Rural Marketing

RURAL MARKETING. Submitted To: Prof. Shibashish Chakraborty.

Prepared By: Niraj Agarwal Section-D Enrollment No: 08BS0002006

Niraj Agarwal

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TABLE OF CONTENTS Acknowledgement

2

Introduction

4

What makes Rural India attractive?

5

Marketing Strategies for Rural India

6-9

ITC – Rural Marketing Strategy

10-13

Conclusion

14

References

15

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ACKNOWLEDGEMENT This project could not have been completed without Prof. Shibashish Chakraborty who not only taught us Marketing Management-II but also encouraged and motivated us to do challenging projects. I am grateful towards him for giving us such a knowledge enhancing project. I thank him for explaining the concepts so nicely that we could apply the same in a practical project easily.

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INTRODUCTION In recent years, rural markets of India have acquired significance, as the overall growth of the Indian economy has resulted into substantial increase in the purchasing power of the rural communities. On account of green revolution, the rural areas are consuming a large quantity of industrial and urban manufactured products. In this context, a special marketing strategy, namely, rural marketing has emerged. But often, rural marketing is confused with agricultural marketing - the latter denotes marketing of produce of the rural areas to the urban consumers or industrial consumers, whereas rural marketing involves delivering manufactured or processed inputs or services to rural producers or consumers.

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WHAT MAKES RURAL INDIA ATTRACTIVE? It is an upcoming market and the following facts substantiate this 800 million people  Estimated annual size of the rural market •

FMCG Rs 65,000 Crore

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Durables Rs 5,000 Crore

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Agri-inputs (incl. tractors) Rs 45,000 Crore

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2 / 4 wheeler vehicles Rs 8,000 Crore

 In 2001-02, LIC sold 55 % of its policies in rural India.  Of two million BSNL mobile connections, 50% are in small towns/villages.  Of the six lakh villages, 5.22 lakh have a Village Public Telephone (VPT)  41 million Kisan Credit Cards issued (against 22 million credit-plus-debit cards in urban) with cumulative credit of Rs 977 billion resulting in tremendous liquidity.  42 million rural households are availing banking services in comparison to 27 million urban households.  Investment in formal savings instruments: 6.6 million households in rural and 6.7 million in urban India.  Nano-Marketing or sachets worked well in rural India and there is ample scope for the products to be accepted by consumers if the price is competitive.

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MARKRTING STRATEGIES TO CAPTURE RURAL INDIA 

BY COMMUNICATING AND CHANGING QUALITY PERCEPTION Companies are coming up with new technology and they are properly communicating it to the customer. There is a trade of between Quality a customer perceives and a company wants to communicate. Thus, this positioning of technology is very crucial. The perception of the Indian about the desired product is changing. Now they know the difference between the products and the utilities derived out of it. As a rural Indian customer always wanted value for money with the changed perception, one can notice difference in current market scenario.

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BY PROPER COMMUNICATION IN INDIAN LANGUAGE The companies have realized the importance of proper communication in local language for promoting their products. They have started selling the concept of quality with proper communication. Their main focus is to change the Indian customer outlook about quality. With their promotion, rural customer started asking for value for money.

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BY TARGET CHANGING PERCEPTION If one go to villages they will see that villagers using Toothpaste, even when they can use Neem or Babool sticks or Gudakhu, villagers are using soaps like Nima rose, Breeze, Cinthol etc. even when they can use locally manufactured very low priced soaps. Villagers are constantly looking forward for new branded products. What can one infer from these incidents, is the paradigm changing and customer no longer price sensitive? Indian customer was never price sensitive, but they want value for money. They are ready to pay premium for the product if the product is offering some extra utility for the premium.

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BY UNDERSTANDING CULTURAL AND SOCIAL VALUES Companies have recognized that social and cultural values have a very strong hold on the people. Cultural values play major role in deciding what to buy. Moreover, rural people are emotional and sensitive. Thus, to promote their brands, they are exploiting social and cultural values.

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BY PROVIDING WHAT CUSTOMER WANT The customers want value for money. They do not see any value in frills associated with the products. They aim for the basic functionality. However, if the seller provides frills free of cost they are happy with that. They are happy with such a high technology that can

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fulfill their need. As "Motorola" has launched, seven models of Cellular Phones of high technology but none took off. On the other hand, "Nokia" has launched a simple product, which has captured the market. 

BY PROMOTING PRODUCTS WITH INDIAN MODELS AND ACTORS Companies are picking up Indian models, actors for advertisements as this helps them to show themselves as an Indian company. Diana Hyden and Shahrukh Khan are chosen as a brand ambassador for MNC quartz clock maker "OMEGA" even though when they have models like Cindy Crawford.

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BY ASSOCIATING THEMSELVES WITH INDIA MNCs are associating themselves with India by talking about India, by explicitly saying that they are Indian. M-TVduring Independence Day and Republic daytime make their logo with Indian tri-color. Nokia has designed a new cellular phone 5110, with the India tricolour and a ringing tone of "Sare Jahan se achcha".

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BY PROMOTING INDIAN SPORTS TEAM Companies are promoting Indian sports teams so that they can associate themselves with India. With this, they influence Indian mindset. LG has launched a campaign "LG ki Dua, all the best". ITC is promoting Indian cricket team for years; during world cup they have launched a campaign "Jeeta hai jitega apna Hindustan India India India". Similarly, Whirlpool has also launched a campaign during world cup.

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BY TALKING ABOUT A NORMAL INDIAN Companies are now talking about normal India. It is a normal tendency of an Indian to try to associate him/her with the product. If he/she can visualize himself/herself with the product, he /she become loyal to it. That is why companies like Daewoo based their advertisements on a normal Indian family.

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BY DEVELOPING RURAL-SPECIFIC PRODUCTS Many companies are developing rural-specific products. Keeping into consideration the requirements, a firm develops these products. Electrolux is working on a made-for India fridge designed to serve basic purposes: chill drinking water, keep cooked food fresh, and to withstand long power cuts.

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BY GIVING INDIAN WORDS FOR BRANDS Companies use Indian words for brands. Like LG has used India brand name "Sampoorna" for its newly launched TV. The word is a part of the Bengali, Hindi, Marathi and Tamil tongue. In the past one year, LG has sold one lakh 20-inch Sampoorna TVs, all in towns with a population of around 10,000.

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BY ACQUIRING INDIAN BRANDS As Indian brands are operating in India for a long time and they enjoy a good reputation in India. MNCs have found that it is much easier for them to operate in India if they acquire an Established Indian Brand. Electrolux has acquired two Indian brands Kelvinator and Allwyn this has gave them the well-established distribution channel. As well as trust of people, as people believe these brands. Similarly Coke has acquired Thumps up, Gold Spot, Citra and Limca so that they can kill these brands, but later on they realized that to survive in the market and to compete with their competitor they have to rejuvenate these brands.

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BY EFFECTIVE MEDIA COMMUNICATION Media Rural marketing is being used by companies. They can either go for the traditional media or the modern media. The traditional media include melas, puppetry, folk theatre etc. while the modern media includes TV, radio, e-chaupal. LIC uses puppets to educate rural masses about its insurance policies. Govt of India uses puppetry in its campaigns to press ahead social issues. Brook Bond Lipton India ltd used magicians e_ectively for launch of Kadak Chap Tea in Etawah district. In between such a show, the lights are switched of and a torch is flashed in the dark (EVEREADYs tact).

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BY ADOPTING LOCALISED WAY OF DISTRIBUTING Proper distribution channels are recognized by companies. The distribution channel could be big scale Super markets; they thought that a similar system can be grown in India. However, they were wrong; soon they realized that to succeed in India they have to reach the nook and the corner of the country. They have to reach the "local Paan wala, Local Baniya" only they can succeed. MNC shoe giants, Adidas, Reebok, and Nike started with exclusive stores but soon they realized that they do not enjoy much Brand Equity in India, and to capture the market share in India they have to go the local market shoe sellers. They have to reach to local cities with low priced products.

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BY ASSOCIATING THEMSELVES WITH INDIAN CELEBRITIES MNCs have realized that in India celebrities enjoyed a great popularity so they now associate themselves with Indian celebrities. Recently Luxor Writing Instruments Ltd. a JV of Gillette and Luxor has launched 500 "Gajgamini" range of Parker Sonnet Hussain special edition fountain pens,priced at Rs. 5000. This pen is signed by Mr. Makbul Fida Hussain a renowned painter who has created "Gajgamini" range of paintings. Companies are promoting players like Bhaichung Bhutia, who is promoted by Reebok, so that they can associate their name with players like him and get popularity.

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MELAS Melas are places where villagers gather once in a while for shopping. Companies take advantage of such events to market their products. Dabur uses these events to sell products like JANAM GHUTI(Gripe water). NCAER estimates that around half of items sold in these melas are FMCG products and consumer durables. Escorts also display its products like tractors and motorcycles in such melas.

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PAINTINGS A picture is worth thousand words. The message is simple and clean. Rural people like the sight of bright colours. COKE, PEPSI and TATA traders advertise their products through paintings.

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ITC (Agri Business Division) ITC's pre-eminent position as one of India's leading corporates in the agricultural sector is based on strong and enduring farmer partnerships, that has revolutionized and transformed the rural agricultural sector. A unique rural digital infrastructure network, coupled with deep understanding of agricultural practices and intensive research, has built a competitive and efficient supply chain that creates and delivers immense value across the agricultural value chain. One of the largest exporters of agri products from the country, ITC sources the finest of Indian Feed Ingredients, Food Grains, Edible Nuts, Marine Products, Processed Fruits, Coffee & Spices. ITC’s Agri Business Division, one of India’s largest exporters of agricultural commodities, has conceived e-Choupal as a more efficient supply chain aimed at delivering value to its customers around the world on a sustainable basis.

The e-Choupal model has been specifically designed to tackle the challenges posed by the unique features of Indian agriculture, characterised by fragmented farms, weak infrastructure and the involvement of numerous intermediaries, among others.

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Why into Rural Marketing? ITC entered into rural marketing because it understood the problems faced by the farmers and also realized the vast opportunity it can capitalize using its mammoth reserves and surplus. The problems faced by farmers can be best explained with –

Thus it clearly explains that farmers basically suffered from 2 D’S  Deep Sea Institutional support o Information of farming best practices o Information on weather o Quality and Information on inputs  Devil – Middle man o Price Discovery o Quality and Weightment o Handling Loss Niraj Agarwal

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The root cause and implications can be sumarised as –

Root Causes Fragmentation Dispersion Heterogeneity

Implications Weak Bargaining Power No access to real time information Need for customized knowledge

The e-choupal initiative of ITC helped farmers of rural India in following ways –

“e” helps overcome 2 D’s in following ways –  Price discovery before deciding to sell.  Freedom of choice for transaction.  Payment – cash on spot.  Knowledge on farming best practices.  Information on weather.  High quality products and solutions – usage.  It provided power of scale to farmers.  It led to overall improvement in productivity.  Sanchalaks has built tremendous trust and credibility in villages. Niraj Agarwal

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RURAL MARKETING STRATEGY – 4 A’S Availability: It emphasizes on the availability of the goods and services to the end consumers. In the case of e-choupal the products are available continuously because sanchalaks maintains continuous inventory and maintains aggregate demnand. Affordability: It focuses on product pricing. ITC buys from farmers directly in the last days closing price and even pays them for transportation. Goods are weighted electronically and hence farmers are no more cheated as they used to be previously. Hence it is a win-win situation both for farmers and the company. Acceptability: It focuses on convincing the customer to buy the product. ITC’s e-choupal initiative is proving the farmers with real time updated information on weather. It is providing them customized knowledge in the form of farm management and risk management. It is also providing them lower transaction cost. It is also providing them financial services in the form of life, general, health and crop insurance. Awareness: It focuses on making people aware of the product. It is providing active servicing up to rural outlets. It is providing them with wide range of product categories. Moreover it has made entrepreneurs out of farmers as they are managing most of the work, it instills in them the sense of ownership.

This enthusiastic response from farmers has encouraged ITC to plan for the extension of the ‘eChoupal’ initiative to altogether 15 states across India over the next few years. On the anvil are plans to channelise other services related to micro-credit, health and education through the same 'e-Choupal' infrastructure.

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CONCLUSION ITC e-Choupal, an innovative strategy which is elaborative and extensive in rural markets so far. Critical factors in the apparent success of the venture are ITCs extensive knowledge of agriculture, the eort ITC has made to retain many aspects of the existing production system,

including

retaining

the

integral

importance of local partners, the companies commitment to transparency, and the respect and fairness with which both farmers and local partners are treated. The concepts, which are becoming more important in every market, include color, product attractiveness visibility, and display quality. In addition, availability (meeting local demand by increasing production locally), acceptability (building brand equity), and affordability (pricing higher than local brands, but adapting to local conditions) are the key factors.

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REFERENCES  Kashyap,Pradeep and Raut, Siddhartha. The Rural Marketing Book- Text & Practice, New Delhi: Biztantra,2005-06,381p  http://www.itcportal.com/sets/echoupal_frameset.htm  http://www.itcportal.com/sets/agriexp_frameset.htm  http://www.echoupal.com/

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