2. OBJECTIVES
Marketing mix challenges.
Product concept and classification.
New product development with adoption
process of consumers.
Lifecycle of a product and Strategies in rural
packaging and after sales service.
4. AVAILABILITY
First challenge-To ensure the availability of
product or services.
638000 villages spread over 3.3 million sq
km ; 742 million Indians may live in rural
areas but finding them is not easy.
Poor state of roads ±a greater challenge to
send products to far flung villages on a
regular basis.
Solution strong distribution system
5. Example
HLL¶s strong distribution system-uses auto-
rickshaws ,bullock carts and even boats in
the backwaters of Kerala.
6. AFFORDABILITY
With low disposable incomes products need to
affordable to rural consumers.
Most of them are daily wage earners.
Some companies addressed the problem by
introducing small unit parks.
Example includes
Godrejs 3 brands cinthol, fairglow and godrej in
50gms pack prices rupees 4-5.
HLL’s lifebuoy at Rs 2 for 50 gm.
Coca cola’s Returnable 200 ml glass bottle atRs.5/-
7. ACCEPTABILITY
Need to provide product that suit the
ruralmarket.
L.G.Electronics-Customized television and
christened it Sampoorna.
Coca cola low cost iceboxes, tin box for new
outlets and thermocol box for seasonal
outlets because of lack of electricity and
absence of refrigerators
8. AWARENESS
Large parts inaccessible to conventional
media. Only 41 percent got access.
Outing confined to local fairs and festivals
Television viewing to state owned channel-
Doordarshan.
Godrej uses radio to reach people in their
own language.
9. PRODUCTS CONCEPTS AND CLASSIFICATION
Market mix planning begins with offering.
Rural consumers judges offering on the basis
of three elements
1)Product features and quality.
2)Service mix and quality.
3)Appropriateness of offering price.
10. Companies should not dump the goods for
urban consumers into rural market.
Understand the cultural dynamics and specific
needs.
Cadbury launched Chocolate flavored biscuit-
mothers opt for affordable rather than
expensive.
Eveready found plastic torches for urban
consumers have got no demand in rural area
they prefer heavy brass torches
Importance of product feature.
11. FIVE LEVELS OF PRODUCT
Each level adds more customer value and
constitute a scale of customer value
hierarchy.
Five levels are ,core benefit, basic product,
expected product, augmented product , and
potential product.
First two levels remains the same in both
urban and rural market.
Difference from the third level only.
12. Third level-marketer prepares an expected
product and defines a set of attributes and
conditions that a consumer normally expects
Rural television buyer expects good picture
quality, clear sound and easy to operate set.
Urban consumer goes for digital sound, flat
screen etc.
13. Fourth level :marketer prepares an
augmented product that meets the
customers desires beyond expectations.
This could be a television which runs on
batteries and better picture quality in weak
signal conditions also local languages etc.
Where as for urban consumers this could be
an inbuilt DVD player with a television etc.
14. Fifth level :encompasses all augmentations
and transformations that the product may
ultimately undergo in future.
Example electric bulbs that sustain high
voltage fluctuations.
16. FMCG MARKET
According to NCAER survey, the rural market
accounted for 53% of the total consumption
in the country in1998-99
The estimated size was around
Rs. 484 billion in 1998-99 and Rs. 650 billion
in 2002
17. FMCG GROWTH
Rural market has grown consistently in
the1990s
A spatial distribution of the FMCG rural
market shows that four states namely
Uttar Pradesh, Andhra Pradesh, Maharashtra
and West Bengal account for 50% share
of this market
18. FMCG PRODUCTS
About 50% of sale of soaps, detergents and
beverages, 37% of personal products
(shampoo, toothpaste and skin cream)and
12% of food products comes from the rural
market.
19. MARKET GROWTH
The average annual per capita spend on
FMCGs in rural is Rs. 9400 as compared to
Rs. 13000 for urban among rich households.
70% of the population accounts for only50%
of even relatively well-penetrated categories
such as soaps and detergents.
20. CONSUMER DURABLES
Durable goods include products like home
appliances, automobiles, watches , furniture
etc
22. NCAER has classified durables into
3categories:
Low priced(<Rs. 1000)
Medium priced(Rs. 1000-6000)
High priced(>Rs. 6000)
23. Consumer Durables Market
As per NCAER Indian Market Demographics
Report 2002, rural India accounted for over
60% share of durables in 1998-99.
The estimated annual size of the rural market
is Rs. 130 billion
24. RURAL SHARE
The rural share of
durables has risen from54% in 1989-90 to
over 60% in 1998-99.
Number of durables with over 75% share has
increased from one to four products.
For several high priced products, the rural
share continues to below 50%
25. DURABLE PRODUCTS
The rural penetration of most products is
very low compared to urban except
for bicycles, radios and mechanical
wristwatches.
The rural-urban disparity is highest in case of
electrical goods.
26. MARKET GROWTH
The mid 1990s witnessed impressive growth
rates
It increased from 8.8% in the mid 1990s
to11.5% from 2000 onwards.
27. AGRICULTURAL GOODS
Agri products are goods that are used
for farm activities.
The agri inputs market accounts for Rs.450
billion annually.
The major players are Rallis India, DCM
Shriram, Chamba lFertilizers, IFFCO,
Mahindra & Mahindra,Eicher and Escorts
28. Services
Major services in rural include
telecommunication, transport, health care,
banking, insurance and education.
This category includes LIC, SBI, BSNL,
Reliance info com, ITCs ,ICICI Prudential
Life Insurance etc.
29. NEW PRODUCT DEVELOPMENT
1.Idea generation
2.Concept testing
3.Product development
4.Test marketing
30. Eg:
5 k.g cooking gas cylinder by HPCL
Jolly battery operated colour television
Free power radio
Kishan credit card
31. Product Life Cycle (PLC)
PLC of a product in the rural market is
often longer than in the urban market due
to challenges involved in distribution ,
communication and adoption
32. Products that enter rural markets without
serious planning die out either soon after the
introduction or during the growth stage
Companies have to focus on brand building
and should innovate constantly to sustain in
rural market
33. Pioneers in rural markets having high
penetration with products at the maturity
stage now extends their brands
34. PRODUCT MIX
Simple-mostly only one product of a
particular company registers its availability
on rural shelves due to
limitations of investments in stocks,
slow movement and replenishment of
stocks,
dominance of retailer in the rural market
Exceptions-HUL, Dabur
35. RURAL PACKAGING
Plays significant role
Affordability,
ability to recognize, convenience
of usage
product appeal
Needs special focus because of
Poor transport system
Difficulties of safe storage
Poor facilities
36. Marketers have to consider following factors
in packaging
Packaging material
Pack size and convenience
37. PACKAGING MATERIAL
Most commonly used-plastics since they are
waterproof, provides barriers to vapors,
sunlight resistant, lightweight.
38. PACK SIZE AND COVENIENCE
Sachet revolution pioneered by Velvet Shampoo at
Re. 1 in later 1970s later followed by HLL,Godrej,
Dabur etc
Sachet packaging replicated in many product
categories-Tiger biscuits, Close-up
toothpaste,Parachute hair oil, Ponds cold cream, Fair
&Lovely etc
Convenience-
factor that affects the decision to use a product
Eg: Colgate tooth powder in small sachet with cap ,
close-up toothpaste, Fair& Lovely, Parachute coconut
oil in Re.1 plastic bottles easy to use anytime
39. OTHER FACTORS IN PACKAGING
Lower literacy levels in rural market
Consumers appreciate bright colours
Eg: Lifebuoy identified as red soap
Distinct lettering, use of local languages on
the pack, images or symbols that convey
products benefits influence
consumer perception about the brand
40. BRANDING IN RURAL INDIA
Brand association with colors, numbers and
visuals and not necessarily with the name of
the brand
Retailers play a major role in rural brand
promotion
41. BRAND BUILDING IN RURALINDIA
BRAND NAME DEVELOPMENT-FACILITATES
easy brand recall-some brands are known by
their names.-
Colours (Lal dant manjan, lal sabun lifebouy,
Red battery eveready)
Numbers and Visuals -Eg:Sampoorna rural
television brand of LG. Ajanta toothpaste
Sansar sewing machine
42. CREATING A BRAND IDENTITY
Challenge: need to relate the brand with the rural lifestyle
Brands are introduced to urban markets and then move to
rural
Tata Steel
Tata Shaktee sheets(qualities of strength, durability and
toughness)
Britannia Tiger Biscuits ( smart, active and sharp child)
BUILDING A BRAND IMAGE
Brand has a personality of its own
Helps in brand connect
43. BRAND LOYALTY VS STICKINESS
Rural people are less likely to switch brands as
they do not have the required information
Comfortable in purchasing tried and tested
brands : brand sticky than brand loyal
Educate rural customers
Develop their interest through interactive
communication
Deepen confidence through live demonstrations
Build a long term relationship
44. REASONS FOR BRAND STICKINESS
Many rural customers are still discovering the
benefits of the products
Early Mover Advantage of the dominating
brand
Entry of new brands very is difficult
45. FAKE BRANDS
Bonds for ponds talc
Fair & lonely or Fair & Lovely
Likeboy for Lifebouy
The main problem of rural market is the low
penetration and the poor availability of branded
products.
No distribution channel to reach the customer.
Led to the growth of spurious brands to fill the
gap in the demand
46. THE FAKES MARKET CATEGORIES
1.Lookalikes
The colour scheme on packaging material
closely resembles that of a popular brand.
Eg: Shagun for Lifebouy(150 mg)Lalita Amla for
Dabur Amla
2.Spell-alikes
Names are subtly and cleverly misspelt
Eg: Paracute for Parachute Pomes for Ponds
3.Duplicates
Exact replicas of original brands
47. STRATEGY TO COUNTER FAKES
Upgraded packaging
Eg: Dabur
Ensure deeper penetration and continuous
and regular availability of products
Forge strong relationships with local retailers.
48. STRUCTURE OF COMPETITION IN RURAL INDIA
Competition from other urban national
products branded tea and detergent powder
Regional urban branded products -brands of
the unorganized sector, like soaps, talc.
Local urban brands ribbons, bangles
Local village brands ropes, bread, food items
Substitutable products or indirect competition
49. CONCLUSION
Product at the heart of marketing
Products must achieve the best fit with rural
conditions.
The shift of rural consumers from product
generalization to product specialization
promises better growth .
First mover in new product categories will
benefit.
53. Cost Factor (Contd.)
Promotion as a cost factor
Credit-based transactions increase cost
54. ITC E-chaupal: A distribution channel to
control costs
Buy crop directly from the farmers. The
farmer is then paid for the crop and is also
given a transport fee. Bonus points are given
to those crops with high quality.
55. Pricing Objective (Contd..)
Profit maximization in the long run
eg.sell shampoos in sachets
Minimum returns on sales turnover
Deeper penetration of the market Here
objective is market expansion so the
company launches its product at a lower
price
Keeping with competition
56. Videocon :Pricing Strategy
Videcon was one of the first companies to enter the
rural market with a plethora of products in the home
appliances. It attacked market leader Phillips by
launching a radio set for Rs.180(the Phillips radio set
cost Rs.250) and grabbed a major chunk of the
market.
Low Priced shampoo
Cavinkare realized that for a family of five members
at rs.2 per sachet and minimum of four hair washes
per person per month would mean a Rs. 40 spends
for a shampoo . Many rural families cannot afford this
expense. hence 50 p sachet shampoo were
introduced.
57. External influences
Customers
the price sensitivity of customers depends on personal, social,
economic , geographical factors .eg.chic shampoo introduced 50
p targeting daily and weekly labourers , sampoorna CTV from LG
Suppliers
Retailers give credit to regular customers.
Competitors
Initially competition in the rural market was on basis of price. But
lately competition is on non price factors. eg-anchor whites
vegetarian toothpaste
Legal environment
