Introduction 3

Introduction 3 2 Strategies 6 2.1 BY COMMUNICATING AND CHANGING QUALITY PERCEPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.2 BY PROPER COMMUNICATION IN INDIAN LANGUAGE 6 2.3 BY TARGET CHANGING PERCEPTION . . . . . . . . . . 7 2.4 BY UNDERSTANDING CULTURAL AND SOCIAL VALUES 7 2.5 BY PROVIDING WHAT CUSTOMER WANT . . . . . . . . 7 2.6 BY PROMOTING PRODUCTS WITH INDIAN MODELS AND ACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.7 BY ASSOCIATING THEMSELVES WITH INDIA . . . . . . 8 2.8 BY PROMOTING INDIAN SPORTS TEAM . . . . . . . . . 8 2.9 BY TALKING ABOUT A NORMAL INDIAN . . . . . . . . . 8 2.10 BY DEVELOPING RURAL-SPECIFIC PRODUCTS . . . . . 9 2.11 BY GIVING INDIAN WORDS FOR BRANDS . . . . . . . . 9 2.12 BY ACQUIRING INDIAN BRANDS . . . . . . . . . . . . . . 9 2.13 BY EFFECTIVE MEDIA COMMUNICATION . . . . . . . . 9 2.14 BY ADOPTING LOCALISED WAY OF DISTRIBUTING . 12 2.15 BY ASSOCIATING THEMSELVES WITH INDIAN CELEBRITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.16 MELAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.17 PAINTINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Introduction For quite some time now, the lure of rural India has been the subject of animated discussion in corporate suites. And there is a good reason too. With urban markets getting saturated for several categories of consumer goods and with rising rural incomes, marketing executives are fanning out and discovering the strengths of the large rural markets as they try to enlarge their markets. Today, the idea has grown out of its infancy and dominates discussions in any corporate boardroom strategy session. Adi Godrej, chairman of the Godrej group that is in a range of businesses from real estate and personal care to agri-foods, has no hesitation proclaiming, It is a myth that rural consumers are not brand and quality conscious. A survey by the National Council for Applied Economic Research(NCAER), India's premier economic research entity, recently con_rmed that rise in rural incomes is keeping pace with urban incomes. From 55 to 58 per cent of the average urban income in 1994-95, the average rural income has gone up to 63 to 64 per cent by 2001-02 and touched almost 66 per cent in 2004-05. The rural middle class is growing at 12 per cent against the 13 per cent growth of its urban counterpart. Even better, the upper income class those with household incomes of over Rs one million [$22,700] per annum is projected to go up to 21 million by 2009-10 from four million in 2001-02. It will have a 22 to 23 per cent rural component. Higher rural incomes have meant larger markets. Already, the rural tilt is beginning to show. A study by the Chennai-based Francis Kanoi Marketing Planning Services says that the rural market for FMCG is worth $14.4 billion, far ahead of the market for tractors and agri-inputs which is estimated at $10 billion. Rural India also accounts for sales of $1.7 billion for cars, scooters and bikes and over one billion dollars of durables. In total, that represents a market worth a whopping $27 billion. It is no wonder that even MNCs have cottoned on to the idea of a resurgent rural India waiting to happen. Four years ago, Coke ventured into the hinterland. Now Coke's rural growth of 37 per cent far outstrips its urban growth of 24 per cent. Coke is not the _rst MNC to have cottoned on to the rural lure. Its global rival Pepsico took a wider approach to the business when it was 3 given permission to set up shop in India in the late 1980s and investment in food processing and farming was a pre-condition for entry. The company imported a state-of-the art tomato processing plant from Italy to Punjab. In _ve years, productivity improved from 16 tonnes to 52 tonnes per hectare and there was a tomato glut in the state. Farmers weren't complaining because even though prices fell, their incomes increased because of the huge jump in productivity. Pepsi is now heralding a citrus plantation drive in the state and other parts of the country for its brand of Tropicana fruit juices, to replace imported fruit. Hindustan Lever Ltd, the $2.3 billion Indian subsidiary of Unilever, the country's largest FMCG company, has also got on the bandwagon. It's Project Shakti uses self-help groups across the country to push Lever products deeper into the hinterland. Its four-pronged programme creates income-generating capabilities for underprivileged rural women; improves rural quality of life by spreading awareness of best practices in health and hygiene; empowers the rural community by creating access to relevant information through community portals and it also works with NGOs to spread literacy. There are currently over 15,000 Shakti entrepreneurs, most of them women, in 61,400 villages across 12 states. By the end of 2010, Shakti aims to have 100,000 Shakti entrepreneurs covering 500,000 of India s 640,000 villages, touching the lives of over 600 million people. With such an emphasis on rural marketing, consumption patterns are changing and it signals a change in the regulatory environment. Vertical integration of the food market from farm to _rm to fork becomes the best way to achieve e_- ciency and serve the interest of every stakeholder in the chain the farmer, the processor, the retailer and the consumer. As Ashok Gulati of the US-based International Food Policy Research Institute put its, The future of Indian agriculture in general and the farmer in particular depends on the how soon they can become globally competitive. Indian economic policy realises this. Between the 8th (1992-97) and the 10th (2002-07) Five Year Plans, successive governments have tripled the spending on rural development from $6.82 billion to $20.2 billion. All this potential has got India's big business houses rushing to enter and expand rural businesses. Telecom giant Sunil Mittal, chairman of the $2 4 billion mobile telephony major Bharti Tele- Ventures, is another unabashed ag-bearer of the 'go rural' strategy. He is con_dent that the next 'explosive' phase of demand for cellular connections is going to come from the villages. In an interesting business diversi_cation, he has tied up with the legendary Rothschilds of Europe for a $51 million food processing venture and export of fruits and vegetables. We can replicate our pre-eminence in IT agriculture and transform the country into a global food basket, he points out. Mittal's initial investments include an agriculture research centre and model farm in Punjab. If the hinterland has caught the attention of Mittal, among the country's most recent entrants to the ranks of big business, it has also not escaped the radar of the oldest business house, the $17 billion Tata group, which has consolidated its rural operations. The group's two companies, Tata Chemicals and Rallis India, ran separate rural initiatives till 2003. Tata Chemicals ran a chain called Tata Kisan Kendra, which o_ered farmers a host of products and services ranging from agriinputs to _nancing to advisory services. Rallis, on the other hand, was partnering ICICI Bank and Hindustan Lever in o_ering deals to farmers that covered operations from the pre-harvest to post-harvest stage. In 2004, the two operations were merged and Tata Kisan Sansar, a network of onestop shops providing everything from inputs to know-how to loans, was launched. Today, the Tata Kisan Sansar has 421 franchisee-run centres in three states and reaches out to over 3.6 million farmers. Like the Tatas, the $2.6 billion Mahindra group has successfully established a synergy between its current businesses and the planned rural forays. Its agship, Mahindra & Mahindra Ltd is India's largest farm equipment company. Its subsidiary, Mahindra Shubhlabh Services, has operations in 11 states, and leverages the strong Mahindra brand, the 700,000-strong Mahindra tractor customer base and the 400-plus dealer network, to provide a complete range of products and services to improve farm productivity and establish market linkages to the commodity market chain. Its retailing arm, Mahindra Krishi Vihar, has been instrumental in increasing the groundnut yield in Rajasthan through a new seed sourced from the state of Maharashtra, and it has also introduced a new variety of grapes in Maharashtra. Says Vikram Puri, head of Mahindra Shubhlabh Services, Almost 80 per cent of 5 the farmers registered with us have less than _ve acres land. We are making farming an attractive proposition through three basic guiding steps growing what the market requires, improving the crop yield and decreasing the cost of crop production. The activities of Mahindra Shubhlabh Services have attracted the attention of the International Finance Corporation, the _nancial arm of the World Bank, which recently picked up a 27 per cent stake in the company. Rural India accounts for a market worth $27 billion. No wonder even MNCs have cottoned on to the idea of a resurgent rural India. 2 Strategies 2.1 BY COMMUNICATING AND CHANGING QUAL- ITY PERCEPTION Companies are coming up with new technology and they are properly communicating it to the customer. There is a trade-o_ between Quality a customer perceives and a company wants to communicate. Thus, this positioning of technology is very crucial. The perception of the Indian about the desired product is changing. Now they know the di_erence between the products and the utilities derived out of it. As a rural Indian customer always wanted value for money with the changed perception, one can notice di_erence in current market scenario. 2.2 BY PROPER COMMUNICATION IN INDIAN LANGUAGE The companies have realized the importance of proper communication in local language for promoting their products. They have started selling the concept of quality with proper communication. Their main focus is to change the Indian customer outlook about quality. With their promotion, rural customer started asking for value for money. 6 2.3 BY TARGET CHANGING PERCEPTION If one go to villages they will see that villagers using Toothpaste, even when they can use Neem or Babool sticks or Gudakhu, villagers are using soaps like Nima rose, Breeze, Cinthol etc. even when they can use locally manufactured very low priced soaps. Villagers are constantly looking forward for new branded products. What can one infer from these incidents, is the paradigm changing and customer no longer price sensitive? Indian customer was never price sensitive, but they want value for money. They are ready to pay premium for the product if the product is o_ering some extra utility for the premium. 2.4 BY UNDERSTANDING CULTURAL AND SO- CIAL VALUES Companies have recognized that social and cultural values have a very strong hold on the people. Cultural values play major role in deciding what to buy. Moreover, rural people are emotional and sensitive. Thus, to promote their brands, they are exploiting social and cultural values. 2.5 BY PROVIDING WHAT CUSTOMER WANT The customers want value for money. They do not see any value in frills associated with the products. They aim for the basic functionality. However, if the seller provide frills free of cost they are happy with that. They are happy with such a high technology that can ful_ll their need. As quot;
Motorolaquot;
 has launched, seven models of Cellular Phones of high technology but none took o_. On the other hand, quot;
Nokiaquot;
has launched a simple product, which has captured the market. 7 2.6 BY PROMOTING PRODUCTS WITH INDIAN MODELS AND ACTORS Companies are picking up Indian models, actors for advertisements as this helps them to show themselves as an Indian company. Diana Hyden and Shahrukh Khan are chosen as a brand ambassador for MNC quartz clock maker quot;
OMEGAquot;
even though when they have models like Cindy Crawford. 2.7 BY ASSOCIATING THEMSELVES WITH INDIA MNCs are associating themselves with India by talking about India, by explicitly saying that they are Indian. M-TV during Independence Day and Republic daytime make their logo with Indian tri-color. Nokia has designed a new cellular phone 5110, with the India tri-colour and a ringing tone of quot;
Sare Jahan se achchaquot;
. 2.8 BY PROMOTING INDIAN SPORTS TEAM Companies are promoting Indian sports teams so that they can associate themselves with India. With this, they inuence Indian mindset. LG has launched a campaign quot;
LG ki Dua, all the bestquot;
. ITC is promoting Indian cricket team for years, during world cup they have launched a campaign quot;
Jeeta hai jitega apna HindustanIndia India Indiaquot;
. Similarly, Whirlpool has also launched a campaign during world cup. 2.9 BY TALKING ABOUT A NORMAL INDIAN Companies are now talking about normal India. It is a normal tendency of an Indian to try to associate himself/herself with the product. If he/she can visualize himself/herself with the product, he /she becomes loyal to it. That is why companies like Daewoo based their advertisements on a normal Indian family. 8 2.10 BY DEVELOPING RURAL-SPECIFIC PROD- UCTS Many companies are developing rural-speci_c products. Keeping into consideration the requirements, a _rm develops these products. Electrolux is working on a made-for India fridge designed to serve basic purposes: chill drinking water, keep cooked food fresh, and to withstand long power cuts. 2.11 BY GIVING INDIAN WORDS FOR BRANDS Companies use Indian words for brands. Like LG has used India brand name quot;
Sampoornaquot;
for its newly launched TV. The word is a part of the Bengali, Hindi, Marathi and Tamil tongue. In the past one year, LG has sold one lakh 20-inch Sampoorna TVs, all in towns with a population of around 10,000. By the end of 1999, roughly 12Thats Rs 114 crore worth of TV sets sold in the villages in a year. 2.12 BY ACQUIRING INDIAN BRANDS As Indian brands are operating in India for a long time and they enjoy a good reputation in India. MNCs have found that it is much easier for them to operate in India if they acquire an Established Indian Brand. Electrolux has acquired two Indian brands Kelvinator and Allwyn this has gave them the well-established distribution channel. As well as trust of people, as people believe these brands. Similarly Coke has acquired Thumps up, Gold Spot, Citra and Limca so that they can kill these brands, but later on they realized that to survive in the market and to compete with their competitor they have to rejuvenate these brands. 2.13 BY EFFECTIVE MEDIA COMMUNICATION Media Rural marketing is being used by companies. They can either go for the traditional media or the modern media. The traditional media include 9 melas, puppetry, folk theatre etc. while the modern media includes TV, radio, e-chaupal. LIC uses puppets to educate rural masses about its insurance policies. Govt of India uses puppetry in its campaigns to press ahead social issues. Brook Bond Lipton India ltd used magicians e_ectively for launch of Kadak Chap Tea in Etawah district. In between such a show, the lights are switched o_ and a torch is ashed in the dark(EVEREADYs tact). ITC's e-chaupal (chaupal is the common place where villagers gather) has been the most elaborate and extensive venture in this _eld so far. Conceived by ITC's international business division and launched in 2000, the e-chaupal project has since grown to around 2,700 chaupals covering a population of around 1.2 million in _ve states { Madhya Pradesh, Karnataka, Andhra Pradesh, Uttar Pradesh and Maharashtra. Rural marketing requires the understanding of the complexities and this article reviews some of the key issues. Indian agricultural industry has been growing at a tremendous pace in the last few decades. The rural areas are consuming a large number of industrial and urban manufactured products. The rural agricultural production and consumption process plays a predominant role in developing the Indian economy. This has designed a new way for understanding a new process called Rural Marketing. The concept of rural marketing has to be distinguished from Agricultural marketing. Marketing is the process of identifying and satisfying customers needs and providing them with adequate after sales service. Rural marketing is di_erent from agricultural marketing, which signi_es marketing of rural products to the urban consumer or institutional markets. Rural marketing basically deals with delivering manufactured or processed inputs or services to rural producers, the demand for which is basically a derived outcome. Rural marketing scientists also term it as developmental marketing, as the process of rural marketing involves an urban to rural activity, which in turn is characterised by various peculiarities in terms of nature of market, products and processes. Rural marketing di_ers from agricultural or consumer products marketing in terms of the nature of transactions, which includes participants, products, modalities, norms and outcomes. The participants in case of Rural Marketing would also be di_erent they include input manufacturers, dealers, farmers, 10 opinion makers, government agencies and traders. The existing approach to the rural markets has viewed the markets as a homogeneous one, but in practice, there are signi_cant buyer and user di_erences across regions as well as within that requires a di_erential treatment of the marketing problems. These di_erences could be in terms of the type of farmers, type of crops and other agro-climatic conditions. One has to understand the market norms in agricultural input so as to devise good marketing strategies and to avoid unethical practices, which distort the marketing environment. Many of the inputs used for production process have implications for food, health and environmental sectors. Rural marketing needs to combine concerns for pro_t with a concern for the society, besides being titled towards pro_t. Rural market for agricultural inputs is a case of market pull and not market push. Most of the jobs of marketing and selling is left to the local dealers and retailers. The market for input gets interlocked with other markets like output, consumer goods, money and labour. The importance of rural marketing can be understood from the fact that today modern inputs i.e. diesel, electricity, fertilisers, pesticides, seeds account for as much as 70Green Revolution areas. Further the percentages were higher at 81of land. Strategic aspects Rural marketing in India is not much developed there are many hindrances in the area of market, product design and positioning, pricing, distribution and promotion. Companies need to understand rural marketing in a broader manner not only to survive and grow in their business, but also a means to the development of the rural economy. One has to have a strategic view of the rural markets so as to know and understand the markets well. In the context of rural marketing one has to understand the manipulation of marketing mix has to be properly understood in terms of product usage. Product usage is central to price, distribution, promotion, branding, company image and more important farmer economics, thus any strategy in rural marketing should be given due attention and importance by understanding the product usage, all elements of marketing mix can be better organised and managed. 11 2.14 BY ADOPTING LOCALISED WAY OF DIS- TRIBUTING Proper distribution channels are recognized by companies. The distribution channel could be a Big scale Super markets, they thought that a similar system can be grown in India. However, they were wrong, soon they realized that to succeed in India they have to reach the nook and the corner of the country. They have to reach the quot;
local Paan wala, Local Baniyaquot;
only they can succeed. MNC shoe giants, Adidas, Reebok, Nike started with exclusive stores but soon they realized that they do not enjoy much Brand Equity in India, and to capture the market share in India they have to go the local market shoe sellers. They have to reach to local cities with low priced products. 2.15 BY ASSOCIATING THEMSELVES WITH IN- DIAN CELEBRITIES MNCs have realized that in India celebrities enjoyed a great popularity so they now associate themselves with Indian celebrities. Recently Luxor Writing Instruments Ltd. a JV of Gillette and Luxor has launched 500 quot;
Gajgaminiquot;
range of Parker Sonnet Hussain special edition fountain pens, priced at Rs. 5000. This pen is signed by Mr. Makbul Fida Hussain a renowned painter who has created quot;
Gajgaminiquot;
range of paintings. Companies are promoting players like Bhaichung Bhutia, who is promoted by Reebok, so that they can associate their name with players like him and get popularity. 2.16 MELAS Melas are places where villagers gather once in a while for shopping. Companies take advantage of such events to market their products. Dabur uses these events to sell products like JANAM GHUTI(Gripe water). NCAER estimates that around half of items sold in these melas are FMCG products 12 and consumer durables. Escorts also displays its products like tractors and motorcycles in such melas. 2.17 PAINTINGS A picture is worth thousand words. The message is simple and clean. Rural people like the sight of bright colours. COKE, PEPSI and TATA traders advertise their products through paintings.

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