SESSI ON I I I
XAVI ER I NSTI TUTE OF MANAGEMENT,
BHUBANESWAR
4Ps in Rural Markets
Product
Anything that has a value in exchange
Product price place promotion
Challenges Availability, affordability, acceptability
& awareness
Marketing Tools Marketing Challenge
Product Acceptability
Price Affordability
Place Availability
Promotion Awareness
Source: The Rural Marketing Book- Kashyap. P & Raut. S
Contd
Appropriate Product Strategies
Existing & New Products
Product features service quality price &
performance relationship
Simplicity is key
Sense & Simplicity Phillips Global Campaign
Urban market successes could be rural market
failures
Appropriate new product development processes
CORE BENEFIT
BASIC PRODUCT
EXPECTED PRODUCT
AUGMENTED PRODUCT
POTENTIAL PRODUCT
Product Levels
Contd
Product Level Characteristics Example Rural Vs Urban
Core Benefit Fundamental
benefit/ services
Entertainment Same
Basic Product Benefit/service
into tangibles
Television Set Same
Expected Product Attributes &
conditions buyers
normally expect
Digital sound, flat
screen
Appearance of
differences in
expectations
Augmented
Product
Exceeding
customer
expectations
Battery Operated
TV
Pleasant surprise
for rural customer
Potential Product Encompassing all
augmentations &
transformations
Jolly Startek TV Uniquely rural
value proposition
Product Development Stages
Stage Marketing Activities
Idea Generation Searching for new product ideas
Idea Screening Select the most promising ideas and drop those with only limited potential. Study the
needs and wants of potential buyers, the environment and competition.
Concept Testing Describe or show product concepts and their benefits to potential customers and
determine their responses. Identify and drop poor product concepts. Gather useful
information from product development and its marketing personnel.
Business Analysis Assess the products potential profitability and suitability for the market-place. Examine
the companys research, development, and production capabilities. Ascertain the
requirements and availability of funds for development and commercialisation. Project
ROI.
Product Development Determine technical and economic feasibility to produce the product. Convert the product
idea into a prototype. Develop and test various marketing mix elements.
Test Marketing Conduct market testing. Determine target customers Reactions. Measure its sales
performance. Identify Weaknesses in product or marketing mix.
Commercialisation Make necessary cash outlay for production facilities. Produce and market the product in
the target market and effectively communicate its benefits.
FMCG Consumption Trends
Products Urban( 1000 HH) Rural ( 1000 HH)
Toilet Soap 998 992
Washing Cake 980 950
Cooking Oil 968 952
Hair Oil/ Cream 897 787
Tea 876 758
Toothpaste 822 449
Washing Powder 819 576
Electric Bulb 723 394
Shampoo 663 352
Biscuits 579 314
Health Beverages 324 67
Source: National Council for Applied Economic Research, 2002
Consumption Ranking
Rank Rural Product Urban Product Rural HH
Consumption
grams / month
1 Toilet Soap Toilet Soap 268
2 Washing Powder Biscuits 950
3 Packaged Tea Washing Powder 268
4 Biscuits Packaged Tea 302
5 Detergent Cake Detergent Cake 893
Source: A.C Nielsen Retail Audit, MAT, July -2004 & ORG- MARG Retail
Consumer Panel, 2001
Rural Durable Usage Trends
NCAER has classified durables into three categories
Group One( <Rs. 1000)
Group Two( Rs.1000- 6000)
Group Three( >6000)
In group one the growth is as high as 75 percent
Electrical goods show the highest urban- rural disparity, why ?
Television( B & W) 195/1000HH in rural Vs 490/1000HH in
urban
Colour TVs 48/1000 HH in rural Vs 304/1000HH in urban
Packaging
Associated with affordability - Convenience -
Consumer recognition & product protection
Packaging material, size, convenience and
aesthetics
Example: Chik Sampoo
Corporate Responses to Fakes
Look-alikes- Spell-alikes & Duplicates
Prices range from MRP to 60 % of MRP
Margins range from 60 % to 300 %
Legal action awareness programmes New
Package Development
Fakes: Some Examples
Contd
Pricing
Issues in Pricing
Internal & external factors
Selecting pricing methods
Pricing adaptations
Low price points Simple packaging utility around
packaging material
Highlighting value
Price Adaptations ( Indicative)
Product sharing services, Example: Tractors
Product Bundle pricing, Example: HUL Operation
Bharat
Free gifts may sometimes not work in rural areas
Special event pricing- Hero Honda Rs. 500 campaign
Colgate- Cibaca
Place- Rural Distribution Challenges
Large number of small markets
Dispersed population and trade
Poor connectivity
Low availability of suitable dealers
Inadequate banking/ credit facilities
Poor product display and visibility
Poor communication of offers and schemes
Levels of Distribution
Level Partner Location
1
Company Depot/ C & FA National/ State level
2
Distributor/ Van
Operator/ Super Stockist/
Rural Distributor
District level
3
Sub Distributor/ retail
Stockist/ sub stockist/star
seller
Tehsil HQ, towns and
large villages
4
Wholesaler Feeder towns, large
villages, haats
5
Retailer Villages, haats
Distribution Adaption( Indicative)
Hub and Spoke Model, Example: Coca Cola
Use of Affinity groups, Example: Project Shakti
Haat Activation, Example: Colgate
Syndicated distribution, Example: Cavin Care &
Amrutanjan
Use of marketing co-operatives, Example: Warna
Bazaar in Rural Areas
Mobile traders, Example: FMCG companies
Promotion- Adaptations for Rural Markets
Conventional Non- Conventional Personalised
Television Haat and Mela Direct mailer
Radio Folk Media( puppet and
magic show)
POS (demonstration, leaflet)
Press Video Van Word of mouth
Cinema Mandi Interpersonal
communication
Outdoor: Wall Painting,
Hoarding
Animator
Melas & Haats
Melas Haat
1. 25,000 melas
2. Companies can concentrate on
the top 100 melas
3. Pushkar Mela in Rajasthan
4. Organised by the state veterinary
department
5. Product sales, promotion,
demonstration and database
generation
6. Cultural activities and rural
sports
1. Periodic markets located in larger
villages(> 40,000)
2. 10 50 villages are serviced
3. Sunday markets are most popular
4. Average number of outlets is 315 and
average daily sales is about Rs 2 lakhs
5. Traders participate in at least 4 haats
6. 81 percent of the visitors are repeat
customers
Types of Promotions
Advertising
Sales promotions coupons, contests, demonstrations
and sampling, Example: Tata Shaktee Haat Hungama
Direct marketing, Example: Videocon
Publicity, Example: Project Shakti and AP Online
Using a direct selling through a sales force, Example:
Swasthya Chetna for Lifebouy
Contd
Push strategy sales force and trade promotion
Pull strategy advertising and consumer
promotion
Close of Session
Thank You
