Introduction to Rural Marketing

RURAL AND SOCIAL MARKETING

Rapport building, familiarization and introducing course outlines and course contents Understanding the rural market environment Rural v/s urban marketing Problems in rural marketing Rural marketing strategy Rural marketing v/s marketing of rural products Issues in rural marketing Analysis and presentation of case on issues in rural marketing (group exercise)

Why should we do this course?

Agricultures share in GDP is going down, but, India still lives in her villages

Urban markets are crowded and saturated

The understanding of rural is diffused and sometimes

confusing

Is rural marketing different from urban marketing ?

Phases in Rural Marketing

Sr. No Time Frame Key Events & Trends
Marketing

Phase One( Pre 1960s)

rural products in rural and urban areas Agricultural inputs in rural areas Agricultural marketing Farming methods were primitive and mechanisation was low Markets unorganised

Contd
2 Phase Two ( 1960s to 1990s)
Green

Revolution Companies like Mahindra and Mahindra, Sri Ram Fertilisers and IFFCO emerge Rural products were also marketed through agencies like KVIC
Demand

Phase Three( 1990s to Present)

for consumables and durables rise Companies find growth in urban markets stagnating or falling

What is Rural

Government agencies like IRDA (Insurance Regulatory And Development Agency and NCAER (National Council for applied Economic Research) define Rural as villages with a population <5000 with 75% male population engaged in agriculture etc

Census

Towns are actually rural areas but satisfy The following criteria Populatio<=5000 75% of the mail population engaged in Non agri activity Location with population up to 10000 Considered Rural Semi Urban 10000 to 100000 All locations upto a population of 10000 Will be considered Rural All locations having shops/establishments Upto 10000 (not population related) are Treated as Rural The rural and semi urban area is defined As all cities other than major metros

RB1

NABARD Sahara

LG Elect.

Concept of Rural from the perspective of marketing has Indeed been dynamic.- gradually changed over the times Was not India a so called Village/Rural for the world a couple of decades back
NABARD National Bank for Agriculture & Rural Dev

What is Rural Marketing

Developing of the market in the area as defined as Rural Hence it could be aptly said that it encompasses the Activities such as developing the process to meet this Objective Right product at the right price to the right people at the right time. Exchange between rural and Urban is a Factor . Could be Urban to Rural: Rural to Urban, Rural to Rural

Size of Rural Markets

FMCG Agri-inputs Durables Automobiles (2 & 4 Wheelers) Clothes, footwear etc. Construction material Total
Source: CII Report (2008)

Rs.65000 crore Rs.45000 crore Rs.5000 crore Rs.8000 crore Rs.35000 crore Rs.15000 crore Rs.173000 crore

Size of the market Largely Untapped Too crowded Urban Market

Reasons for Going Rural

Income on the rise/disposable income Income from other than agriculture Income flow from urban /abroad Better exposure - media

Great success stories HLL 50% Colgate 50% LG 50% Asian Paints 60% Dabur 40% Videocon 40% Cadburys 25% Hero Hona 40%

Sorce ORG Marg and Fransis Kanoi

Points to Note with Regard to Rural Markets

Extremely Diverse Market Villages Size, Population, Spread, Income Literacy levels , awareness level, languages Urban Market scope and saturation Flow of funds from Urban National /International Literacy levels on the rise

Media Penetration

Move to Rural Market encouraging Data

Rural India buys Soft Drinks approx 45% of all soft drinks Almost 50% motor cycles Approx 55% of cigarettes Half the total market for TV, Fans, pressure cooker, bicycles Washing soap, tea, blades, salt, toothpowder

Coca Cola is growing over 35% in Rural areas compared to Over 22 % in Urban According to Hasna Research , a market research farm that has published a Guide to Indian Markets 2006 Consumer durables in Indian Villages risen sharply
TV Sales up Motorcycle

by 200% by 77%

There are 3000 households in rural area that earn > 50 lakhs

Low per capita income

Low disposable income

Inadequate fixed income (daily wages) Majority depends on Agricultural Income Acute dependence on monsoon Consumption linked to harvest Infrastructure problems Roads, power Low awareness

PROBLEMS IN RURAL MARKETING

Communication- difficult & expensive

Too many languages Geographic Spread

Digging for Diamond

Urban & Rural Markets

Key Differences Per capita Income Disposable Income Literacy levels Infrastructure Communication Geographical Spread

Customer has many choices

Profile of the Rural Consumer

Profile of the Rural Consumer

>Low Literacy Level >Low Income Level >Massive Geographic Spread Urban population concentrated 3200 cities town Rural scattered over 630000 villages >Reference Group Health Workers Doctors Teachers Panchayat Members Rural Bank Managers District Managers Occupation Principal Farming Trading Handicrafts Cattle & Poultry Farming >Media Habits Fond of music T.V Radio Video Films

Generally they have a lot of reservation/inhibition rigid in their behaviour

RURAL CONSUMER BEHAVIOR

How does an individual decide to spread his available resources (time,money effort) on consumption-related products.
That is what they buy why they buy when they buy where they buy it how often they buy it how often they use it

Simple Model of Rural Consumer Behaviour

Need Recognition Pre Purchase Search

Evaluation of Alternatives
Purchase Decision

Post purchase behaviour

Factors that Influence Rural Behaviour

Stimuli
Inputs to any senses Products Package Commercials Brand image Reference Information cues about the characteristics of the product

Attitude
>Consumer belief Consumer feelings

Perception
Depends on

Interpretation Exposure
Eg IFB had not adequately Educated farmers about the Washing machine -they thought It was a churn for making large quantities of lassi (prosperous village of Punjab)
Iodex muscular pain Reliever used on animals After hard days work in MP Godrej hair dye on Buffaloes To make them look better in Village haats in Raichur

Key
Awareness

Challenges 4A

Affordability
Availability Acceptability

4 Ps Promotion Price Product Place

4 As

Awareness
Affordable Acceptable Available

RURAL MARKET RESEARCH

Marketing Research is a formalized means of obtaining Information to be used in making marketing decisions

Market research
Issue Design Manage Analyze Communicate

Information Required to address

Method of Collecting Information The data collection process The results Finding and implication

SOURCES

Primary Sources

FOR
CONDUCTING

RURAL
MARKET
Secondary Sources

RESEARCH

Primary Sources

Secondary Sources
Government website [Link] [Link] www [Link] Private bodies (market research advertising agencies Indian Market Research Bureau Thompson Rural Index Guide to Rural Markets Publications

Retail shops/STD booths Tea Stalls Playgrounds/schools Chaupals (meeting point old/middle aged/ influential)

Haats & Melas

Influence Group

Tool Kits Used for Rural Market Research

Tool Kits Used for Rural Market Research Faces Color Wheel Happy Sad

Same Color Different shades Different Color

Build Recognition
Rural folks understands symbols and colours better.
Laal

Sabun Lifebuoy Peela Powder - Nirma

Route to Brand Building in Rural

Build customisation
Chotukool

from Godrej Boyce, a nano refrigerator (43 litres cool box loaded from top) Co-created using suggestions from rural women and sold by rural women

Route to Brand Building in Rural

Build Empathy / Relevance

Nokia Life Tools for farming and rural community Agri information to farmers in association with Reuters Imparting of knowledge of English language to students by teaching one new word every day

Build word of mouth

Through

effective communication using specific communication package aimed at specific rural audience

Ideal Media Strategy for Reaching Rural Audiences

Mass Media Plus Direct Marketing Efforts Opinion Leaders R U R A L M A SS E S

Rural Cinema
Radio TV

Unconventional Media Focused Events

Other Points to Remember

Understanding the Characteristics of the Rural Masses

Very intelligent and clever cannot be easily hoodwinked.

Daily activity is routinised

Plenty of time / No Sundays

Very conscious of value for money

Understanding the Characteristics of the Rural Masses

Does not like to pay extra for frills he cannot use.

Eg. Colour TV Eg. Durables

High involvement in any product purchased

So how do we communicate with the Rural Folks?

Rural Communication

Keep the communication simple

No

scope for gimmicks

Take time in communicating the message

Quickies

have no impact.

Think in the local language to capture the local spirit in the communication aimed at specific region.

Rural Communication

Demonstration a key element for success

Shampoo Demonstration

Dalda Vanaspathi Demonstration

Rural Communication
Television does not distinguish between urban and rural You may be able to get away with a common TVC for both urban and rural audience particularly for FMCG products provided your communication is not gimmicky, suggestive and is easy to comprehend.

Rural Communication
But when it comes to Durables, where rational decisions are involved, it is advisable to target the opinion leaders first. While urban oriented TVC may register with opinion leaders and help create awareness, for real impact down the line, a region specific and need specific communication programme has to be devised which provides for demonstration and touch & feel of the products.

Important
Rural Urban Divide in terms of communication continues to exist Hence need for different communication packages focused on rural audience

Lessons from the Success of regional brands in recent times

They understand the regional ethos better They satisfy a perceived local need Their communication touches a chord which helps in brand acceptance They are flexible

Adapt

to changing market situations

Eg. Anchor, Gadi, Ajanta, Cavinkare (Chik), Power, Goldwinner, Arasan

If you are small with limited budgets start by concentrating on smaller areas
Outdoor

/ local Cable TV / Radio / participate in local festivals etc.

Even Nirma started very small Today it is a Rs.2000 plus crore company!

POINTS TO REMEMBER FOR RURAL MARKETING RESEARCH

Remember

Build Rapport - *** Greet need to be informal Speak local language Do not jump to survey speak of other matters of interest

Gradually lead to the objective of the interview

Explain the benefit of the survey how it will gain

RURAL MARKET SEGMENTATION TARGETING & POSITIONING

SEGMENTATION Very Varied hence proper segmentation very essential Geographic: Region North, East, West and South Village size Climate Demographic Age Family Size Gender Income Occupation Education Caste Psychographics (consists of psychological: sociology: anthropological) Lifestyle Rigid ,changing attitude, urban influence Personality Authoritarian, Ambitious Behavioral Occasions Regular, special occasion

Class

Rural Consumer Classification

TheAffluent/Very Rich

Households owning personal cars/jeep with other products

The Well Off

Household owning any/all of the foll. A.C/Motorcycle/scooter/washing m/c color TV with other durable (No car/jeep)

Source - NCAER

The Climbers

Households owning any/all of the foll VCR/VCP,mixer grinder sewing m/c audio equip, B/W TV, geyser with other durables (not those mentioned in above 2 categories)
The Aspirants Households owning any/all of the foll bicycle,electric fans, electric iron with other durab (not those mentioned in above 3 categories) The Destitutes/Poor Households other than those classified above Households owning any/all of the foll wristwatch,pressure cooker,cassette recorder transistor/radio
Source - NCAER

Who buys the high priced Durables in the Rural Areas.

Occupaction Weightage in rural categoty households(%) Owner farmer Shopker Service Agricultural worker Unskilled ,non-agri Labour Others 34 8 13 20 17 2 contribution to Contribution to Contribution to T.V Owner two-wheeler fridge 33 14 31 6 9 2 33 16 39 3 4 1 31 20 40 2 5 1

Source:IRS 1998 by ORG-MARG

TARGETING

>Select Target Segment

>Formulate Market a marketing strategy for the target market One shoe fits all !!!! . Everything for Everyone !!! It is Something for Someone

POSITIONING How to Position

USP of the product uniqueness of the product Special needs either address partially/ unaddressed Noticeable gap in the products available

Select & Develop the Concept Bridge gap between the product and the target market. Communicate the Concept Advertise and Reach (Media) Offer Product After STP (Segmentation, Targeting and Positioning) Post Sales Feedback & After Sales Service

RURAL MARKETING STRATEGY

New Entrant Company starts Rural Market first & then ventures in Urban Market

ENTERINING
THE

(eg Cavin Kare Chik & Meera Shampoo) Mid- Entrant

RURAL MARKET

Company starts Rural Market after success in Urban Market (eg. LG)

Purpose

R G A

Retain Grow Add

RURAL MARKETING STRATEGY P L Profile the Rural Market A Profile the Consumer N 1 N Market Behaviour & MR I Segmentation Targeting Positioning N E G --------------------------------------------------------------------------------X Rural Product E Rural Pricing C 2 Rural Distribution U T Rural Sales Force Management I Rural Communication O --------------------------------------------------------------------------------N F E Monitor the Rural Strategy E 3 D Feedback & Control B A C K

DEVELOPMENTAL MARKETING
Developmental marketing is a process through which awareness is created >could be demonstration >could be presentation >Free samples >could be through up eg tie up with Bank tie up with Petrol/Diesel pumps (Hyndai did with PNB and SBI subsidiaries >30% sale of Hyndai from Rural/Semi Urban areas)
Awareness Trial Purchase Post-Purchase Satisfaction

Colgate program Operation Jagruti Switch from Charcoal to Colgate tooth powder

HLL Free samples of Lifebuoy Cavin Kare Free sample of Chik Champoo
Marico Industries Parachute coconut oil Sudhata ki pehchan smell to differentiate between real and spurious

RURAL PRODUCT RURAL PRICE RURAL DISTRIBUTION RURAL SALES FORCE MANAGEMENT RURAL COMMUNICATION

Rural Product

Product to be marketed with the requirements of the Rural Consumer should not be an extension of urban offerings

(Philips launched Free Power Radio does not require Battery/electricity you wind it with a lever and radio runs For approximately 30 min.

Classification Of Rural Products

FMCG (HLL, Dabur, Marico, Colgate=Palmolive Coke, Pepsi)

Consumer Durables TV ,Fridge, Fan, Presssure Cooker, Cycle, Two wheelers, Sewing machines, watch, mixer grinder, radio, music system, Fans, Washing machines (Philips, LG, Videocon, Onida ) Services Telecom, Banking, Health care ,Insurance (Airtel, BSNL, SBI, PNB,Dena bank,) Agri-inputs Seeds, pesticides, tractors (Rallis India, Bayer,)

Product Life Cycle (PLC)

Maturity
Take Off Launch Decline

Rural Branding

1. Brand Name 2 Create Brand Identity 3 Enhance Recognition 4 Build a Brand Image 5 Countering Spurious brands Look alike Spell alike Duplicates

Enhancing Brand Strategies with Social Perspective Soaps for Hygiene Cooking gas for environment 3. Creating need by more awareness
1. 2.

Partnering with a long term perspective requires total belief and Commitment - to the people, to the processes, to their own empoyee. Need to work for a cause ITC, Hindustan Petroleum, HLL , Colgate Palmolive , Several Banks are a few such examples

Rural Products
Easy to Use After sales support Conveniently packed- success of Sachets Product literature to be simple Have a logo easy to identify eg Thums Up

Rural Packaging

Packaging material plastics, poly packs, unbreakable materials Looks- attractive colors Size-convenience

RURAL PRICE
Pricing In Rural Market plays a key role in the success of a product RURAL PRICING OBJECTIVES

Have a long run perspective Idea is to penetrate first Increase Volume Make using the product a habit Volumes to take care of the Margins Keep eye on Competition Price The following may help in addressing the issue Low cost less amount (small packages- sachets) Simple but colorful packaging eg. success of biscuits Refill packs Value engineering eg soya protein in place of milk protein

METHODS OF PRICING

Cost Plus Pricing = cost of product +distribution +profit Value Pricing (VFM-Value for Money) High Benefit Power Price eg Re 1, Rs 2, 3, 5,10 Penetration Price Introduce at low and hike price after success Differential Pricing Different price for different market Price Gap Comp prices range

RURAL DISTRIBUTION
Physical Distribution Channel of Distribution

PHYSICAL DISTRIBUTION Transportation

Warehousing
Transportation Railways, Roads ,Waterways, Animals Communication ITC using internet, Mobile users by fisherman Warehousing (Three Tier Rural Warehousing Set Up)

Communication

Central/State Warehousing Cooperatives Rural Godowns

PLANNING FOR SALES FORCE MANAGEMENT

SET THE PERSONAL SELLING OBJECTIVES FORMULATE THE SALES POLICIES

STRUCTURE THE SALES FORCE SIZE OF THE SALES FORCE ASSIGNING SALES TARGETS CREATING SALES FORCE- SELECT, RECRUIT, TRAIN

SALES FORCE COMPENSATION, MOTIVATION, SUPERVISION

SALES COMMUNICATION & REPORTING

SALES COORDINATION/SALES CONTROL

TRAITS OF A RURAL SALESPERSON

Hardworking Have Empathy Enthusiastic Perseverance Knowledge Attitude Skills Willingness to work in Rural Areas Adopting to cultural differences Down to earth approach Fluent in local language Developmental approach Create not only Communicate Common to both Urban & Rural Sales person

The Success of Organizations depends on lot on the Sales Force

They are the face of the Organization the Ambassador They are the ones who have direct interaction with The Potential Consumer/Customer The Users The Dealers The Distributors The Retailers

They are a major link to the chain and establish the link
They are the ones who help in building Trust They need to break the rigid ideas and preconceived notions

RURAL COMMUNICATION
Effective Communication goes a long way in establishing the right Messages and thereby more interaction with Potential Customers Communication, however, is not complete if there is no feedback It is very important to re enforce messages in Rural areas Factors Affecting Rural Communication 1. Media Habits

2. Traditional approach
3. High resistance more so initially 4. Purchasing power also depending on weather- the crops

5. Inequitable distribution of wealth

6. Too many languages 7. Culture

RURAL MEDIA

Mass Media (Conventional)

Traditional Media (Non Conventional)

T.V /Cable network Satellite Channels Radio Print Cinema/ Theatre Word of Mouth

Puppet Shows Folk Theatre/Opera Demonstration Haats and Mela Wall painting Post card and posters Booklets/Calendar

You are the Marketing Director of A Company dealing in Consumer Durables (TV, Fridge, Washing Machine Music System, Microwave etc).

Your business has been growing steadily in the Urban Market however, you are aware that the Business will grow manifold if you also cater to the Rural market. (Present growth rate has been 8%. You are targeting a growth of 14%) Present your case to the Managing Director and the Board How you intend going achieving the desired Objective with your plans for opening up the Rural Market

Take into account the following The Target Audience The Product proposition Distribution Strategies and Sales Forecast Pricing Strategies Promotional Strategies