4Ps in Rural Markets

Product
Anything that has a value in exchange Product price place promotion Challenges Availability, affordability, acceptability

& awareness
Marketing Tools Product Price Place Promotion Marketing Challenge Acceptability Affordability Availability 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

Product Levels

CORE BENEFIT

BASIC PRODUCT

EXPECTED PRODUCT

AUGMENTED PRODUCT POTENTIAL PRODUCT

Contd
Product Level Characteristics Example Rural Vs Urban

Core Benefit
Basic Product Expected Product

Fundamental benefit/ services

Benefit/service into tangibles Attributes & conditions buyers normally expect Exceeding customer expectations Encompassing all augmentations & transformations

Entertainment
Television Set Digital sound, flat screen Battery Operated TV Jolly Startek TV

Same
Same Appearance of differences in expectations Pleasant surprise for rural customer Uniquely rural value proposition

Augmented Product Potential Product

Product Development Stages

Stage
Idea Generation Idea Screening
Searching

Marketing Activities
for new product ideas

Select

the most promising ideas and drop those with only limited potential. Study the needs and wants of potential buyers, the environment and competition.
Describe or

Concept Testing

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.
Assess

Business Analysis

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.
Determine technical and

Product Development

economic feasibility to produce the product. Convert the product idea into a prototype. Develop and test various marketing mix elements.
Conduct

Test Marketing

market testing. Determine target customers Reactions. Measure its sales performance. Identify Weaknesses in product or marketing mix.
Make

Commercialisation

necessary cash outlay for production facilities. Produce and market the product in the target market and effectively communicate its benefits.

FMCG Consumption Trends

Products Toilet Soap Washing Cake Cooking Oil Hair Oil/ Cream Tea Toothpaste Washing Powder Electric Bulb Shampoo Biscuits Health Beverages Urban( 1000 HH) 998 980 968 897 876 822 819 723 663 579 324 Rural ( 1000 HH) 992 950 952 787 758 449 576 394 352 314 67

Source: National Council for Applied Economic Research, 2002

Consumption Ranking
Rank Rural Product Urban Product Rural HH Consumption grams / month 268 950 268

1 2 3

Toilet Soap Washing Powder Packaged Tea

Toilet Soap Biscuits Washing Powder

4
5

Biscuits
Detergent Cake

Packaged Tea
Detergent Cake

302
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 Company Depot/ C & FA Distributor/ Van Operator/ Super Stockist/ Rural Distributor Sub Distributor/ retail Stockist/ sub stockist/star seller Wholesaler Retailer Location National/ State level District level

1 2

Tehsil HQ, towns and large villages Feeder towns, large villages, haats Villages, haats

4 5

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
Television Radio

Non- Conventional
Haat and Mela Folk Media( puppet and magic show) Video Van Mandi

Personalised
Direct mailer POS (demonstration, leaflet)

Press Cinema

Word of mouth Interpersonal communication Animator

Outdoor: Wall Painting, Hoarding

Melas & Haats

Melas 1. 25,000 melas 2. Companies can concentrate on the top 100 melas 3. Pushkar Mela in Rajasthan Haat 1. Periodic markets located in larger villages(> 40,000) 2. 10 50 villages are serviced 3. Sunday markets are most popular

4. Organised by the state veterinary

department 5. Product sales, promotion, demonstration and database generation 6. Cultural activities and rural sports

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