NATURE AND IMPORTANCE AND NEED OF RURAL MARKETING

Rural Marketing strategies

1. RURAL MARKETING Rural marketing is the study of all the activity , agency and policy involved in the procurement of farm inputs by the Farmers and the movement of rural products from farmers to consumers.

2. Nature of Rural marketing The rural market is quite different from urban markets. Agriculture is the chief economic activity in rural areas, the entire village population is associated directly or indirectly to agriculture. In the process of development of civilization agriculture and pastoral life along river banks are the first of settled life.

3. Size of rural market Rural target population Employment Better living Contribution to national income Increase in farm income Importance of rural marketing

4. Rural v/s Urban OCCUPATION: Rural: Cultivators few non –agricultural pursuits. Urban: manufacturing, trade, commerce, professions

5. Lack of proper communication Distribution problem Seasonal demand Low literacy level Problem and difficulties faced in rural marketing

6. Rural products are the results of the art of agriculture and allied activities. In a narrow sense, rural products refer to the products arising out of the cultivation, namely various crops, vegetables and fruits etc. Rural products

7. Industrial goods consumer goods Industrial goods:-industrial rural goods are those use for further industrial processing. e.g. tobacco, fiber crops like cotton and jute. Consumer goods:-goods are mean for direct use like all food grains, dairy product, poultry products vegetables and fruits. Types of rural goods

8. Rural markets have become the new targets to corporate enterprises for two reasons : 1. Urban market has become congested with too many competitors. 2. The market have reached a near saturation point. Attractiveness of rural market

9. Various factors which have made rule markets viable:- Large population 2. Raising prosperity 3. Growth in consumption 4. Life-style changes 5. Life-cycle advantages 6. Market growth rates higher than urban 7. Rural marketing is not expensive 8. Remoteness is no longer a problem

10. Facts and figures. The Indian rural market today accounts for only about Rs 8 billion (53 per cent - FMCG sector, 59 per cent durables sale, 100 per cent agricultural products) of the total ad pie of Rs 120 billion, thus claiming 6.6 per cent of the total share. So clearly there seems to be a long way ahead. Time and again marketing practitioners have waxed eloquent about the potential of the rural market. But when one zeroes in on the companies that focus on the rural market, a mere handful names come to mind. Hindustan Lever Limited (HuL) is top of the mind with their successful rural marketing projects like 'Project Shakti' and 'Operation Bharat'.

11. Marketing channels are routes through which rural products move from producers to consumers Cleary the main challenge that one faces while dealing with rural marketing is the basic understanding of the rural consumer who is very different from his urban counterpart. Also distribution remains to be the single largest problem marketers face today when it comes to going rural. "Reaching your product to remote locations spread over 600,000 villages and poor infrastructure - roads, telecommunication etc and lower levels of literacy are a few hinges that come in the way of marketers to reach the rural market RURAL MARKETING CHANNELS

12. In 1998 HUL’s personal products unit initiated Project Bharat, the first and largest rural home-to-home operation to have ever been prepared by any company. The project covered 13 million rural households by the end of 1999. During the course of operation, HUL had vans visiting villages across the country distributing sample packs comprising a low-unit-price pack each of shampoo, talcum powder, toothpaste and skin cream priced at Rs. 15. This was to create awareness of the company’s product categories and of the affordability of the products.

13. Khaitan fans' ad on a horse cart

14. The greatest challenge for advertisers and marketers continues to be in finding the right mix that will have a pan-Indian rural appeal. Coca Cola, with their Aamir Khan ad campaign succeeded in providing just that.

15. "Yaara da Tashan...” ads with Aamir Khan created universal appeal for Coca Cola

16. "Yaara da Tashan..." ads with Aamir Khan created universal appeal for Coca Cola Coca-Cola India tapped the rural market in a big way when it introduced bottles priced at Rs 5 and backed it with the Aamir Khan ads. The company, on its behalf, has also been investing steadily to build their infrastructure to meet the growing needs of the rural market, which reiterates the fact that this multinational has realized the potential of the rural market is going strength to strength to tap the same.

17. For HLL, a one rupee or a five rupee sachet or the Kutti Hamam (the small Hamam) helps in giving the consumers a trial opportunity. While it does help in generating volume but not in terms of values. "Till the time that volume - value equation is managed better. Ultimately, the ball lies in the court of rural marketers. It's all about how one approaches the market, takes up the challenge of selling products and concepts through innovative media design and more importantly interactivity.

18. Amul is another case in point of aggressive rural marketing. Some of the other corporates that are slowly making headway in this area are Coca Cola India, Colgate, Eveready Batteries, LG Electronics, Philips, BSNL, Life Insurance Corporation, Cavin Kare, Britannia and Hero Honda to name a few.

19. Interestingly, the rural market is growing at a far greater speed than its urban counterpart. "All the data provided by various agencies like NCAER, Francis Kanoi etc shows that rural markets are growing faster than urban markets in certain product categories at least. The share of FMCG products in rural markets is 53 per cent, durables boasts of 59 per cent market share. Therefore one can claim that rural markets are growing faster than urban markets

20. Satellite dish antennas reach rural India

21. In 2000, ITC took an initiative to develop direct contact with farmers who lived in far-flung villages in Madhya Pradesh. ITC's E-choupal was the result of this initiative.

22. So the fact remains that the rural market in India has great potential, which is just waiting to be tapped. Progress has been made in this area by some, but there seems to be a long way for marketers to go in order to derive and reap maximum benefits. Moreover, rural India is not so poor as it used to be a decade or so back. Things are sure a changing

23. Typical shop in rural India stocked with sachets, etc

24. Daily & weekly commodity prices? Offers & Bids? Market news? Production, processing & trade statistics? Supply and demand balances? Production & price forecasts? What is Rural Market Information System?

25. Market players who can’t or do not want to pay for MIS usually do not value it & can’t benefit significantly from MIS, thus, free market information is not really necessary but making it affordable is an important challenge Example of Ukrainian vegetable farmer (costs of MIS are only about 2% of a revenue from 1 ha or about 0.2% of small farmer’s revenue but it could help them increase revenue by at least 5%). Do you want to reach millions?

26. Improves marketing decisions; Lowers price fluctuations; Facilitates sales and lowers losses; Attracts investments; Improves strategic decisions; Increases competitiveness. Benefits of MIS

27. Farmers (sales, prices, planning, inputs); Processors (purchases, sales, planning); Input, machinery and equipment suppliers (promotion, planning); Wholesalers, importers/exporters, retailers (price, buy, sell, planning); Banks and financial institutions (evaluation of credits); Governments (greater budget revenues, new jobs) Who benefits from MIS?

28. Independency (provider should not be involved in trade or sales of anything besides MI services); Transparency (users should have access to detailed methodology of information gathering and analyses); Continuity (same principles used over time make analyses of time series possible); Key principles of MIS

29. RURAL MARKET RESEARCH

30. Marketing Research is a formalized means of obtaining Information to be used in making marketing decisions Market research Issue Information Required to address Design Method of Collecting Information Manage The data collection process Analyze The results Communicate Finding and implication

31. SOURCES FOR CONDUCTING RURAL MARKET RESEARCH Primary Sources Retail shops/STD booths Tea Stalls Playgrounds/schools Chaupals (meeting point old/middle aged/ influential ) Haats & Melas Influence Group Secondary Sources Government website www.censusindia.com www.indiastat.com www agroindia.com Private bodies (market research advertising agencies Indian Market Research Bureau Thompson Rural Index Guide to Rural Markets Publications

32. POINTS TO REMEMBER FOR RURAL MARKETING RESEARCH

33. 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 Interviewer should be aware of the rural area Never make the respondent uneasy – if he offers tea do not refuse Remember …

34. RURAL MARKET SEGMENTATION TARGETING & POSITIONING

35. 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 Benefits User status regular user, first time user, non user Usage rate Light, medium, heavy Loyalty None, medium, strong Attitude to ) positive, negative, hostile Product )

36. Class Rural Consumer Classification 1995-96 2006=2007 The Affluent/Very Rich Households owning 1.60% 5.60% personal cars/jeep with other products The Well Off Household owning any/all of the foll. 2.70% 5.80% A.C/Motorcycle/scooter/washing m/c color TV with other durable (No car/jeep) The Climbers Households owning any/all of the foll 8.30% 22.40% 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 26.00% 44.60% bicycle,electric fans, electric iron with other durab (not those mentioned in above 3 categories) The Destitutes/Poor Households other than those classified above 61.40% 20.20% Households owning any/all of the foll wristwatch,pressure cooker,cassette recorder transistor/radio Source - NCAER

37. DEVELOP THE PROFILE Select the Target Market Evaluate the Market Evaluate the Segment size growth rate profitability accessible compatible with firm’s resources & capabilities Easy Hard Low High Ease of Implementation Value to Rural Customer

38. TARGETING >Select Target Segment >Formulate Market a marketing strategy for the target market POSITIONING One shoe fits all !!!! ……. Everything for Everyone !!! It is “Something for Someone” How to Position USP of the product – uniqueness of the product Special needs – either address partially/ unaddressed Noticeable gap in the products available Positioning Concept Study the possible motives of the rural customer Then figure out how to appeal to them (USP, Price Quality Uses, Class, Culture etc 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

39. RURAL MARKETING STRATEGY

40. ENTERINING THE RURAL MARKET New Entrant Company starts Rural Market first & then ventures in Urban Market (eg Cavin Kare Chik & Meera Shampoo) Mid- Entrant Company starts Rural Market after success in Urban Market (eg HLL, LG) Late - Entrant Company starts Rural Market after success in Urban Market for long ( eg Cadbury) R G A Retain Grow Add Purpose the market

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

42. 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 IOC and 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

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

44. 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) Launch Take Off Maturity Decline

45. Points to note 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 (like all tea companies) Size and convenience- small is beautiful 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 Creating need by more awareness Partnering with a long term perspective requires total belief and Commitment - to the people, to the processes, to their own employee. Need to work for a cause – ITC, Hindustan Petroleum, HLL , Colgate Palmolive , Several Banks are a few such examples

46. 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

47. RURAL DISTRIBUTION Physical Distribution Channel of Distribution Transportation Warehousing Communication PHYSICAL DISTRIBUTION Transportation Railways, Roads ,Waterways, Animals Communication ITC using internet, Mobile users by fisherman Warehousing (Three Tier Rural Warehousing Set Up) Central/State Warehousing Cooperatives Rural Godowns

48. WHY CHANNELS OF DISTRIBUTION Geographical Spread Dealers are few – hence required to bank on a number of resources Financial Viability Inadequate Bank and Credit Facilities TO ADDRESS THE ABOVE CHALLENGES Rely on Private Village Shops Supply Chain Stores Rural Super Market Small companies tie up with large companies – Leverage/Syndicate Distribution network of Marico to sell Tide by P&G Satellite Distribution Whole- Saler Town D D D D SD SD SD SD SD SD SD SD SD SD SD SD SD SD SD SD SD R D-dealer SD- Sub Dealer R-Retailer

49. 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

50. 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 Additional traits for making it Big in Rural Areas

51. 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

52. 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 Literacy level Media Habits Traditional approach High resistance – more so initially Lavish at occasions ( eg Marriage) Purchasing power also depending on weather- the crops Inequitable distribution of wealth Too many languages Culture

53. RURAL MEDIA Mass Media (Conventional) Traditional Media (Non Conventional) T.V /Cable network Satellite Channels Radio Print Cinema/ Theatre Word of Mouth Video on Wheels Puppet Shows Folk Theatre/Opera Demonstration Haats and Mela Wall painting Post card and posters Booklets/Calendar Advantages >Excellent Reach Less expensive ,wider coverage Disadvantages At times unnecessary coverage No customized messages Companies using this medium Levers, Onida, Videocon Mahindra Tractors, Eveready Advantages >High involvement High Interest Localized administered at low cost Disadvantages Coverage Repeat /Re enforcement Skill of performer Companies using this medium Bajaj, Levers, HUL, ITC

54. 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%) Take into account the following The Target Audience The Product proposition Distribution Strategies and Sales Forecast Pricing Strategies Promotional Strategies How the above strategies will help in achieving the Business Objectives. While making the presentation – you need to be clear on Why you chose to launch the particular product Why did you chose the particular location (Opportunity Assessment)

55. Agriculture Produce Agriculture sector contributes 18.1% GDP in India as on 2011. India is ranked second worldwide in farm output. India is the largest producer of many fresh fruits, vegetables, milk, fibrous plants. India is second largest producer of rice and wheat. India is third largest producer of dry fruits. World five largest producer of 80% agri. produce. World five largest producer of livestock with fastest growth rate as on 2011.

56. Marketing of Agriculture Produce The peculiar characteristic of agriculture produce result in a very complicated marketing system and in the process rural produce are exploited. The rural credit survey conducted by RBI in 1951 described marketing system of agriculture produce as “Inefficient and Exploitative” Income of rural consumer depend upon the efficiency of marketing of agricultural produce irrespective of the technology adopted in production. Any technology Innovation should go hand in hand with efficient marketing.

57. Agri -Marketing Around 700 million people or 70% of India’s population live in 6,38,000 villages in rural areas. 90% of the rural population is concentrated in villages with population of less than 2000. Rural marketing is as old as the civilization. Surplus of agro products are exchanged in earlier days in the barter system. The introduction of currency, transport and communication has increased the scope of rural market.

58. Agri-Marketing The demand for products and services has increased a lot in rural areas. Green Revolution in North and White Revolution in west has brought about a new prosperity in the lives of rural people. Government emphasis on rural development has caused significant changes in the rural scenario. Moreover the special attention given for infrastructure development through the successive Five-Year plans has improved the buying and consumption pattern of rural people.

59. Marketing of Agriculture Produce The Rural Agro – Products The Peculiar Characteristic of Agriculture Produce are : Bulkiness Perishability Wide Varietal Differences Dispersed Production Processing need for consumption Seasonality Comparative Advantage

60. Market them according to needs There are three marketing functions while selling of agri -product Assembling Preparation Distribution Selling of agriculture product depends upon Demand of product Availability of storage

61. Selling strategies The products can be sold directly or stored. It can be sold as gathered from the field or it can be cleaned, graded and processed. Distribution system needs to match supply with the demand by whole selling and retailing in various points of different markets. Most of the time the product is sold to moneylenders where farmers are indebted. It can be sold weekly in village or at irregular intervals in mandi .

62. Government Institutions Commission of agriculture cost and prices. Food Cooperation of India. Cotton Cooperation of India. Jute Cooperation of India. Specialized market for rubber, tea, coffee, tobacco, spices and vegetables. Agriculture Produce Act of 1937.

63. Marketing of Agriculture Produce Agriculture Input can be classified A) Consumable Input into two categories B) Durable Input Plant food (Manure & Fertilizers) Farm Equipment (Tractor, harvester, Thresher) Agro Chemical for Plant Protection (Pest) Irrigation Equipment (Motor, Pump-set) For Power Generation (Diesel, Oil, Petrol, Electricity) Construction Material (Cement, Bricks) Feed (Cattle, Poultry) Transportation Equipment (bullock cart, tractor, truck) Veterinary Medicine Farm Animal (Bullock, Cow, Goat) Packing Material Others (Tiers, Tube, Spare parts)

64. Approximate Consumption Value of Major Agriculture Equipment Input Value In Crore (2002 – 03) Fertilizers 10,000 Pesticide/Insecticide 3,000 Tractor and agriculture machinery 5,000 Electronic motor, pump-set and oil engine 300 Seeds 2000 Total 20,300