Niraj Rural Marketing

Niraj Agarwal Page 1

RURAL MARKETING.

Submitted To: Prof. Shibashish Chakraborty.

Prepared By:

Niraj Agarwal

Section-D

Enrollment No: 08BS0002006


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


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.


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.


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

• Durables Rs 5,000 Crore

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

• 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.


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.

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.

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.

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.

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


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.

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 tri-

colour and a ringing tone of "Sare Jahan se achcha".

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.

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.

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.


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.

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.

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).

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.


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.

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.

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.


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.


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


The root cause and implications can be sumarised as –

Root Causes Implications

Fragmentation Weak Bargaining Power

Dispersion No access to real time information

Heterogeneity 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.


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 ‘e-

Choupal’ 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.


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.


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/

http://www.itcportal.com/sets/echoupal_frameset.htm

http://www.itcportal.com/sets/agriexp_frameset.htm

http://www.echoupal.com/

Documents

Niraj Rural Marketing