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A

DESSERTATION REPORT

ON

A study on the ruler marketing

Boom in India

Submitted in Partial fulfillment of Award of the Degree of Post Graduation diploma in management (2004- 2006)

UNDER THE GUIDANCE OF SUBMITTED BY

Mr. A.R. MISHRA Mirza Mohd Haider Faculty/ Mentor PGDM (05-07)I.T.S. Ghaziabad

Institute of Technology & ScienceMohan Nagar, Ghaziabad. 201007

(Affiliated to U.P. Technical University, Lucknow)

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Acknowledgement

The feeling of acknowledging something and expressing it in words are two

different things altogether. It is my weakness, but I honestly admit that when

we truly wish to express our warm gratitude and indebtness towards

somebody Concerned, I am always at a loss of words.

I gratefully take this opportunity to express my gratitude and indebtness to

my most able guide Mr.A.R.Mishra (Faculty) for his active interest, timely

encouragement, valuable suggestions and unceasing assistance and creative

criticism at every stage of this project.

Mirza Mohd Haider

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EXECUTIVE SUMMARY

Marketing today has completely transformed the nature and dynamics of business.

Marketing of products has taken precedence over the process of production itself.The

rural market is a significant part of our marketing strategy which enables us to help the

consumer link with our product. The main objective of the Dissertation is to through

light on scope of Rural Marketing in India. The Future growth potential in Indian Rural

marketing and Different strategies for competing in rural India was the area of study. It

will help in understanding the whole marketing strategy about Indian rural market.

It will also help in understanding, why Indian rural market is booming. Analyze the

opportunities & threads in Indian Rural marketing and work out different strategies for

competing in rural India.

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

newspapers, and journals. The Rural markets have been a vital source of growth for most

companies. For a number of FMCG companies in the country, more than half their annual

sales come from the rural market. My research has attempted to explore the key

opportunities and challenges of marketing in rural India. In the hunt for fresh pastures,

the vast and hitherto vastly unexplored terrains of rural India consistently beckon the

moolah seeking marketer.

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To be successful, multinational consumer goods companies need to be innovative,

dogged and culturally sensitive in developing rural marketing strategies. It is a testament

to both multinational and local consumer goods companies that they have been able to

innovate and address the challenges offered by Indias rural market to bring goods, to and

improve the lives so many people

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INTRODUCTION

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INTRODUCTION

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

help the consumer link with our product."

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

with its vast size and demand base offers great opportunities to marketers, we tend to

conclude that the purse does not stay with them. Nothing can be far from truth. Rural

marketing involves addressing around 700 million potential consumers, over 40 per cent

of the Indian middle-class, and about half the country's disposable income. According to

a NCAER study the consuming class households in rural equals the number in urban. and

awareness The recent NCAER publication "The Great Indian Middle Class" further

reveals that the Indian middle class consisted on 10.7 million households or 57 million

individuals of which 36 per cent lived in rural areas. No wonder, the Rural markets have been a vital source of growth for most companies. For a number of FMCG companies in

the country, more than half their annual sales come from the rural market.

Although with the substantial improvement in purchasing power, increasing brand

consciousness, changing consumption pattern and rapid spread of communication

network rural India offers a plethora of opportunities all waiting to be harnessed, the

marketers lack the in-depth knowledge of the village psyche, strong distribution channels

and awareness that are indeed the prerequisites for making a dent into the rural market.

Moreover, vast cultural diversity and vastly varying rural demographics, poor

infrastructure - be it inadequate roads and highways or the availability of telephones and

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electricity, low income levels, low levels of literacy often tend to lower the presence of

the corporates in the rural markets.

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

systematic psychographic analyses and an appropriate marketing mix to meet the

consequent challenges of availability, affordability, acceptability.

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

development programmes. There is a need to innovate and adapt products that suit rural

operating conditions. The rural consumers need to be educated of new concepts, relevant

to the environment and usage habits that will improve their quality of life.

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

work on economical packaging, dual pricing and special sizes of FMCG and household

products. IT can be considered as an important marketing tool.

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

depending on the wholesalers for distribution in the rural market as this has not proved to

be very effective and a proactive marketing medium.

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

mandis and on village and small town income levels and consumption patterns. They

need to learn how to use existing market places - haats, melas, and mandis - to arrange

live demonstrations of products. The ingredients for successful penetration into the hearts

and

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Wallets of village consumers include long-term commitment, cost re-engineering and

sustained innovation and specialized strategies.

I would like to mention that despite the hurdles that rural economy presents; corporate-

rural partnership can overcome these and bring about positive results for both the entities.

Partnership needs to extend beyond agribusiness. It is not only the FMCGs but also the

financial and insurance sector that needs to come forward. We are glad that today we

have senior representatives from the Banking and Insurance sector to discuss their

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

address the specific needs of the rural markets.

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RURAL MARKET 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, Indias rural market is indeed a large one; it consists of more

than 740 million consumers. 73% of Indias total population is rural. The rural

market consists of more than 12 crore 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.

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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.

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Marketers effort to reach out the rural market.

BUYING BEHAVIOUR :-

Buying behaviour of rural consumers has 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.

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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 .

Amazing innovator

With a queer psychology of purchase and usage, Indian rural market is still a puzzle to

marketers. In many a case, it stretches its imagination to find surprisingly different uses

of some of the products. And the red-faced marketers admit that they actually sell their

products in areas they would otherwise find difficult, simply because there are other uses

for them. For instance, in parts of Northern India, condoms are used by weavers as gloves

on their fingers to weave fine threads. Lubrication on condoms allows them fine control

on threads and protects their sensitive fingers. Buffaloes displayed at the haats for sale

are dyed an immaculate black with Godrej hair dye. Horlicks is used as a health beverage

to fatten up cattle in Bihar. In villages of Punjab, washing machines are being used to

make frothy lassi in bulk. Paints meant for colouring up the rich-smooth walls are used to

paint the horns of cattle to make identification easier and to achieve a long-term

protection from theft. Iodex is rubbed into the skins of animals after a hard

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days work to relieve muscular pain. The organizations in question might not be pleased

with such usage. However, their moneybags keep on jingling.

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.

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OBJECTIVEOF

RESEARCH

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OBJECTIVE

The over all objective of the Dissertation is light on scope of Rural Marketing in India

To know the scope of rural marketing in India

Future growth potential in Indian Rural marketing

Different strategies for competing in rural India

opportunities & threads in Indian Rural marketing

Scope:

It will help in understanding the whole marketing strategy about Indian rural

market.

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

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METHODOLOGY USED

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METHODOLOGY USED

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

and to adopt a well defined procedure for each and every research there is also a need of

methodology . Methodology of any research constitutes the selection of representative

sample of the universe or the general population ,application of the appropriate

research tools and the techniques.

The research involves the following steps:-1. DEFINE THE PROBLEM AND RESEARCH OBJECTIVE:-

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

Objective here to assess the scope of rural marketing

2 - COLLECT THE INFORMATION :-

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

magazines , newspapers , and journals

3- ANLAYZE THE INFORMATION :-

The next step in the marketing research process is to exact

findings from the collected data .

4-PRESENT THE FINDINGS AND CONCLUSIONS :-

As the last step ,the findings and conclusion of whole

research are presented . .

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INTERPRETATION

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CREATIVE RURAL MARKETING FOR RURAL INDIA

INTRODUCTION

Marketing today has completely transformed the nature and dynamics of business.

Marketing of products has taken precedence over the process of production itself. This

can be attributed to the fact that the new age consumer equipped with the potent tool of

information seeks more knowledge about the product, its features and its uses. And when

this information is presented in a creative and effective manner, it creates an everlasting

impression on the consumers mind and may even alter his perception of what he needs.

Marketers are forever seeking fresh challenges and scouting for more and more clientele

to be drawn into their sphere of influence. The urban consumer has always been

pampered with the most dazzling array of goods and services from every industry. Butthe urban market is fast shrinking due to saturation caused by the competition and the

growth rate over the past few years has consistently shown a declining trend. In the hunt

for fresh pastures, the vast and hitherto vastly unexplored terrains of rural India

consistently beckon the moolah seeking marketer.

Why go Rural?

There are various reasons why every industry is taking a very serious look at rural

markets

About 285 million live in urban India whereas 742 million reside in rural areas,

constituting 72% of Indias population resides in its 6, 00,000 villages.

The number of middle income and high income households in rural India is

expected to grow from 80 million to 111 million by 2007 while urban India is

expected to grow from 46 million to 59 million.

Size of rural market is estimated to be 42 million households and rural market

has been growing at five times the pace of the urban market

More government rural development initiatives.

Increasing agricultural productivity leading to growth of rural disposable income.

Lowering of difference between taste of urban and rural customers.

Many companies like Colgate-Palmolive, HLL, Godrej etc have already made forays

into rural households but still capturing the markets is a distant dream. Most

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marketers still lack in depth knowledge to analyze the complex rural market.

Characteristics of Rural markets

There are certain characteristics of rural India, which every prospective marketer

needs to be aware of before unleashing his product:

Low income influenced by seasonal fluctuations

Low literacy

Diverse customs, languages and social structures

Resistant to change

Price sensitive

High brand loyalty

Influenced by traditions

Moderate aspirational levels Quality Conscious

Low to moderate risk taking ability

These typical characteristics of the rural market make it evident that there are huge

challenges, which a marketer will face. These challenges need to be tackled using

appropriate strategies and proper planning. The major obstacles can be classified as

follows:

Poor infrastructure facilities, which hamper the effective distribution of

products and make the task of reaching the target consumer difficult.

Traditional media is ineffective due to illiteracy and non availability.

There is insufficient past research to provide some insight about consumer

behaviour.

Disposable income is highly dependent on good monsoons and a rich

harvest.

Varying linguistic and socio-cultural norms compel the marketer to vary

his marketing message for different parts of the same country.

Role of women in buying process is still not independent of family constraints.

Inadequate credit availability hampers the ability of rural retailers to carry

stocks.

Understanding the psyche of the rural consumer and gauging the complexity of the

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rural market has to be given utmost priority by marketer. Creative marketing

solutions need to be devised to combat these barriers.

Methods followed traditionally

Traditional methods of rural marketing make an interesting study and they ought to

be analyzed carefully to draw relevant conclusions. Conventionally marketers have

used the following tools to make rural inroads:

Use of few select rural distributors and retailers to stock their goods

but no direct interaction with prospective consumer.

Use of print media or radio but no alternate form of advertising for

promoting their brands

More focus on price of product but less attention devoted to quality or

durability Same product features for urban and rural setting with no

customization for rural areas despite differences in the market

environment.

Low frequency of marketing campaigns.

Little uses of village congregations like haats and melas to sell the

products.

More focus on men as decision makers and buyers.

Marketing in focus groups

To explain how the dynamics of branding works in different settings, let us take

example of four villages from various parts of the country. For our purpose we will

refer to these villages as our focus groups. We have taken a village each from Punjab,

Bihar, Kerala and West Bengal. As we have stressed earlier, for any product to be

successful in the rural parts of the country, a customized approach is necessary. So we

will start our analysis by describing the features of each village, define a product that

we wish to market in that village and then describe the marketing strategy for that

product.

FOR A VILLAGE IN PUNJAB

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There are various factors that need to be kept in mind so as to influence the buying

behaviour of the people of this village. Punjab has a rich culture and Punjabis are per

se very lively people. They believe in strong community relationships. Caste system

is not very strong and overall farmers are prosperous. Land is fertile and there is

abundant food and water. Literacy rates are almost equivalent to the countrys rate

and people are highly aware of the current trends and like to own goods that enhance

their status in the community. People are fond of eating and frequent celebrations are

part of their lives.

To understand how marketers need to approach this market, we have chosen an

electronic grill as the product. Traditionally a clay tandoor is used to cook chapattis,

non-vegetarian items etc in this region. We are offering electronic grill as a substituteto this. Characteristics that a marketer needs to highlight in this product are:

_ Modern way of cooking

_ A premium product, uses some imported technology

_ Control panel in Punjabi language

_ Smart looks, international styling

_ Faster cooking, heat controls and offers variety in terms of dishes that can be

cooked

_ Payment in easy installments

_ Convenient to handle and portable

_ Available in different sizes viz. 22 liters, 19 liters, 16 liters

In addition to using these promotional parameters, it has to be kept in mind that

disposable income is maximized during harvesting season so its the perfect time to

launch this product. Television and radio can be used to effectively promote the

product. In addition to this, demonstrations can be used to carry home the message.

As women are highly regarded in this region, so they can be roped in to educate the

local women about the benefits of using this product instead of traditional tandoor .

Also another way to promote this product can be to position it as a gift item during

marriages etc.

FOR A VILLAGE IN BIHAR

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Factors that need to be analyzed while entering this market are low level of literacy,

division of society based on economic background and caste system. There is no

dearth of water in this region and soil is also fertile. But there is lack of infrastructure

and modern industries. Rainfall levels are high. The law and order situation has

worsened in the recent past and the frequency of extremist violence has risen. The

people of Bihar are very religious and God-fearing. For recreational purposes, they

engage in folk theatre and enjoy music and dance.

To understand how marketers need to approach this market, we have chosen

multipurpose oil as the product. Characteristics that a marketer needs to highlight in

this product are:

_ Non- sticky quality of the oil

_ Contains herbal qualities _ Can be used for many purposes like hair massage, body massage and for

relieving stress

_ Special characteristics like cooling attributes

_ Available in variety of fragrances

As the income level in this part of the country is very low, so small and convenient

packaging is very important. Moreover to help them to relate to this product,

impression of their local Madhubani painting can be used on sachets or bottles. Also

the product name has to be traditional to which villagers can relate to for example

madhusudan or sanjivini. For promoting the product , some movie star should be used

as villagers aspire to be like them and thus emulate them.

FOR A VILLAGE IN KERALA

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A typical village of West Bengal has characteristics like low amount of agriculture,

coastal areas with fishing being the major source of income for the locals, generally

people are poor and land holdings are very small, literacy rates are very low. Staple

diet is rice and fish. People are very proud of their language and culture. We have chosen

dairy whitener as the product to demonstrate the approach that a marketer needs to take to

make inroads in this type of market. The main brand promise that is offered to the

consumer is low pricing and economy of the product Cost of milk in a cup of tea is

around Re 1. But a 50 gm sachet, which is priced at nearly Rs 6.50, can be used to make

nearly 25 cups of tea. So cost of milk used comes down drastically to nearly 26 paise per

cup. Moreover sachet offers convenience of use and can be used anywhere. As there is

high degree of humidity in that region and people cannot afford refrigerators, so this product helps to eliminate the problem of proper storage.

Analysis & Opportunities

As it is clear from the examples taken, for the product to be successful in rural

market, it has to be customized for that particular market. Each product needs

individual attention and success in one market cannot be emulated in other markets.

Most important factors that work for a product are right brand promise that is relevant

for the local population and discreet brand visualization. Brand visualization would

include factors like name of the product in local language, color combination

according to local settings and a tag line, which delivers the message that is easily

understood by the people. Companies need to identify the opinion leader in each area

and target him as the first point of contact for villagers. One potential area that

companies need to tap is advertising the local events like bullock races, melas or

festivals. Another way is to advertise in places where people commune like hand

pumps, ponds or haats .

Innovative uses of products

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Time and again it has been proved that whatever may be the level of research

involved in the market study, rural consumers behave in the manner that is totally

unpredictable. They devise such innovative uses of a product that even surprises the

companies. Some of the following examples will support this are:

_ In a village of northern India, weavers used condoms to cover their fingers

while weaving. This not only helped to avoid cuts on the fingers but also the

lubricant helped in easy movement of the thread between the fingers.

_ Godrej hair dyes are used in some villages to dye the buffaloes. This made

them look younger and thus fetched better price at the cattle fairs.

_ Horlicks was added to the feed of the cattle to fatten them and thus improve

the milk producing capacity.

_ Asian paints found that in some villages paints were used to color the hornsof the cattle for easy recognition.

_ In the villages of Bihar, Iodex was used on the tired limbs of the cattle,

returning from the fields in the evening so that they are fresh the next day.

All these examples show the there is tremendous potential for the existing products in

the rural areas, and companies need to look beyond the obvious and critically analyse

every indication that rural markets give, be it poor sales or high sales volumes.

Future Outlook

Considering the magnitude of the task at hand with the companies, it makes sense for

non-competitive companies like HLL and LG to make a joint effort to penetrate the

market. They can use each others distribution channels to leverage their brands. Also

considering the poor awareness levels of the people, competitors like HLL and P&G

should join hands to avoid the product proliferation, which results in confusing the

consumer. Rural consumers have a very high level of ethos so all the care should be

taken not to hurt them in any form of advertising. Moreover every effort should be

made by the companies to promote the my brand feel in the minds of consumers.

This can be achieved by connecting the local industries of that place and if possible,

Cracking the Rural Market in India

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To a marketer, India's rural market presents a challenge like no other. While marketers

salivate at the prospect of making their marketing millions in rural India, none has yet

been able to understand what makes rural India tick. Harish Bijoor says that so far

marketers have sought to thrust cornflakes and dog biscuits alike at rural Indians. He

makes a plea to preserve the sanctity of Rural India and discover commerce and sense in

it all - by creating brands that keep in mind rural imperatives. The rural market for brands

is a powder keg of an opportunity waiting to be explored - not exploited!

I spent the first four years of my career entirely in rural markets. I used every mode of

travel to enter into the gut and gore of the slice of market I had the privilege to look after.

The bullock-cart, the camel-driven cart and the boat were all means to penetrate a terrain

no MBA in his right mind wanted to. Dirty rat-infested lodges, police-raids that had me

ashamed of my neighbours in the rooms around and food that had me running to the

nearby field even in broad daylight are tales my early life in the rough and tumble of

Indian marketing is made of. These four years taught me one thing clearly! There are two

Indias! Real India and Virtual India!Real India was this piece of terrain I sold tea, coffee,

spices and condoms to. It was a big chunk of the land mass. It occupies bulk of the

landmass and houses 742 million people as of now! It is populous, multi-cultural and

multi-faceted. India started here. This is the residence of the arts, the culture, the food, the

ethnic fashion, the agricultural practice, the nuance of language and diction and

everything else that we in Urban India have morphed to our needs as of today.

Remember, in the very beginning there was no urban at all! It was all rural! All real!

Virtual India was where I came from. Virtual India was where I was shaped into a being

capable of commercial, social and cultural existence. The size of pie of land I came from

was an urban island of sorts. An aberration even! The populace that lives here

compriseda fourth of the size of the population of India on the whole.

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There sure was a Matrix at play! While politics of the nation was governed largely by

what Real India had to say, government policy did not necessarily tread the very same

path. There was this huge gap in understanding what was right for the masses and what

was politically expedient. In the bargain, policy was hijacked by the politician. While

politics was the domain of the politician and the bureaucrat that ran the nation in many

ways, commerce was largely played in the very same way. Till the wave of liberalization

set in. And when this happened, Indian businesses actually steered Virtual India. Whats

more, Virtual India took charge of the way Real India was to be run as well.

And in Virtual India, the businesses that dictate the soap that needs to be placed in your

toilet and the detergent in your bathroom and the cooking gas in your kitchen, actually

ran Real India. Real India is today run by Virtual India. The largest part of land-mass and

the larger part of the population base is controlled in many-many ways by the way the

urban man in urban India wants it run. A true blue hegemony of the Urban Indian!

Remember again that all marketing men and their kin in advertising, market research and

branding are mostly urban souls. Many in disguise as well! Real India (read as: rural

India henceforth) is fast morphing to the needs, wants, desires and aspirations discovered

by the urban man. Television as a medium has created awareness, a raging interest in

brands, a latent desire to consume and possess what is shown on the not-such-an-idiot-

after all-box! Television has spurred on consumptive action and has acted as a brand

consumption catalyst in many ways. And television has continually shown us images that

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make everything Urban desirable and everything Rural as something that is basic.too

basic!

Look keenly at the statistics that tell us the growth of urbanisation. In 1951 we had 2,843

Urban Agglomerations(UA) and towns. Today, the number is close to 4000! The Urban

population in 1951 stood at 17.3 per cent of total. Today, the number is a proud and

unidimensional 27.8 per cent! In the last fifty years, we have had what I would call

creeping urbanisation. In the next fifty, it is time to expect a galloping rate! Thanks to

televisionand thanks fundamentally to the Brand movement, which is poised to make a big movement in the heart and hearth of the rural dweller! The two Indias mean two sets

of peoples. The rural man, woman, child, dog and cat for a start! Remember, dog-food

and cat-food companies will definitely

want to invade the vast rural hinterland

sometime in the future for sure!

How then does one go about creating

brands for the rural person in the rural

dwelling? There are two ways really.

The first is the insensitive way most

marketers

have adopted to date. The second is a more sensitive rendering of what marketers and

brand-evangelists in the future could adopt. The first is really the easy way. Pioneer

marketers in rural areas used it to good advantage. Take the urban brand,

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multi-variable format. But why? Is this a return to socialism? A form of retro-appeal? Of

retro-fashion? No, the logic is strong enough for us to pursue the new rules of branding

for rural India.

For one, take the case of the fertilizer and pesticide situation. In the very beginning, all of

India was organic. We grew everything we did to cater to a population size that was

manageable without the use of pesticides and fertilizers. Natural organic manure and very

innovative natural practices that used plant and animal waste distinguished the

agricultural practices of India. And then came the revolution everyone wanted. The menin the Gandhi caps (except Gandhiji of course) wanted a bigger yield from the land and

the cow and the factory alike. Practices morphed and India became yet another dumping

ground for the pesticide and fertiliser that came from far and near. The countryside

morphed. Yields doubled.

The year is 2003! The world is discovering health and the joy of consuming the organic

produce. Its back to naturethe pure way! And India has lost it! Imagine a situation

where India could emerge as a 100 per cent producer of the organic product! And

remember still that the organic produce today commands a premium in the key

consumption markets of the world! We lost it! The rural terrain we still boast of can be

preserved. I seek a sensitivity among the marketing man. A sensitivity that promises not

to harm commercial intent, which is the salient driving force of all business intent.

Sensitivity that could well carve out for the marketing man a commercial space one can

be truly proud of.

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The case I present in this piece therefore, is a case that seeks to preserve the sanctity of

Rural India and discover commerce and sense in it all! A plea to really stop this one-sided

movement that seeks to make the rural man a consumptive animal of cornflake and dog

biscuit alike! Create brands keeping in mind rural imperatives then. Here goes the ideal

E - MARKETING IN RURAL INDIA

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Abstract

Modern information and communications technologies (ICTs) and web based marketing

of agricultural produce hold great promise for the socio-economic development of rural

hinterlands in India. However, if they are to serve the `unserved and spawn innovation

at grass root level their implementation must be carefully localised. This paper explores

several models of ICT deployment and information design issues which have been tried

in various parts of the developing world in the context of agricultural marketing over the

web and uses that learning with field experience from a live project. The flexible systems

framework is found appropriate and useful to design the next action agenda.

The anytime-anywhere advantage of e marketing leads to efficient price discovery and

offers economy of transaction for agricultural trading. This attracts many rural

developmental agencies to deploy websites for marketing agricultural produce. But in

spite of a core value proposition and significant investment by the Indian

government/NGOs and commercial agencies in developing such portals, many have

failed. Internet traffic on these websites is either very limited or none at all. Yet there is a

lack of empirical studies on the modes of their failures.

This study using the SAP-LAP methodology examines the experiences of a number of

internet portals from India and other countries engaged in rural marketing or

disseminating rural development information, with usability measures derived from

farmers and traders and those suggested by researchers. The findings are used in

developing a conceptual framework for e-marketing info design for agricultural market in

rural northern India for the portal (DM).

Situation

Common wisdom has it that the advent of modern information and communication

technologies (ICTs) such as telephony or the internet hold unprecedented opportunities

for rural development. Researchers, policymakers and entrepreneurs alike frequently

claim that ICTs represent one of the most powerful tools in the struggle against poverty.

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The significance of the Web in disseminating information and communicating this

effectively to the targeted user has been sufficiently debated. Most experts agree to it that

the Web will have a great impact on the way rural marketing would be conducted in the

future, yet there has been little research towards exploring the effectiveness of the

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

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

areas of information provision through such websites maintained by government

departments and agencies, private profit-motivated as well as non-governmental

organizations (NGOs), and to identify the barriers to communication. The results offer

significant implications for researchers and practitioners interested in development of

portal information structure for Web development, multi-dimensional communication,electronic commerce networks and e-commerce trading platforms for rural marketing.

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

ICTs may serve the development process. For instance rural entrepreneurs can benefit

because ICTs help to improve access to markets or supply chains and provide a broader

base for decision-making, thus making risk more calculable. Moreover, many local

communities have experienced that ICTs have increased bottom-up participation in the

governance processes and may expand the reach and accessibility of government servicesand public infrastructure. In Andhra Pradesh, Internet-based Integrated Citizen Service

Centres allow for electronic bill payment, issuing of certificates, permits and licenses; or

access to public information. The electronic village project of M.S.Swaminathan

Research Foundation (MSSRF) in Pondicherry received the Stockholm award for its

promise.

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

developmental impacts of ICTs. Moreover, in many especially rural areas, the private sector is yet to invest significantly in ICT experiments (except for a few like ITC

or Tata Chemicals) because of lack of experience with rural markets or low purchasing

power of the local population. This means that, if ICT access is to be expanded, public

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

be considered. In many areas, there are serious questions about how much money

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policymakers should spare for the build-up of ICTs instead of investing further in potable

water supply, roads, electricity or other physical infrastructure projects.

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

best value for money, and how the limited resources that can be spent on it can be madeto best suit the particular needs of rural India. A number of `models have so far been

tried.

One of the most famous projects of successful ICT application for development is the

Grameen Village Phone system, undertaken by Grameen Telecom (a member of the

Grameen Group). The project aims at ultimately spreading phone access to the over 100

million inhabitants of Bangladesh who are so far unwired, made possible by combining

the Grameen Banks expertise in village-based micro-enterprise and micro-credit with the

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

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

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

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

attempts to combine phone access with access to the Internet is that of the so-called

Telecentres or Information Kiosks or the recently introduced Infothela of MLAKLH. An

Infothela is a common point of access for multiple users (often an entire community),

providing a range of ICT services including Internet, fax, phone, e-mail, word processing,

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

matrimonial matchmaking).

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

service provision and means of funding. In Peru, the establishment of numerous `Cabaas

Pblicas created one of the highest concentrations of public internet access and a

significant reduction in prices. Nevertheless, the experience with telecentres has so far

been a mixed one. In numerous cases, usage, particularly of PCs, has been lower than

expected or commercial viability was not attained. Of the over 70 Community

Telecentres established since 1997 by the South African Universal Services Agency, only

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40 per cent remain open today, with only 3 per cent making enough money to cover

costs.

Buried at the end of the World Bank policy paper on the Networking revolution:

opportunities and challenges for developing countries ( June, 2000) is an account of multipurpose community telecentres (MCTs) in rural Mexico. It turns out that of twenty-

three MCTs built in rural Mexico, only five were working two years later. This is a

failure rate of 80 percent.

The policy paper comments, Problems encountered included insufficient maintenance

funding, inadequate political interest and will, and cultural constraints which hamper

community interest in the projects. The paper gives no hint why political interest and

will might have been inadequate and why community interest might have been

constrained by that holdall excuse for failure, culture.

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

design and attention to sustainability issues in the development of such programs.

Actor

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

First, one might distinguish between the small private sector cyber cafes on the one hand

and bigger, donor-funded telecentres like e-Seva in Andhra Pradesh or e-Village in

Pondicherry on the other hand. Smaller, privately run cyber cafes are often financially

self-sustaining but are thus usually restricted to areas where they expect to be viable

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

poor. They are also unlikely to be able to provide local content. By contrast, larger,

often externally funded telecentres are rarely financially sustainable but can focus more

on specific development aspects, including access specifically targeted at ruralcommunities and the poorest in general, as well as a focus on training.

A second distinction is according to the institutional context they are embedded in. This

often has a significant influence on the developmental impact of telecentres.

Commercial telecentres and commercial franchises (like e-choupals of ITC) are usually

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closest to commercial viability but, as mentioned, are unlikely to have an impact on the

poor outside the economic circle of the e-Choupals. Telecentres run by or with the

involvement of developmental NGOs are more likely to target poor and marginalised

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

creation, provision of public goods without which ICT access would be of limited

developmental use. Telecentres in village schools for example as another alternative have

the significant advantage that for their establishment an existing physical infrastructure

only has to be extended and some of the ICT-relevant training can be cost-effectively

integrated into the mainstream curriculum of the educational institution. This partnership

has successfully worked in the DM project.

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

voice mail systems, as have been set up in Brazil. These can provide individuals with

their own telephone number and access to a voice mailbox. In other words, the individual

need not possess a telephone but can receive calls to a voice mailbox using his/her

personal PIN. Extending this idea to text e-mail access, a South African company assigns

e-mail addresses to every Post Office box address in the country, thereby providing

electronic mail indirectly to around eight million South African households through

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

identification number. The Postal Department in India has now taken up a similar programme. .

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Thus there are a number of alternatives and apparently mutually exclusive business

models for ICT implementation in Rural India.

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

applications (like e choupals in Northern India or voicemail service in Brazil or matrimonial matchmaking service in Tamil Nadu) will succeed on the other hand

following the success model of the world wide web itself one may suggest that if an

infrastructure is created and user friendly appropriate interfaces are continuously

accessible then local rural folks will develop their own applications and Information

Kiosks or Infothela will survive.

The Digital Mandi Project conceived as an electronic trading platform for agro-

commodities of Northern India and meant to run as a core application on the mobileInfothela faced additional problems.

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

that impede a users participation in the activities on a website. The barriers may be

actively imposed by the architects and website designers or they may be allowed to

continue simply through their lack of action or lack of understanding of the critical user

conditions. Such critical user conditions may arise due to particular demographic,

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

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

al, 1973), user response, user satisfaction (Doll et al, 1988) and many other aspect of

usability have been studied in great detail by researchers. But interactions with focus

groups at various agricultural market places around Lucknow-Kanpur showed the need of

a more detailed study on Information communication barriers on a more localised set of

priorities.

Learning

A general framework for web design keeping in mind the human-computer interaction

theories (Pirolli, 2001), web site usability principles (Huang, 2003), information intensity

paradigm (Palmer and Griffith, 1998), e-customization models (Ansari and Mela, 2003)

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and heuristic evaluation models (Agarwal and Venkatesh, 2003) is already in place and is

assumed to sufficiently address the question of defining broad guidelines for designing

any successful website. It is therefore, assumed that a website with relatively high-level

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

to particular user groups, and tailored to specific geographical needs should be

universally successful and hence, accepted in India too. However many such efforts have

apparently failed to achieve their targets.

The challenges to agricultural website usability for rural marketing in India arise mainly

because of the highly specific local needs and the great diversity in local conditions. The

major challenges are

Poor literacy rate low use of textual information

Remote village locations - physical distances compounding problems of

lack of proper price information and habitual dependence on middlemen.

Absence of alternate media for dissemination of info.

Absence of info in vernacular languages and multiplicity of languages.

Cash crunch of farmers, immediate cash transaction system and reluctance

of banks to provide soft loans to farmers. Economic, low-cost solutions - any technology solution aimed at

benefiting the masses in rural India must be affordable and low-cost so

that the perceived economic benefits of such an endeavor are much more

than the cost of switching over to a different technological solution.

In the absence of timely and correct information about prices, arrivals and market trends,

compounded with the problems of low cash-at-hand and proper advice, farmers areforced to sell their produce at lower-than-expected rates. The result is that the benefits of

the green revolution have not really percolated down to the farmers.

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Action

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

the ICT access projects that are particularly successful from a developmental viewpointThis means, for instance, to somehow convey the relevant (local) content provided

through internet access to the largely illiterate rural populations of developing countries

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

A model that inspired the Mandi team was The Kothmale Community Radio in Sri

Lanka. This project has combined community radio and Internet access. It has a leased

line connection to the Internet, and in the so-called process of radio browsing

programme presenters browse the Web in the studio on behalf of listeners (who provide

requests/input through phone or post). Relevant experts from the community then

interpret the information for listeners. Another good example of the creation of relevant

local content are the Infoshops in Pondicherry, India. After information requirements

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

comprising government programs for low income rural families; cost and availability of

farming inputs such as seeds and fertilisers, grain prices in different local markets; a

directory of insurance plans for crops and families; pest managements plans for rice and

sugar cane; a directory of local hospitals, medical practitioners and their specialties; a

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

animal husbandry programs. All these preceding experiments contributed to the Digital

Mandi design.

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

website design, which encompasses both the content creation and information design.

All website design issues aim at providing certain requisite features in the website.Jonathan Palmer (see references) has contented that website success depends on such

factors as website download delays, navigation, content, interactivity and responsiveness.

The inclusion of these features into a good website can be addressed as (a) content-

related issues, (b) information design issues and (c) communication design issues.

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

the content-creation and context-appropriateness issues only. While website designing

objectives for other purposes may be fulfilled by creating a good fusion of relatively

high-level content with fine design features taking care of the issues mentioned above,

they would certainly fall behind their objectives when considering agricultural websites

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

characteristics of rural markets in India. These websites are therefore bound to fail unless

delivery services for agricultural information can be effectively integrated with good

information design models and grass root innovators/ social activists agenda.

Performance

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

of a number of desired features in a website leads to higher user satisfaction. Such

features are broadly aimed at satisfying one or the other of the following immediate user

objectives:

a) Ease of access.

b) Up-to-date content.

c) Layout, design, consistent themes.

d) Easy navigation.

e) Higher interactivity.

f) Access through multiple media.

g) Higher use of non-textual information.

h) Multiple languages.

i) Lower cost of transaction.

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

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The Digital Mandi project now wants to integrate an ethnographic approach with flexible

systems methodology to focus on the communication design issues for web-portals

specifically devoted to rural marketing in India. The specific research questions are:

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

Hypotheses (a), (b), (c), (d) and (e) are tested to find answer to this question.

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

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

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

specific user groups?

What local language solutions are to be provided through which

media?

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

educated, untrained user?

What makes ICT relevant for the unserved rural communities?

Hypotheses (g), (h) and (i) are being tested against this group of questions.

Conclusion

The general results of this study are presented in a tabular form. The list is not

exhaustive but can be assumed to be a representative sample of the most-widely used or

known (by search engines) for rural marketing and the general responses of researchers.

The basic website layout varies from the single-page, no partition, no frames approach

to the four-partitions (a top main menu, a left/right lower-level menu, a bottom links bar

and a central space) approach which is also the most-widely accepted layout in the

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corporate websites (Huang, 2003). More than 50% of the websites provide up-to-date

content. A website worth mentioning is www.agmarknet.nic.in, a government-promoted

STRATEGIC ISSUES: A PEEK INTO THE RURAL MARKET

Here the rain gods still play havoc with ones dreams. The dusty village path winds past a

cluster of slumbering cottages and leads one to a weekly rural bazaar or haat, brimming

over with din, bustle and transaction. This is where the real India resides. Telephone is a

luxury here. Electricity, if at all, comes here only in fits and starts. And a delivery by road

may take any stretch of time.

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

explosion, people are becoming conscious about their lifestyles and about their rights to

live a better life. Brand consciousness is on the rise. This, clubbed with increasing

disposable income of rural households, has made the rural consumer more demanding

and choosier in his purchase behaviour than ever before. And the dusky village damsel

has now learned to pine for a satin rose .

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

Indias 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 Indias buying potential lies in its villages. Thus for the countrys

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 sizeablechunk of its marketing budget to target the rural consumers.

Increasing brand awareness

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

There is a r Increasing brand awareness

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

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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.

FMCG CONSUMPTION

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

Parle foods and Malhotra Marketing have carved inroads into the heart of rural markets.

Various categories of products have been able to spread their tentacles deep into the rural

market and achieved significant recognition in the country households. And, in the

process, the regional brands, local brands and the other unbranded offerings got displaced

by the leading brands.

Company Household penetrationHLL

Nirma ChemicalCompany Household penetration

HLL

Nirma Chemical Works

Colgate Palmolive

Parle Foods

Malhotra marketing

88%

56%

33%

31%

27%

Category% volume of local

brands/unbrandedWashing cakes/bars

Tea

Salt

88

56

33

Of the expenditure on consumer goods in rural household, approximately, 44% is on food

articles such as biscuits, tea, coffee and salt, 20% on toiletries, 13% on washing material,

10% on cosmetics, 4% on OTC products and 9% on other consumables. A number of

category products have established themselves firmly in the rural households.

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

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that a larger proportion of the purchases made in rural market can be attributed to local/

unbranded players. Surprisingly, however, the unbranded/local component contributes to

a substantial portion of the volume of only a few of the highly penetrated categories.

Focus on urban categories

CategoryCategory

Penetration

Brand with highest

penetrationToilet Soap

Washing cakes/Bars

Edible oil

Tea

Washin powder / liquid

Salt

Biscuits

91%

88%

84%

77%70%

64%

61%

Lifebuoy

Wheel

Double iran mustard

Lipton Taaza Nirma

Tata Salt

Parle G

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

Ponds 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 Ponds 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

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Skin creams

Talcum Powders

18%

15%

In the skin care category, Fair & Lovely fairness cream, with a penetration of 75%,

accounts for 60% of the skin care market in rural India. It also enjoys the undistinguished

patronage of 58% of its user households. Both Ponds 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 usersSurf

Ariel

Pantene

Denim

6.2%

4.5%

1.8%

1.8%

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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 Ponds

Dreamflower talc and 18% of Pantene using households use Clinic shampoo as well.

AMAZING INNOVATOR

With a queer psychology of purchase and usage, Indian rural market is still a puzzle tomarketers. In many a case, it stretches its imagination to find surprisingly different uses

of some of the products. And the red-faced marketers admit that they actually sell their

products in areas they would otherwise find difficult, simply because there are other uses

for them. For instance, in parts of Northern India, condoms are used by weavers as gloves

on their fingers to weave fine threads. Lubrication on condoms allows them fine control

on threads and protects their sensitive fingers. Buffaloes displayed at the haats for sale

are dyed an immaculate black with Godrej hair dye. Horlicks is used as a health beverage

to fatten up cattle in Bihar. In villages of Punjab, washing machines are being used to

make frothy lassi in bulk. Paints meant for colouring up the rich-smooth walls are used to

paint the horns of cattle to make identification easier and to achieve a long-term

protection from theft. Iodex is rubbed into the skins of animals after a hard days work to

relieve muscular pain. The organizations in question might not be pleased with such usag

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POWER BRANDS, THE NEW FMCG MANTRA

"The power brands strategy has worked very well for us." Adi Godrej, chairman, Godrej

group.

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

both topline and bottomline growth in this quarter." D Sundaram, finance director,

Hindustan Lever Limited, after announcing Q3 2005 results."We benefited by dropping brands with low profit margins or moving out of categories

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

Industries.

Three men, one voice. Indian fast moving consumer goods companies like HLL, Godrej

Consumer Products Limited and Marico Industries are completely sold on the concept of

"power brands". But in their rush to put their best brands forward, are these big

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

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

portfolios on the basis of the power brand strategy. How have they fared? And what does

the future hold?

Why power brands?

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

bouquet of 110. Of these select brands, the top five brands of the company contributed

more than Rs 3,000 crore (Rs 30 billion) to the company's turnover (close to 30 per cent

of sales). So what did it take to be a power brand? In a nutshell - size, brand strength,

uniqueness and growth potential. The thinking in HLL? Helping brands grow under the

prevailing market conditions required scale.

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

were beamed on television every month, while stock-keeping units at retail outlets had

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increased by over 40 per cent, in just three years. Unfortunately, for the most part, shop

sizes remained the same. Which meant in-store displays - critical for impulse purchases -

suffered. Even the plethora of television commercials wasn't helping the FMCG cause: it

was difficult for brands to stand out amidst the clutter.

For others like Marico, GCPL or Dabur, too, "getting more from fewer brands" became

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

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

that strategy made eminent sense. Around the same time, Marico decided to exit from

slow-growth, low margin sectors such as Sweekar edible oil and Sil jams. Instead, it

chose to stick with brands like Parachute, Saffola and Hair & Care. Was the approach

correct? Arindam Banerjee, professor and chairman, marketing area, Indian Institute of

Management, Ahmedabad, agrees cautiously. "Power branding counters brand dilution by allocating organisation resources on lesser but more secured marketing investments,"

he explains. Adi Godrej is more emphatic. "[Power branding] is not to prevent dilution of

brand, but to prevent dilution of the company's focus. If a company has 10 brands and

tries to support all of them, focus on the important brands would be diluted."

Top to bottom

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

aren't too bullish about a power brands strategy's impact on the balance sheet.

"Power brands will have an impact on the bottomline of companies, but not necessarily

on the topline growth," says Nirmalya Kumar, director, centre for marketing, and co-

director, Aditya V Birla India Centre, at London Business School.

Jagdish Sheth, Charles H Kellstadt Professor of Marketing, Goizueta Business School,

has a slightly different viewpoint. "You may have problems in the short run, but these can

be ironed out in the long run. Introducing brand variants will help."

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

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

Over the same period, turnover went up less than 4 per cent, from Rs 520.47 crore (Rs

5.2 billion) to Rs 603.46 crore (Rs 6.03 billion).

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

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

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Rs 671.08 crore (Rs 6.71 billion) to Rs 953 crore (Rs 9.53 billion), profits increased from

Rs 49.32 crore (Rs 493.2 million) to Rs 73.79 crore (Rs 737.9 million).

For its part, HLL has been plagued by flat or declining growth for some time now.

Between 2001 and 2004, profits plunged more than 22 per cent {Rs 341 crore (Rs 3.41

billion)}, while turnover dropped by Rs 892 crore (Rs 8.92 billion).

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

contributed 24 per cent of HLL's sales in 2004, with sales value increasing marginally

from Rs 2,089 crore (Rs 20.89 billion) to Rs 2,380 crore (Rs 23.8 billion). But sales

volumes had actually declined, from 384,000 tonnes in 2001 to 368,000 tonnes,

indicating that the growth was mainly on the back of price hikes.

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

brands (Surf, Rin and Wheel). Sales volumes increased from 892,000 tonnes to 930,000tonnes, but sales value crashed from Rs 1,975 crore (Rs 19.75 billion) to Rs 1,872 crore

(Rs 18.72 billion), thanks to the price wars with Procter & Gamble.

The lesson? Power brands may be "powerful" to the company or the retailer, not

necessarily to the consumer. Not everyone agrees. Counters a senior HLL executive,

"The impact was because of the migration phase to power brands - sales of non-power

brands declined." He adds that the company's power brands strategy will boost both

topline and bottomline growth in the future.

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

may be a power brand for HLL, but it doesn't face the same enemy in every market in the

country: if Wagh Bakri rules in Gujarat, Girnar and Sapat vie for the top honours in

Maharashtra.

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

comes to preferences. That's a problem GCPL, too, faces; at present, rural sales account

for just 30 per cent of the Rs 603.46 crore (Rs 6.03 billion) company's sales, but the

company expects that figure to go up substantially in the coming years.

Marico's Mariwala agrees that penetration is difficult to achieve with a power brands

strategy. Consequently, segmentation takes a hit, because you don't have 20 brands for 20

different people.

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"As a brand grows larger, it simply cannot mean everything to everybody," agrees

London Business School's Kumar. There is a way out, though. Kumar points out that a

power brand strategy allows a company the luxury of targeting fewer segments, but the

more profitable segments.

HLL found another way. In addition to its 30 national superpowers, it also has 10

regional jewels. HLL executives point out that with fewer brands on which to focus, the

company will be able to manage its marketing spends better.

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

soap Godrej No.1 entered the sub-popular category in 1998-99, it had only one offering:

rose.

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

markets. The rose variant finds takers in northern states such as Uttar Pradesh, Bihar,Punjab, Madhya Pradesh and Rajasthan.

One, two, three, you go free

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

urban shopping landscape renew hopes. Most analysts expect shoppers to throng to malls

and hypermarkets, for everything from electronics and clothing to groceries.

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

outlets, power brands could be an answer. According to HLL, at present just 3 per cent of

Indian customers shop through organised retail outlets. The average in Asia -- 30 to 35

per cent.

How will organised retail help power brands? In developed markets, all brands, leaving

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

free ticket to the shelves as the third brand, it is important to be a No. 1 or No. 2 in a

category.

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

companies in foreign countries. Sheth refers to P&G's experience in Canada. In that

market, rival Unilever was a market leader with loyal customers, while P&G wasn't doing

all that well.

When Wal-Mart entered Canada, it changed the complexion of the market. Wal-Mart

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

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

companies will reap better benefits," says Sheth.

That's because organised retail formats will provide more display space to power brands,

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

That's not happening at present. Remember, more than 90 per cent of grocer shops in

India are cubby-hole outlets.

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

The answer: it depends on the category, the market and the consumer. Now, where have

we heard that before?

Power brands in perspective

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

partner. When a P&G executive paid a visit to Japan, he saw the respect and importancegiven to retailers -- something that was not happening in the US where there were several

layers in the distribution channel.

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

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

P&G started power brand projects with Wal-Mart, K Mart and others.

The principle was simple. Brands were rationalised to support the super retailer. In 1999,

P&G's arch-rival Unilever decided to focus on 400 out of its 1,600 strong brand portfolio.

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

decided to spend on only 30 brands and 10 regional brands from its original basket of 110

brands.

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

Godrej, Britannia, Dabur and Marico.

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

Special, Antiquity, Bagpiper, McDowell No 1, Signature and 10 other brands as power

brands.

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MARKETING MIX FOR RURAL MARKETING

Product

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

Packaging. Now the rural customers are usually daily wage earners and they dont have

monthly incomes like the ones in the urban areas have. So the packaging is in smaller

units and lesser-priced packs that they can afford given their kind of income streams.

Then a thing like the colour that attracts him is also important.

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

powder packaging. Firstly - it made sachets as was required by their income streams.

Secondly - since many households dont have proper bathrooms and only have a window

or things like that to keep such things -- it was wise to cap this sachet for convenience of

storage while use. So this is what they did.

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

the rural customers. We need to use different models and means to reach them as what

appeals to the urban customer may not appeal to him due to varying lifestyles. The

communication and the design of it are also different as what attracts one need not attract

the other as well. So again, even if the media reaches him, there might not be an impact

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

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

concept of supermarkets coming up in urban areas is not the same as in rural areas. There

the concept of Haats is more prevalent.

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

Here's a classic example which illustrates this perfectly: CavinKare's Chik shampoo in

50-paise sachets - a huge success which redefined shampoo usage and forced giants such

as HLL and P&G to follow suit - saw the idea germinate from the grassroots. Literally.

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

for washing their hair. The company field force found the reasons - the rural consumer

had not heard of soaps damaging hair, and in any case, hair was being washed by soaps

for generations by their predecessors. Interestingly, the rural consumer were aware that

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

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

shampoo was conceptualised then, and has since been a runaway success in rural markets

Keep Products Simple and Functional

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

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

products that cater to the needs of rural consumers who demand quality products at an

affordable cost. This requires substantial R&D to better understand consumer behavior

and preferences.

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

India in an attempt to capitalize on a culture where hair grooming is taken extremely

seriously by women.While rural women may wear faded saris and little jewelry, few step

out without ensuring that

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their hair is in place. Consumer goods companies introduced a transplanted product from

developed markets, the 2-in-1 shampoo/conditioner. Companies thought that women

would be attracted to this product because it was cost-effective, however, initial sales

were dismal. What companies failed to recognize is that most rural consumers had

previously never used shampoo and did not value or understand the full benefits of

conditioner. Several years back, Hindustan Lever focused on product development

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

indicated that a prevailing consumer habit in rural India was to use soap for hair and bodycare. Rather than try to change instilled consumer behavior, product developers focused

on creating an opportunity. Consumers wanted a product that was convenient and low-

cost. The result was a new 2-in-1 soap, a product that cleans the hair and body, and is

targeted towards consumers in rural areas.

MODEL VARIANT:-

Models developed specifically for the rural market have found more takers in the market .

For instance, Motorcycles that are designed to take on the rig ours of rural roads have

succeeded more in the rural market.

COLOUR VARIANT :-

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

products , colour may matter vary much . firms can exploit this fact to their advantage .

For example , ASIAN PAINTS understood the substantial difference between the rural

buyer in the colour preference .

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

different positioning

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

different brands, different packaging and different positioning.

PACKAGE DESIGN AND PACK SIZE

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

be different for the rural target group. Package design and colour help identification of

brands by rural buyers . Many rural consumers are not quite conversant with various

brands .All the same, they manage to pick the brand that they want . They recognize the

brands by its packaging . This 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.

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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

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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 . HLLs

Lifebuoy, for example, is a low priced carbolic soap that is often the first choice of bath

soap by a rural consumer .

Documents

Siddhrarth ITS2