Rural Marketing

Rural marketing in India

1. Rural Marketing Presented by:- Prajakta Chitalkar Ajay Devgire Supriya Dhamne Sachita Gadekar Nakul Gavhane

2. Content Introduction Evolution Characteristics Scope Importance Rural vs urban Rural products Attractiveness of rural market Factors contributing to the rural market Problems in rural marketing Strategy for rural marketing

3. Rural Marketing can be defined as the process of developing, pricing, promoting, distributing rural-specific goods and services leading to exchange between urban and rural markets, which satisfies consumer demand and also achieves organisational objectives. (Rural: “places far away from towns or cities” -Collins’s Cobuilds Dictionary(2001))

4. Rural India According to 2012 census, rural population is 75% of total population and it is scattered over a wide range of geographic area. Approximately 75% of India’s population lives in 6,38,365 villages spread over 32 lakh sq.km. Income Level of Households % share of population Less than 90,000 65 90,000 to 2 lakhs 32 2 to 5 lakhs & above 03

5. Phase I Prior to the 1960s Agriculture products such as food grains. Industrial inputs like cotton, oilseeds, sugarcane. Not giving importance to metallic utensils, agricultural tools made by skilled workers like Carpenters, potters, blacksmiths Phase II 1960s-1980s Green Revolution White Revolution FMCG companies began establishing a distribution network in rural segment . Evolution of Rural Marketing

6. Phase III (1990s-2000 ) During first two phases, marketing of consumables and durables to rural markets was not considered seriously. Because- Growth of urban markets in this period Potential of rural markets was not visible. Rural markets were not very accessible. Poor infrastructure of village. In 1990s, India’s industrial sector gained in strength and maturity. Increase plan outlay of central and state government for Rural Development. Realizing potential of rural markets .

7. Phase IV (After 2000) Rural marketing has taken centre-stage. FMCG have planned for increased visibility, hired people to establish local connections. Ex. Hindustan Unilever, Godrej consumer products, Dabur , ITC. Automobiles companies launching more models in the affordable price range. Reliance has entered with mobile connections. After 2000, Govt. initiatives like farm loans, employment, rural infrastructure development programmes .

8. Characteristics of the rural market Large and scattered Market Heterogeneous Market Income from Agriculture Standard of Living Infrastructural Facilities

9. 1. Rising rural prosperity:- Average income level has unproved due to modern farming practices, contract farming industrialization, migration to urban areas etc. 2. Growth in consumption :- There is a growth in purchasing power of rural consumers. 3. Change in life style :- Life style of rural consumer changed considerably 4. Market growth rate higher than urban :- The growth rate of fast moving consumer goods [FMCG] market and durable market is high in rural areas. The rural market share is more than 50% for products like cooking oil, hair oil etc. SCOPE OF MARKETING:

10. Rural Marketing is a two-way marketing process wherein: Urban to rural : Major part of rural marketing. Includes transactions of urban marketers who sell their goods and services in rural areas pesticides, fertilizers, FMCG products, tractors, bicycles, consumer durables, etc. Rural to urban: Basically falls under agricultural marketing. A rural producer seeks to sell his produce in urban market like seeds, fruits and vegetables, forest produce, spices, milk and related products, etc. Rural to rural : Includes the activities that take place between two villages in close proximity to each other like agricultural tools, handicrafts, dress materials, bullock carts, etc.

11. IMPORTANCE OF RURAL MARKETING Size of rural market Rural target population Employment Better living Contribution to national income Increase in farm income

12. Urban Vs Rural Marketing No. Aspects Urban Rural Philosophy Marketing & Social concept Development & Relationship marketing 2. Market Demand High Low 3. Competition organized sector Unorganized sector 4. Literacy High Low 5. Income High Low 6. Needs High level Low Level

13. NO. Aspects Urban Rural 7. Adoption Faster Slow 8. Product : - Awareness High Low - Concept Known Unknown - Quality Good Moderate 9. Price : - Sensitive Yes Very much - L evel desired Medium-high Medium-low 10. Transportation Good Average 11. Advertising Print, audio visual, outdoors.etc TV, Radio , print media in many languages 12. Personal selling Door-to door, frequently Occasionally

14. RURAL CONSUMER Classification The rural consumers are classified into the following groups based on their economic status: The Affluent Group They are cash rich farmers. Very few in number. They have affordability but do not form a demand base large enough for marketing firms to depend on. Wheat farmers in Punjab and rice merchants of Andhra Pradesh fall in this category.

15. The Middle Class One of the largest segments for manufactured goods. It is fast expanding. Farmers cultivating sugar cane in UP and Karnataka fall in this category. The Poor This constitutes a huge segment. Purchasing power is less, but strength is more. They receive grants from the government and reap the benefits of many such schemes and may move towards the middle class. The farmers of Bihar and Orissa fall under this category.

16. Characteristics The rural consumer has a very high involvement in any product purchased. He purchases products more often (mostly weekly), usually in small quantities. He is very quality conscious but value for money is of prime importance. He looks more for functionality of the product rather than frills associated which he cannot use but for which he will have to pay extra. He is brand loyal. Once loyalty formed is difficult to dislodge.

17. He understands symbols and colors better, and looks for endorsement by leaders or icons. The source of information is critical for him, as he is influenced by information received and opinion formed through various resources in his purchasing decisions. Purchasing decisions are usually taken by the eldest member of the family. Major purchasing is done during the festivals. In many cases, the buyer is different from the user.

18. CONSUMER BEHAVIOUR Consumer buyer behaviour refers to the buying behaviour of final Consumer – individuals and households who buy goods and services for personal consumption. About 70% of Indian population lives in rural areas. About 80 crore people lives in 6,00,000 villages. Consumers in this huge segment have displayed vast differences in their purchase decisions and the product use. Villagers react differently to different product, colour, sizes etc. in different parts of India.

19. Differences between Brands High Low Involvement High Low CONSUMER BUYING BEHAVIOUR MODEL

20. Complex Buying Behaviour: Buying behaviour is complex when products to be bought are expensive and many different brands exist. Consumer highly involved in purchase and aware of significant differences in brands Eg . Automobiles, computers Dissonance reducing Buying Behaviour: In case of products which are expensive but have few differences. Consumer is highly involved in purchase but sees little differences in the brands. Eg . Furniture

21. Habitual buying Behaviour: Products which are frequently purchased. Low consumer involvement and absence of significant brand differentiation. Eg . Salt ,soap Variety seeking buying Behaviour: These are products that are less expensive and frequently purchased but have significant differences. Low consumer involvement but significant brand knowledge. Eg . Confectionery items

22. Rural Taste Subject Urban Taste Bold and Primary Colors Colors Liked Shades of Colors, Light Hues Cinema, Nautanki , Dangals , Melas Entertainment Theme Parks, Internet, Travel Synthetics, Colorful Clothes Denim, Cottons, Designer Red – Happiness, Auspicious. Green - Prosperity Color Relevance Red – Danger Green - Safety RURAL TASTE VS URBAN TASTE

23. FACTORS INFLUENCING RURAL CONSUMER BEHAVIOUR Environmental factors Personal factors Psychological factors Cultural factors Social factors

24. ENVIRONMENTAL FACTORS: Economic Factors: The quantum of income and the earning stream determines what a consumer will be able to buy. Political factors: The philosophy and decisions of ruling party and thinking of rival parties greatly influence the fortune of rural people. Eg . four fold increase in outlay for rural development from seventh to nine five year plan, Programmes like Prime minister’s Rojgar Yojana Technological development: Technology has an impact on the occupations and life styles of rural people. Legal: Eg . Consumer protection act Cultural factors : Buying decisions are highly influenced by social customers, traditions and beliefs. Social class: Aspect Traditional Modern Agriculture Bullock cart Tractors Life style Neem stick Toothpaste

25. PERSONAL FACTORS Age and life cycle stages : A person began with child birth, move to infancy ,teenage, adult, middle age, old, and then ends with death. Under each stage buying behavior is different. Eg . Child stage –Toys, daliya , teeen age –Bicycle ,Young- motorcycle, Middle age-Tractor, Old- chaupal Occupation : This leads to increase the demand for consumer durables. Economic circumstance : At same income level, a rural consumer has relatively high disposable income

26. Life style: How people spend their money and time in day to day activities. Personality and self concept: Personality is a combination of factors such associability, self confidence and dominance.

27. PSYCHOLOGICAL FACTORS Motivation : Rural consumers are satisfied by meeting the 2 needs i.e. physical and security need Perception : Needs, wants, values attitudes and personal experience vary from person to person. consumer’s perception means what he thinks about the product, producer or the brand. Learning: It is a process of acquiring knowledge about products, product benefits, method of usage and maintenance Beliefs and attitudes : Attitude indicates our feeling about a product, service, brand and shop. Belief may be positive, negative or neutral

28. CULTURAL FACTORS Culture and sub culture : Culture represents an overall heritage a distinctive form of environmental adaption. Eg . Traditional life, traditional occupation, traditional beliefs Sub culture : It exists within the dominant culture, with its own set of values, beliefs and attitudes and behaviour pattern. The pattern of behaviour would vary between north and south even in rural areas. Social class : Consumer behaviour is determine by social class to which they belong and is determine by a combination of factors like education, occupation, income and assets.

29. SOCIAL FACTORS Family: The members of family play different roles such as influencer decider and purchaser in buying process. Buying habits have been shaped by family influences. Reference group: It includes family and friends with whom an individual interacts on a face to face basis. Word of mouth communication positive opinion towards a product or service based on admiration

30. Urban Buying Process Rural High-involvement product, comfort, status, drive, consumer’s recognition for need Need Recognition High involvement product - productivity drives consumer’s recognition for need. First hand information from TV, Internet, Newspaper Ads/ Consults a fellow owner before dealer visit Information search First hand information from a fellow owner and nearby dealer at district town. Educated/aware understands, analyses technical specifications. At most looks for test drive Evaluation of alternatives Lower education and awareness. More importance to fellow owner and illustration of dealer. Consults opinion leader like progressive farmers. Live field demonstration. Normally buyer makes final decision. Family influences color and looks,. Drives new car home with family. Purchase decision Collective decision by buyer, adult son, mechanic and progressive village farmer.

31. Urban Buying Process Rural Higher satisfaction or dissonance because of greater risk factor. Higher risk taking ability, because of wanting experimentation. After sales service no issue Post-purchase behavior Higher satisfaction, lower dissonance. Because risk-taking is lower and expectation level is low. Low risk-taking ability because life-attached product, lack of technical know how, low confidence on after sales service.

32. Recently have graduated from Unbranded to Branded. Brand association mainly with colours , visuals and numbers and do not with name of brand. Colours – Lal dant manjan , Lal sabun ( Lifeboy ), Red Battery(Eveready) Numbers - Godrej No.1 soap, Broke Bond A1 karak chai Visuals – Ghari detergent, Katchua Chaap mosquito coil Retailers plays a significant role in Brand promotion. Have strong bond with consumers. Low brand awareness ,enables retailers to push any brand of their choice. PRODUCT BRANDING IN RURAL MARKETING

33. Major brands and products are facing huge problems with fake products Fakes Markets Categories : Look-alikes : Color scheme on the packaging material closely resembles to popular brand. Ex. Lalita Amla for Dabur Amla Spell- alikes : Packaging is similar but names with subtly or cleverly misspelt . Ex. Paracute for parachute, Fair & Lonely for Fair & Lovely Duplicates : Exact replicas of original brands. Colour , design, name and packaging are same. Differs in quality of product. FAKE BRANDS

34. GOVERNMENT INITIATIVES Credit cards ( Kisan credit card) to farmers from the public sector banks which helped them to take short and medium term loans to buy seeds, fertilizers, etc. This enabled them to produce more thus increasing their income. Large inflow of investment for rural development programmes from the government. Schemes like IRDP (Integrated Rural Development Programme ) and REP (Rural Electrification Program me) in the 1970’s gave a boost to the agrarian economy. This resulted in changes in people’s habits and social life. REP gave impetus to the development of consumer durable industry.

35. ATTRACTIVENESS OF RURAL MARKET 1. Large population 83.3cr Indians consisting of 16.78 cr households reside in 6,40,867 villages (Census, 2011). It constitutes about 68.84% of the Indian population. 2. Growth of market The market has been growing at a rate of 3-4% annually adding more than one million new consumers every year. 3 . Increasing Income And Purchasing Power The agricultural development programs of the government have helped to increase income in the agricultural sector 4 . Accessibility Of Markets The attraction of a market depends not only on its potential but also on its accessibility. The road network has facilitated a systemized product distribution system to villages.

36. 5. Consumer Behaviour Changes: Increased literacy and greater awareness in rural markets create new demands and discriminating buyers. 6.. Competition In Urban Markets Intensified competition in urban markets increases costs and reduces market share. The rural markets are therefore becoming increasingly attractive in relation to urban markets. 7. Various Government Policies The governments stress on self-sufficiency resulted in various schemes like Operation Flood (White Revolution), Blue Revolution, Yellow Revolution, etc. resulted in the production of 15 million tons of milk per annum 8. Green Card / Credit Card For Farmers The government initiated credit cards for farmers through public sector banks.

37. 9. Improved Exports Due To Export Policy The new Export Policy 2000 paves the way for open market (OGL- Open General License System ) status for agriculture. The World Trade Organizations (WTO) Policy for agro-exports has increased exports of Indian agricultural produce thereby increasing incomes of the rural population. Better Credit Facilities Through Banks With co-operative banks taking the lead in the rural areas, every village has access to short, medium, long-term loans from these banks.

38. FACTORS CONTRIBUTING TO THE GROWTH OF RURAL MARKET 1. New Employment Opportunities Government schemes like IRDP (Integrated Rural Development Programme), JRY (Jawahar Rozgar Yojana) and TRYSEM (Training Rural Youth for Self Employment) have created new employment opportunities in rural India. 2. Green Revolution The vision of Dr. Swami Nathan, the father of the green revolution to achieve self-sufficiency in food grain production in 1995, gave a major breakthrough in food grain production by the use of scientific methods in agriculture. At present, Rural India generates 299 million tons annually. 3. Favourable Government Policies Tax exemption in backward areas,sussidy,concession,incentives and heavy investment in rural develpoment programmes in has bought rapid growth of rural markets.

39. 4. Literacy Growth Literacy rate is increasing in rural areas, nearly 45% of rural Indians are literate. This being social and social and cultural changes in buying behaviour of the rural customers. 5. Rising Disposable Income Green revolution and administered Pricing Mechanism have raised disposable income in rural areas. 6. Attraction of higher Standard of living Rural people have been motivated to change their lifestyles and have higher standard of living. 7. Media Mass Media has created increased demand for goods and services in rural areas. Smart marketers are employing the right mix of conventional and non-conventional media to create increased demand for products.

40. PROBLEMS IN RURAL MARKETING 1. Deprived people and deprived markets The number of people below the poverty line has not decreased in any appreciable manner. A vast majority of rural people is tradition bound, and they also face problems such as inconsistent electrical power, scarce infrastructure etc. 2. Lack of communication facilities Even today, most villages in the country are inaccessible during the monsoons. C ommunication infrastructure is also highly underdeveloped. 3.Transport Many rural areas are not connected by rail transport. Many roads have been poorly surfaced and got severely damaged during monsoons.

41. 4. Many languages and dialects The languages and dialects vary from state to state, region to region and probably from district to district. Since messages have to be delivered in the local language, it is difficult for the marketers to design promotional strategies for each of these areas. 5 . Low per capita Income D emand in rural markets depends on the agricultural situation, which in turn depends on the monsoons. Therefore, the demand is not stable or regular 6. Low levels of literacy The level of literacy is lower compared with urban areas. This again leads to a problem of communication in these rural areas. 7. Prevalence of spurious brands and seasonal demand Rural consumers are cautious in buying and their decisions are slow, they generally give a product a trial and only after complete satisfaction they buy it again.

42. 8. Different way of thinking The rural customer has a fairly simple thinking and their decisions are still governed by customs and traditions. It is difficult to make them adopt new practices . 9. Warehousing problem Warehousing facilities in the form of godowns are not available in rural India. The available godowns are not properly maintained to keep goods in proper conditions. 1o. Problems in sales force management The languages and dialects vary from state to state, region to region, and probably from district to district. Since messages have to be delivered in the local language, it is difficult for sales force to communicate with the rural consumers. 11. Distribution problem . Rural markets typically signify complex logistical challenges that directly translate into high distribution costs. Bad roads, inadequate warehousing and lack of good distributors pose as major problems to the marketers.

43. STRATEGIES FOR RURUAL MARKETING

44. SEGMENTATION TOTAL POPULATION SEGMENT TARGET Breaking down a diverse market into homogeneous groups

45. BASIS TO SEGMENTATION OF RURAL MARKET BEHAVIORAL Occasions Loyalty & usage status / rate

46. TARGETING THE RURAL MARKET SEGMENT Targeting involves evaluating each market segment’s attractiveness and selecting any one or more segments to enter. Evaluation of segments Selection of segments Coverage of segments 1.Step-Evaluation of segments -Profitability of the segment -Attractiveness of the segment -Growth rate of the segment -Company’s objective -Limitations of the segment

47. 2. Step: selection of the segment Selection of segment can be made by rating the alternative segments on a predetermined scale in respect of 5 aspects given above. The segment may be ranked based on the scores obtained and be considered for selection. Those with the high scores will be accepted and the others will be kept aside for future consideration . 3.Step: coverage of the segment Organization has 3 alternative coverage strategies to suit their segmentation approaches. They are: Undifferentiated marketing strategy Differentiated marketing strategy Concentrated marketing strategy

48. TARGETING OF Step 1. Evaluation of segments Profitability of the segment HUL’s Lifebuoy has targeted mainly the major segment of rural area i.e. the working segment from the age group of 20 – 50. Thus this age group comprises majority of the rural population. Hence, this segment is 100% profit Promising . Attractiveness of the segment: In rural India, health is of paramount importance, because indisposition is very directly related to loss of income. People in rural area are mostly into agricultural activities or its allied activities. Hence, they have to play with mud on daily basis. If the farmer is well protected then the country is well protected.

49. Growth: Since 70% of India’s population lives in rural area, this sector is definitely gong to grow. Also the age group that Lifebuoy had targeted is large enough to capture the entire market. Hence, the growth can be seen in the area. Company’s objectives: Company’s objective is to make Lifebuoy synonymous to soap in the entire country. Its objective is to make Lifebuoy the most trusted soap of India. Unilever's mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life . Limitations: The major limitation of lifebuoy is that, it has targeted only one segment of the rural market. The age group of 0-20 and 50-70 remains untapped. The opinion leader i.e. the doctor is also not so appealing to the rural people. Hence their opinion leader fails to promote the product

50. TARGETING OF Step 2: selection of the segment HUL for Lifebuoy has targeted only one major segment of the rural market i.e. the working class . Step 3: coverage of the segment Concentrated marketing strategy is used by Lifebuoy. Lifebuoy is targeted only to 1 segment i.e. the working class. Their opinion leader targets to the working class of the rural market. Therefore this strategy has provided Lifebuoy a kind of brand loyalty form the working class of the rural market.

51. POSITIONING Positioning is the act of finding place in the minds of the consumers and locating the brand therein . The companies have to plan the positions that give their products the necessary advantage in the target markets. Identifying the differences of the offer with the competitors offer Selecting the differences that have greater competitive advantage Communicating such advantage effectively to the target audience. uniqueness of the brand

52. STEP 1 Identifying the differences of the offer with the competitors offer The marketing offer may be differentiated along the following lines: --Product differentiation --Service differentiation --People and image. STEP 2 Selecting the differences that have greater competitive advantage When the company identifies several differences it can evaluate them with the help of following criteria: --Attractiveness --Distinctiveness --Primitiveness --Affordability --Communicable

53. STEP 3 Communicating such advantage effectively to the target audience Once the company has chosen the difference it has to choose an appropriate marketing strategy.

54. P R O D U C T S T R A T E G Y

55. PRICING STRATEGY FOR RURAL MARKERTING

56. DISTRIBUTION STRATEGY

57. PROMOTION STRATEGY Promoting Products with Indian Models and Actors: Promoting Indian Sports Team : -Companies may promote Indian sports teams so that they can associate themselves with India. -With this, they influence Indian mindset. ITC was promoting Indian cricket team for years; during world cup they launched a campaign " Jeeta hai jitega apna ‘Hindustan India India India ’’ 3. Talking about a comman Indian: Indians likes to associate with the product. When they can visualize themselves with the product , they become loyal to it -Amir khan promoted coke -As Amir khan projects simplicity and integrity the rural customer admire him -They think, if Amir drinks coke it has to be good.

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