviation programmes and rural development

Rural consumptionRelationship between agriculture, rural income and consumptionLiteracy in rural indiaElectricity availability in rural indiaElectricity availability in rural indiaDevelopment indicators in rural india

A) Rural income distributionIn generating more than half of the national income55.6% contribution to the national income by 74.6 crore rural populationBut per capita income is lowThe annual household income for rural areas in 2002 was Rs 56,630 as compared to Rs 1,02,963 in urban area

Per capita income in rural and urban areas

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Different economic profile for different regions, districts and villageThere cannot be a single generalisation on the basis of income for the entire rural IndiaThe marketer has to segment this huge market according to his product profile and then select his target market.

B) Magnitude of poverty in rural indiaAnalyses the phenomenon of poverty and its spread in rural indiaPoverty is measured in terms of proportion of population living below the poverty linePoverty line is developed by putting a price on the minimum required consumption level of food, clothing, shelter, fuel and health careICMR 1958

2,100 calories for urban areasPer capita monthly expenditure worked out to Rs 49.09 rural and Rs 56.64 for urban (1973-74)As of december 2005, monthly family expenditure is Rs 1,840 for a family of five in rural areas and Rs 2,795 in urban areas32.5 crore Indians lived below poverty line -1/3 of the country population

The percentage of BPL population varies significantly from one state to other (ex) orissa 48%, Punjab 6%Therefore formulating strategies for the rural market cannot be developed on the basis of all India figuresRegional variations must be taken

C) Poverty alleviation programmesThese include gram sadak Yojna- providing urban amenities in rural areasNational rural employment guarantee actJawahar rozgar yozra schemes preference to SC and ST ,and 30% employment opportunities are reserved for women

D)Rural consumptionFMCG Rs 65,000 crorePer capita expenditure on education by urban households was 4,5 times by rural householdsUrban spend twice on health compare to ruralUrban rental house five times more that rual area42 million, rural, - 27 million, urban avail banking services

E) relationship between agriculture, rural income and consumptionThe agriculture sectors average annual growth fell to 1.94%, but the FMCG growth was around 12%Getting less depended on agriculture income

Literacy in rural indiaThe rural literacy level has improved in the recent past from 36% to 59%55%reported at least secondary educationElectricity availability----Almost 56% had an electricity connection in 200590% of rural households in punjab and goa are electrified25% jharkhand, 10.3% in Bihar

F) development indicators in rural indiaBringing down the poverty level from 55% to 36% Ranked 138th as per the human development report

Number of Towns and Villages in IndiaItem Year NumberNo. of towns 2001 5,161No. of villages 2001 *640,000Source: Census of India, 2001.Note: * Approximate

Nature and characteristics of the rural market1) large and scattered market75 crore rural consumers who live in approximately 6,38,365 villages23% have population less than 20021% have population between 200 and 500So widely scattered- raise transportation costs, affects the viability of the distribution system

2) Heterogeneous marketNot a homogeneous24 languages and 1642 dialects- varies every 100 kmDifficult to develop uniform message caste, community, tradition values (from state to state, region to region differ)PunjabBihar(per capita income)25,0485466562332(1965)

Variations in economic development and socio-cultural background influenceLiteracy rate in rural south India is higher than rural northRural consumers in the south are more brand consciousSo, variations in behaviour due to the consumer environment geographical, occupational

3) Income from agriculture 55% of rural income comes from the agriculture sectorHence rural prosperity is tied with agricultural prosperityCont

Recently- gradual reduction in the sole dependence on agriculture( other sectors plays significant role in the rural economy)4) Standard of livingLower standard of living70% rural population is employed in small scale agricultural and related occupationSeasonalityAs it is unreliability in income- rural consumers are extremely conscious in their purchase behaviourLow literacy, social backwardness, low savings

5) infrastructural facilitiesRoad, warehouse, communication system and financial facilities are inadequate in rural areaRoads donot connect nearly 50% villages in the countryInadequate infrastructure is single most important factor distinguishes urban and ruralPromotion and physical distribution thus becomes very difficult

Life style of rural consumerHaryana that had television(53%) sets was more than the number of households that had toilets(44.5)1) rural consumer is very religiousThe promotional material built around religious themes is not only going to last longer, but will be kept with care by the villager

Dabur developed religious calenderRapid success of the ganga brand toilet soap (contained milk and it was made from the water of ganga)- the brand register a good responseGovinda, a cine star famous for rural audience

2) rural consumers prefer to work hard themselvesWould not like to be replaced by a machineThey are less likely to spend on products making life a bit easier

3) strong family ties and respect for family valuesMore conservative in their approach toward the different socio, economic issuesThe loose, free flowing hair of a girl in a shampoo or hair oil advertisement may actually act as barrier in the rural market.

4) likes to play cards and hangs out at choupal Whatever promotional message is delivered to the opinion leaders in a village, gets transmitted Love chatting with friendsWord of mouth stories develop around easily and fastITC which has created an e-choupal- using the internet to bring down any barrier with regard to technology

Profile of rural consumer1) traditional outlook Values old customs and tradition2) perception and its influenceIn rural markets, colour, size and shapes are interpreted differently(ex) yellow colour indicate prosperity in the rural south, but it indicate sickness and disease in s

The lower literacy levels in the rural markets increase the importance of visual influence3) less exposure to marketing stimuliLow exposure to branded productAdvertisementSource of information and learningLow convenient buying4)conscious of value for money

5) realistic aspiration : he can reach out and stretch the budget but that is done with in limits onlyDual uasge 15% of surf and 12% of ariel using families also use nirma detergent18% of pantene using households also used clinc plus shampoo6)concept of quality-values for long lasting solid), low cost maintenance

7)attitude towards prestige productsYet they are interested in products adding to his prestige but the price of a product justifies the value equation

Challenges in rural marketingRural markets remain untapped because of three Ds1.distance2.diversity3.dispersion

The challenges are..1.distribution: the problems of physical distribution of channel mgt adversely affect the service as well as the cost aspect- it is not commensurate with the returns that the marketers expect.(poor infrastructure)Greatest challenges is reaching out to the remotest destinations and having a number of vendors at the retailing end.

2.understanding the psyche of the rural consumerVery distinct from one anotherCampaigns have to be tailor-made for each product category, each region, custom in region, language and dialects etc..3.limited knowledgeDifferent research organisations are very different from one anotherDifficult to have limited knowledge

4. communication: comm..barrier due to language or icons used for advertisingDifferent interpretation in rural marketDubbing not a right solution for rural audienceThe context, story line, narration, idiom, symbols, appeal need to examined while developing an advertisementExplain directly and clearlyUrban symbolism,emotional appeal &indirect

5. cost per contactCompare the rural promotional cost with the urban - is the biggest challenge Renting a van per day cost Rs 3500 and there are 6 lakhs villages spending 500 dialects to coverOne exposure may not be sufficient By simple calculation we can known that the total cost will be much more to reach the entire rural market.

6. sale of fakes and spurious productThe retailer pushes imitation products as they get better margins (retailer)A research undertake by A.C. Neilsen reported that the sales value of the fake of P&Gs vicks brand were almost equal to the sale of the brandSeized products worth Rs 35 lakhSecondly , selling face goods in not a criminal offense in India and it is under civil law

The only practical way to deal with fake is to improve the distribution and make the products available in as many placesOriginal productsimitation1.pondpolons2.rinrun3.501 bar509 bar4. brooke bond paisabenson brand paisa5. lifebuoylifejoy, liteboy

7.budgetary allocationCorporate sector loves the rural markets, but when it comes to allocations, the amount of investment in rural marketing is very limited, observes R. Gopalakrishna executive director, Tata sons Ltd.Allocate at least respectable amount of the budget for research and promtion

8.urban orientation and biasRural people are just like urban onesThey too have the same needs, desires and aspirations Most of the marketer apply minor modifications (of the indian urban market)But, these paradigms (patterns) fail

9.lack of right competence and commitment at frontline levelMost of the frontline staff is from the urban areasThey are not very comfortable to travel and interact with the villagerSolution is recruiting frontline staff from the rural parts of india

Opportunities in rural marketsAs per I. Natarajan, chief economist The rural marketer has tremendous opportunity and he stated clearly that, it was not the buying power but the distribution , which was the biggest hindrance in realising the potential of the rural market5 lakh ruraliter have gone abroad- sending remittances

HLL gets 50% of its sales turnover of RS 11,700 crores froms r.indiaLIC sells 50% of its policies in rural indiaFMCGs market worth Rs 64800 crore are selling in R.indiaCarbonated soft drinks worth Rs 1800 crore are selling in R.indiaClearly states that rural market is not as poor as it is perceived

1.rising rural prosperityMonsoons were normal for 11 out of 13 yearsMajor drought year was 1987-88The ratio of rural per capita income to urban per capita income is increasingThe rural consuming class is increasing by about 3-4% per annumThe government also spends hundreds of thousands of crores of rupees in rural area Cont.

Rural Haryana had more super rich than not just the urban HaryanaRural Haryana- 482Urban - 340Bangalore - 137Hyderabad - 226 (2001-2002)

2. lesser dependence on agriculture and monsoonThere is a time when market predictions were made on the basis of the state of the monsoonChanged over the year, large non-farming sector-which generate almost 45% of the rural wealthRakesh kalra, CEO Eicher moto

Rakesh kalra, CEO Eicher motor agreed as long as the rain deficiency during monsoon is not more than 20% the long term average there is nt a significant negative impact on the commercial vehicle sales.3. increasing rural consumptionMore than urbanSales of FMCGs is 53%Durable goods 59%

FMCGs RS 650000 crore out of a total market Rs 1,23,000 croreJust a 1% rise in rural incoem translates into Rs 10,000 crore of buying powerAmong the seven high consumption state punjab is the lead position Low expenditure- bihar, madhy pradesh, assamAverage-karnataka, uttar pradesh, T.N, orissa

Tax- exemption on rural income too has been enhanced rural purchasing power4. rural marketing effortsInnovative models are being developed to take the products to the rural retailers shelves5. increasing sale of branded productBranded goods comprise 65% of sales in villages today and share of non branded goods is shrinking dramatically

6. large popualtionThe population is very large and its growth rate is also highC.K. Prahlad, the future lies with companies who see the poor as their customerThere is an opportunity to make a lot of money in rural india. But, there are obstacle too i.e rural consumers is still evolving.

Rural products

Unit IIIRural Buyer Behaviour: Rural buyer behaviour Factors determining rural consumption Rural buying process Current trends in rural buying behaviour.

Consumer behaviourDynamic behaviour and the environment by which human beings conductIt can be understood, by the statistical reportContinuous study should be thereKnowledge of buyer behaviour is vital for marketing strategic

Definition consumer behaviourSchiffman and kanuck the behaviour that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs. It is thus a study of how individuals make decisions to spend their available resources like time, money, effort- on consumption related items.

Fundamentals of consumer behaviourFour types of buying behaviour, based on the following two parameter1) degree of buyer involvement ( high and low)2.degree of differences among brands (significance and non significance)

High involvementLow involvementSignificant differences among brandsComplex buying behaviour (expensive, may difference in brands like computer, automobile)Variety seeking buying behaviour (less expensive and frequently purchased, experience size,smell, sound, touch, ice crea, confection) per yr India 6 brand, america -2 brandFew difference among brandDissonance reducing behaviour(expensive,but few different like social products- furniture)Habitual buying behaviour(low cost, frequently purchased salt,soap,-exception in cigaretter- brand preference is more)

On basis of the amount of time spent, purchase behaviour can be classifiesPlanned purchase behaviourEmergency purchase behaviour(to avoid stock-out)Impulse purchase behaviour(purchase spontaneously, taking decision on the spot)

The consumer passes through a series of steps while purchaseStep 1. need identification /problem awarenessStep 2. information gatheringStep 3. evaluation of alternative solutionStep 4. selection of appropriate solutionStep 5. post purchase evaluation of decision

Post purchase behaviour?

Sour Grapes a story of cognitive dissonance after being unable to reach the grapes the fox said, these grapes are probably sour, and if I had them I would not eat them. --Aesop

Factors which influence rural consumers during purchase of a productAcceptance of washing machines and rejection of dish washersAcceptance of maggi noodle and rejection of kelloggs cornflakeCan only understood in terms of consumer behaviour with regard to the positioning and marketing mix of the organisation

1.social cultural factorsInfluenced by social customs, traditions and beliefsCaste influences are direct and strongConservative in their outlook, take a longer time to be influencedDiscuss the issue of purchase- important and knowledgeableRural youth are more open

2.groupConsumers are part of a group to which they belongOpinion leader- a teacher, bank manager, vDO, etcThe acceptability of an idea by the group and by the leader is critical in rural areas.3.familyFamily size and the role played by family members (joint family)

4. Role and statusRole refers to the behaviour expected of an individualStatus refers to the respect given to the individual by the societyHead master demonstration- opinion leaders can be useful in transforming the opinion of others

5. sociabilityIn rural areas, individual are know and identified betterAccepted by the group makes them agreeable 6.economic factorsMore than 70% of the people are in small-scale agricultural occupationThese factors affect the purchase decision

7. political factorsProgrammes for self-employment like the prime ministers Rojgar Yojana (RMRY)of the cental govt.CMEY- chief minister employment yojana program in Andhra pradesh increase the potential of the rural marketThe IT, telecom and infrastructure policy, which is bringing connectivity to village is empowering the consumer

8. factors which influence the final choiceAttitude of otherAdvice of the retailerExperience at the retail outletDemonstration of productUnanticipated situational factorsMood swingPerceived risk

examplesCreating Rural-specifi c MessagesNot all commercials are accepted by rural folk. Social workersrecount stories of advertisements that confuse or scandalise ruralviewers. For instance, members of some rural communities inRajasthan were offended by the Halo shampoo spot, featuring femalemodels with beautiful, bouncy hair. The reason was that here it isconsidered indecent for women to let down their hair in public.The same villagers were bemused by the Strepsils Bahut Mazaa ayaadvertisement. In their dialect, the word mazaa has a strong sexualconnotation and they could not understand how anyone could getcorporeal pleasure from a cough lozenge (Ghosh, 1994).

Rural consumers increasing trend towards consumptionUntil 1980-81, per capita of india was just under RS 2000 but even then household saving rate was 18-20%A dramatic change is in progress- charcoal- cleaned teeth are a rare sight- use of twigs of neem and babool treeHousehold are upgrading from indigenous teeth cleaning ingredients to toothpowder and tooth paste

Shifting from low priced brands to premium brandsToday, the bright shine of colgate or some other international brand of tooth paste holds more appeal than the traditional methods of cleaning teethAt a seminar on rural marketing, organised in New Delhi , by the international development enterprise, the Indian rural tastes are changing fast, thereby reflecting a marked improvement in the purchasing power of village household

In 1990-1992 lowest end of rural market earned around Rs 14000 per year, today segments annual earning Rs 24,000Rural buyers disenchantment with second hand item , thank to competition increasingly purchasing new product.

ConclusionThe size of the rural market is quantitative and qualitative Mr. kartik raina of dalmia consumer care- tobacco free beedi called vardaan the rural market in not for all, but for those with the guts, the skin of an elephant and the mind of an evangelist .

Most successful brand Hero Honda is no moreby khalid on 18/12/2010 in Bazaar Talk,Intresting NewsHero Honda is the most successful brand name in India. It is the largest player in the market in two wheeler segment

Saluting the spirit of women empowermentFair & Lovely Foundation offers honoured.

Saluting the spirit of women empowermentFair & Lovely Foundation offers scholarships to 212 meritorious girls. Five women achievers honoured.

Unilever Sustainable Living Plan UnveiledWe meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life.

HUL brands top India's Most Trusted Brand Survey 30-08-2010: Once again this year HUL brands have topped the Indias Most Trusted Brands Survey rankings.Six HUL brands(Lux, Lifebuoy, Clinic Plus, Pond's, Fair & Lovely and Pepsodent) featurein the top 10 andeightin the top 20.

caseMarket Development Strategy of HLLIn 1999, the soaps, detergents, and personal product segmentsof HLL owed their growth strategy to a strong rural thrust. HLLlaunched its Operation Bharat, a 20 million household nationalsampling exercise for its personal products portfolio. As part of thecampaign, low priced sample packets of toothpastes, fairness creams,shampoos (Clinic Plus) and talcum powder (Ponds) were handedout to 20 million households.According to Dalip Sehgal, Head of Marketing (Personal Products)in HLL, The size of the pie will increase from the rural segment, notthe urban segment. So the focus should be more on market developmentrather than market share at the moment (Zaheer, 1999).

WALL PAINTING An Economical and best Media in Rural Marketing

MOBILE VAN An Effective way of Communication

examplesBehaviour Variations of Watch BuyersThe demand for watches is high in rural areas and it increasesduring the marriage season. This is true throughout the country. Thevariation is, however, in the type of watch and brand that is preferredby the consumers. In the villages of the north, winding watches arepreferred which are bought from large feeder villages nearby. Theyfi nd it convenient to get it serviced at a nearby place. The awarenessof quartz brand of watch is limited. The awareness of a brand is usuallyfrom newspapers in addition to word of mouth.In the south, the preference is for a quartz watch and is purchasedfrom a showroom in the town. In some of the villages, television hascreated a high degree of product awareness. As the purchase of quartzwatches is expensive, the villager prefers to buy it from the town andis willing to take it back to the showroom in town in the event thereis a problem with the watch.Occupation

examplesStrategy to Refl ect the Social-Cultural Infl uences on BehaviourIn rural areas the houses are painted during festival season. Thedemand for distemper paints is therefore very large. This demand ismet by local brands, which are of low quality. Asian Paints developed aproduct with bright colour shades (preferred by the rural consumers)for rural markets and which had greater durability than the localbrands. It launched the product in a pouch form and with the brandname Utsav (meaning festival). Utsav was promoted as a good qualityeconomy brand. It used wall paintings and point-of-purchase displaysto create awareness. It identifi ed dealers and sub-dealers who had thepotential to stock and sell Utsav. To demonstrate the quality of Utsav,the company painted the headmans house or post offi ce. The brandwas well accepted by the rural consumer.The social-cultural infl uences on behaviour need understandingfor developing an effective marketing strategy

Unit IVProduct and pricing for rural market:marketing mix for rural markets- developing a new product for rural market- product life cycle- innovations in product design rural market- branding products for rural markets price determination for rural market- pricing methods for rural market.

Rural marketing mixIntroductionIndepth understanding- rural life style, identify needs of rural consumersThe success of a product like shampoo in the rural market acting upon the consumer insight- made cavinkares chik sampoo(market leader in a market which was not using shampoo at all)

Marketing mixA series of interconnected and interdependent marketing issues that need to be considered togetherFirst developed by Neil Borden in 19501960s jerome Mccarthy (Harvard) elaborated the concept of the four PsMarketing mix refers to the set of actions, tactics tools or variables that a company uses to promote and sell its brand or product in a market

4Ps of marketingDecisions about the controlled marketing variables 4Ps : product, price, promotion, and place (distribution)Several other Ps: Packaging, positioning, people, pace, passion, publics and even politics as well

Decisions be taken after assigning a value to each variable some variables could be1.price- price level, credit terms, price changes and discounts2. product features, packaging, quality and range3. promotion: advertising, publicity, sales promotion and personal selling4. place inventory, distribution channels and number of intermediats

By choosing the appropriate level , the right marketing mix can be developedThe marketing tools and the possible variations are top end luxury model, medium range product and value for money low end product.

1)product anything that is capable of or can be offered to satisfy a need or want- include tangible and intangible serviceHowever, a product must deliver a minimum level of performance, otherwise even the best work on the other elements of marketing mix wont do any good in the long run2)Price refers to the amount the customer has to pay inorder to acquire a product or serviceCont

Depended factors are:Cost of productionSegment targetedAbility of the market to payDemand and supply of competing products and substitutesPricing objective of the firm Other direct and indirect factors

4 Cs of pricing(a)costumer value- value the customer perceives that the product delivers (b) competitors prices(c) cost to the company- combination of fixed and variable cost(d) strategic and pricing objectives of the company- the financial, marketing and strategic objectives that the organization has decided to achieve from a product.

Pricing objectivesTo maximise long run profitTo maximise short run profitTo increase market shareTo match competitors pricesTo survive in the short run

caseTypical Strategy in Rural Markets: Crane SupariCrane betel nut powder is a leading brand of betel nut powder inSouth India. It is known for its quality and has a very strong consumerloyalty. The packs are sold in convenient price slots of 50 paise, Re 1,Rs 2 and Rs 5. The pack sizes include, apart from very small packs,packs of 25 gms, 50 gms, 100 gms, 250 gms and half kg. There are sixvarieties of arecanut and brand building is through maintaining thetaste. The product range includes both spicy and sweet supari.

The channel includes distributors, sub-distributors, wholesalersand retailers. The distributors are reached through company vehicleswithin three days of the receipt of requisition along with a draft foradvance payment. In the case of rural markets, the distribution isonce a month through trucks that follow an itinerary. In the case ofsmaller and interior areas, transporters are used. In addition to this,the company provides van support to distributors for delivering torural markets. The company makes available to the rural distributorssmall vans with the condition that they carry only the Crane brand.The days expenditure for the van is borne by the distributor whouses it.

The media used in rural markets include cable television, stickersand danglers, painting the sides of buses, wall paintings and shoppaintings. Mimicry and dance drama were used in the early Nineties,but no longer. Vans were used to create awareness and to providebrand knowledge in between songs that attracted attention. Thevans were also painted with the brand message. This kind of promotionis no longer used as the company does not fi nd them effective.A large part of the promotion to rural areas today is through stallsin fairs followed by wall paintings. Other media are used but to alimited extent.

The brand has a good image in the rural market but the presenceof a large number of local and small brands competing on pricerestrict the market share. The rural market is large but because ofprice competition its major share is from the urban market. It isthe leader in South India but its leadership is because of the urbanmarket.

Pricing processStep 1- developing the marketing strategy: performing the segmentation, targeting and positioning functionsStep 2- making the marketing mix decision-determining the other 3 Ps:product, place and promotionStep 3 estimating the demand curve analysing how the demand is likely to vary with the price

Step 4- calculating the cost determining the fixed and the variable cost likely to be associatedStep 5 developing an understanding of the environmental factors- the competitive as well as the legal environment scenarioStep 6 finalising the pricing objectives maximise long run profit, short run profitStep 7 determining the price selecting the price method, determine the margins and discounts

Pricing methodsA) cost plus pricing- organisations add certain profit margin over the cost of the productB) target return pricing targeted return on its investmentC) value based pricing based on customers perception of valueD) psychological pricing- already existing reference or psychological prices in the mind of customerPricing through the product or service life cycle

PlaceRefers to the point of saleThe main aim of distribution or place strategy- catching the eye of the consumer and making it easy for to buy a product ideal balance between the cost to the organisation and consequent convenience to the customerIn fact, the mantra of a successful retail business is location

DistributionMeans ensuring the spread of the product throughout the market place in a manner ,so that a large number of people can buy it.Distribution channelsFlow of products from the site of manufacture to the point of saleConventional channel : factory- c&f-distributors- retailers(most common channel for the most goods)

Unconventional channels like- Internet portals or a network of salespersonsPromotion to make the product or service known to and preferred amongst the user and trade.Advertising, word of mouth, press, incentives , commission, awards to the traders, consumer schemes, direct marketing, contest and prize mass mediaIMC integrated marketing communication promoting the companys goal to its target audiences

Clearing and Forwarding Agent (C&F)The clearing and forwarding agent is the representative of the manufacturer. The C&F manages the company's warehouse and handles distribution on behalf of the company. The goods that the C&F deals in is the property of the company he is representing. The C&F gets a small commission for his services. The C&F deals with the wholesalers - including the super-stockist, stockists and distributors.

examplesComplex Communication as Barriers to ReceptionIt is relevant to share our recent experience on a market survey onpesticides. Here we have a serious communication problem. Thoughthere are local names of pests, but all the material released by all thepesticides companies mostly identify the pests by their English andacademic nomenclature. There are generic names used for pesticideswhich again are in English. Some of these names are diffi cultto pronounce. For example, Monocrotophos, the brand name suchas Nuvacron. The choice for the consumers increases in complexitybecause of additional dimensions. Additional dimensions are themanufacturers, formulation strength, product form and varying percentagesof technical material content. Cont

The entire exercise is so complicated that the marketing organisationsare not able to effectively communicate with the farmer onthe brand name of the pesticide for a given pest. The result is notonly an improper and wrong selection of pesticide but also that therecommended dosages are not being used, and the farmer blamesthe pesticide and the manufacturer for the ineffective treatment. Thefertiliser manufacturers have introduced simple symbols and brandslike Star brand, Crescent brand, etc. Such sign language needs to bedeveloped in case of pesticides also ( Jain, 1983).

Signs and Symbols in Rural MarketsA number of successful brands in rural markets have brand names orsymbols with numbers or animals. These include 555 soap, Monkeybrand toothpowder, Gemini Tea (with an elephant), Cheetah fi ghtmatches or Sheru (tiger) beedi and Tiger cigarettes. The associationof symbols with these brands helps recollection. The 3-Roses brandof tea makes the rural consumer think and feel fresh. The symbolhelps associate the product features with the brand of tea. Thesymbols that make the consumer feel and think about features thatare relevant for the product are critical for brand building in therural market (Krishnamurthy, 1999).

CaseUsha International Ltd.Usha International Limited (UIL) of the Siddharth Shriram groupproposes to increase its focus on the rural market, which contributes50 per cent of its total income. It plans to increase the penetrationlevel of its fans in rural areas from the current 5 per cent by introducingfans (both ceiling and table) designed to function undersevere conditions of voltage fl uctuations. They will be priced 30 percent less than normal. It also plans to increase the penetration levelof its sewing machines in rural areas from the current 11 per centby introducing low cost models. UIL intends to route its productsfor the rural market through its diesel engine dealers, completingits strtategy to make use of product design and pricing decision todeliver value to the rural consumer

Rural marketing mixMarketing mix conceptually remains valid for the rural marketEvery product and promotion, which is a hit in cities, might not work in rural areasIt doesnt mean, Indian villages belongs to restricted zoneThey are different as consumers and hence, market differently

ProductModified to suit the lifestyle and needs of the rural consumersRural consumers like to buy products for need based consumptionRecycling and putting a product to all possible practical uses before discardingWhile designing a product- consider reuse and recycleThe product to be useful and easy to use

Appear tough and rugged- outlookAs less educated new technology acceptance is also lessCellular phone-washing machines not acceptingAcceptance- solve their problems ,suits their culture and their pocket and worth the price

Branding Making them change their product or brand is very difficult Higher brand loyalty among the villagerOnce a brand is accept(vill, state, region) very difficult to replaceAccording to Harish Manawani ,the vice president HLL, international brands need to be relevant interms of perceived image, performance value if they are t succeed in the Indian market

PackagingThe decision of packaging is influenced by the characteristics of consumers i.e affordability, cultural preferences, usage conditions and ability to readMinimum quantity of the product for weaker section(financially poor)The problem of dust, heat or bumpy roads special stress on packaging

Packaging size store- another problem for customer or retailerColgate put a cap on the sachet for convenience of storageAttractive, decorative and synchronisation with local culture- should not be costlyWriting products name in the local language- consumer awarenessColour and convenience of package are very important

Illiterate not able to ask for a brand- advertised recognise the product by its packaging This is why (imitating the packaging ) is available in village shopsSKUStock keeping unitOrganisations should maintain a smaller number of SKU for the rural marketAs the rural retailer has a limited working capital

Product strategiesIn rural marketing1) new/modified product designsA) research and marketing department think new design according to their (rural) life styleB)rural environment- product tough- rough handling, rough roads and frequent power fluctuationC) nokias1100- customised model for ruralD)dust resistant, small torch, economically etc.

2)sturdy product- sturdy enough to stand rough handling, transport and storage3) utility oriented product- more concerned with the functional utility of the product than its appearance and sophistication4)avoiding sophistication packaging5) refill packs/ reusable packaging6) application of value engineering- substituting the costly raw material with the cheaper one- cheaper but better quality

7)brand name- brand awareness in the rural areas is fairly high. The only issue is that the brands are known differently than they are known in the urban market (fake product)8) small unit packagingLow per capita income single serve packets or sachets are enormously popularThe use of 50 p or 7 ml sachets is declining in the rural areas by 10%Bigger packs for jam and milk powder are doing well even smaller is available

PricePrice is the most important phenomena affecting rural marketLittle extra for better qualilty- cheaper versionSome retailers in the interior villages charge more than the maximum retail price(mrp)-to fetch spend time and money from distributors

Prices of substitutes also must be studied along with the pricing of the competitorsAs coca cola found out that it was not just pepsi that they were competing with in the rural market, but also nimbu paani, jal jeera and others

Pricing strategiesAs per capita income of india was lowExtremely price sensitive(a)large volume- low margin : rapid or slow penetration strategyTo focus on generating large volumesNot big profit margins

(b)over all efficiency and passing on benefits to consumerThe strategy should be to cut down the production distribution and advertising costPassing the benefits to the customers to further increase the turnoverObserved that advertising has less to dowith product sales in the rural areas

low cost/value for money productsThe price can be kept low by smaller unit packaging(d) low volume low price strategyReducing the package size- more affordable especially in finance(e) ensuring price complianceRural retailers most of the time, charge more than the MRPManufactures has to ensure price

PlaceThird PVillage as place for promotion, distribution- different form town or city general marketing theories cant be appliedReaching right place is the toughest part in todays marketBecause high distribution costMost the rural retailers themselves go to the urban areas to procure these goods

Significance of distributionThe best product, price, promotion and people come to nothing if the product is not available for sale at the pointGood distribution system- company has greater chance of sellling it s product more than its competitorsIn the FMCG industry in india companies have to distribute to over 10 lakh retail outlets or point of sale

Now a days direct marketing through internet- feasible for the smaller villages

Place strategy(a) segmentationExamine the market potential of different villages and target the villages that can be served ina financially viableNot viable to contact and serve all the village

(b)coverage of villages with 2,000 and above populationDistribution network in about 55000 villages have population of 2000 person and above can cover about 25 crore rural consumersGood to begin with lesser populations distribution up to feeder markets/mandi townsThe feeder markets and mandi town offer excellent scope for distribution

The rural consumers visit these towns at regular intervals, not only for selling their agricultural product but also for purchase(d)joint distribution by non-competing companiesAs distribution vans can be unviable for a single companyDifferent non- competing companies can come together to jointly operate distribution vans

(e)direct contact with rural retailAlong with the efforts of wholesalers and dealers, companies need to have direct points of contact, with retailers and sub- retailers(f) shandies/haatsHeld on a particular day of every weekDistributors in the area can utilise mobile tractors to sell the products

(g) agricultural input dealersAs per the essential commodities act,fertilizers should be made available to the farmers with ina range of 4 to 5 KM from their residenceAbout 2 lakh fertilizer dealers in the countryBoth in coopertative and private sectorsThese outlets can be used to market(h) use of co operative societiesAt least one cooperative society of one form or the other, for every 1 or 2 villages

(i)utilisation of public distribution system(j) multi-purpose distribution centers by petroleum companiesThe petroleum retail outlets now will be seen stocking some non-petroleum retail outlets now will be seen stocking(k) post and telegraph department (l) alternate retail /distribution channelsMilk man, vegetable vendor, entry and exit point of village

(m) personel selling networkResidents of the village or community(n) e- marketingE-choupals, direct contact with the rural consumer

PromotionAs it is thin population- promotion aspect is challenge Media dark- inaccessible to television signals- not only denied to access to product but also knowledge about it.Problem in mass media communication- time gap between the point of exposure and the time of purchase

The memorability of the message while it last till the time of purchaseSurvey 16%of rural and 25% of urban consumer felt that advertising influenced them to frequently or always to buy products they donot really need19% rural and 30% urban advertisements are frequently misleading

caseResponses to Consumer BehaviourHindustan Lever found that retailers in villages were cutting its large100 gm Lifebuoy soap into smaller pieces and selling these. So itintroduced a smaller 75 gm pack. It also introduced Wheel detergentin a 100 gm pack (Joshi, 1991).

Media vehicles and rural market1.mass mediaIn rural market, 2 out of 5 indians are not reached by any media : tv, press, radio and cinema together(a) televisionTv penetration in rural homes was about 26% in 2002 , 66% of urban areaIn 1993 it was 13% and 49% in urban area

Although the number of television channels have increased from 6 channels in 1991 to 300 by the end of 2004As of now doordarshan telecast network nearly covers the entire country55% reach in 1997 DDsSince, one third of india is not covered by DD

(b) radio: primary source of entertainment in rural market listenership stands in the 20% range for both urban and rural20% listenership is a good number in terms of popualation print mediaLiteracy level is low in rural areasThrough dailies, periodicals, pamphlets, booklets

But reading habit in the rural areas does not appear to be very goodReaches the rich families of the villages- so work of mouth Should not ignored because it reach the opinion leaders(d) cinema of rural adult population view cinema in the southern region so effective media

(e)hoarding/ wall paintsWalls of shops and other place are easily availableRelatively longer span than other mass medis

Unconventional mediaAs media does not cover as much as 43% of rural indiaEvents like fair, festivals, cinema van, shop frontStickers on hand pumps, wall of wells, putting on tin plates on all the trees, pond- innovative media used by HLL for lux, life boy and wheelFolk media quite popular in different regions and state

High frequencyLow frequencyHigh reachJeep, wall painting, bus stand , haat, hoardingVan based advertising , melas, direct to home, exhibitions/ created eventsLow reachCo operative notice, shop front painting, tin plating calender / labelTin plating trees / shop leaflets, posters and banners , danglers

Promotion strategies1.Think global act localRural population is diverseBut the commonalities of their ethos and simple living habits need to be understood for advertising to succeed( context, story line, language and idioms)2. think in local idiomthanda matlab coca cola

3.simplicity and clarity4.Narrative story style5.Choice of brand ambassadors govinda in the mirinda ad boosted the sales of the drink in rural market.

Additional Ps of rural marketing1. passion it represents an attitude of three dimension a) passion to earn goodwill for the company b) passion to serve and educate the consumer c) passion to give 100% to the rural marketing effort.

2) pace (step by step)Rural market need to be launched into the heart of the customerWorking capital and storing space donot allow rural retailer to store numerous brandHe can sell whatever he is stockingThus companies have to reach the retailer early

4 As of rural marketing mix1. affordability : not cheaper product, designing products which match the needs of rural consumers, at a price that they feel2. availability: lesser number of brands available at rural retail outletEnsuring the reach of the products at the retailers shelf is one of the most critical function

3.awareness : they use unconventional media along with commercial media like TV , RadioElements like colour, logo, slogan designed according to the rural consumer4. Acceptability They must feel that the product serves its purpose, then they are ready to even spend extra for the product

examplesOscar Televisions Offering to the Rural Marketsthe leading television brands. Arpita Khurana, the director of theOscar television competed effectively in the rural markets againstcompany expects a boom in the rural market with growth of nearly80 per cent.Oscar television competes in the rural market by providing a no frillvalue for money product. For instance, Oscar, which derives 40 percent of its sales from the semi-urban and rural sectors, has launcheda battery-operated television model in the 14" segment to cater toparts of Eastern UP and Bihar. This has boosted the companys salesby 5 per cent to 7 per cent. It is planning to come out with a similar21" model in the near future. Says Khurana, Since electricity is aproblem in these areas, we felt the model would be a success.Source: (Ghosh and Verma, 2003).

casesProduct Design that Responds to Consumer PerceptionsUnion Carbide found that its slick plastic torches, which were allthe rage in the metros, had no takers in the villages. Farmers preferredheavy brass torches. Says Union Carbide Managing director,V.P. Gokhale With brass torches, they feel they are getting value formoney.Texla drew a blank with its television sets with grey and blackcabinets as farmers did not prefer the somber urban shades. It introduceda new range in bright red and yellow, which was refl ected ina dramatically increased acceptance by rural markets (Das Guptaand Menon, 1990).Philips promotes the size of its music systems to rural consumers.Consumers are willing to pay a higher price for larger models assumingthat big is better. The company now makes its rural models oneand a half times larger and louder than the ones for urban markets(Mukherjee, 1993).

New product development for the rural marketNot invention- minor modification existing productObjectives 1.Satisfy customer demand2.Competitors launch new product3.Expand strategy4.Changes in technology5.Increase in sales and profit6.Single product business vulnerable to multi product business7.Maturing stages and decline stage

New product development processA) exploration stage:Ideas for new products is within a company itself60% of industrial and 46% of consumer new product ideas came from the research staff engineers , sales people30% of consumer product ideas came from the userMarket feed back and research- key role to playTeam - assimilate all new product ideas on a single formatevaluation

B) screening stageElimination process- which carry unacceptable level of riskVital criteria for evaluation1) nature of demand 2) compatibility new idea matches with the corporate objectives, impact the existing product3)resource what amount of money, tech, time4) competition actual competition strength and weakness

C) detailed value offering evaluationAfter screening only few are left for considerationTime for detail product specification need satisfying, simple and easy, convenient store, tough and solid appearance, affordable, rural product usage, environment Electroluxs bijlee refrigerator can store power for 12 hours as back upUrban imagery (feel and comfort)- Mahindras Maxx- styles and finishChassis is designed to keep the mother board cool at tem 45deg c

D) business alnalysisLikely cost? Potential demand? Recovered?. ROI?E) product development Approves particular productExecuted in research lab stage concept on the paper is transformed in to a product in hand

F) development of marketing mixProduct : packaging, colour, logo and brand name taken at this stage sampoorna chosen as a brand name for televisions by LG, is a word from the four leading languages spoken in rural Hindi, Tamil, Marathi, Bengali.Promotion : selecting media, punch line TATA ACE

Price : retail price, dealer and retailer margins are taken at this stageTATA ACE slightly higher price that three wheeler it enabled the customer to climb the ladder by paying a slightly higher pricePlace: TATA MOTORS conceived a concept called 1st outlets for the distribution of ACE. 1st retail out lets that handle only sales of ACE

G) product Testing :1) product testing : before it is formally launched in the market Intel took the personal computer designed for rural marketTest in pilot project changes made accordance to it2) concept testing : entire product concepts is presented to the customer to have their reaction it might be successful or not 3) test marketing done by selling the product in limited

H) commercialisation or launch :New product is actually launched in its target market place : do some effortPromotion strategy TATA Ace road show, demonstrated test- drive, using the metaphor of an elephant baby elephant TATA TRUCK mother elephantPricing strategy : tied up with auto financer in urban areas who offer five year financing for the vehicle (three wheelers get only two/three year financingFinance companies comfort level with salary slip than the agricultural income

Place strategy : nine state, 300 exclusive sales outlets across India, with in a range of 50 to 100 km from their village, tied up with local garages apart from its existing dealers, Training to the staff of these local garages

Rural market and product life cycle The four stages of PLC Introduction, growth, maturity and declineThis fact remains true for the rural market as wellIntroduction to decline varies from one product to another

PLC determined by the following factorsmarket conditiongrowthtrends in buyers spendingtechnologicalcompany policy

Characteristics of different stages of PLC and marketing mix strategiesIntroduction stages: Growth , sales volume is low, Product awareness is limitedProfit is unlikelyFocus on to build awarenessEstablish distribution network

Marketing strategies for introductory stageA)product strategies : small trial packB)place strategies: encourage to stock the product, offer schemeC)promotion strategies : generate greater awareness, by educating and reaching the opinion leader, targeting the innovatorsAs competition is less, highlight the benefit of the product concept

D) pricing strategy : go for introductory price offer, Rapid or slow penetration can be taken on the basis of the resources.

Growth stageBecomes aware of the product of its benefitsCharacteristics : rapid growth in sales and profit , economies of scales, lower prices are possible, the competitors move in the market

So focus :To build brand preference,To increase market shareMarketing strategies for growth stagesA)product strategies : i) brand reinforcement educating the customer about benefits

ii)modification or value addition in the product iii) making the product more relevant for the customer iv) launching medium packaging HLL created bubble packs shampoo- neither sachets nor bottle

B) pricing strategies option to either maintain or lower the price even further economies of scale due to the significant increase in saleC)place strategies-strengthening relationship with distributor, deepening the penetration tapping some of the rural segmentD)promotion strategies- increase in promotional budget, highlighting the quality or performance of the product

Maturity stageCompetition becomes even more intenseMost of the product remains in this stage globally for a considerably long timeCharacteristics of maturity stageMaximum sales and profitIntense competitionFace tough competition - withdraw

Focus : defending the market share, maximising the profit, tractors and chemical fertiliser- entered maturity stage like in punjabA) elongate the maturity stage :Imperative to sustain the customers interestSo saves the product from entering into decline stage

B) product strategies : by adding interesting features, Update the productBeing decided to market its ketchup in different colourOrganisation need to strengthen the perception that their product is better and different from others, so R and D to enhance features

C) promotion strategiesAppear novel in product promotionBrand repositioning add new market segments, promote how their offerings are different and better from competitorsPromotion needs to be made broad based potential consumers due to their conservative attitude.

D)place strategies : deepen the distribution networkIncentives to channel partnersE)price strategiesLowering prices

Decline stageIt is not possible to extend the maturity stageTooth paste- maturity stage- but still they cannot be considered immune from declining stageWashing soaps taken oven by detergentCharacteristicsSales drop, demand diminishes, market for product shrinks, inventories start piling up, profit decline

Marketing strategiesA)rejuvenate the product i) revive the product by additional features ii) harvest the product Sell their manufactured product at reduced prices

Branding product for rural marketDespite create an awareness of their goods and services still un tappedLifebuoy- one of the first soaps with rural areas as the key target market- create brand loyaltyColgate, Bajaj, Tata adopts right set of brand building tools- for long term

BrandOrigin- Norwegian word- brandr- means to burnA brand is defined as a name , term, sign, symbol or special design or some combination of these elements that is intended to identify or differentiate the goods or service of one seller or a group of sellers (American Marketing Association)

If Mercedes Benz is a brand name- the star is a brand mark.All trade marks are brands and include both the brand name and Pictorial designs- which are legally protectedExclusive rights to use brand granted by trademark law, unlike patents and copy rights which have expiry dateBrand- attributes, value, personality, cultureBrand is a complex symbol- not just a name- identity and builds a personality around itself.

Branding processBranding is a process, a tool, a strategy and an orientationThe process of creating a brand stem from research that starts with the concept of what the product is and what its functions and objectives are Brand building is usually a long, tedious and methodical workIt is not static- continuous change in product appearance and performance

Brands is some thing which is designed by the marketer, but which is built over time by the consumer

Brand loyaltythe degree of consistency in buying particular brands as a function of cognition, emotion , satisfaction, commitment, habit and positive attitude towards brandConsumer loyalty refers to the unwillingness on part of consumer to switch over to the other products, brands, or storesConsumer loyalty is a board term encompassing brand loyalty and store loyalty.

Factors determining brand loyalty

Emotion- emotional bond between the customer and the brandObjectivity- people who constantly reassess their buying decisions on objective purchase parametersInertia rarely reassess their purchase decisions- out of involvement or high switching costs

Satisfaction, customer relationship management- not only thisRecency, frequency, and monetary value- regard as good measure of customer loyalty.Indian consumers tried on average 6.2 brands of the same packaged good product in one year, compared with 2.0 brands for American consumers.

Benefits of brand loyalty for the organisationLoyal customer are typically less price sensitive than otherProvides firms with a valuable time to respond to competitive actionCost- attracting new customer six times higher than the cost of retaining current customer.

Significance of brandsMarket place teeming with thousands of product and servicing A brand differentiates a product from similar other productsWorlds top three brand represent enormous capital valueValue of coca- cola (Rs 3,17,400 crores)Microsoft 2,99,000 croresIBM- 2,43,800 crores, BMW- 64,400 crores

Regional brandsA regional brand is need specific and unique to a particular regionHowever, should not be confused with a national brandMass consumption product like tea, soap, detergent and dish washing powder have several regional brands with loyal customers.555 and chhokra soap strong regional brands in punjabArun ice cream of Hatsun foods- third of market share

Reasons for the success of regional brandsSpread of cable and satellite televisionUnderstanding of the need of regional consumersLow overheads- regional brands can offer the promise of value because of their low overheads.LegacyLarge regional markets- fairly homogeneous

6. One to one relationship with channel partners.The personal touch that the entrepreneurs are able to provide is something that the national level companies find it difficult to replicate.7. Entrepreneurial spiritBecause of small- take quick decision in any change in the consumer demand

Regional brand: success storiesAnchor toothpaste- vegetarian toothpasteParakh foods- gemini oil- sunflower or Ghari Kanpur based detergent powder , no 3 just behind nirma and levers

Regional brands : competitive response of national brandsThe national brands are not serious- to moves of the regional playerBut once reach threatening to the growth and market share of the national brandPrice cut, promotional efforts and brand building initiativesHalf of 2003 national brand surf, colgate, tide- battle with regional brands like Ghadi, Anchor, Ajanta etc,

Most of the cases national brands managed to snatch market share from the regional brandOne view is that the regional brand should not try to emulate national leadersSqueezed by large Indian companies on one side and cheap imports on the other, only a few regional brands make it big.Regional brands can not fight the battle with price alone- innovation, value system, faster response, entrepreneurial spirit, lean organisational, Rand D etc.

Brand building in rural marketCustomisationFind out the needs, wants and aspirations of rural consumers by directing contacting themReengineering the product- according to need of rural consumersThen the entire brand building efforts has to be built on the basis of their needs and aspirationNokias 1100 promoted with caption of Made for India

RelevanceThe brand name or the punch line is in vernacular languageThe same logic applies to the colour, logo and sloganCelebrity not only the brand awareness spread but it also has a good impact on over all sales volume growth.

MediaThe media selected to promote the brand is very importantAs the conventional mass media may not prove to be very effective when used alone select other below the line media- live demonstration, contestsDemonstration vans with audio visual equipments have deep rooted impact, than the short commercial on TVHaats can be an effective medium for rural marketing

MessageMessage should meet the rural sensibilitiesWith emotion touch and story line are most effectiveCommercials with gimmicky hi-tech story- not work well Rural consumers have strong visual sense.

RecongnitionEither does not understand english or even illiterateCavinkare strategy 5 empty sachets of chic shampoo contest by the consumer conscious that he is buying only the chic shampoo

Word of mouth publicityTarget the right set of opinion leaders- develop the brand recall than the five or ten seconds commercial on the TvThe stories they hear from others are more believable for ruralCrores of rupees invested in brand building efforts can go waste- if not available at the retailer shelf.

Branding and rural buyer behaviourWhat is the response of rural consumer towards the brands?In eighteen product categories consumption of branded items accounted for about 80% of the sales in 2005 not only national brands also include regional and locally manaufactured

branded goods comprise 65% of sale in villages today and the share of non-branded goods is shrinking dramaticallySign that a market for premium goods is emerging 0.9% denum talc, 0.7% shampoo using panteneRural consumers recognises Parles pack of biscuits by its yellow stripes and the baby

Youth in the family buy national brandsSenior members use regional or local or low value national brandTwo different detergents, shampoo, tooth paste and talcum powder might be found in a single home

Product innovation and designProduct are classified in to 2 categories based on nature of innovation- original, novel product and imitation.Original, novel productAn innovative firm will surely succeedHowever, it should be careful in making technical innovation . Ex tractors, pesticides, fertilizers

ImitationImitations may result in two typesA poor imitator will end up in producing deceptive, spurious , fake, copycat products.On the other hand, a competent imitator may even produce an improved version of the original product

Product design decisionA product or a service is an offer made by a marketer, which has the ability to satisfy the needs and wants of customersIt can be physical and tangibleService are intangible- soil testing, retailer advice, training.

The key consideration in individual product/service offers is the development of the product at three levels1. core product development2. Tangible product development3. Augmented product development

Core product A core product provides benefits that correspond to the need specified by consumersWhat are the needs of consumers?What kind of form and functional utilities are consumer demanding?A core product is one that provides important form utility and ensure performance of the basic functionCan the tooth powder be used to keep the teeth clean?

Tangible productThe product concept becomes visible and operational when psychological needs are specified in physical termsA) quality durability, capacity, efficiency, economy, reliability B) features 1) rational problem solving- it is willingness to buy solutions that leads marketers to add features to the stripped down model 2) emotion fancy- the second type of features are those that capture the attention of the buyer . They are less funtional and more fanciful.

C) design and style so as to produce an artistic unit with functional structure and attractive shapeA designer has to give consideration to the functionality, aesthetics, ergonomics, convenience of operator, ease of repair, service and costs.D)packaging: packaging is the process of providing a container or wrapper for a product. packaging is done at three level

1.primary package it hold the product, for ex. Bottle2. secondary it holds the primary package (ex) cardboard box3. shipping package : (ex) corrugated box.E) branding it give products an identity- the brand is a name, term, sign, symbol, design or colour or a combination of them that helps identity the sellers product.

Augmented productMarketers should have the vision to look at the specific needs of consumers and also their related requirementAugmentation requires fortifying the product strategy with additional force drawn from other Ps. as a result buying and using the product becomes a pleasant and exciting experience.

Unit VDistribution trendsEmergence of new customer groups : more and more price conscious consumers are demanding the best value for the money they spend. They are now brand conscious and looking for exposure, explanation.High media exposure: highly active media is both boon and bane for marketers. Brands can be build over night and can also demolishes. The penetration of Tv, DTH- highlighted

3. It revolution: ITC e- choupals, I-shakti of HUL, kisan kendras in addition to internet kiosks of entrepreneurs, have opened up new windows for information. Seeking villagers.4. Consumer as seller a recent trend ushered in by HUL is the engagement of women in rural areas as channel participants. Earlier , Amway had introduced network marketing in which consumers acted as dealer.

Distribution strategyEnsure constant availability of advertised products in the marketIn India what ever is available at the outlet, influenced largely by the retailers advice and recommendationReaching to 6 lakh villages is a distribution nightmareDespite increasing in the number of consuming class- 68% of the rural market still lies untapped primarily due to inaccessibility.

Yet some regional brands like Ghari detergent, Anchor toothpaste and gemini oil have achieved rural reach from MNCs like HLL, colgateOne should know the key challenges1)large numbers of small markets2) dispersed population3) poor road4) multiple tiers( intermediaries)5) poor availability of suitable dealers

6) low density of shop7) inadequate bank8) poor storage system9) poor visibility on rural shop shelves10) poor communication poor reach of media.

Channels of distributionManaging such a massive sales and distribution network is in itself a huge task.It is estimated that over a million market intermediaries wholesalers, stockists, transporters and retailers.Urban areas have a variety of distribution outlets, ranging from large supermarkets to smaller retail stores.

Small shop alone are the back bone of the local retail networkThere are 5 layers of distribution channels for the movement of products from the company depot to the interior village marketsLayerchannel location1company depotnational/state level2distributordistrict3sub-distributortown4wholesalerlarge village5retailervillage

Most companies have direct representation up to level 3 in the form of sub- distributorTo achieve an advantage in rural markets, marketers need to maximize direct flow and control of stocks from layer 3 to layer 5The last layer is the most crucial as well as the most challenging- because existing distribution models fails to provide of products to the village.FMCG distribution has the maximum channel partners . In contrast, the durable goods channels has fewer partners

Evolution of rural distribution systemHistorically, the rural distribution system has included wholesalers, retailers, mobile traders, vans and weekly haatsWholesaling : more than 70% of the rural market is still beyond the reach of direct distribution- due to low density- rural market were neglected, company distributors focused mainly on the large number of retailers in urban areas

Rural retail spread: rural india accounts for 65% of retail outlet in the country . Restricts the variety and range of the products stocked. Distributors can cover most of the larger 2000 and population villages numbering around 1,10,000Retail premises: three out of four shops have less than 100 sq.ft area. Constraints (lack of sufficient space, inadequate power suppley, lack of proper storage system, )

Rural retail shelves: products are stocked in a cluttered and disorganized way. Slow- moving product covered with dust. Visibility of brands is very poor- due to the absence of proper rack and standStock turnover: the cash outlay of rural retail outlet is extremely low. So offer- combination of attractive margin, credit facility etcVan: is important place in the distribution and promotion of product. Eveready and JK dairy use vans for distribution.

Rural mobile trades: the last mile distributors is an age-old, direct to home, unorganized distribution system in rural IndiaHaats/shandies to play a vital role in the rural economyPublic distribution system with a network of about 4.76 lakh FPS is perhaps the largest distribution network of its type in the worldCo operative societies- the largest network of cooperative in the world consisting of more than 4 lakh cooperative .

Emerging distribution modelsThe SHG distribution model ( project shakthi), satellite distribution, syndicated distribution, the NYKS model, use of IT kiosks(e- choupal) PDS, cooperatives, petrol pumps, agricultural input dealers and other unconventional channels of distribution are recent initiatives .

SHG 10-15 women , with over 10 lakh SHGs across India. The initiatives taken by HLL,TTK prestige and TVS mopedsSatellite distribution (the hub and spoke system-strong and viable model)Syndicated distribution- 2 or more companies come together to form a syndicated trading organization, to jointly distribute a collective group of household product in rural markets by sharing distribution cost (ex) P & G to sell with Ariel, tide etc, Cavinkare- Amrutanjan pain balm.

NYKs haat distribution model: the Nehru Yuva Kendra Sangathan hires young people (18-35 ages) . Pay monthly stipend of Rs 2,000. assigned to 15-20 villages to organize awareness camps, cultural and sport events.