Session

1
4Ps in Rural Markets

• Session III
• Xavier Institute of Management, Bhubaneswar

2
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
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Contd
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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

5
Product Levels
CORE BENEFIT
BASIC PRODUCT
EXPECTED PRODUCT
AUGMENTED PRODUCT
POTENTIAL PRODUCT
6
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
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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.
8
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 Source National Council for Applied Economic Research, 2002 Source National Council for Applied Economic Research, 2002
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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 Source A.C Nielsen Retail Audit, MAT, July -2004 ORG- MARG Retail Consumer Panel, 2001 Source A.C Nielsen Retail Audit, MAT, July -2004 ORG- MARG Retail Consumer Panel, 2001 Source A.C Nielsen Retail Audit, MAT, July -2004 ORG- MARG Retail Consumer Panel, 2001
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Rural Durable Usage Trends

• NCAER has classified durables into three
  categories
• Group One( ltRs. 1000)
• Group Two( Rs.1000- 6000)
• Group Three( gt6000)
• 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

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Packaging

• Associated with affordability - Convenience -
  Consumer recognition product protection
• Packaging material, size, convenience and
  aesthetics
• Example Chik Sampoo

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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

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Fakes Some Examples
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Contd
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Pricing
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Issues in Pricing

• Internal external factors
• Selecting pricing methods
• Pricing adaptations
• Low price points Simple packaging utility
  around packaging material
• Highlighting value

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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

18
Colgate- Cibaca
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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

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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
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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

22
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
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Melas Haats
Melas Haat
25,000 melas Companies can concentrate on the top 100 melas Pushkar Mela in Rajasthan Organised by the state veterinary department Product sales, promotion, demonstration and database generation Cultural activities and rural sports Periodic markets located in larger villages(gt 40,000) 10 50 villages are serviced Sunday markets are most popular Average number of outlets is 315 and average daily sales is about Rs 2 lakhs Traders participate in at least 4 haats 81 percent of the visitors are repeat customers
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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

25
Contd

• Push strategy sales force and trade promotion
• Pull strategy advertising and consumer
  promotion

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Close of Session

• Thank You