Segmentation of Rural Market

Marketer can target a market with two broad strategies.

Mass Market Strategy

Market Segmentation strategy

•Market Segmentation is the process of identifying small Markets that exists within a large market .

Levels of MarketSegmentation

Mass Marketing or Undifferentiated Marketing e.g. Ruf & Tuf Jeans,

Segment Marketing - Cars

Niche Marketing – specialize to a narrowly definedcustomer group – Temple jewellery for South Indianwomen wanting to take part in cultural programmes

Local Marketing – Market around sector 44

Individual Marketing

One to One Marketing

Mass customization – ability to prepare on amass basis individuallydesigned products

Why is segmentation useful ?

Segmentation helps firm tailor their marketing programs

focuses an actionable and accessible set of the market.

cuts of wasteful expenditures on unwanted consumers

matches needs and wants of specific groups of buyers to firm’s offerings

stimulates demands through multi-products for multi-segments

resource allocation to segment specific marketing mix activities will be mademore efficient

Segmentation is a way to plan rather than explain

Bases

Geographic - Rural / Urban; metropolis/city/town/village; modern retail stores/kirana stores / mandis/ haats

Demographic – Age, Family Size (nuclear or joint ), gender,Income, Occupation, Education, SEC, religion, race,Nationality, social class

Psychographic – Use of Psychology and demographics•Lifestyle (AIO) – Nike, Benetton, * Personality – Femina – woman of substance* Values – HiDesign leather accessories – consumerswho hold the value ‘style and elegance in a classical sense’

Behavioral Segmentation – next slide

Behavioral Segmentation - based on buyer’s knowledge of, attitude towards,

use of, or response to a product

Occasions – Marriage, Birth – Archies and Hallmark cards

Benefits – In soaps - Dettol – antiseptic, Lux – Beauty

User Status – Non users, first time users, potential users, regular user

Usage rate – Light users, medium users, heavy users

Buyer Readiness State – Cold Prospect, Hot Prospect

Loyalty status – Hard Core Loyals, Split Loyals, Shifting Loyals, Switchers

Attitude – enthusiastic, positive, indifferent, negative, hostile

Segmenting the Market: Nirma vs HLL

Until about twenty ago, the rural market in India was considered a homogenous decade of the 1980s was a significant one for Hindustan Level Ltd (HLL), when the giant and undisputed market leader in detergent (Surf) in Indian Suffered significant losses at the hands of a new and small firm , Nirma Chemicals . Nirma immediately caught th fancy of the middle and lower-income customers, who were finding it difficult to make both ends meet with their limited monthly income.Nirma was the lowest –priced branded washing powder available in grocery and co-operatives stores. The middle class house wife was happy as she could choose a lower priced washing powder against Surf, Which was beyond her budget Around 1984 , HLL decided to take a fresh look at the market. Research conducted across the country revealed that different income groups of consumers had varying expectorations from detergent and washing powder. Thus, to counter the attack from Nirma, HLL launched Sunlight (Yellow), Wheel (green) and Rin (blue) detergent powders for different market segments. This strategy of segmenting the market helped HLL win back part of its lost market.

Segmenting the Markets

• T-Series introduced audiocassettes at unbelievably low price and took away a huge share from the market leader HMV.

• Cavin Kare studied the Shampoo market and came out with Chik Shampoo priced at 50 paisa per sachet and the brand became an instant hit in rural areas.

• Titan has introduced Sonata brand watches; priced between Rs 350/- and Rs.800/- to meet the requirement of price sensitive rural and semi urban consumers.

Utsav Time• Asian Piants Ltd(APL) is India’s largest paints company and ranks

among the top ten decorative coating companies in the world today. The company has come a long way since its small beginning in 1942.APl was the first Indian company to go rural In 1999 It launched Tractor enamel paint in rural markets, rural customers started using it to paint the horns of their bullock. APL survey the rural markets extensively with the able support of its advertising agency Ogilvy outreach. They found that there was a gap in demand in the market for paints used for houses. These were two choice available for rural people : the traditional chuan powder, which cost around Rs9 per kg and enamel paint which cost around Rs 50 per liter was very expensive for most rural customers. Chuan powder however was not long lasting .

Hence APL launched Utasv distemper exclusively for rural markets in 1999. Utsav is good example of brand that used excellent STP for rural markets.

Segmentation Variables

Geographic Variables

Demographic variables

Psychographics Variables

Product Related Variables

•Segmentation variables are the parameters and characteristics of people comprising total market for o product category on which can segment them into groups.

Conditions fro Effective Market Segmentation

1.Measurable

2.Accessible

Profitable

Data Availability

Customer Oriented Philosophy

Enables Tailoring of marketing Programme

Enables Development of strong positioning of Brand

Approaches for segmentation the rural market of India

• Based on Size of Village Population(The size of population residing in a village is a significant factor which determines the overall potential demand for a product or service in that village)

Population No.of Villages % of total VillagesLess than 200 114,267 17.9*200-499 155,123 24.3*500-999 159,400 25.01,000-1,999 125,758 19.72,000-4,999 69,135 10.8**5,000-9,999 11,618 1.8**10,000& above 3,064 0.5**Note:* Hardly any shop in these 2.7 lakh village** 13% of villages falling in the last three categories account 50% rural population

and 60% rural wealth.

Based on Location with Respects to Nearby Town

• Villages Near Urban Centers.

• Villages in Developing Districts

• Immobile and self sufficient Asiatic Villages

Based on Size of Farmland

1. Marginal Farmer :holding upto 1.0 hectare

2. Small Framer :holding 1.0-2.0 hectare

3. Semi-medium :holding 2.0-4.0 hectare

Farmer:

4. Medium Farmer : holding 4.0-10.0 hectare

5. Large Farmer :holding 10.0 hectares and above

Rural Market Segmentation Tools

• Thompson Rural Market Index.

• Mica Rural Market Rating

• Linquest

• Indian Market Demographic

• Business Intelligence Unit

• Lincompass

• ARCVIEW