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GRADUATE SCHOOL OF BUSINESS &

ADMINISTRATION
( Affiliated AICTE)
ALFA -2 GATE NO.5 GREATER NOIDA ( NCR)

Management Studies

presented by: Vijay Kumar & Seth Pal Singh

Under the aegis of


Mrs. Arpita Srivastava
CONTENTS

• Introduction. • What is Innovation?


• Highlighting features of • Marketing innovations
Rural market. • Rural Marketing Mix
• Significance of Rural • Challenges in Rural
markets in Indian Market
economy. • Examples an eye view
• Literature cited • Learning experience
• Conclusion
RURAL INDIA: A BREIF PROFILE

• Villages are the heart of India. Approximately 75% of


India’s population(equaling 12.2% of the world’s
population)lives in 6,38,365 villages spread over 32 lakh
square kilometers.
• As per the census (2001) rural segments comprises 13.5
crore household which constitute 72% of total households
in India with 48 crore adults individuals.
Note:But the rural market is not homogenous across the
country .
• RURAL
• places far away from towns or cities.

• RURAL MARKET
• CENSUS OF INDIA 2001 - A place where the population is
not more than 5000, the density of population is not more than
400 per square kilometer and atleast 75% of the male
population is engaged in agriculture.
Rural Marketing Definition
Function that manages all activities involved in assessing,
stimulating and converting the purchasing power of rural
consumers into effective demand for specific products and
services to create satisfaction & a better standard of living for
achieving organizational goals.

Rural marketing involves the process of developing, pricing,


promoting, distributing rural specific product and a service
leading to exchange between rural and urban market which
satisfies consumer demand and also achieves organizational
objectives.
Features of Indian Rural Markets

• Large and Scattered


market
• Major income from
agriculture
• Low standard of living
• Traditional Outlook
• Infrastructure Facilities
SIGNIFICANCE OF RURAL MARKETS

1. Large Population
2. Higher Purchasing Capacity
3. Market Growth
4. Development of
Infrastructure
5. Insulated from the global
economic slowdown (RMAI)
WHAT IS INNOVATION?

Innovation may be defined as exploiting new ideas leading


to the creation of a new product, process or service.

Another way of putting this is that an innovation lowers the


costs and/or increases the benefits of a task. A wildly
successful innovation increases the benefits-to-costs ratio
MARKETING INNOVATIONS

“A marketing innovation is the implementation of a new


marketing method involving significant changes in product
design or Packaging, product placement, product
promotion or pricing.”

Innovative marketing of products is about leveraging the


marketing mix, namely, the four P’s: Product (Design and
Packaging), Price, Place and Promotion in ways that has
not been before by the organisation implementing the
innovations.
MARKETING INNOVATIONS
• FMCGs have come up with creams and soaps @ Rs 5, hair oil and
shampoo sachets @ Re 1 and small Coke @ Rs 5. To develop a
product to suit the rural scenario,
• Companies came up with special rural products, like Chic Shampoo
sachets @ Re 1, Parle-G Tikki Packs @ Rs 2, customised TVs by LG,
Shanti Amla oil by Marico. All these brought positive results for them.
CHALLENGES IN RURAL MARKETING
 Low literacy rate
 Resistance to change
 Seasonal demand
 Lack of infrastructure facilities & proper warehousing
facility
 Threat of spurious products.
 Communication problems.
 Problems related to distribution
and channel management.
Rural Marketing Mix

• Rural Marketing Mix refers to the set of actions, tactics,


tools or variables that a company uses to promote and
sell its brand or product in a Rural markets
The 4Ps of Rural Marketing
PRODUCT:
1. Small unit size and low priced.
2. New product designs- sturdy products
3. Brand name.
4. Avoid sophisticated packing – Refill packs,
Reusable packaging
Factors to be considered while designing the product:
 Specific requirements of Rural consumers.
 Habits of usage and purchase
 Income levels
 Customs, beliefs and taboos.
The 4Ps of Rural Marketing

PRICE:

1. Low priced products


2. Application of value
engineering (milk-soya protein)
3. Small sized utility packs
The 4Ps of Rural Marketing

PLACE:
• Segmentation
• Coverage of villages with 2,000
and above population
• Distribution up to flea markets/
Mandi/shanties/ Melas.
• Direct Contact with rural Retail
The 4Ps of Rural Marketing
PROMOTION: • Television
• Radio
• Haats, Melas,
Fairs.
• Print media
• Cinema
• Hoarding/ Wall
Painting
• Rural van
Examples of Innovations in
Rural an eye view
Examples of Innovations in
Rural Marketing Mix
• ICICI BANK customized their rural ATMs, so they can
operate biometric authentication. ICICI rural ATMS are
battery operated so that power failure is not issue.
• Nokia develop affordable Mobile phones for rural markets
with unique features such as local language capabilities,
present time/ call limits.

• Philip develop a TV ‘ Vardaan’ for rural markets. This TV


work on the voltage 90-270 volts.

• Philips developed ‘ Free Power radio’ this radio do not


require power and battery also. it run on simple winding of
level provided in the set. The price of this attractive set is
Rs. 995.
• Asian Paints promoted its Utasv brand of paint by
painting the village Sarpanch’s house a few months
prior to the launch to demonstrate that the paint does not
peel off and is an ideal replacement of chuna

• The health development assistant of HUL regularly


meets school teachers to promote Lifebuoy soap in
Villages.
• Paint companies supporting Pola fair in Maharashtra by
painting the horns of the bulls.
• Sonepur Mela, Vaisakh Purnima Mela( Bihar).
• Navaratri Fair, Ambaji (Gujarat)
• Naucahndi Mela, Ramlila Mela(UP)
• Kartik Mela, Gawlier Trade Fair( MP)
• Parachut Oil, Nirma washing powder and tiger brand
biscuits have been promoted through haats.

• About 40,000 Haats are held in rural areas in our


country, highest number haats in U.P (10,000).
Increased penetration of electronic
media
Examples of Innovations in
Rural Marketing Mix - ITC e-choupal
ITC is setting up e-Choupals
• The company’s e-chaupal initiative is a novel idea which
bypasses the brokers between the Company and the
farmers.
• It is helping Indian agriculture to enhance its
competitiveness by empowering Indian farmers through
the power of internet .

• This unique transformational strategy has become the


subject matter of a case study at Harvard b school ,has
created for I.T.C a huge rural distribution infrastructure
,significantly enhancing the company’s marketing reach.
Formed in 1946,it is a brand name managed
by an apex cooperative organization ,Gujarat
co-operative milk marketing federation limited
which today is jointly owned by some 2.41
million milk producers in Gujarat.

It has been a sterling example of right mix of


rural marketing and has established itself as a
uniquely appropriate model for rural
development.
Amul has spurred the white revolution in India
and it is today the world’s biggest cheese
brand.
ONIDA

The company introduced its igo range of t.v’s

priced cheaply at rs.5000 for 14 inches particularly to


cater to the backward states like Bihar, Rajasthan and
Uttar Pradesh.
Mobile phone market penetration

•LG-BSNL –Reliance tie up for rural market.

•Handsets which are cheap and with offers are


provided to the rural customers.
parle g.m peg
NIRMA

• This company introduced the innovative technique of


using video vans for marketing Nirma products .

1. Reach to interior parts


2. Offer opportunity for personal interaction .
• LG India- tripled the number of its retail &
distributor outlets in rural areas from 2004 to
2008.
• The avg. price of its Sampoorna range of
CTVs came down to about the price so
competitive that, thereby bridging the gap
between CTVs and other local B/W TVs.
• It also tapped local forms of entertainment like
annual haats and fairs and made huge
investments in infrastructure for distribution
and marketing.
CAVIN
CARE
This company first come out with the concept of
sachets and it revolutionize the whole market,
making the Chic shampoo the 2nd largest selling
shampoo in India

What followed was the flood of products in small


packing ranging from toothpaste, face creams,
soaps, hair oil etc.
COCA-COLA
Increase in number of outlets from
80,000 in 2001 to 190,000 in 2005
resulting in increased market penetration
from 13 % to 28 %.
. It concentrated its entire advertising towards the rural
customer.
It also tapped the local form of entertainment like annual
haats and fairs and made huge investment in
infrastructure for distribution and marketing.
GODREJ Introduced Cinthol
and Fairglow in 50 gram
packs priced at rs.4

coca-cola is providing low cost ice-boxes


because of the lack of electricity and refrigerators
in the rural areas.
Learning experience
 Companies are finding Rural Markets increasingly attractive.

 Rural population is gradually getting urbanized and has a great


potential and improving purchasing power.

 The 4 As- Acceptability, Affordability, Availability,


Awareness has to be effectively adopted in order
To capture the untapped potential of the rural
consumers.

 With the initiation of various rural development


programs there have been an upsurge of employment
opportunities for the rural poor.
Learning experience
 Rural markets are delicately powerful. Certain
adaptations are required to cater to the rural
masses; they have unique expectation and warrant
changes in all four parameters of product, price,
promotion and distribution.

 Continuous customization seems a sure shot


approach to provide both short and long-term
returns in the rural markets.
CONCLUSION

• The rural market in India is vast and scattered and offers


a plethora of opportunities in comparison to the urban
sector.
• Improvement in infrastructure and reach promise a bright
future for those intending to go rural.
• Rural market is not exploited Completely and is
yet to be explored.
Literature cited
 Books:  Articles:
• Rural Marketing by C.S.G. • Rural Retailing by Navya
Krishnamacharyulu, Lalitha
Choudary, NIFT New Delhi
Ramakrishnan
• Rural Marketing by T.P.Gopalswamy, II • India business Directory
edition. • Rural mktg and its significance, by
• Rural Marketing- Text and cases by C. Pavithra (Research scholar,
U.C.Mathur. Periyar University)
 Websites: • Soumen Banerjee Senior
• www.wikipedia.org Administrative Officer at ICFAI
• www.business-standard.com National College, Asansol. &
• www.indiastudychannel.com Lecturer at IIAM, Durgapur.
• www.ruralrelations.com Article posted on March 21, 2009