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Study of Promotional Strategies of

Rural Brands
(FMCG & Agri Inputs)
&
Overall potential of rural market
Winter Project Report

Kshitij Gautam
MBA-(AB)
PRN-07020242018
Batch 07-09

Submitted on

10th March 2009


Certificate of Completion

This is to certify that Kshitij Gautam, a student of Symbiosis Institute of International Business,
Pune has successfully completed the winter project as partial fulfillment of the MBA-Agri
Business Management course in the final semester for academic year 2007-09.

The title of the winter project was “Study of promotional strategies for Rural brands (FMCG
and Agri Inputs) and overall potential of the Indian rural market.” This project was completed
under the guidance of Dr. B. R. Mulik, Consultant-cum-Visiting Faculty, SIIB.

SIIB wishes Kshitij Gautam success in all him future endeavors.

10th March 2009 Dr. B.R Mulik


Consultant-cum-Visiting Faculty
SIIB, Pune

[1]
Declaration

I, Kshitij Gautam, a student of Symbiosis Institute of International Business, Pune hereby


declare that the winter project titled “Study of promotional strategies for Rural brands (FMCG
and Agri Inputs) and overall potential of the Indian rural market” has been completed by me
under the guidance of Dr. B.R Mulik as part of the course curriculum for the partial fulfillment
of the MBA-Agri Business Management course for the academic session 2007-09.

I further declare that the contents of the report are authentic and specific references have been
quoted along with the secondary data for better cross check and verification. The primary survey
had been done in Bihar and Maharashtra as a part of the project and the results of the survey can
not be transferred or copied without prior approval.

It is also declared that this work is original and has not been published or presented earlier.

10th March 2009 Kshitij Gautam


MBA-Agri Business
SIIB, Pune

[2]
Acknowledgement

I express my deepest gratitude to our Director Dr. Rajani Gupte for giving us such an
opportunity in our curriculum to carry out independent research and understand the market to the
fullest extent. My special thanks to Prof. Suresh Bhosale for providing extremely valuable inputs
in the very early stage of my project and helping me understand the objectives of the study.

I pay my sincere respect and gratitude to Dr. B.R Mulik for guiding me throughout the project
and helping me to improve the study and enhance the absorption of the subject matter with
greater depth, insight and detail.

The completion of this project would have been extremely difficult without the never ending
and sincere help from my colleagues at SIIB. The primary survey would never have been
completed in Pune with out help and support of my friends from Maharashtra. I would like to
express my special thanks to my brother ‗Neetij Gautam‘ for helping me carry out the primary
survey in Bihar with ease and comfort.

I express my gratitude to the technical staff of SIIB for their support in providing reading and
research materials as and when required. My whole hearted thanks to the internet service
providers of SIC-A Hostel a well as SIIB-EDU for providing uninterrupted 24x7 internet service.
Without their help and support the completion and compilation of this report would have been
only a fascinating fairy tale.

I thank my friends and my roommates for bearing me and supporting me throughout the
research. They were the source of inspiration whenever I needed. Above all I thank my family,
especially Papa, Mum, Tubu and Ruppu for their constant motivation and support. It was just
because of their divine love and support that made me work properly and complete my
objectives in a splendid manner.

Finally I thank the Almighty for creating an aura of favourable situations for me and guiding me
throughout the pathway.

Kshitij Gautam
MBA-Agri Business
SIIB, Pune

[3]
1. Title

The title of the project is “Study of promotional strategies of Rural Brands (FMCG and Agri
Inputs) and overall potential of Rural market in India.”

[4]
2. Abstract
In country like India, where the 70% of the people live in rural area, the rural market holds a lot
of marketing potential. There is a wide spread difference in the standard of living between urban
and rural India. In order to launch products and develop advertising for rural market there is a
need to understand both the rural context and also the consumer very well. Promotion of brands
in rural markets requires the special measures. Due to the social and backward condition the
personal selling efforts have a challenging role to play in this regard. The word of mouth is an
important message carrier in rural areas. Infact the opinion leaders are the most influencing part
of promotion strategy of rural promotion efforts. The experience of agricultural input industry
can act as a guideline for the marketing efforts of consumer durable and non-durable companies.
Relevance of Mass Media is also a very important factor.

The strong Indian brands have strong brand equity, consumer demand-pull and efficient and
dedicated dealer network which have been created over a period of time. The rural market has a
grip of strong country shops, which affect the sale of various products in rural market. The
companies are trying to trigger growth in rural areas. They are identifying the fact that rural
people are now in the better position with disposable income. The low rate finance availability
has also increased the affordability of purchasing the costly products by the rural people.
Marketer should understand the price sensitivity of a consumer in a rural area. This research
paper will be therefore an attempt to study the brand promotion in the rural market and the
overall potential of the rural market. Branding correlates with Image Building in an organization
vis-à-vis its products produced/services rendered. In the vicinity of today's Marketing scenario
along with advancement in technology, Brand Management is the order of the day. In the process
of branding, the aspect of brand activation at ATL (above the level) and BTL (below the level)
makes a vital contribution for the marketing journey. To attain a safe platform in Brand
activation, the Marketing Managers pay attention and focus in a diligent manner on the value
based credentials of the users in the Marketing arena. A full-fledged dedicated team with multi
focused thoughts only can do the needful for the successful brand management. Good branding
strikes a chord with viewers help them relate with the product and reflect their aspirations. The
studies suggest that there has been extra-ordinary growth in this sector and the trend is likely to
continue over a period of tie as the market is in the very initial stages of the life cycle.

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Table of contents

Acknowledgement _________________________________________________________________ 3

1. Title __________________________________________________________ 4
2. Abstract _______________________________________________________ 5
3. Introduction____________________________________________________ 9
3.1 Realities of the market __________________________________________________________________ 11
3.2 Some Facts about Rural Market __________________________________________________________ 13
3.3 India's USP ___________________________________________________________________________ 13
3.4 Statistical Glance ______________________________________________________________________ 14
3.5 Branding and Promotion ________________________________________________________________ 14
3.6 Expert Opinion ________________________________________________________________________ 15
3.7 Need of Branding ______________________________________________________________________ 15
3.8 Successful Branding ____________________________________________________________________ 16
3.9 Branding strategy in Rural place __________________________________________________________ 16
3.10 There are seven C's steps for brand positioning: ____________________________________________ 18
3.11 Promotion of Brands __________________________________________________________________ 19
3.11.1 Promotion and Branding ( A Live Example) _____________________________________________ 20

4. Literature Review ______________________________________________ 22


4.1 Rural Marketing - A Critical Review ________________________________________________________ 22
4.2 Rural market for FMCG on upswing - By Business Standard ____________________________________ 27
4.3 Rural markets beat cities in FMCG sales growth – The Economic Times, December 8, 2008. __________ 29
4.4 Case Study – Rural Marketing ____________________________________________________________ 31
4.5 Potential of Rural Market- “Despite Challenges, rural India offers huge potential for retailers” ________ 35
4.6 Rural PR – Cocacola India ________________________________________________________________ 37
4.7 Enhanced Access To Rural Markets For Agri Inputs IFFCO’S experience __________________________ 40
4.8 Consumption And Growth of Fertilisers In India ______________________________________________ 46
4.9 Wooing Rural Customers! _______________________________________________________________ 48
4.10 Seed Industry Transition towards Hybrid Varieties __________________________________________ 50
4.11 Seed Industry in India Poised for a leap ___________________________________________________ 51
4.12 Some Prominent Success Stories _________________________________________________________ 52
A) Philips India Ltd. - Electronic Entertainment Equipment ______________________________________ 52
B) Marico Industries - Parachute Coconut Oil Pouches _________________________________________ 53
C) Acc Limited - Acc Suraksha Cement ______________________________________________________ 53

5. Research Design _______________________________________________ 54


5.1 Objectives and Sub-objectives of the study _________________________________________________ 54
5.2 Scope of the project ____________________________________________________________________ 54
5.3 Research Methodology _________________________________________________________________ 55
5.4 Data Collection ________________________________________________________________________ 56
5.5 Data Analysis and Findings _______________________________________________________________ 56

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6. Secondary Research - Case Study Findings _________________________ 57
6.1 NIRMA – Rural Success Story (As published by the company) ___________________________ 57
About the Company _____________________________________________________________________ 57
Introduction ___________________________________________________________________________ 58
Product _______________________________________________________________________________ 59
Price _________________________________________________________________________________ 66
Distribution ___________________________________________________________________________ 68
Promotion ____________________________________________________________________________ 69

6.2 A Special Section on Product Dev., Marketing, Distribution and Promotion in Rural India ____ 70
Rural Communication and Advertising ______________________________________________________ 73
Importance of the 'trade' as a medium - ____________________________________________________ 74
Mandi and Mela magic - it works !! ________________________________________________________ 75
Trends in Rural Markets _________________________________________________________________ 75
Strategies for Rural markets ______________________________________________________________ 76
Role of Technology - ____________________________________________________________________ 77
Product Marketing Strategies for Rural India _________________________________________________ 77
Come to Rural Country !!! ________________________________________________________________ 77
What are Rural Indians consuming _________________________________________________________ 78
Channel Selection and Distribution _________________________________________________________ 81
Advantages of companies marketing through haats ___________________________________________ 82
Advantages to companies using melas ______________________________________________________ 83

6.3 HUL SWOT Analysis of Distribution Strategy (Rural) __________________________________ 84


Strengths _____________________________________________________________________________ 84
Weaknesses ___________________________________________________________________________ 85
Opportunities __________________________________________________________________________ 86
Threats _______________________________________________________________________________ 87

6.4 Rural Market Perspective _______________________________________________________ 89


Concept ______________________________________________________________________________ 89
What Makes Rural Markets Attractive? _____________________________________________________ 89
Opportunities __________________________________________________________________________ 90
Rural Consumer Insights _________________________________________________________________ 91
Why Different Strategies? ________________________________________________________________ 92
Strategies to be Followed ________________________________________________________________ 92
Some Live Examples _____________________________________________________________________ 94
Conclusion ____________________________________________________________________________ 94

6.5 Lifebuoy – Success Story (As per HUL) ______________________________________________ 95


Introduction ___________________________________________________________________________ 95
Repositioning of Lifebuoy ________________________________________________________________ 96
Promotion ____________________________________________________________________________ 97
Price _________________________________________________________________________________ 99
Place _________________________________________________________________________________ 99
Single Distribution Channel ______________________________________________________________ 100

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7. Secondary Research – Data Findings _____________________________ 101
7.1 Opening the Rural Eye _________________________________________________________________ 101
India's consumer classes - Distribution of people income-wise _________________________________ 102
A Brief description of the Indian FMCG industry - Product wise production _______________________ 103
Finding of the survey conducted by MART and Anugrah Madison Consumer goods 1. Babool and Navaratna
hair oil: Attraction and acceptability _______________________________________________________ 104
7.2 Promotion of Brands in rural market of India _______________________________________________ 105
Advertisement of Coca-Cola (Acceptability pattern) __________________________________________ 106
BPL advertisement _____________________________________________________________________ 107
Rating of Amitabh Bacchan as Brand Ambassador ____________________________________________ 107
Different Modes of promotions in rural market ______________________________________________ 107

8. Primary Research – Data Findings & Interpretation ________________ 108


8.1 Most Prominent Mode of Communication _________________________________________________ 108
8.2 Modes used in Print Medium ___________________________________________________________ 109
8.3 Modes used in Electronic Medium _______________________________________________________ 110
8.4 Modes used in Campaigns ______________________________________________________________ 111
8.5 Modes used in Direct Contact ___________________________________________________________ 112
8.6 Rating of Promotional Activities _________________________________________________________ 113
8.7 Reasons for Rating the Promotional Activities ______________________________________________ 113
8.8 Likeness towards Promotional Activities ___________________________________________________ 114
8.9 Purchase due to Promotions ____________________________________________________________ 114
8.10 Product Category purchased due to Promotions ___________________________________________ 115
8.11 Need for Promotions _________________________________________________________________ 116
8.12 Advantages of Promotions_____________________________________________________________ 117
8.13 Disadvantages of Promotions __________________________________________________________ 117
8.14 Highly Promoted products _____________________________________________________________ 118
8.15 Similarity among Promotions __________________________________________________________ 119
8.16 Focus of companies in Promotions ______________________________________________________ 120
8.17 Areas to focus in Promotion ___________________________________________________________ 121
8.18 Brand Ambassador Recognition ________________________________________________________ 122
8.19 Role of Brand Ambassadors in Purchase __________________________________________________ 123
8.20 Popular Brand Ambassadors ___________________________________________________________ 123
8.21 Market Development Due to Promotional in Rural areas ____________________________________ 125
8.22 Factor contributing to development _____________________________________________________ 126
8.23 Role of Development in Prosperity ______________________________________________________ 127

9. Results & Recommendations ____________________________________ 129


10. Conclusion __________________________________________________ 133
11. Annexure ___________________________________________________ 136
11.1 Questionnaire for Survey ___________________________________________________________ 136
11.2 Fertiliser Consumption Trend ________________________________________________________ 137
11.3 Seed Replacement Rate 2007 (State-wise) ______________________________________________ 138

12. References __________________________________________________ 142


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3. Introduction
Rural India with its traditional perceptions has grown up over the years, not only in terms of
income, but also in terms of thinking. The rural markets are growing at about two time faster
pace than urban markets, not surprisingly, rural India accounts for 60 per cent of the total
national demand. According to a survey conducted by Mckinsey in 2007, rural India with a
population of 630 million (approximately) would become bigger than total consumer market in
countries such as South Korea or Canada in another 20 years and it will grow at least four times
from its existing size which was estimated at US$ 577 billion.

Gone are the days when rural consumer went to nearby city to buy ‘branded products and
services‘. The rural consumer is growing and this is an opportunity to grab the market share for
all the global players in the market -- whether it is into Fast Moving Consumer Goods (FMCG)
sector or retail sector (either insurance or banking or for that sake any other sector). The FMCG
sector includes companies like Indian Tobacco Corporation (ITC), Godrej, Hindustan Lever
Limited (HLL), Gujarat Cooperative Milk Marketing Federation (GCMMF-Amul) and Dabur
India Limited. All these have shown a strong global presence in the rural sector and it can be said
that all the FMCG companies should target the rural sector. Some FMCGs products like
toothpaste, hair oil and other like shampoos have done much better in the rural areas than the
urban and the semi urban areas. It has been a phenomenon that the sales of many companies have
gone up; Coca-Cola, Nestle and Godrej too have also reported better sales in rural areas.

The retail sector has a huge potential for growth as a study shows that opportunities in rural retail
sector were estimated to be over $34 billion in the year 2007, which is expected to touch $43
billion by the year 2010. It can be seen from the market that companies like Reliance, Subhiksha
are expanding in the rural market. ITC has launched its first rural mall ‘Chaupal Sagar‘, which
offers products ranging from FMCG to electronic appliance to automobiles. Indian Oil is
planning to invest $ 189.10 in the rural areas during the financial year 2009. Insurance sector has
one of the biggest potential in the upcoming scenario and the fact lies in the statement that only
eight to 10 per cent of the rural households are covered by life insurance. Rural investments are

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limited to their available option -- post offices and a few limited commercial banks rural
extension counters. The remaining 90 per cent offer a huge potential as such for the insurance
companies. The rural market is vibrant and holds tremendous potential for growth of insurance
business, particularly because of the strong saving habits. LIC has a target of selling four million
policies in the current financial year.

Telecom sector is one of the booming sectors of the economy. There are a large number of
mobile subscribers in India and with the next 100 million to come from non-urban areas, many
Indian mobile service providers are targeting the rural market with aggressive tariffs and low
cost hand sets. In this regard Reliance Communication has targeted the rural segment by its
‘Grameen programme‘ for rural subscribers. Spice Telecom is into the process of launching local
market rates for the commodities across Karnataka to connect with rural customers. BSNL plans
a $ 125.38 million to be spent on its rural infrastructure. The most fascinating thing in this rural
sector has been the working of the Agri Input Companies which are either Indian or MNCs.
Although the MNCs do not have much rights as enjoyed by the domestic companies but the
Major players like Monsanto, Syngenta, Bayer, Nuziveedu, Excel, John Deere, UPL and many
others have provided agri solutions to the most needed ones at the right time and at reasonable
cost.The growth of this sector has been phenomenal and the contribution is equally shared by the
Indian counterparts such as Mahindra and Mahindra, Ankur seeds, Kaveri Seeds, Rashi Seeds,
Sonalika, TAFE and Chemical Fertilisers companies like Indo gulf fertilizers, Deepak Fertilisers,
PPL and many others. The contribution from the retais end in the Agri Sector needs high
appreciation. The Haryali Kisan Bazaar Kendra (DSCL) provides a complete agri solution store
right at the village level, it works on the principles of retailing and gives a feel of rural Mall. The
initiative from DCSL-HKBK forced the other players to enter into the highly untapped potent
market.

Consumer durable industry is also on the verge of making a foray into the rural India as it is all
set to witness 12 per cent growth in the year 2008. Many companies like LG, Samsung are all set
to put themselves into rural sector. With India entering the globalization mode and the rural
revolution being governed by rising purchasing power, increased savings, changing consumer
habits, there are sure and positive signs that a new dawn of rural India is going to come. The

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Indian growth story is now spreading itself to India's hinterlands. With rising incomes, both
consumption and production have increased significantly. Food grain production was in excess
of 227.3 million tonnes in 2007–08 which was an increase of an increase of 4.6 per cent over the
previous year. In 2008, the rural market has grown at an impressive rate of 25 per cent compared
to the 7–10 per cent growth rate of the urban consumer retail market. The development of rural
infrastructure is an important priority for the government. The Punjab government has launched
a mobile information service for the farmers for information about 17 crops and commodities.
The Himachal government is trying to boost tourism in the state by promoting the rural
experience theme by launching the "Himachal Pradesh Home Stay Scheme 2008", wherein,
tourists would be offered comfortable home stay accommodation in the rural areas of Himachal.

3.1 Realities of the market

70% of India's population lives in 627000 villages in rural areas. 90% of the rural population us
concentrated in villages with a population of less than 2000, with agriculture being the main
business. This simply shows the great potentiality rural India has to bring the much - needed
volume- driven growth. This brings a boon in disguise for the FMCG Company who has already
reached the plateau of their business urban India. As per the National Council for Applied
Economic Research (NCAER) study, there are as many 'middle income and above' households in
the rural areas as there are in the urban areas. There are almost twice as many' lower middle
income' households in rural areas as in the urban areas. At the highest income level there are 2.3
million urban households as against 1.6 million households in rural areas. According to the
NCAER projections, the number of middle and high-income households in rural India is
expected to grow from 80 million to 111 million by 2007. In urban India, the same is expected to
grow from 46 million to 59 million. Thus, the absolute size India is expected to be doubles that
of urban India.

HUL chairman MS Banga Says, "This exercise may not pay in the immediate future, but will
definitely give long-term dividends. Incidentally, over 50 percent of the sales of HLL's fabric
wash, personal wash and beverages are in rural areas. And we see a future in going rural in a
major way". The improved agricultural growth is expected to boost rural demand, through not at

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too sizzling a rate. Moreover, the price drop in personal products, after the recent excise duty
reductions, in also expected to drive consumption. "Better agricultural yields will give farmers
more spending power, making the rural markets bullish," says an analyst. As a result, HUL has
planned a rural marketing program that is expected to result in a marked growth in the
consumption of the company's products in the rural market. HLL will adopt three-pronged
marketing strategy- new price points, sizes and awareness campaigns for its detergents and soaps
segment to augment rural growth.

The Indian established Industries have the advantages, which MNC don't enjoy in this regard.
The strong Indian brands have strong brand equity, consumer demand-pull and efficient and
dedicated dealer network which have been created over a period of time. The rural market has a
grip of strong country shops, which affect the sale of various products in rural market. The
companies are trying to trigger growth in rural areas. They are identifying the fact that rural
people are now in the better position with disposable income. The low rate finance availability
has also increased the affordability of purchasing the costly products by the rural people.
Marketer should understand the price sensitivity of a consumer in a rural area. The small sachet
packs are the examples of price sensitivity. Colgate has done this experiment with launching of
sachet packs for rural markets.

Given the Literacy scenario in to consideration the promotion of Brands in rural markets requires
the special measures. Due to the social and backward condition the personal selling efforts have
a challenging role to play in this regard. The word of mouth is an important message carrier in
rural areas. Infect the opinion leaders are the most influencing part of promotion strategy of rural
promotion efforts. The experience of agricultural input industry can act as a guideline for the
marketing efforts of consumer durable and non-durable companies. Relevance of Mass Media is
also a very important factor. Door Darshan had already acquired high penetration in rural
households. Now the cable and other Channels have also penetrated in rural households. The
newspapers and other printed Media are also gaining strategy but their role is still secondary in
this regard.

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3.2 Some Facts about Rural Market
1. There are nearly 42,000 rural haats (Super Markets) in India. In 2002–2003, LIC sold 50
percent of its policies in rural India.
2. Of the 20 million who have signed up for Rediffmail, 60 percent are from small towns.
3. Of the 1,00,000 souls that have transacted on Rediff's shopping site, 50 percent are from
small towns.
4. The 30 million Kisan Credit Cards (KCC) issued so far exceed the 25 million credit-plus-
debit cards issued in urban. A whopping Rs. 65, 000 crore has been sanctioned under the
KCC scheme.
5. Electricity Consumption increase from 17.6 %t in 1980 – 81 to 20.2% in 1999 –2000.
During the same period, the industry share has dropped from 58.4 percent to 34.8 percent.
6. Hindustan Lever, the largest FMCG Company in the country. More than half of its annual
sales of Rs.11, 700/- crore come from the rural market.
7. The proposed agricultural reforms in the tenth plan, the easy availability of agriculture
credit Rs 60,000/- Crore Village road programme introduced recently to connect
1,90,000/- village and the improved communication network (STD and Mobile).

3.3 India's USP

India is shining then! India is Unique in many ways. India has a population that is large and
heterogeneous, largely English speaking and a cultural heritage that runs back to thousands of
years. India is young. India is vibrant. The major segmentation of mass population is located in
rural area. So, the market potential is large in number. So we can expect the market strength in
rural area. Now, the educational Institutions are also concentrating on rural marketing and doing
market research in rural places. Rural markets are rapidly growing in India but have often been
ignored by marketers. Most of them are remote-fully ignorant due to the reason of diversification
of products produced thereby slitting into disposable income.

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3.4 Statistical Glance

A glance at the following statistics will help to get a fair idea of the consumers in Rural India:

1. 46 percent of soft drinks.


2. 49 percent of motorcycles.
3. 59 percent of cigarettes.
4. 18 million TV Sets.
5. 50 percent of 2 million BSNL mobile connections.
6. 53 percent of FMCG products .
7. 59 percent of consumer durables are sold in rural India.

3.5 Branding and Promotion


Branding is the creation of an image of the product which personifies the characteristics and the
value deliverables of the particular product being delivered at a particular time and place. The
research approaches to get at brand objective.

1. Word Associations: While using the logo, hoardings and exhibits, suitable jargons have to be
deployed in the word association. People can be asked what strikes in their mind when they hear
the brand's name.

2. Personifying the Brand: Visual control mechanism plays a vital role in identifying the brands
in terms of personification. People can be identified the brands when seeing the visual pictures
described.

3. Laddering up to find the brand essence: Brand essence relates to the deeper, more abstract
goals consumer and trying to satisfy with the brand. The attribute, a functional benefit and an
emotional benefit brand essence constitute a technique known as laddering up. Brands are
increasingly getting more entwined with our lives. The debate today is not as much about 'why
branding' as above defining a meaningful role for a brand in the consumer's life.

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3.6 Expert Opinion

The theme addresses of the Confederation of Indian Industry (CII) Brands submit 2005.
Pointed out, this increasing clutter in the market place and the changing consumer dynamics
have thrown up a new set of challenges for marketers-of accruing, retaining and sustaining the
relationship with the consumer.

Dr. Erich Joachimsthaler, CEO, Vivaldi Partners and Co – author with David Aaker of the
seminal book BRAND LEADERSHIP, says that this no longer means mere lip service on the
part of the marketers. As he points out, perhaps to many a brand marketer's chagrin, brands don't
occupy much mind space. In consumers, but revolves around other interest in their lives. Now as
he says it's up to companies to develop products that fit in to consumers' lives rather than develop
products, which they think consumers will prefer.

Prof. Ramaswamy says consumers are no longer passive beings that who will accept what is
doled out to them as a product and service. Consumers today are seeking to "co-create" their
experience of a product or service with a company. This puts traditional business models in a
bind and also has implications for companies' brands.

The next decade is expected to be quite cataclysmic for brands and an article by D.Shivakumar,
ED of Philips India, captures the essence of the changes that are being wrought. But the refrain is
the same. To manage and succeed in tomorrow's Brand world, marketing teams would need to be
far more right brained than left brained they need to be more consumer connected and responsive
than ever before. Speed, smart thinking and sensitivity will be the skill set of the marketer. An
office desk will be a bad place from which to manage the future brand, says a clairvoyant
Shivakumar.

3.7 Need of Branding

a) Separate a brand from other competitors in a unique way.


b) Relevant and motivating to a target group of customers.
c) Prospects and channels-it gives a value and make the product special.

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d) Enhance the perceived value, there by supporting premium pricing, sheltering the
product from low price competition.
e) Contributing to share holder value. (Companies like Monsanto, HUL look to evidence of
brand strength in setting buy ratings).
f) Provide resilience in times of negative press.
g) Enables to launch new products more quickly and cost effectively

3.8 Successful Branding

As branding can make or break a product, marketer should handle it with the same concern as the
artisans show in their work. All the activities that are taken under the umbrella of a brand add to
or subtract from the value. The customer's evaluation of a brand is a result of all the consumer
experiences he has had with the brand. Consumer experience includes product, services, personal
contacts, advertising, promotions, word of mouth, etc.

This mix of memories, which are built up over a long time, makes the brand potentially the most
powerful liver of the intangible perceived values. After all the first thought that comes to the
mind of the customer prior to the purchase of the product is 'who has made it', if that brand has
good reputation, it raises the level of confidence on the part of the customer to buy the product

3.9 Branding strategy in Rural place

a) Rural Product Development: The rural market is a fast growing one and has a huge
population with a great level of disposable income. To encash this, products have to be
specifically developed to meet the needs of rural markets. Sometimes, existing products might
have to be modified to suit these markets too accordingly. Rural product development has the
strong edifice on a great deal of research like feasibility studies, rural aspiration, rural profiling
and so on. This paves way for a great deal of infrastructure and expertise in this area.

b) Rural Branding: Rural branding bears quite different stand from urban branding. The first
step towards rural branding is to research and gain insight into the working of rural markets.
Based on this communication campaigns have to be developed with a lot of rural sensitivity.
Rural branding is attained by way of opting to a greater percentage of local media and a smaller

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percentage of the mass media. Rural gatherings like temple festivals, melas, cinema halls and so
on can be used as venues to promote brands. Direct Marketing and events like road shows; film
shows, melas, street theatre can also be used to promote brands. A well-planned rural branding
campaign cannot just create brand awareness but help your target relevant to your brand and
promote sales. A long-term campaign will keep your brand at the top-of-the-mind and build
brand loyalty. So the brands are in safe hands.

c) Rural Market Research: Rural markets behave most differently from urban markets. While
many marketers have tried to market their products in rural areas, just a handful of the same only
has succeeded. A strong insight into rural consumer behavior and sensitivity to their values and
beliefs is essential; to upgrade the rural market rural market research encompasses not just
gathering data but analyzing them and linking the findings to promoting your products.

d) Rural Communication Campaigns: Communication for rural markets calls for a different
kind of outlook. There must be a strong accent on helping the target relate to the message. The
entire communication and media strategy has to devise a system based on research findings.
These have to be developed in the regional vernacular languages and set in the local culture for
easier acceptance and reach. Unlike communication campaigns in urban areas that rely greatly on
the mass media, the strategy will be of crying in the wielderness in rural areas. Besides mass and
outdoor media, rural extravaganza like temple festivals, melas and other events where the
villagers come together can be used for promotions.

e) Rural Events: In the rural context, one of the best ways to capture the attention of the
audience is through Event-management. Since rural areas have limited venues for entertainment,
conducting an event in rural areas can bring a good response. A well-planned event can get the
product the mileage that we want. Some of the interesting events that can be conducted are Road
Shows, Melas, Street-Theatre, Film Shows and so on. These make a visually strong impact and
build long term brand recall. Rural public are the target audience and hence the portfolio of event
management has to be handled professionally with diligent care and broad perspective.

f) Rural DM Campaigns: Direct Marketing (DM) is one of the most powerful way to meet the
target on their turf and build product awareness as well as promotion. The success of any DM

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campaign depends on the field workers and their sensitivity and emotional connectivity to rural
markets. In the area of Direct Marketing, rural team has to be trained, to be sensitive to rural
culture and beliefs. They can handle activities like Door-to-Door sampling, marketing and
product promotion. These activities can also be carried out innovatively at places like local
cinema halls, melas and festivals, in the midst of cross-cultural gatherings and conglomerations.

g) Database Creation & Management: Marketing, branding and promotional activities in the
rural context can be highly effective and thereafter have to create a database of prospects. The
question is how will you source this critical data? The data will contain details of your target
segments at the village level / town-level. This data is essential for us to reach our target
accurately and helps our marketing plan and communication strategies. Management Information
System along with Database management paves ways for a congenial rural marketing through
the information and data available for effective interpretations and use.

3.10 There are seven C's steps for brand positioning:

1. Capacitate: Understand the company history, its products, top management's objectives their
view of the market and their commitment to branding. So, our brand should capacitate in the
customer's mind. The mind-sets of the customers shall congenially work out the strategic goals
and action plan thereupon to ameliorate the situations prevailing in the rural market.

2. Cabochon: Our brand is the achievable, differentiating, compelling, attractable, and for long
run. The pragmatic approach in the marketing field in such way to differentiate/ discriminate,
identify the branding activity in an achievable manner for long run.

3. Caesarism: Our brand is unique, creative, are catchy, asked question forever "do I brand or do
I sell product," Answer: 'yes' to both. Caesarism literally means the creative and unique thought,
ideas and actions in a catchy manner to penetrate the customers' mind regarding the brand of the
products in the selling –buying process.

4. Cameraderic: By learning from environment be strong enough to make changes as needed,


yet have the faith and courage to be patient and let your marketing programs build your brand. It

[18]
is friendly in nature and branding program is creating awareness, attitude shift etc. The trust
worthiness and consensus of minds prevailing between the market personnel and
customers/consumers will largely contribute to the attitudinal pleasure.

5. Calibre: Obtain feedback by setting up a response analysis system for individual media, as
well as tracking system to measure effectiveness of marketing investments where they are best
tested in the market. Efficiency and effectiveness, the two extreme scales in a continuum of the
rural market shall develop the calibre of the members present in the game of Direct marketing in
rural marketing.

6. Clincher: Incorporate consistency in media scheduling, adequacy of spending levels and


extend brand message across products and campaigns. Don't just plan a launch campaign for
short period and then 'Go dark' for the balance of the period. Our customer should demand for a
particular brand campaigning, media scheduling, etc shall incorporate the brand activation at
ATL and BTL.

7. Catagorize: The company's should outline very exact specifications of what they hope to
accomplish. The company has to invest often in emerging technologies and services simply
because what all the customers earnestly believe will eventually set a standard. The company can
predict the outcome, should do professional services and introspection, long term vision, and
initiate steps to dedicate for the customers. Virtually speaking, "categorize", the seventh step will
be the gate-way for customers as well the marketer in the journey of brand positioning.

3.11 Promotion of Brands

The rural brand promotion is very different from the urban brand promotion. The direct contact
and visual aids play a very important medium of promotion. The most important medium is the
campaigns and the public meetings, the purchase behaviour is finalized only when any influence
leader proposes for it. Most of the promotions are done via jeep campaigns and meetings. The
communication used for the local promotion uses local language and dialect.

[19]
3.11.1 Promotion and Branding ( A Live Example)

In June 2006, it was reported that Prakash Agro Industries (Prakash Agro), an agro-based
company in India, was selling cattle fodder under the brand name ‗Lalu Pashu Aahar‘ (Lalu
cattle food). That the product had used the name ‗Lalu‘ as a brand didn‘t surprise any one. It had
increasingly become common in the state of Bihar, for some businessmen to brand their products
or services under the name of the popular politician from the state, Lalu Prasad Yadav (Lalu).
Lalu, currently the Union Minister of Railways for India, is also a well known politician across
the country. Satish Kumar Singh (Satish), Manager, Prakash Agro said that during the
discussions on branding the fodder, they chose the ‗Lalu‘ name as they felt that this name was
very popular in the rural areas of Bihar and would help the product establish an instant rapport
with the rural customers. Satish said, ―The name Lalu guarantees instant success and is very
popular in the rural areas of Bihar hence we thought there is none other, which can better connect
the product with the rural masses and also save money on advertisements.‖1

Prakash Agro reported that the outcome of this branding strategy had surpassed the company‘s
expectations and they were facing problems in meeting the huge demand for their fodder. They
were sending 200 tonnes of fodder everyday to the market and reported a monthly turnover of
Rs.200 million per month. The company had plans to market the fodder in other states under the
same brand name. This was not the first time that a ‗Lalu‘ branded product had become popular
with the rural masses in Bihar. In June 2006, it was reported that a toffee candy branded as ‗Lalu
ka Khazana‘ (Lalu‘s treasure) had become hugely popular among children, especially in
Northern Bihar. These toffees, locally called as Lalu Chocolate, were produced by a company
called Chetak and were available in two packs priced at Rs 1 and Rs 2. The toffees were packed
in sachets which depicted Lalu in two outfits - one wearing his traditional dress, ‗kurta and
pyjama‘ with silver hair, and the other one as a magician dressed in trendy jacket and jeans.

The company was able to sell more than 100,000 sachets of ‗Lalu ka Khazana‘ toffees, since its
launch, and was witnessing a steady demand. A distributor of the toffees said, ―Lalu Chocolate is
a big hit in rural areas of north Bihar districts like Muzaffarpur, Sitamarhi and Madhubani due to

[20]
the unmatched popularity of Lalu. A shopkeeper said that kids always asked for Lalu Chocolates
regardless of its flavor or taste, only due to the popularity of the Lalu name. It was reported that
in a bid to attract more children, the company was offering freebies such as rings and ear rings as
gifts along with the toffees. Another ‗Lalu‘ branded product that had made a good impact in rural
Bihar was a cosmetics pack branded as ‗Lalu Chale Sasural‘ (Lalu goes to in-laws house). Each
packet was priced at Rs 23 and contained items of daily use like face powder, cream, earrings,
sticker, and a necklace. The cosmetic pack had become extremely popular among girls,
especially in the areas such as Vaishali, Muzaffarpur, Darbhanga and Samastipur. In 2005, dolls
called ‗Laluji‘, manufactured by Speedage Corp., had become a big hit among kids.

The dolls were an exact caricature of Lalu complete with his trademark white kurtha and pyjama
and silver strands of hair falling over the head. The price of each doll was Rs 125. Apart from
these, there were several other products such as ‗Lalu Khaini‘ (tobacco powder), ‗Lalu Sattu
Cola‘ (a kind of cola drink), and ‗Lalu Lemons Choos‘ (lemonade). It was also reported that
local barbers and saloons were profiting by offering the ‗Lalu hair cut,‘ which was defined by the
strands of hair falling over the forehead. A barber was quoted as saying that the style was a craze
among the youth and policemen. The company said that it was inspired by the matrimonial bond
between Lalu and his wife Rabri Devi, and therefore decided to name the website after them. The
company claimed to have got 30,000 hits within the first fifteen days of the website‘s launch.

Lalu was famous in India for his rustic humor. He had inspired several comedy shows in
television in the past like the serial titled ‗Ram Khelawan & Family,‘ which was a spoof on him
and his family. Lalu had even made a guest appearance in the full length Hindi feature film titled
‗Padmashri Lalu Prasad Yadav‘. When it was pointed out that his name was being used to sell
products and services, Lalu took the entire situation in a lighter vein. He said that he could not do
anything about the phenomenon and was happy that someone was able to earn their livelihood on
account of his name. His party members were also happy and they claimed that it showed the
popularity of their leader.

[21]
4. Literature Review

4.1 Rural Marketing - A Critical Review


Dr. N. Rajendhiran(MBA, PhD)/ Mr. S. Saiganesh(MBA, MA, M.Phil)/ Ms. P. Asha(MBA)

Prime Minister Dr. Manmohan Singh recently talked about his vision for rural India: "My vision
of rural India is of a modern agrarian, industrial and services economy co-existing side by side,
where people can live in well-equipped villages and commute easily to work, be it on the farm or
in the non-farm economy. There is much that modern science and technology can do to realise
this vision. Rural incomes have to be increased. Rural infrastructure has to be improved. Rural
health and education needs have to be met. Employment opportunities have to be created in rural
areas."

'Go rural' is the slogan of marketing gurus after analyzing the socio-economic changes in
villages. The Rural population is nearly three times the urban, so that Rural consumers have
become the prime target market for consumer durable and non-durable products, food,
construction, electrical, electronics, automobiles, banks, insurance companies and other sectors
besides hundred per cent of agri-input products such as seeds, fertilizers, pesticides and farm
machinery. The Indian rural market today accounts for only about Rs 8 billion of the total ad pie
of Rs 120 billion, thus claiming 6.6 per cent of the total share. So clearly there seems to be a long
way ahead. Although a lot is spoken about the immense potential of the unexplored rural market,
advertisers and companies find it easier to vie for a share of the already divided urban pie.

The success of a brand in the Indian rural market is as unpredictable as rain. It has always been
difficult to gauge the rural market. Many brands, which should have been successful, have failed
miserably. More often than not, people attribute rural market success to luck. Therefore,
marketers need to understand the social dynamics and attitude variations within each village
though nationally it follows a consistent pattern looking at the challenges and the opportunities
which rural markets offer to the marketers it can be said that the future is very promising for
those who can understand the dynamics of rural markets and exploit them to their best
advantage. A radical change in attitudes of marketers towards the vibrant and burgeoning rural

[22]
markets is called for, so they can successfully impress on the 230 million rural consumers spread
over approximately six hundred thousand villages in rural India.

What rural market buys?

Rural India buys small packs, as they are perceived as value for money. There is brand
stickiness, where a consumer buys a brand out of habit and not really by choice. Brands rarely
fight for market share; they just have to be visible in the right place. Even expensive brands, such
as Close-Up, Marie biscuits and Clinic shampoo are doing well because of deep distribution,
many brands are doing well without much advertising support — Ghadi, a big detergent brand in
North India, is an example.

Why Rural Market?

The Indian rural market has a huge demand base and offers great opportunities to marketers.
Two-thirds of Indian consumers live in rural areas and almost half of the national income is
generated here. The reasons for heading into the rural areas are fairly clear. The urban consumer
durable market for products like colour TVs, washing machines, refrigerators and air
conditioners is growing annually at between 7 per cent and 10 per cent.

The rural market is zooming ahead at around 25 per cent annually. "The rural market is growing
faster than urban India now," says Venugopal Dhoot, chairman of the Rs 989 -crore(Rs billion)
Videocon Appliances. "The urban market is a replacement and up gradation market today," adds
Samsung's director, marketing, Ravinder Zutshi.

Reasons for improvement of business in rural area

 Socio-economic changes (lifestyle, habits and tastes, economic status)


 Literacy level (25% before independence – more than 65% in 2001)
 Infrastructure facilities (roads, electricity, media)
 Increase in income
 Increase in expectations

[23]
MART, the specialist rural marketing and rural development consultancy has found that 53 per
cent of FMCG sales lie in the rural areas, as do 59 per cent of consumer durable sales, said its
head Pradeep Kashyap at the seminar. Of two million BSNL mobile connections, 50 per cent
went to small towns and villages, of 20 million Rediffmail subscriptions, 60 per cent came from
small towns, so did half the transactions on Rediff's shopping site.

Special features of rural market

Unlike urban markets, rural markets are difficult to predict and possess special characteristics.
The featured population is predominantly illiterate, have low income, characterized by irregular
income, lack of monthly income and flow of income fluctuating with the monsoon winds.

Rural markets face the critical issues of Distribution, Understanding the rural consumer,
Communication and Poor infrastructure. The marketer has to strengthen the distribution and
pricing strategies. The rural consumer expects value for money and owing to has unsteady and
meager status of weekly income; increasing the household income and improving distribution are
the viable strategies that have to be adapted to tap the immense potential of the market.

Media reach is a strong reason for the penetration of goods like cosmetics, mobile phones, etc.,
which are only used by the urban people. Increasing awareness and knowledge on different
products and brands accelerate the demand. The rural audience are however critical of glamorous
ads on TV, and depend on the opinion leaders who introduce the product by using it and
recommending it.

Opinion leaders play a key role in popularizing products and influence in rural market.
Nowadays educated youth of rural also influences the rural consumers. Rural consumers are
influenced by the life style they watch on television sets. Their less exposure to outside world
makes them innocent and fascinated to novelties. The reach of mass television media, especially
television has influenced the buying behaviour greatly

[24]
Creating brands for rural India

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.

A lot is already emphasized on adapting the product and price in terms of packaging, flavouring,
etc and in sachets, priced to suit the economic status of the rural India in sizes like Rs.5 packs
and Re.1 packs that are perceived to be of value for money. This is a typical penetration strategy,
that promises to convert the first time customers to repeated customers.

The promotion strategies and distribution strategies are of paramount importance. Ad makers
have learnt to leverage the benefits of improved infrastructure and media reach. The television
airs advertisements to lure rural masses, and they are sure it reaches the target audience, because
majority of rural India possesses and is glued to TV sets!

Distributing small and medium sized packets thro poor roads, over long distances, into deep
pockets of rural India and getting the stockiest to trust the mobility is a Herculean task. Giving
the confidence those advertisements will support. Sales force is being trained to win the
confidence of opinion leaders. Opinion leaders play an important role in popularizing the brand.
They sometimes play the role of entry barriers for new products.

The method of promotion needs to be tailored to suit the expectations of the market. Techniques
that have proved to be successful are Van campaigns, edutainment films, generating word of
mouth publicity through opinion leaders, colourful wall paintings. The Wide reach of television
has exposed the other wise conservative audience to westernization. Panchayat televisions in
Tamilnadu carries message that are well received and contribute to community development.

Dynamics of rural markets differ from other market types, and similarly rural marketing
strategies are also significantly different from the marketing strategies aimed at an urban or
industrial consumer. This, along with several other related issues, have been subject matter of
intense discussions and debate in countries like India and China and focus of even international

[25]
symposia organized in these countries. Rural markets and rural marketing involve a number of
strategies, which include:

* Client and location specific promotion

* Joint or cooperative promotion

* Bundling of inputs

* Partnership for sustainability

Client and Location specific promotion involves a strategy designed to be suitable to the location
and the client. Joint or co-operative promotion strategy involves participation between the
marketing agencies and the client. 'Bundling of inputs' denote a marketing strategy, in which
several related items are sold to the target client, including arrangements of credit, after-sale
service, and so on. Media, both traditional as well as the modern media, is used as a marketing
strategy to attract rural customers. Partnership for sustainability involves laying and building a
foundation for continuous and long lasting relationship.

Innovative media can be used to reach the rural customers. Radio and television are the
conventional media that are reaching the rural audience effectively. But horse cart, bullock cart
and wall writing are the other media, which can carry the message effectively to the rural
customers.

Rural marketing is an evolving concept, and as a part of any economy has untapped potential;
marketers have realized the opportunity recently. Improvement in infrastructure and reach,
promise a bright future for those intending to go rural. Rural consumers are keen on branded
goods nowadays, so the market size for products and services seems to have burgeoned. The
rural population has shown a trend of wanting to move into a state of gradual urbanization in
terms of exposure, habits, lifestyles and lastly, consumption patterns of goods and services.
There are dangers on concentrating more on the rural customers. Reducing the product features
in order to lower prices is a dangerous game to play.

[26]
References

1. Rural Marketing, Ravindranath V. Badi and Naranyansa V. Badi, Himalaya


Publishing, 2004

2. The Hindu - Business Line

3. www.deccanherald.com

4. www.indiantelevision.com

4.2 Rural market for FMCG on upswing - By Business Standard


Ruchita Saxena / Mumbai December 27, 2007

Fast moving consumer goods (FMCG) companies can rejoice as the Rs 27,369 crore rural market
in the country registered a growth rate of 17 per cent in the first ten months this year.

About 34 per cent of the offtake for FMCG products came from rural areas. FMCG companies
are trying to tap the rural market with more vigour, given the fact that nearly 70 per cent of the
country‘s population lives in villages.

The estimated number of households that are using FMCG products in rural India have grown
from 13.6 crore in 2004 to 14.3 crore in 2007. This growth was achieved on an average year-on-
year growth of 1.8 per cent in the number of households, which use at least one FMCG product.

For some FMCG categories, the penetration levels have remained stagnant over the past three
years. In others, the growth has been faster.

A study by market research firm IMRB International shows that while the monthly consumption
categories comprising detergents and toilet soaps have remained largely stagnant with a 92 per
cent penetration, categories such as liquid shampoos have grown from 68 per cent in 2004 to 83

[27]
per cent in 2007. Moving to higher-value products seems to have happened across categories,
from toothpowder to toothpaste or from unbranded to branded products.

RURAL TOOTS
Market penetration (in %)
Category
2004 2005 2006 2007
Household Care
Detergent/soap 93 92 92 92
Washing powder/liquid 95 96 96 97
Insecticide 17 20 21 21
Personal Care
Toilet soap 98 98 98 99
Shampoo 68 77 80 83
Hair oil and dressings 84 85 85 86
Skin cream 64 71 71 72
Food and Beverages
Tea 92 93 93 93
Coffee 14 15 15 15
Milk food drink 7 8 8 8
Oil/ghee/vanaspati 98 97 98 98
HH Universe (000s) 136043 138682 141321 143855

Manoj K Menon, senior project director, IMRB International (media and panel group), says,
―One of the most significant changes includes growing preference towards branded products. For
example, in the food and beverages segment, penetration of branded atta has gone up year-on-
year by 8 per cent and branded salt by 3 per cent. The penetration of unbranded atta has
decreased by 1 per cent and salt by 3 per cent.‖

FMCG companies Hindustan Unilever and ITC have worked on increasing rural penetration
through corporate social responsibility projects such as Project Shakti and e-Choupal,
respectively.

According to Vijay Sharma, head, Project Shakti, the growth in sales from the rural market has
been both in value and volume terms.

[28]
Speaking about his experience of the rural market, he said, ―Through Project Shakti, the
company has been implementing programmes that aim at building the market by increasing
usage of the categories it is present in. The key here is to educate consumers about improving
their lifestyle and our brands play a role in enabling this. For example, Lifebuoy Swasthya
Chetana is a rural health and hygiene educational programme. Our Shakti network is growing
and the company expects to cover 600 million consumers across 5 lakh villages through one lakh
Shakti entrepreneuers by 2010.‖

Currently, Shakti has 45,000 entrepreneuers in the country.

Suchitra Potnis, associate director, Client Solutions (a Nielsen company), said, ―Store density in
rural India is 5.4 stores per thousand persons compared with 10.1 in urban areas. The top-20
categories account for around 70 per cent of the FMCG market. Categories such as batteries and
iodised salt have gained a slot among the top-20 in the rural market since the consumption of
these categories is higher in rural than urban India.‖

4.3 Rural markets beat cities in FMCG sales growth – The Economic Times,
December 8, 2008.

Rural consumers are displaying considerable resilience in spends on fast-moving consumer


goods (FMCG) despite the economic slowdown, say top industry officials. While overall
consumer spends (urban+rural) on FMCG are showing smart rates of growth, the growth in rural
markets at 20% plus has overtaken urban markets, which is growing at 17-18%, according to
industry estimates. Industry watchers attribute the growth to rise in rural disposable incomes,
following three consecutive years of good agricultural growth. Also, top industry officials said
the government has pumped in a lot of investments into rural areas.

In recent years, FMCG companies have invested significantly in effective distribution and
tailoring their products and prices to geographic nuances to increase their return on investment
(RoI) geographically. These efforts may now be paying off. AC Nielsen numbers for the April-
September 2008 period show that across a wide range of sectors, including skin creams and

[29]
lotions, hair oils, toothpaste and candies, volume and value growth in rural markets have been
significantly higher than urban markets. Skin creams and lotions, for example, grew 26.3% by
volumes in rural markets compared with 12.5% in urban markets for the April-September period.
In value terms also, rural markets grew faster than their urban counterparts in skin creams and
lotions, according to Nielsen numbers.

Godrej group chairman Adi Godrej said, ―The overall FMCG market, both urban and rural, have
recorded robust growth rates. Urban markets have been relatively weaker in some segments
because the growth of certain sectors has been affected lately. But good agricultural growth and
government focus on these markets have led to higher disposable incomes with rural
consumers.‖ Consumer spends on FMCG in urban markets, through both traditional trade and
modern trade, have been upbeat in recent months. But modern trade footfalls in Mumbai have
been listless in the past few days, owing to the terror attack. However, kiranas, or traditional
formats, continue to report robust numbers. Traditional trade contributes over 90-95% of the
total FMCG business. Modern trade (formats like Food Bazaar or Spencer‘s) contributes 10% to
total FMCG business in metros and around 5% to total industry sales.

CavinKare CMD CK Ranganathan said, ―We have been surprised by strong consumer
undertones at a time when inflationary trends would have otherwise hit demand. There are no
signs of downtrading. Consumer purchases in rural India have been quite impressive in recent
months.‖

Rural India clocked 19.1% growth for hair oils in April-September against 11.4% in urban
markets by volume. Similarly, among toothpaste, the all-India rural volume growth was a healthy
17% compared with just 6% in all-India urban markets. The gap in growth rates was even wider
among candies. In the April-September period, rural markets registered 26.5% growth against a
minuscule 3.6% growth in urban India. It was the same story with value growth.

At a recent analysts meet, Dabur CEO Sunil Duggal said, ―Everyday products, which are priced
at popular price points, have not seen any drop in consumer demand, whether it is urban or rural.
But rural market seems to have actually done better, growing at a much faster pace. While the
rural growth story has remained completely intact and has even accelerated a bit, the urban

[30]
market has been affected by lower offtakes in modern trade. But we believe the traditional trade
should take up the slack.‖ Companies are now working on stepping up distribution in smaller
towns and increasing focus on marketing and operations programme for semi-urban and rural
markets. Seventy per cent of the total households in India is in rural areas. Industry watchers say
the increased consumption is also the result of a growing middle class base in these markets. The
total number of rural household is expected to rise to 153 million in 2009-10 from 135 million in
2001-02, suggesting a huge market.

According to an NCAER report, the numbers belonging to ‗lower middle income‘ group in rural
areas is almost double compared with urban areas. This is a large consuming class, constituting
41% of the Indian middle class and having 58% of the total disposable income.

4.4 Case Study – Rural Marketing


By www.sharetermpapers.com

Introduction

India‘s vast rural market offers a huge potential for a marketer facing stiff competition in the
urban markets. The rural market environment is very different from the familiar surroundings of
the urban market. Rural consumers have customs and behaviors that the marketers may find
difficult to contend with. The opportunities in the rural market are demonstrated by comparing
consumption levels in urban and rural market for different product categories. Their volumes and
growth show the importance of the market.uhderstanding demographic profile of consumers and
their response to brand offering is a useful approach to analyses the rural market.

The use of an existing network of channels in the rural market is the key to connecting with the
rural heartland. Haats and melas that are unique to rural markets, supplement the retailer route to
the rural market. The interactions between consumers and these unique institutions provide
information for use in marketing decision.

[31]
Corporates interest in rural marketing

When rural customers discover the new and exiting choice f brands available in urban markets, a
demand for these brands is created in rural areas. When Titan found rural consumers purchasing
their Sonata brand of quartz watches, they formulated a marketing strategy tailored to the
requirement of the large rural market.

Growing importance of rural markets

Hindustan Motors (HM) launched a utility vehicle the RTV (Rural Transport Vehicle), aimed at
the rural market. One way of meeting the intense competition in the passenger car segment by
HM is through increased efforts in rural markets. It has over40% of this rural market, expoiting
the low prices, reliability and time tested rugged aspect of the Ambassador brand.

Titan industries the country‘s largest watch maker is now set to aggressively woo the rural
consumer. Titan intends to make in roads into the Indian hinterland with Sonata. The company‘s
watches are available in towns with a population of 20,000. Rural consumers who come to larger
towns have access to Titan products.

Reasons for interest

Untapped Potential:-

Rural markets offer a great potential for marketing branded goods and services for two reasons.
First one is the large number of consumers. A pointer to this is the larger volume of sales of
certain products in rural areas as compared to the sales of the same products in urban areas. The
second one is large untapped market which is yet to be discovered.

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Market size and penetration:-

The estimated size of India‘s rural. Market stated as the percentage of world population is 12.2
percentage. This means 12.2 percentage of the world‘s consumers live in rural India. In numbers
this works out to about 120 million households. In India the rural households form about 72
percentages of the total households.

Increasing income and purchasing power:-

The agricultural development programmes of the government have helped to increase income in
the agriculture sector. This in turn has created greater purchasing power in rural markets. The
road network has facilitates a systemized product distribution system to village.

Channel variants in rural market

The distribution in rural markets is different from urban markets for multiple reasons. One of the
main reason is that the cost of reaching the outlets is higher for rural markets because of the
geographical spread. There is also a difference due to the type of channel available to the
marketer. A distinct feature of the rural market is the presence of haats and rural fairs.

Haat:-
Haats are periodic markets. Periodic markets mean that people assemble at a particular place at
least once a week in order to buy and sell products. Haats operate in a weekly cycle. They may
vary in the intensity of their transactions depending upon the season but they seem to have a
fairly stable periodicity. They serve the village in which it is located and also the surrounding
village. Each haat caters to the needs of a minimum of 10 to maximum of 50 villages from where
an average of 4000 persons come to buy a range of daily necessity and services

[33]
Consumers and traders who form a major part so the population attending these markets do not
necessarily attach much importance to the population of the village in which the market is held.
In their view. The importance of a market is based on the number of stalls it haates specially the
number of stalls selling urban consumer goods.

Competition in rural market


Competition in rural markets is varied in nature and a marketer faces competition not only from
other brands but also from substitutes, especially in places where the product is new to the
consumer. Such situations are quite common in rural markets. Competition for existing brands
can be from other brands, from new player‘s small unorganized sectors, duplicates and imitation.
The task for a new player entering in the market is difficult given the advantage that entrenched
brands have in rural markets.
Entry strategy for a new player
The entry of a new brand in the rural market is a difficult proposition. This is because in rural
markets the pioneer creates a lasting impression and loyalty to such brands is higher. In the case
of the organization entering in the rural market for the first time the sheer size of the market in
geographic terms poses a formidable challenge in accessing retailers. Entry strategy in such
situation includes,
 Efforts to create shelf space for the product,
 To establish a symbiotic relationship with an existing marketer.
 Consumer pull creates a space for the brand on the retail shelf that is difficult to replace.
In such a situation competitive efforts that rely on positioning alone are unlikely to create
sufficient,impact.

Conclusion

Rural markets are for marketers with perseverance and creativity. The market is extremely
attractive with its vast potential but also provides challenges. It is a classic case of risk return
situation. It is a high risk area but with the promise of a large customer following as the prize for

[34]
those who succeed. The key to reducing the risk is to understand the market, the consumer need
and behaviors.

A marketer need to understand that rural consumers are not a homogeneous lot. The rural market
is not synonymous with the farmer. The consumer groups here differs by occupation, income,
social and cultural grouping.

The rural marketer will find it useful to identify consumer groups who require products
purchased in the urban market. Adaptation to consumer needs of the rural market is reflected in
products offered and the message used. Understanding and communication in the language that
the rural consumer comprehends is a challenge the market has to face. The communication
strategy that allows flexibility and autonomy to meet the local situation is important. Consumer
purchase behavior is also reflected in distribution decisions. The periodic markets are an
imortantsocial institution that marketers can user to supplement reaching the rural consumer.

4.5 Potential of Rural Market- “Despite Challenges, rural India offers huge
potential for retailers”
By – IndiaRetail Biz, October 8, 2007

Rural India, according to a research report prepared by international consultancy Ernst and
Young, accounts for 60% of the country‘s overall consumption amounting to Rs.9.135 lakh crore
($228 billion), reports IANS.

The rural market, even for Fast Moving Consumer Goods, at Rs.48,000 crore ($12 billion) in
2004, was bigger than the urban market. This apart, the urban-rural wealth divide is also
narrowing.

Interestingly, according to the Ministry of Communications and IT, while 54% of the rich and
well-off households having an an annual income above Rs.500,000 ($12,500) live in urban areas,
the balance 46% live in rural areas. ―Hence, in total disposable income terms, rural India offers

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great market potential,‖ says Ranjan Biswas, Partner, Ernst and Young and National Leader
(retail and consumer products practice).

―But it has its fair share of problems and challenges before any retail or marketing operations
become successful and sustainable,‖ added Biswas. He is absolutely right, as despite almost all
marketers and retailers agreeing on potential of rural India, barring a very few, have found its
physical and geographical expanse daunting. It is really a nightmare for any marketer to address
the needs of 600,000 plus villages spread over a geographical area of over 3.2 million square
kilometers, and that too hardly connected by all weather roads.

No wonder, India boasts of highest number of retailers, estimated at over 12 million, 90% of
whom are located in towns having population of less than 100,000. Moreover,96% of them
occupy retail space of less than 500 sq.ft. each.

Lack of infrastructure and logistics together with multiple tax rates, restrictions on goods
movement, among others increse inventories and, therefore, costs. Due to lack of scale and
diversity in buying behaviour, marketers are also forced to not only create multilayered
distribution networks but also develop new packagings and price points.

However, increasing penetration of TV (specially after introduction of DTH), rebirth of radio


(through FM), availability of broadband internet, fast spread of mobile phones, and rural road
development programmes, could in a short span of time may apart from improving
infrastructure, bridge gaps in behavioural patterns across the country.

Teething problems notwithstanding, the future of the retail industry, according to experts is is
bright.

This is evident from IOC (Kisan Sewa Kendras), DCM (Hariyali), ITC (Chaupal Sagars and
eChaupals), Muruguppa, Godrej, and Reliance Retail, Future Group, and AV Birla Retail, among
new retailers, becoming quite in the rural retailing space.

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4.6 Rural PR – Cocacola India
Annual Report
Source: Anugrah Madison Advertising Pvt. Ltd

An eminent personality once asked a gathering - If you see a woman in a village milking a cow,
do you see an opportunity?
Most did not reply and the ones who did reply, replied in the negative. But that is exactly where
Dr. Varghese Kurien saw an opportunity and it gave birth to one of the most successful
organizations of India – AMUL.

The Indian rural market with its vast size and demand base offers great opportunities to
Companies. Two-thirds of Indian consumers live in rural areas and almost half of the national
income is generated here. It is only natural that rural markets form an important part of the total
market ofIndia.

Of Bharat Sanchar Nigam Ltd's (BSNL) two million mobile connections, as many as one million
subscribers are in small towns and villages. It is much the same story for wristwatches, dry cells,
cassette recorders and so on. Like any market that has seen a demand and awareness boom, rural
India has been witnessing considerable rise in purchasing power and brand 'recognition' (not to
be confused with 'awareness'). A change in consumption patterns and access to communication
media have made the rural market a vital cog in the sales-growth wheel, especially with demand
for many categories plateauing in the urban markets.

Hindustan Lever Ltd., India's most admired FMCG company (A & M's Most Admired Marketing
Companies survey) and a company whose products have among the deepest penetration in rural
India, saw sales of about Rs 9,954 crore in year 2000, in the rural market. Yet, as often as one
hears about the huge potential rural India can offer, one hears about how very few categories and
brands have seen substantial product penetration., and how very few marketers have actually
tapped the market for what it's worth. Yes, there are tremendous growth opportunities, and they
require investment in terms of distribution, product realignment, product-variant creation, etc. In
fact, a conference on Rural Marketing and Communications, organized by FICCI, highlighted
the issues that potential marketers to rural India need to take heed of, or need to address.

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Companies have to counter a number of challenges as well – understanding the pulse of rural
consumers, physical distribution of products and services as well as communicating to a
heterogeneous rural audience. For instance, propensity to buy differs among urban and rural
consumers in the same income bracket, because the rural mind is troubled by daunting
uncertainties, which may seem irrelevant in the urban context. In spite of that, there are a huge
number of success stories, products that have prospected the challenge and turned it into an
opportunity.

They include Lever's Breeze soap and A1 Tea, Britannia's Tiger biscuits, LG's Sampoorna
television set and, recently, 502 Pataka Chai, the tea brand. The success of a brand in the Indian
rural market is as unpredictable as rain. It has always been difficult to gauge the rural market.
Many brands, which should have been successful, have failed miserably. More often than not,
people attribute rural market success to luck. Therefore, companies need to understand the social
dynamics and attitude variations within each village though nationally it follows a consistent
pattern. While the rural market certainly offers a big attraction to marketers, it would
be naive to think that any company can easily enter the market and walk away with a sizable
market share. Actually the market bristles with a variety of problems.

Physical Distribution & Channel Management

The problems of physical distribution and channel management adversely affect the service as
well as the cost aspect. The existent market structure consists of primary rural market and retail
sales outlet. The structure involves stock points in feeder towns to service these retail outlets at
the village levels. But it becomes difficult maintaining the required service level in the delivery
of the product at retail level.

One way could be using company delivery vans which can serve two purposes- it can take the
products to the customers in every nook and corner of the market, and it also enables the firm to
establish direct contact with them thereby facilitating sales promotion. However, only the
bigwigs can adopt this channel. The companies with relatively fewer resources can go in for

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syndicated distribution where a tie-up between non-competitive marketers can be established to
facilitate distribution.

Promotion & Marketing Communication


In the area of communication, companies have perhaps failed to recognize that a rural consumer
may be buying a particular brand or even the product category itself (particularly durables) for
the first time. With hardly any key influencer within the village and few sources of information
(since print and electronic media have limited reach), the rural consumer feels inhibited and ill
equipped to buy confidently. To communicate effectively with rural audiences, it is important to
understand the aspirations, fears and hopes of rural customers, in relation to each product
category, before developing a communication package to deliver the product message. Hence,
there is a strong need to build reassurance and trust about product quality, service support and
company credentials in the minds of rural consumers. This is best done through the face-to-face
'below the line' touch, feel and talk mode at haats, melas and mandis.

Language and regional behaviour variations should be considered whiledeveloping rural


communications strategy. Advertising and Public Relations agencies should entrust development
of rural communications packages to professionals hailing from small towns, as they would have
a better connect with rural mindset. Although the reach of television in rural India is high,
frequent power-cuts restrict viewing time considerably. With the licensing of FM channels to
cover all district headquarters, the power of radio to deliver a localized message in a local
language will soon be available to advertisers as a cost-effective way to reach rural masses. Rural
India has a very high ownership of transistor radios and as these run on batteries, radio can once
again be expected to become a popular medium for reaching rural masses.

As a general rule, rural marketing involves more intensive personal selling efforts compared to
urban marketing. Companies need to understand the psyche of the rural consumers and then act
accordingly. To effectively tap the rural market, a brand must associate itself with the same
things the rural community does. This can be achieved by utilizing the various media in rural
areas to reach out to their readers in their own language and in large numbers, so that the brand

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can be associated with the myriad rituals, celebrations, festivals, melas and other activities where
they assemble.

An interesting example that can looked at is that of MRF Bullock Cart Tyres where the focus
was on educating farmers about the advantages of using Nylon tyres for bullock carts and
building an image for the MRF brand. MRF achieved this through a unique nylon cord-breaking
contest with real life pahalwans, thus effectively demonstrating the strength of MRF Bullock
Cart Tyres. MRF Bullock Cart Tyres became the Brand leader in the segment within three years
of the launch campaign and continues to lead the category with 35 per cent share of the market.
Escorts & Yamaha too focused on deeper penetration in the rural markets without relying on
television or press advertisements but concentrating on a focussed approach depending on
geographical and market parameters like fares, melas etc. Another example which can be quoted
in this regard is that of HLL's ‗Operation Bharat‘ to tap the rural markets. Under this operation it
passed out low–priced sample packets of its toothpaste, fairness cream, Clinic Plus shampoo, and
Ponds cream to twenty million households. Today, these brands have a flourishing market in
rural India. Thus, when looking at the challenges and the opportunities, which rural markets offer
to the marketers, it can be said that the future is very promising for those who can understand the
dynamics of rural markets and exploit them to their best advantage.

4.7 Enhanced Access To Rural Markets For Agri Inputs IFFCO’S experience
By -U S Awasthi, Managing Director,Indian Farmers Fertiliser Cooperative Limited (IFFCO)

Abstract
Integration of natural resources along with agri inputs is important for future development.
Agriculture is the core activity in India as it provides employment opportunities to millions of
farmers and also people are dependent directly or indirectly on it. Growth in agriculture is
therefore, necessary to provide food security to India. Agri inputs have an important role in
increasing the productivity of crops; they are also a means for other supporting systems. Their
availability needs to be ensured at consuming point based on micro planning. Various key issues

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confronted with agriculture etc. have been identified for addressing them through planning and
policy support.

Introduction
Both population increase and shrinking resources are inevitable and therefore needs efficient
management for sustainable development. Intensification of agricultural activities in India is
faced with challenges of population pressure of 1028.7 million during 2001 which is projected to
increase to 1400 million by 2025. As a result, availability of land per capita would reduce from
0.15 ha in 2000 to 0.08 ha in 2025, thus straining the natural resources. Nearly 2/3rd of India‘s
population depend on crop and animal husbandry, forestry and agro forestry, fisheries (Inland
and marine) and agro processing for their livelihood, majority of consumers are farm families.
Over 200 million farmers and farm workers toil hard to meet the food requirement of the
population. Farming families are struggling in India to produce more per unit area and time from
diminishing land and water resources, inclement weather conditions of recurring flood or
drought, growing inadequacies/weaknesses in farm support systems like seed, fertilizer,
agrochemicals, irrigation water, credit, access to technology, infrastructure (logistics, storage,
processing, etc.), marketing, output price, etc. Agriculture provides employment to millions of
hands in rural areas; supplies raw material to various types of industries located from village to
town areas and contributes about 22 per cent in GDP of the country.
As per 2001 census, there are 593 districts comprising of 4691 towns and 0.62 million villages,
reaching them is a Herculean task. India is endowed with varied cropping pattern dominated by
food grain crops (almost 2/3rd of total cropped area) followed by oilseeds and other crops such
sugarcane, fruits and vegetables, cotton, etc. Ensuring availability of inputs in adequate
quantities at consuming point is necessary for higher crop yields. The inputs essentially need to
be made available in the remote and inaccessible and low consuming areas to increase their use.
This should however be supported by marketing activities such as procurement, processing, etc.
to provide higher returns to farmers. Rural markets have tremendous potential for the growth of
agri inputs, as they are the prerequisite for higher production and a means for other supporting
systems. Consumption of agri inputs being seasonal, need micro planning with respect to
logistics, storage, demand and supply, cropped area, rainfed and irrigated conditions, credit
support, promotional effort, etc.

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Key Issues
India being an agrarian country, issues related to agricultural development are State/Region
specific due to diverse agro climatic conditions, cropping pattern, etc. The efforts from now
onwards should lead to increase in production and productivity, employment generation and agro
processing to give higher returns to the farmers. Some of the key issues are:

• The average size of operational land holdings has declined from 2.30 ha in 1970-71 to 1.41 ha
in 1995-96. This lead to increase in number of marginal and small farmers from 69.7 per cent
(covering 20.9 per cent area) to 80.3 per cent (covering 36.0 per cent area) during the same
period. This will lead to uneconomic holding resulting to low productivity.
• Stagnation/fluctuations in productivity and production of food grains, oilseeds, sugarcane and
cotton in the last 3-5 years, need to break the yield barrier through intervention of technology.
This lead to decline in net availability of food grains to the extent of 14.1 per cent from 510.1
g/day/capita in 1991 to 438.2 g/day/capita in 2003. The availability of cereals declined by 12.5
per cent from 468.5 to 409.9 g/day/capita; pulses by32.2 per cent from 41.6 to 28.2 g/day/capita
during the same period.
• About 2/3rd of the cultivated area in the country depend on monsoon, which is prone to
moisture stress due to skewed pattern of rainfall. Use of inputs particularly fertilizer from these
areas is limited due to risk factor affecting productivity of crops adversely.
• Rice and wheat being staple food of majority of populace, any aberrations in their production
may have adverse impact on food availability. Their contribution in total food grains production
increased from 52.3 per cent in 1951-52 to 76.9 per cent in 2004-05. Sustainability in their
production through better management practices is vital for ensuring food security.
• Percentage share of agriculture in GDP at factor cost from agriculture and allied sectors at
current prices have declined from 31.0 per cent in 1993-94 to 22.2 per cent in 2002-03.
• Lack of crop diversification opportunities.
• Mismatch between nutrients additions versus removal, later on higher side leading to shift in
nutrients status from high to medium to low coupled with occurrence of multi nutrients
deficiencies.

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• Skewed pattern of fertilizer consumption with emphasis on nitrogen use and inadequate
attention to use phosphorus, potassium, secondary and micronutrients leading to imbalanced crop
nutrition.
• Fertiliser consumption in 163 districts (32 per cent) out of 514 districts has consumption over
100 kg/ha, mostly from high cropping intensity areas, while in remaining districts it is less than
100 kg/ha mostly under rainfed areas.
• Fertiliser use restricted to cash crops like rice, wheat, sugarcane and cotton whereas its use in
other crops like cereals, millets, pulses, oilseeds, fruits, vegetables, etc. is very low.
• Farmers access to information – weather data, agro technology, updated market intelligence on
arrival of produce and their rates in different mandies.
• Non-availability of inputs viz. seed and its low seed replacement rate, fertilizers, agro chemical,
credit, etc. particularly in hilly and inaccessible areas.
• Minimize gap between potential versus actual productivity through inputs supply and effective
transfer of technology and its adoption.
• Contribution of cooperatives in inputs supply is declining fast owing to poor loan recovery.
Streamlining the cooperative credit structure for facilitating hassle free flow of credit.
• Need to create awareness about transgenic or genetically modified crops.
• Environmental pollution including surface and ground water pollution.
• Inadequate infrastructure facility for transportation, storage, processing and marketing of
finished products particularly for perishable goods resulting to distress sale affecting returns to
the farmers.
• Long-term policy on agricultural commodities, trade, including role of private sector.
• Implementing watershed development projects particularly in the rainfed areas to provide
irrigation during critical stages of crops; for recharging of wells.
• Insurance support to farmers in case of crop failure due to adverse climatic conditions such as
flood/drought.

The list of such issues is endless and therefore identifying them on topical basis and addressing
through proper planning and policy support will help in achieving sustainability in agriculture.

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Agri Inputs – Demand and Supply
Timely availability of inputs in adequate quantity at the consuming point is the precursor for
increasing crop yields. Presently, the assessment of requirement of seed, fertilizer and
agrochemical is made through various meetings held at District, State and Zonal level and
reviewed from time to time to ensure adequate supplies. The present seed replacement rate
ranges from 2 per cent to about 40 per cent for different crops and there are large scale variations
amongst States and districts. On the average, the seed replacement rate for the country is around
15 per cent to 20 per cent and the remaining seeds are basically farm saved seeds. Newly
released varieties/hybrids of crops must reach farmers in a shortest possible time through cluster
approach and by imparting training on quality seed production and seed technology to all the
participating farmers. Fertiliser supplies particularly for urea are made through ECA allocation
whereas for NP/NPK fertilizers, supplies are based on State specific requirement.

Demand and supply of inputs needs scientific assessment considering district as a unit and may
be based on various factors such as rainfall pattern, soil fertility status (including secondary and
micronutrients), cropping pattern, rainfed or irrigated conditions, gap between actual versus
potential yield, extent of use of HYV/hybrid seeds and seed replacement rate, nutrient use
through organic and fertilizers, crop wise and product wise fertilizer use pattern, extent of use of
agro chemicals including IPM practices, extension support, credit support, input output prices,
marketing infrastructure, etc. This is only an introductory list of factors for assessing demand and
supply of agri inputs; it would however vary from district to district. Designing an appropriate
format considering farming systems approach, analyzing the constraints based on benchmark
survey and mitigating the supply of required inputs would assist in increasing productivity and
production of crops. Such database should be updated on yearly basis and networked to State
headquarters for initiating corrective measures on agri inputs supplies. The suggested approach
need to be tested under ON FARM conditions through a pilot project for a period of 3 years by
identifying two districts each under irrigated and rainfed conditions with constraints free
approach. The performance should be evaluated on yearly basis for its improvement, if
necessary. This may give confidence for its expansion on a wider scale. IFFCO was registered as
a Multi Unit Cooperative Society on November 3, 1967 with a broad objective of production and
sale of fertilizer through cooperatives; educate farmers on balanced use of fertilizers through

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different field programmes and undertake community based programmes. IFFCO started with a
modest membership of 57 societies, which contributed a sum of Rs 0.549 million in share
capital. In the last over three decades, cooperative membership has steadily increased to 37381
with a subscribed and paid up capital of Rs 4210.8 million (as on 31.3.2005).

The sales of 6.46 million tonnes of IFFCO fertilizers (2004-05) are done through cooperatives
(State level Cooperative Marketing Federations, District and Village level societies); Institutional
Agencies (State Agro Industries Development Corporation, Commodity Federations, etc.) and
IFFCO‘s own Farmers Service Centre (FSC). Village level societies also called as Primary
Agricultural Credit Societies (PACS) are the backbone of the cooperative system having direct
access to the farmers for supply of fertilizers in village and remote areas. In order to strengthen
cooperatives, IFFCO is giving more business of fertilizer, hiring their warehousing facilities and
also gives preference to them for handling and transportation of IFFCO fertilizer, thus, improved
farmer‘s access to fertilizers. FSCs are also supplying agri inputs mostly fertilizers and in a
limited way seed, zinc sulphate, agrochemicals, etc. directly to the farmers in a cluster of 10-15
villages/FSC. Promotional programmes are also organized in the villages surrounding FSC‘s to
educate farmers on better crop management practices. Majority of the fertilizers are transported
by rail (85 per cent) and remaining 15 per cent by road. The godowns available with State
Marketing Federations, Cooperatives, Central Warehousing Corporation, State Warehousing
Corporation are utilized for storage of fertilizer near the consuming point to facilitate lifting of
fertilizer.

IFFCO has always believed in providing services to their member cooperatives and farmers by
organizing various promotional and educational programmes such as farmers meeting, crop
seminar, field day, demonstrations, sales point personnel training, agricultural and social
campaigns, etc. to increase crop yield through balanced use of fertiliser. Besides, it has
contributed for cooperative development, construction of storage cum community centres, social
and community development helped the victims of natural calamities. IFFCO‘s five mobile soil
testing vans analyses soil samples in the village itself and reports are given to the farmers on the
spot. IFFCO has established Cooperative Rural Development Trust at Phulpur in Uttar Pradesh
and Kalol and Kandla in Gujarat to work on multi disciplinary approach including training to

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farmers on various subjects. Production of biofertilisers and analysis of soil samples are done at
Kalol and Phulpur. Fertiliser Marketing Development Institute, Gurgaon provides training
facilities to in-house participants and also for cooperative personnel from all over the country.
IFFCO has installed touch screen kiosks containing information on crop production, nutrient use,
animal husbandry, etc. in local languages. Publicity was given to various programmes through
electronic and print media. All these programmes helped to remain IFFCO amongst the farmers
and cooperatives and assists in fertilizer distribution in the country as has been seen from the sale
of 6.46 million tonnes of fertilizer is the testimony of IFFCO‘s brand image. The support and
faith repose by cooperatives and farmers, which has given strength and confidence to IFFCO to
further expand vision and to perform in a humble way for their benefit.

4.8 Consumption And Growth of Fertilisers In India


Annual report 2007-08
Ministry of Fertilisers and Chemicals, Department of Fertilisers, Government of India

Consumption of Fertilizers
Fertilizer has been considered as a crucial input to Indian agriculture for improving productivity
to meet the requirements of a growing population. Chemical fertilizers impact agricultural
production along with a number of supporting factors like high yielding varieties of seeds
,assured irrigation, access to credit and land reforms. Keeping in view the vital role played by
chemical fertilizers in making India self-reliant in terms of food security, the Government of
India has been consistently pursuing policies conducive to increased availability and
consumption of fertilizers in the country.

As a result, the annual consumption of fertilizers in nutrient terms (N, P & K) has increased from
0.7 lakh MT in 1951-52 to 216.52 lakh MT in 2006-07, with the per hectare consumption of
fertilizers, which was less than 1 kg. in 1951-52 having increased 113.26 kg (estimated) in 2006-
07. Consumption of Urea, DAP and MOP has been increasing successively for the last three
years at 205.47 lakh MT, 60.79 lakh MT and 23.14 lakh MT respectively during 2004-05, 220.00

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lakh MT, 65.00 lakh MT and 27.00 lakh MT respectively during 2005-06 and 244.84 lakh MT,
69.24 lakh MT and 23.93 lakh MT respectively during 2006-07.
The current financial year 2007-08 has seen unprecedented growth in the demand for fertilizers.
The demand projected by DAC for the Kharif 2007season was for 131.68 lakh MT of urea, 40.08
lakh MT of DAP and 16.52 lakh MT of MOP. The demand was met fully and sales of 124.58
lakh MT of Urea, 36.14 lakh MT of DAP and 14.17 lakh MT of MOP were registered. Similarly,
for the Rabi season of 2007-08, the demand projected by DAC was for 140.02 lakh MT of Urea,
49.13 lakh MT of DAP and 19.61 lakh MT of MOP. As per the current trends, the sale is likely
to be 126.60 lakh MT of Urea, 41.59 lakh MT of DAP and 14.48 lakh MT of MOP.

Growth of Fertilizer Industry


The industry made a very humble beginning in 1906, when the first manufacturing unit of Single
Super Phosphate (SSP) was set up in Ranipet near Chennai with an annual capacity of 6000 MT.
The Fertilizer & Chemicals Travancore of India Ltd. (FACT) at Cochin in Kerala and the
Fertilizers Corporation of India (FCI) in Sindri in Bihar (now Jharkhand) were the first large
sized fertilizer plants set up in the forties and fifties with a view to establish an industrial base to
achieve self-sufficiency in foodgrains. Subsequently, the Green Revolution in the late sixties
gave an impetus to the growth of fertilizer industry in India and the seventies and eighties
witnessed a significant addition to the fertilizer production capacity. However, there have not
been any substantive addition to fertilizer production capacity during the last 15 years. As on 31
Jan 08, the country has an installed capacity of 120.61 lakh MT of nitrogen and 56.59 lakh MT
of Phosphate. Presently, there are 56 large size fertilizer plants in the country manufacturing a
wide range of nitrogenous, phosphatic and complex fertilizers. Out of these, 30 (as on date 28 are
functioning) units produce urea, 21 units produce DAP and complex fertilizers, 5 units produce
low analysis straight nitrogenous fertilizers and the remaining 9 manufacture ammonium
sulphate as-product. Besides, there are about 72 medium and small-scale units in operation
producing SSP.

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4.9 Wooing Rural Customers!
Dr Tapan K Panda, Faculty IIM-Lucknow

Since long Indian marketers are trying to consolidate their brands in the rural markets of India.
The estimate speaks of the potential volume of business that can be generated in Indian Rural
markets. The estimate is about three times that of the European Market. Yet there has not been
substantial progress in this area. The reasons are well known. The rural market is typically a
seasonal market. The consumption level goes high in post monsoon and dries up during non-crop
period. The unit disposable consumption level is very low and the assortment has to be made in a
different size compared to the urban market to make it suitable for the rural customer‘s pocket.
Multiplicity of assortment adds up to the cost level of the product and works against adding
experience effect to the production. Further more the distributed settlement and high
transportation cost makes it potentially less feasible for many companies to launch products for
rural consumption. Yet few success stories in Indian marketing history makes it a point to enter
in to the rural market. The pressure from the multinationals in the urban markets is also forcing
the domestic marketers to search for alternatives. The saturation of urban markets, the
demanding urban customers and intermediaries and frequent promotion schemes to break the
brand loyalty level are factors forcing for an entry in to the rural market. But rural market has its
own inherent problems! One of them being the low level of education that creates problem in
brand identification. Since they can not read the brand names and price tags it makes it easier for
the clones to launch brands similar in label and design and spoil the brand image of the so called
successful urban brands. Unscrupulous retailers are taking the benefit and damaging the
perception of the brands before they actually enter in to the rural market.

So marketers and advertisers are looking for alternate medium for promoting brands through
advertising. The success of a business in India will be decided in future by its success in the heart
of India i.e. the rural market. The rural advertising in India needs some innovative and alternative
media to woo the customers. The conventional wisdom of urban glossy advertising and fantasy
mix through television is not going to work in the rural markets. The Joint Publicity Committee
of the nationalized banks started advertising through mobile van publicity in early 90s in the
rural markets of India. It is a potential tool for reaching customers but how do we do that? The
best would be to make an announcement in the village about a show of some religious and holy

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films in the local language and in between we can carry the message to the audience. Rural
advertising strategy is not only important for those who are planning for a brand promotion in the
rural market but also for the existing players in the businesses like tractors, pesticides, fertilizers.
Conventional media like television and radio covers some of the areas but still 265 million are
beyond the catch of advertisers through the available vehicles! Even though there is a reach to
the villages but how many of them have the rural electricity to run the shows! The rural audience
may have the purchase parity to be a potential customer but his idea of consumption and
behavior as a consumer is completely different.

So the vehicle as well as the message has to be in the liking of the rural customer. Corporations
and advertising agencies have started working out in this area. The puppet shows in Punjab, Folk
media like Ragini in Haryana for communicating qualities of Virat cement, Pala and Daskathia
in Orissa for promoting safe electricity consumption and tooth pastes of Colgate Palmolive, Baul
songs in West Bengal for avertising insecticides are some of the examples. Britannia has entered
in to the rural market by participating in rural melas and displaying its down market brand
Britannia Tiger Biscuits. These rural melas and weekly haats have become more popular
medium of rural advertising by the media planners. Through this arrangement they can break the
saddle of scant geographical distribution of customers in rural markets as people of number of
villages assemble together to participate in the fair. It is a good ground for brand awareness
building, trial sales and sampling. It provides a wider audience at a fairly low cost. Companies
like HLL, Titan and Colgate Palmolive use festivals like Rathyatra, Kumbhmela, and Onam for
brand promotion. These companies are following a typical media schedule and are always in a
march from one place to the other with our festival calendar and a collapsible arrangement of the
exhibition setup. Companies can also use popular forms of entertainment like puppetry,
nautanki, ragini, bhangra, qaualli and traditional dance shows to increase the brand experience.
The companies can develop a story line relating to the brand and show the characters using the
brands for their advantage and even the dresses of the characters can be that of the brand‘s
packaging. The Lowe Lintas ‗s database covering 5.96 lakh villages over 459 districts suggest the
best places to undertake a brand promotion.

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The recent example of adopting a railway station by Titan during Kumbha mela helped them to
generate a high brand recall as for each arrival of the train the announcement was made
―Welcome to Sonata-Naini”. The extensive network of postal and medical workers throughout
the country can be used as an alternative vehicle for brand promotion in the rural areas.

The days are not far when the postbox, post office walls and the postman‘s dress will carry the
logo and brand names of companies, the walls of the rural primary health centers, the schools
will be covered by suitable brand advertising catering to the taste of the rural target market. Once
this innovation of reaching through alternate cost effective media starts then the rural
consumption will go high making it potentially more attractive than the urban market.

4.10 Seed Industry Transition towards Hybrid Varieties


By – The Financial Express

India‘s Rs five billion seed industry — the backbone of the massive multi-billion fruit and
vegetable industry — is undergoing a silent transition to branded varieties, thanks to the fast
changing food habits and retail food industry. And at the forefront to take the advantage of the
vast potential of this untapped seed segment are the multi national corporations (MNCs).

The impact of this is witnessed in the interior regions, where farmers are busy gauging the
possible benefits of shifting to the branded, value-added hybrid seeds which give better prices
and higher yields in relatively shorter span of their cropping activities. ―The scenario is fast
changing in the seeds market,‖ said Puls Farming Orion Pvt Ltd managing director VB Dongre.
―While the change is seen more in parts of Western Maharashtra, Karnataka, Gujarat, South
Rajasthan, Andhra Pradesh, Tamil Nadu, where farmers prefer branded seeds, the Northern and
the Eastern regions are yet to shift,‖ he added. Little wonder, therefore, the MNCs are busy
drawing the battlelines to take advantage of the untapped potential of the Rs five billion Indian
seeds industry. In the forefront are MNCs Syngenta, Indo American Seeds, Monsanto India,
Pioneer Seeds. The latest entrant is the USA‘s Seminis, claimed to be one of the leader in

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vegetable and fruits seeds brand enter in the local some $920 million annual seeds sales market.
Last week, Seminis Vegetable Seeds (India), the Indian arm of $450 million California-based
fruit and vegetable seeds major, announced launching of its own branded seeds in India. An agri
analyst said, ―Most of the MNCs are willing to invest in technology and offer advanced products
while passing the benefits to the farmer in the form of higher yields and the better prices.‖ The
changing pattern, in the retail food industry, has prompted the farmers to increase seed
replacement rates in India for crops. Around 10-12 per cent of the normal seeds market has
already shifted to the hybrid seeds or valued-added seeds, industry sources said. While
technological advances have led the release of superior quality seeds that offer many benefits to
the farmer, the product has become so complex that special agronomic practices must be
followed to maximise its benefit and requires that the farmers are educated about the product
requirements by qualified personnel. Such educational efforts among the farmers would help
MNCs and hybrid companies yield good rewards, said seed dealers.

4.11 Seed Industry in India Poised for a leap


The Hindu, August 16, 2007

Seeds form the fundamental and crucial input for sustained growth in farm production, often
stimulating the use of new methods, machinery and yield-enhancing agro-inputs. The role of the
seed sector is not only to ensure adequacy in seed quality but also to ensure varietal diversity.
Today, the Indian seed programme boasts one of the biggest seed markets in the world, with
annual sales at around US $920 million. Of this, domestic offtake accounts for US $900 million
and sales in the global market account for the remaining US $20 million. The New Policy on
Seed Development (NPSD), established in 1988 with the objective of augmenting productivity
and output quality, stimulated major growth in the industry as it attracted a lot of investment in
seed business from major domestic seed companies. Given the growth of the seed sector in
recent years, India has the potential to become the foremost player in the seed export business in
the developing world with prospective markets in Asia, Africa and South America.

[51]
Public Sector: Like many agriculturally developed Asian nations, India has sizeable public and
private sector seed businesses. Giant public sector players include the National Seeds
Corporation (NSC), the State Farms Corporation of India (SFCI) and the thirteen State Seed
Corporations (SSCs). NSC was the first public sector organization, established in 1963, and
remained virtually the only agency for seed production for around 13 years. Its role extended to
several developmental programmes including training, quality control and extension activities in
seeds. This was followed by the setting up of the SSCs under two consecutive plan periods,
supported by the World Bank, and these largely adopted the role of the NSC in the Indian States.
These corporations engage principally in production and marketing of seeds of high yielding and
hybrid varieties developed by the public sector.

Private Sector: Although private seed companies such as Poacha and Sutton have been
established since the pre-independence era, accelerated growth of the private sector began only
after the introduction of the new seed policy in 1988 which ushered in a liberal business climate.
Currently there are over 200 private seed companies, together with a few multinational
companies, and these tend to focus on low volume, high value crops with the principal effort
being placed on creating hybrids for oilseeds, maize, cotton and vegetable crops. The private
sector accounts for 70% of the market in terms of market turnover whereas the public sector has
the greater share in terms of volume sales.

Global Initiatives: India today has a critical mass and level of growth that it could use not only
to cater to the growing domestic requirement but also to make a concerted effort for global trade
under provisions of GATT and WTO. Furthermore, India is endowed with second largest area of
farmland, and the largest area of irrigated land, in the world and, with its huge germplasm
diversity, its seed industry is well placed to serve both domestic and international markets.

4.12 Some Prominent Success Stories


A) Philips India Ltd. - Electronic Entertainment Equipment
Objective - promote Phillips Electronic Entertainment products, viz., Stereos and CTVs, among
the rural population of Tamil Nadu. Communication Strategy - Based on information regarding
buyer behaviour 'Philips Super Shows' were conducted in five district headquarters with the

[52]
intention of motivating dealers as well as opinion leaders to generate word-of-mouth publicity, as
a first step. This was followed by extensive van operation in 5000+ population areas with
audience participation techniques for mouthing the brand, supported by mass media campaign in
regional press (district wise edition), rural cinemas, radio, wall painting and intensive
merchandising activities.
Result - Between October '97 and January '98, Philips achieved a 61 per cent growth in Audios,
28 per cent in Colour Televisions and a 7per cent growth in B&W TV over sales of the
corresponding period in 1996-97, in Tamil Nadu, in a sluggish consumer electronics market.
They were able to sustain the growth rate in the following year too.

B) Marico Industries - Parachute Coconut Oil Pouches


With the objective of creating awareness for Parachute Coconut Oil pouches in towns with less
than 20,000 population in Tamil Nadu, and in order to convert loose oil buyers into Parachute
pouch customers, Marico Industries launched a van campaign. The communication Strategy
focussed on getting women out of their homes to participate in the van campaign, which was
aimed exclusively for them and for the first time conducted by women.
Result - A study by Marico showed a 25per cent conversion from loose coconut oil usage to
Parachute Pouch Pack, post van campaign and a substantial increase in sales from the campaign
areas.

C) Acc Limited - Acc Suraksha Cement


In a market dominated by graded cements in the semi urban/rural areas of Karnataka, ACC
Cement ventured out to establish the superiority of ACC Suraksha blended cement and build an
image of a Premium Cement for the brand. To reach the opinion leaders viz. Architects,
Engineers, Contractors, etc., the assistance of the regional local press was sought and other
Direct Marketing efforts such as field meetings with small groups of masons & customers were
used.
Result - A post-campaign study initiated by ACC revealed tangible improvement in off-take in
the state of Karnataka and an extremely positive response from dealers, who believed that the
campaign helped in strengthening their hands.

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5. Research Design
The research design will give a clear cut idea of the procedure to be followed for the completion
of the project. The research has been carried out with certain focused objectives which need to be
fulfilled after the completion of the study. The completion of these objectives will throw some
light on the problem. The problem at hand is to study about the promotion and brand
promotional activities of some FMCG products in rural market and also to find out the potential
of rural market (on a pilot basis).

5.1 Objectives and Sub-objectives of the study


The following objectives and sub-objectives have been defined for the study. The study will
focus on these areas to find out a suitable answer. The objectives and sub-objectives are as
follows:-

1) To analyze the present promotion strategy of rural brands (FMCG and Agri Inputs) in
rural markets.
a. To study the modes of communications used and their effectiveness.
b. To find out the role of promotion in rural sales.
c. To find out the promotional strategies of different players in the market.
2) To measure the success of rural marketing campaign of the brands in terms of consumer
appreciation.
a. To study the determinants of specification factors which decide the success of
rural promotion strategy
3) To evaluate the effects of adopting the specific brand ambassadors in the rural marketing
context.

4) To analyze the market opportunity and potential for existing and new entrants in the rural
market.
a. To find the growth of rural market over a period of 5 yrs.
b. To find the behavioral changes in the rural consumers.

5.2 Scope of the project


The study will provide some basic ideas regarding the brand promotional measures and the
market potential of rural sector in and around some villages of Pune in Maharashtra and a few

[54]
selected villages in Muzaffarpur, Samastipur and Begusarai districts of Bihar. The scope of the
project is limited to the study of consumer perception regarding the selected brands of FMCG
such as soaps, toothpastes, washing powder, hair oil and Agri Inputs such as Hybrid seeds (corn)
and fertilizers in the selected areas. The study has limited exposure to the market due to time,
mobility and budget constraints.

5.3 Research Methodology


The basic knowledge about the brands and their promotion has to be gathered thorough the
secondary data available on the internet and the documents available in the institute library. The
quantum of information on this subject matter is enormous and updated. The secondary sources
such as internet and news articles cover almost all sections and geographic locations. Although
the project does not entitle for a primary research but for the validity and reliability of the
research and better perception of the subject a primary research was undertaken in the selected
regions in Maharashtra and Bihar state. The primary survey was conducted in the selected
regions to get some idea of the subject matter. The following sites had been identified and
surveyed:

1. Maharashtra (Pune District)


a) Hinjewadi
b) Marunje
c) Maan
d) Rawet
e) Punawale.

2. Bihar (Muzaffarpur, Samastipur and Begusarai Districts)

a) Sherpur

b) Mushahri

c) Tilrath

d) Ujiarpur

e) Karpuri Gram

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Random sampling was done for interview of the respondents in every village. A sample of 10
respondents per village was interviewed. The research was carried out for a period of 20 days
from 5th January to 25th January 2009. The total sample collected was 100 respondents (non-
overlapping).

5.4 Data Collection


The secondary data was collected from the sources such as institute library and internet along
with some meetings with subject matter experts. The primary data was collected by way of a
non-disguised primary survey in the selected areas. The survey was done with the help of a semi
structured questionnaire having MCQs for fact based responses and Open ended questions for
opinion based responses.

5.5 Data Analysis and Findings


The data analysis is to be done using statistical tools and techniques. The result is to be critically
analysed and every aspect of the objectives to be dealt with great detail. The findings are to be
reported with the help of suitable graphs and diagrams where ever required. The comparative
analytical findings are to be reported for most aspects of the objectives.

[56]
6. Secondary Research - Case Study Findings

6.1 NIRMA – Rural Success Story (As published by the company)


There's an interesting way of putting rural India into perspective. India's population, as per the
estimates of the United Nations Population Division, is 1,147,995,904, then rural India is taken
as 73.3% of India. Divide that by the estimated total world population of 5.9 billion, and rural
India becomes 12.2% of world population. Forget all of us sitting in the cities (4.4% more) but
12.2% of the world resides in rural India. Which, given our effective lack of knowledge makes
it a bit like one of the world's last great undiscovered countries.

Rural inhabitants aren't a different species, but consumers as quirky and demanding of marketers
as any of their urban cousins. And just as eager to consume - maybe even more so, given their
access to messages of consumption via TV, but lacking the easy access that makes urban
consumer‘s blasé. For marketers the potential is huge -- a country waiting eagerly for their
products, providing they can make the effort to export inwards, and learn to play the games by
rural rules. And if they don't, the chances are that they will be left behind. Even with the
minimal effort put in by companies so far, rural India now accounts for majority, or near
majority, consumption in many categories. - Rural India is clearly not such an area of darkness
anymore, and as a further incentive to keep the lights on, farmers get electricity free.

One of the most popular and widely accepted Marketing Myth is that the rural consumers will
only buy really cheap mass market brands. But the stark reality is that though brands like Nirma
lead, but penetration of premium products has also been observed even to the lowest SEC (socio-
Economic Classification). The percentages may be very small, but given the large universe, the
actual figures may be significant. Thus when we are aware of the fact that brands like Nirma rule
the rural market, it would be interesting to study and analyse their basic marketing inputs -the
4P‖s.

About the Company


Nirma is the Rs.17 billion Detergents, Soaps and Personal Care Products Brand, a market
leader in the Indian detergent market and second largest in bathing soaps... the brand NIRMA

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being one of the world's biggest in it's segment... a result of it's mission to provide 'Better
Products, Better Value, Better Living'.

The man who altered the clothes-washing habits of the Karsanbhai Patel
the chairman of the Ahmedabad-based Nirma Ltd. This chemist who manufactured detergents at
home in Ahmedabad in 1969 has certainly come a long way. He worked from his backyard
which developed into a soap factory, cycled to retail outlets and hawked his brand at one-fourth
of the price of similar products then available at Rs 6 per piece. Nirma, named after his daughter,
was the cheapest detergent vying for attention on shop shelves. By the late 1980s, Nirma had
become one of the world's largest-selling detergent powders. That he rewrote history and gave
Hindustan Lever, the Indian subsidiary of the Anglo-Dutch foods and toiletries conglomerate
Unilever, a huge headache is well-chronicled. Today he is proud owner of an Rs 2,500-crore
Ahmedabad-based soaps and detergents major.

Introduction
It has been Patel's dream to make Nirma a synonym for quality. "Nirma is not merely a brand or
a product, it is a dynamic phenomenon, a revolution, a philosophy," he once said. Nirma sells
over 800,000 tones of detergent products every year and commands a 35% share of the Indian
detergent market, making it one of the world‘s biggest detergent brands. Towards this end, he
tried his hand at many brand extensions. From toothpaste to salt and matchsticks, they all nestled
under the Nirma umbrella. Incorporated as a private limited company, Nirma was converted into
a deemed public company and then to a public limited one in Nov.'93. Nirma is an over Rs. 17
billion brand with a leadership presence in Detergents, Soaps and Personal Care Products,
offering employment to over 15,000 people. In fiscal 1997, the Nirma group restructured
operations and merged four companies – Nilinta Chemicals, Nirma Detergents, Nirma Soaps and
Detergents, and Shiva Soaps and Detergents – with its flagship Nirma Ltd. Products are
marketed through a 100-per cent subsidiary, Nirma Consumer Care.

Nirma has undertaken backward integration into manufacture of Industrial Products like Soda
Ash, Linear Alkyl Benzene (LAB), Alfa Olefin Sulphonates (AOS), Fatty Acid, Glycerine and
Sulphuric Acid.

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Today, Nirma sells over 800000 tones of detergent products annually, giving it a 35% share of
the Indian market, which are the world‘s second largest fabric wash products markets. This
makes Nirma India's largest detergent marketer and one of the world's biggest detergent brands.
The Company has acquired Kisan Industries Limited situated at Village Moraiya, Dist.
Ahmedabad as a going concern, which was engaged in the business of manufacture of
detergents, Single Super Phosphate, fertilizer and printing and packaging. The second stream of
the 420000 tpa Soda Ash plant at village Kalatalav, Bhavnagar was commissioned in September
2000. The Company also set up a pure water plant to manufacture 2.80 lacs TPA Vacuum-salt in
October 2000.Debottlenecking process which was made during 2001-02 by the company resulted
in expansion of installed capacity of Soda Ash at Village Kalatalav, from 420000 TPA to 650000
TPA. The total cost of the project is approximately Rs.110 crores. This project is expected to be
completed in September, 2002. The company issued Secured NCD aggregating Rs.360 crores in
order to augment its working capital and also to bring-in cost efficiency in funding cost

In detergents market Nirma and Hindustan Lever are close competitors with 38% market share
each. Nirma leads the popular segment, while HUL leads the premium detergent powder
segment. P&G and Henkel Spic are the other key competitors in the detergent market.

In toilet soaps, HUL has a dominating 63% market share. Nirma has also garnered a significant
22% market share in a short time. Other major players in the segment are Godrej Soaps and
P&G.

Product
Nirma is aptly considered as a marketing miracle and this is reflected in the strength of the
brand. Nirma has successfully challenged and changed the conventions of detergents marketing
and today leading business schools are analyzing it's strategies to demystify this miracle.
Norma‘s core marketing thrust revolves around prompting consumer trials by offering a good
quality product at most competitive price and retaining these new consumers by continuously
offering the same 'Value For Money' equation. This is borne by the fact that today Nirma can

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boast of a strong brand loyalty from its 400 million consumer base. Based on the pragmatic
concept of 'Umbrella Branding', Nirma has been increasingly successful in extending its brand
equity to other product categories like Premium Detergents, Premium Toilet Soaps, Shampoos,
Tooth pastes and Iodized Salt, thus opening new vistas to the field of Brand Building.

Detergents

Nirma dominates the popular detergent segment with brands like Nirma Popular powder, Nirma
Detergent powder, Nirma bar, etc. Super Nirma detergent powder is positioned in the mid-priced
segment.

Nirma Detergent Powder was launched in 1969, by Mr. Karsanbhai Patel. The product created a
loyal customer base that increased day by day. In 1982 Nirma Detergent Powder became the
largest selling detergent powder in western India and by 1989 the same was established on the
national scene. The detergent when launched was priced one third that of the nearest competitor.
The detergent powder was overnight converted into a common mans necessity from being a
luxury of a few. The credit goes to the pioneer of this new environmental friendly technology,
Mr. Karsanbhai Patel who lowered the usage barrier and started the Nirma phenomenon which
took the world by storm. After a period of more than 20 years the poly packet for Nirma
Detergent Powder was changed in 1998 to differentiate it from me too look alike'. The strategy
seems to have worked as consumers have successfully identified the new pack as a genuine
Nirma product. The product today is available in two pack sizes 500 grams and 1000 grams.

Super Nirma high quality spray dried detergent was launched into market in 1996 with a price
40% lower than the nearest competitor offering the same quality. With in a short span of two
years Nirma Super Detergent Powder cornered substantial market share in the premium detergent
segment. The brand targeted towards Nirma consumers who were shifting towards more
sophisticated form of washing, clicked very well as the ever dependable Nirma Brand name
assured high quality at affordable prices. The powder is available in 25 grams, 500 grams and
1000 grams in polypacks.

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Nirma launched a flanking brand named Nirma Popular Powder in selected pockets where
Detergent powder usage was limited or established brands were eating into Nirma's share. The
product was a good product available at prices that would switch people to use branded powder.
The substandard products took a severe beating in the pockets where Nirma Popular was
launched. It is available in 500 grams and 1000 grams pack sizes. The product with similar name
and slightly different formulation is being sold in the exports market successfully.

Nima Green Powder was introduced in Q4 - '99 is Nirma's introductions in a segment which was
not addressed by Nirma till then. This powder positioned in the economy segment has lingering
fresh lime perfume. It scores high on cleaning efficiency and generates a good amount of lather
leaving clothes sparkling clean. This powder is packed in multi-colour poly bag. This product is
available in 500-grams and 1-kg packing and is sold exclusively through the efficient Nima
distribution network.

Driving the inspiration from its success in Detergent powder market, Nirma expanded its product
portfolio by introducing Nirma Detergent Cake in 1987. The cake was launched keeping in
mind the washing habits of rural India where limited use of bucket and more so of running water
added to the wastage of washing powder. The answer was brought by Nirma in form of
Detergent Cake. The brand today is ranked as most distributed detergent cake brand in the
country by AIMS retail audit. The product is available in two pack sizes of 125 grams and 250
grams

The positioning of Nirma Popular Detergent Cake is similar to that of Nirma Popular Detergent
Powder but meant to fight other detergents cake. This product is more important as the
unorganized players are far more penetrated in cake market as compared to that in the powder
market. The product is available in 125 grams and 150 grams pack sizes. To meet the consumer's
growing aspirations and to allow consumers to upgrade to a better quality product, Nirma
introduced Super Nirma Detergent Cake in 1992. As Nirma Detergent Cake is to Nirma
Detergent Powder, Super Nirma Detergent Cake is to Super Nirma Detergent Powder. It was
launched to woo back the Nirma Detergent Cake user who had shifted to the competitor's
product. The cake has high detergency value at an affordable price. It is available in 125 grams
and 250 grams sizes.

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Launched in Q4 - '98, Nima Green Cake became a close no.2 in its segment within 3 months of
its launch and was successful in arresting the growth of competition in this segment. This brand
has seen a number of consumer promotion schemes tied with it. The splendid laminated multi-
colour wrapper, which shows a slice of lemon and trishul, exemplifies razor-sharp dirt cutting
efficiency of this cake. This cake is rich in lime perfume and has an exceptionally high brand
recall. It is available in sizes of 125 grams and 250 grams.

Nima Blue Detergent Cake was introduced as a low cost alternative to the then available blue
detergent cakes in Q4 - '99 in very few select states and has ever since been performing very
satisfactorily. It is the epitome of Nirma's endeavor to provide better products at more
competitive prices. It is available in 125 gram and 250 gram pack sizes. This cake is packed in a
dark blue wrapper and has strong eye catching presence on the shelf.

Nima Bartan Bar was launched in Q1 - 2000, gives an outstanding performance is Nirma's foray
into the scourer's market. The slogan "Darpan Hai Ya Bartan" in the product's TV commercial
has helped immensely in conveying the message of "Bartan Bar's cleaning efficiency very
quickly across all segments. Our TV commercial supports our positioning of Nima Bartan Bar as
the one giving superior quality cleanliness and making the utensils shiny and sparkling clean.
Nima Bartan Bar is available in a 400 gram packing.

Nirma Clean was launched in Q2 - 2000 and is available in a 300 gram bar packing. The "Chak
Chaka Chak" television commercial of 'Nirma Clean', showing a whole set of spotless, clean
vessels in a kitchen sparkling with starlight, delineates the high cleaning quality of this scouring
cake. It is targeted at the low end of the market. 'Clean' is expected to trigger conversion from the
unbranded detergent powders and cakes. Nirma expects the scourers market to undergo
dynamism with its introduction of two scourer cakes.

Bathing Soaps

Nirma Bath Soap (Carbolic): Toilet soap market was dominated by few MNC's who could
monopolistically drive the prices. The growth of toilet soap market was tremendous in 90's and
was expected to increase further. Nirma's brand equity in detergent market was very strong and
was unanimously associated with value for money products. We saw no reason why cannot this
be extended to the personal care market. Nirma ventured into this market with Nirma Bath a

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carbolic soap to counter the largest selling soap from a MNC stable. The carbolic soap
segment though a declining market saw a sudden burst of activity. Nirma Bath started gaining
substantial volumes at the cost of he competitor's and India's largest selling brand. The pricing of
the product was penetrative at a quality (TFM - 60%) which the competitor's could not match.
The product is available in 75 grams and 150 grams pack sizes.

Nirma Beauty Soap: After targeting the largest selling toilet soap with Nirma Bath, now was
the time to target the second largest selling toilet soap. Nirma after successful launch of Nirma
Bath launched, Nirma Beauty. Nirma Beauty was a popular category soap which targeted the
middle and lower middle class population of the country. The product had high TFM content of
70%, an excellent aroma and an advertisement with a touch of aspiration. The product became an
instant success, and in no time became India's third largest selling toilet soap brand. The volumes
came from the category shift as well as brand switching. The product is available in 100 grams
and 150 grams pack sizes and three different perfume variants. Recently company has changed
its packaging and made it more contemporary by printing the wrappers on six color Cerruti
machine from Italy thereby differentiating it from the me too look alike'. The brand today is
growing very fast and is firmly moving towards the second position. Competitors tried to copy
the concept and the commercial but were not able to match the success of the brand. As it is said
you cannot fool consumers when it comes to quality

Nirma Premium Soap: For the first time in the history of FMCG there was an attempt to extend
the value for money proposition to the premium segment. The concept was innovated by none
other than Nirma. Nirma launched Nirma Premium Soap during 1996 in the premium soap
category with 80% TFM, mild fragrance, three variants and a touch of class in its advertising.
The brand targeted to match the changing Nirma consumer's profile in terms of aspiration,
quality consciousness and image perception. The brand has started picking up volumes in the
premium soap market which is characterized by large number of brands and cut throat
competition. Nirma Premium has been able to differentiate itself in this cluttered market its
unique packaging and exclusive advertisement.

Nirma Lime Fresh was launched in 1997 with absolutely no advertising support. The lime
segment of the toilet soap market was growing at a sedate rate, prior to the launch of Nirma Lime
Fresh. Launch of Nirma Lime Fresh saw the volumes of the segment grow at more than 10%.

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During the first year of the launch Nirma Lime Fresh over took the largest selling brand in the
lime segment. The product is priced competitively with 80% TFM content and strong tingling
lime fragrance. The commercial was aired during the later part of the year which saw the volume
grow rapidly. The commercial shot at Maldives and Switzerland with a new and young face was
equally liked by consumers. The successful launch was termed as the seventh best launch of the
year 1997-98 by Business Standard. There in no looking back and today Nirma Lime Fresh is the
undisputed market leader in the lime segment and is giving shivers to the competition. The
product is available in 75 grams and 150 grams.

Nima Rose: The remarkable and phenomenal market response received by Nima Rose soap
within just two months of its launch has once again proved the merits of Nirma's commitment
towards its consumers. Nima Rose soap has got an exceptionally fine perfume of rose that
lingers around your body for a long time even after you bath. Due to high TFM (Totally Fatty
Matter) content, it provides one of the nicest baths. This brand has already carved niche in its
particular segment by achieving leadership position just within tow months of its launch.

Nima Lime, the first product in the Nima range of products has a very high TFM content and
was introduced in Q2 - ' 98 when the astounding success of Nirma Lime Fresh Soap prompted
competition to launch lime variants in the same price segments. Nirma is committed to the
concept of umbrella branding. We have reaped benefits of this strategy right from our inception
till date. In the past, we have faced umpteen numbers of situations where the competition
introduces special campaigns to draw away the consumer's attention from our core brands like
Nirma Detergent Powder, Super Nirma Detergent Cake, Nirma Beauty Soap, Nirma Lime Fresh
Soap, etc. The purpose was to lure away consumer attention from Nirma Lime Fresh Soap by
temporarily modifying the product. We, at this point of time introduced a 'fighter brand' called
Nima Lime to provide at shield to our core brand - in this case 'Nirma Lime Fresh Soap'. The
success of Nima Lime has been the cornerstone in Nima brand growing into a full fledged
business

Nima Sandal: This soap was launched in Q2 - '99. Over a period of time, the Indian toilet soap
market has fragmented and has seen the emergence of prominent segments such as Sandal, Rose,
Jasmine, Body moisturizing soaps, Herbal etc. Nima Sandal is Nirma's offering in the ethnic
sandal segment. With a rich and exotic perfume and 80% TFM content, this toilet soap is

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available in a 100 gram packing. Nima Sandal is promoted by a TV commercial shot at exotic
locales depicting the form of 21st Century Indian woman. Early market indication promises this
brand to be the future no.1 in this segment.

Nima Herbal is the emanation of Nirma's quality and caliber. Nima Herbal is ingrained with
benefits that accrue from using various herbs, shrubs, medicinal plants and various day-to-day
commodities like sandal wood, lemon, turmeric, coconut, tulsi, neem etc. that are gifted to
mankind by nature. Nima Herbal is the nature's legacy. It is reflection of Nirma's conviction of
"Care For The nature's legacy. It is reflection of Nirma's conviction of "Care for the Consumers".
It was launched in Q3, 2000 with a 78% TFM content in a 100 gram packing.

Nirma Herbalina: Nirma has invariably identified the nerve of the market and answered it at the
proper time. We addressed the ayurvedic and medicated soap segment with Nirma Herbalina.
Launched in Q3 - 2000 with a high TFM content, 'Herbalina' is Nirma's latest introduction in the
range of toilet soaps. The natural commodities that are shown on the wrapper blend very well
with the green colour of the eye-catching pack. Available in a 100 gram packing size, Nirma
Herbalina is the 'Natural flow of freshness'. It is Nirma's yet another impression of 'Better
Products, Better Value, Better Living'. Herbalina has an exceptional long-lasting, heart-capturing
aroma.

OTHER PRODUCTS:

1. Hair care
a. Nirma Beauty Shampoo
b. Nirma Shikakai
2. Toothpaste
a. Nirma Toothpaste
3. Iodized Nirma Free Flow Salt
4. Industrial chemicals

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Price
Ivory tower theories are rethinking their business basics-thanks to Karsanbhai K.Patel. Taking on
the might of a multinational, his-priced detergent Nirma captured a majority market share
arresting the sales and growth of a consumer giant‘s up market brand. Among the greatest
success stories in the annals of marketing management in India is that of a low-priced detergent
of reasonably good quality which, in the course of a mere decade, put the skids on a product that
was considered the pride of a powerful multi-national. The story of Nirma has become a classic
as a marketing case-study. And the story of its progenitor is as genuine and romantic a tale of
rags-to-riches as one could hope to find anywhere.

For most housewives, struggling to balance their monthly budgets, Nirma came as a boom. It
was much cheaper than Surf, which had already gone well out of their reach; and it washed
clothes nearly as well. Its cleansing power was far superior to that of the slabs of cheap washing
soaps that had been their sole alternative until then. By the early 1980s the burgeoning sales of
Nirma reached a rate of growth that was twice or thrice that of the industry in general. Moreover,
Nirma operated in the small-scale sector and, therefore saved an enormous amount of excise duty
that multinationals had to pay on every kilo of detergent produced. The latter simply could not
hope to bring the price down to a level that was attractive enough for the middle and lower-
middle classes, which were the bulks segments for Nirma sales.

The pricing policy adopted by Nirma for its Nirma washing powder i.e. adequate Quality at an
Affordable price has challenged the mighty HUL‘s Surf.

Nirma Washing Powder - 1kg Rs.36.00


Nirma Washing Powder - 500grams Rs.18.00

Even the second product that Karsanbhai introduced was a low-priced toilet soap, which he
thoroughly test marketed in Gujarat before going national with it in 1990-hs been faring well.
Nirma toilet soap retailed at a mere Rs.2/- with the shopkeeper allowed to retain 25 paisa behind
each cake sold. The Nirma name itself was a guarantee of quality for the consumer smiles the
businessman. It found ready acceptance. Today, Nirma's toilet soap products are priced in the
range of Rs 9-15. Nirma Lime Fresh, for instance, commands a price of Rs 12 for 75 grams,
while Nirma Premium is priced at Rs 18. Nirma Bath, a popular soap, is priced at Rs 12. In

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comparison to Nirma's price range, HUL's toilet soap brands are priced at a slight premium.
LifeBuoy is priced at Rs 14, and LifeBuoy Gold at Rs 18. The price of Rexona is Rs 13, while
that of Liril, which competes with Nirma Lime Fresh, is Rs 21.

Thus it is a well known fact that Nirma’s best Unique Selling Proposition is Price

The result of there cost effective product offering is that though the industry has been growing at
the rate of 15 per cent annually, Nirma‘s growth has been at least 30-35 per cent a year for the
last few years.

Nirma has been successful in keeping its prices at such affordable levels primarily due to their
strategy of backward integration projects. These projects had been undertaken with a strategy to
become the lowest cost detergent manufacturer in the world. Self sufficiency in key raw
materials will give protection against commodity cycles besides yielding substantial savings in
raw material cost. The company estimates a total cost saving of 25% in material and handling
costs due to the backward integration projects. The LAB plant has yielded about 12% cost
savings and the company expects a similar cost saving of about 12-15% once the soda ash plant
stabilizes. Overall the backward integration has yielded a cost saving of Rs0.8-1bn last year. Post
completion of backward integration the company now plans to focus on building large volumes
and gain from economies of scale.

Till 1985 the Nirma ingredients were simply mixed by hand thus requiring neither machinery nor
capital investment. Due to the scale of his product and the simple non-mechanized production
process, Nirma gained a number of tax and excise benefits for not using electricity. Since Nirma
was a small-scale local venture, they did not have to pay excise duties that were levied on
multinationals.

Another area where Nirma saved millions was in labor costs. Being a cottage industry Nirma
was not compelled to abide by minimum wage rules. To maintain low costs Karsanbhai used
contract workers who were paid Rs. 85 per ton (In 1985 $1 U.S = Indian Rupee 12.368) for
mixing raw materials and then bagging them into 1000 bags of 1 kg each. Payment was made
according to work done and since labor was not permanent no additional overhead for benefits
etc. needed to be paid. It was not until the mid 80‘s that Nirma started to mechanize their
production process, however by then they were an already well-established name. In 2008

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Nirma‘s labor costs for 12000 workers was estimated to be between Rs 40-50 per person day in
comparison to HUL who paid their semi-skilled workers approximately Rs 70-90 per person day.

Distribution
In its incipient days Karsanbhai Patel‘s distribution network and sales force was a one-man team
himself. Karsanbhai affected his deliveries of washing powder on foot. As the popularity of
Nirma grew with a spread of positive word-of-mouth Karsanbhai adopted the time-honored Coco
Cola maxim that his product should be available within an arm‘s length of desire. So he
concentrated on widening his distribution network; and Nirma began surfacing all over Gujarat,
in scruffy little shops in even the remotest villages. As the product‘s fame spread, agents from all
over the country began writing in, and expressing their willingness to operate on the tiny margins
that the businessman gave. Distribution is clearly the key to rural marketing, which Nirma has
pioneered over the years. Nirma has a 850 strong sales force, a distributor strength of 800 and a
retail reach of over 1 million outlets. When setting up a distribution system Karsanbhai was
extremely aware of the importance of keeping costs down. Once demand for Nirma had
outgrown his ability to deliver on bicycle he moved on to vans and then later to trucks. Nirma
had neither a field sales force nor owned a distribution network. Karsanbhai negotiated prices
with truck and van suppliers on a daily basis. As sales grew Karsanbhai eventually hired
stockists (those who stocked additional quantities of the goods) as commission agents. On the
one hand it helped him avoid central sales tax and the stockists were responsible for all
transportation, octroi, handling and delivery costs. There was also a strict system of protocol and
distribution depended on prepayment for stocks so as to minimize risk for Nirma.

Nirma sells over 800,000 tones of detergent products every year and commands a 35% share of
the Indian detergent market, making it one of the world‘s biggest detergent brands. The brand
promotion efforts are complemented by Nirma‘s distribution reach and market penetration,
through a country wide network of 400 distributors and over 2 million retail outlets, making
Nirma products available from the smallest rural village to the largest metro.

The company has set up for Nima a parallel distribution and sales channel consisting of 1500
distributors and an independent sales force. A two-tier network, the Nima distribution channel is
'flat' enabling swift market response. The company took great care that the new brand did not

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cannibalize on the existing brands. The Nima portfolio today complements the Nirma range,
furthering the company's strategy of Value for Money.

Promotion
Karsanbhai does not start up a media assault until his entire distribution network has the product
in place. Nirma believes in advertising only after they have launched a product in place. Their
belief is that nothing can be more irritating for a customer than to see a product advertised, and
then find it has not reached his grocer. Advertising just tells people that a product is available.
After that, the product has to stand on its own feet on quality and price.

As televisions reach spread in India during the late 1970s so too did Nirma‘s. The little girl on
the pack became a symbol that was almost generic with a good quality, low-priced detergent. A
catchy jungle hammered home the message to millions of housewives. It was as if a down
market consumer revolution had taken off.

While advertising did not appear as a cost in his initial budgets, by the late 70‘s as televisions
slowly started to spread into rural India, so did the Nirma ad campaign, with its simple message
and catchy jingle. By the early 80‘s Nirma became synonymous with good quality and low-
price. The stockists were also responsible for promotions and they funded 50% of promotional
expenditure for their goods. Nirma‘s sales reached a rate of growth that was two to three times
that of the industry in general. As a result of all the above measures Nirma survived and
flourished on what looked like a miniscule margin per unit.

The recent advertisement that has been aired on television has been devised keeping in mind the
psyche and choice of the middle class housewives. With the increase the popularity of the T.V.
Soaps and there amplified impact on their thinking and daily life, these serials have become an
inseparable part of their lives. The new commercial has thus tried to encash on this very aspect.
The commercial is a reflection of these soaps and in a way a mockery of these T.V. serials. Thus
the commercial has been successful in attracting a substantial amount of the audience.
Furthermore Nirma needed a ―new and improved look‖ in its promotional activities which it has
successfully achieved through this new commercial.

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6.2 A Special Section on Product Dev., Marketing, Distribution and Promotion
in Rural India
By: Rahul Mirchandani, ARIES AGRO-VET INDUSTRIES LIMITED

It is well accepted that vyapaar (business) is apaar (boundless). An ideal society and its
foundation includes moving from the traditional chaturalaya to a panchalaya. The chaturalaya
had a devalaya (Temple) for spiritual needs, a vidyalaya (School) for education needs, a
granthalaya (library) for knowledge needs and a vaidyalaya (dispensary or hospital) for health
needs. This version of the foundations of a society needs to change into a panchalaya, by
including the all important vikralaya (shop or sales outlet). India‘s Rural Market has 175 million
people. Furthermore, this market is non- homogeneous and the aggregate size is very large.
However, individual subsets of this market tend to be rather small and disparate. Geographical,
demographical, statistical, logistical differences are very apparent. Positioning and realities
regarding the potential of each of these market segments differ and lie at the very core of
forming the strategy for the rural markets. In the past few years, disposal income in these
markets has risen very sharply. However, the market still remains largely unexploited and at
most times potential markets need to be found and at times created. Such creation of demand
needs efficient management of the supply chain. To increase market share, behavioural change
needs to be at the forefront of any strategy. It is seen that choice made by a villager is based on:
1. Price

2. Availability

3. Neighbour's use

4. QualityAdvertising

The buying behaviour is 55% on a cash basis, 21% on credit and 24% surprisingly still exists as
barter trade (as per the article). Another feature is that the rural consumer enjoys shopping,
mainly due to the fact that they look at striking at a good bargain. Close to 81% of rural
consumers buy only after bargaining. 41% shop daily, 43% shop weekly and only 9% buy on a
monthly basis. It is also observed that the wife buys 45% of the time, the husband buys 35% of
the time, while joint purchases are made only on 19% occasions. Due to the diversity of this

[70]
market, the traditional marketing philosophy of planning globally for all markets is not
applicable. Marketers need to think and plan locally and also act locally. This becomes very
difficult considering that Rural India has 3.7 million shops, with an average of six shops per
village. The penetration of this market is not sustained and uniform. Infact, studies show that
market penetration is rather sporadic. The market is also seeing the benefits and ills of
liberalisation. Foreign competition is raising its head in areas of quality, price and efficient
delivery of goods. It is seen that rural consumers are not looking only at the lowest price but they
are looking at maximum value. It is the seller who fixes the price. However, it is the buyer who
looks at value. To put it in line with Kauntilya‘s Arthashastra, "If the buyer sees that your
product has pramaana (quality), samayana (timely availability) and seva (service/utility), then the
moolyam (value) of the product or service becomes amoolyam (priceless).

The British Prime Minister Mrs. Margaret Thatcher had also stressed the importance of quality
when she said in one of her famous speeches “I am a daughter of a grocer. So I know that if the
goods are good then the customers come back. If the goods are not good, then the goods come
back”. The Rural market is buoyant. It is fast changing from a seller's market into a buyer's
market. Government expenditure in the current 5 year plan on Rural India has increased to
60,000 crores. Further, every economist and marketer believes that social development,
economic development and market development are all linked. Corporate India believes that
there will be a Resurgent India but ―for this, the green revolution must become a sustainable ever
green revolution‖. The gap between the rural and urban areas in terms of consumption is fast
closing. The face of agriculture is changing from dry land and irrigated agriculture into high-tech
and low-tech agriculture. There is therefore a need to reprioritize, segment and activate rural
markets. The aspirants are becoming climbers showing a sustained economic upturn as
purchasing power is increasing in the rural markets. The proportion of very rich has increased
five- folds (as per Economic survey). With these changes, new concepts need to be evolved. Any
macro-level strategy for these markets should focus on availability, accessibility and
affordability. Constant scanning and sieving of ideas and plans is essential at all times. Focused
attention needs to be paid to market research that goes on to reduce the uncertainly in dealing
with these markets. More specifically, in relation to rural areas, demand is seen to a very highly
price elastic. Breaking the price barrier is essential. Only this can keep the grey area local brands
in check. A clear distinction needs to be made with regard to the reality versus the image of rural

[71]
India. If such a distinction is not made, we will be unable to distinguish between the serpent and
the rope and the rope and the serpent. For example, electricity has been made available to quite a
large number of villages as compared to a few years ago. However, the reality is that much of
this electricity, if not all of it, goes into powering pump sets and not to the households. Unless,
such realities are understood, strategies can never be successful. Rural India is fast becoming a
one stop shop. Demand is seasonal and credit arrangements hold the key to success. Another
major feature is that point of purchase and point of contact material go a long way in creating
product acceptance. This is because, the rural consumer likes to feel, hear and touch a product
before deciding to buy. A study revealed that the average rural consumer takes approximately 2
years to decide on buying a watch. He will not do so unless he is totally convinced that he is
getting value for money.

In terms of promotion, the use of local idioms and colloquial expressions are an excellent
way to strike a rapport with a consumer and must be borne in mind when developing
media plans and public relations programmes. No high voltage publicity is required. The
rural consumer is soon as very down to earth but equally discerning and marketers need to step
into the shoes of the rural folk while creating product campaigns. Every salesperson that enters
the rural market must do his marketing activity with vidya (knowledge), shraddha (devotion to
duty) and above all, knowledge of the local factors and external environment. There is also a
need to realise that the dealer is the company's "unpaid" sales force. It is essential to educate and
involve him as he is the local company representative and is the only member in the channel of
distribution who is in direct contact with the final consumer. The dealers' feedback needs to be
obtained as the direction for future strategy emanates here. At all times, RELATIONSHIP with
the customer is all important. This strong bond needs to be created with every consumer even in
the remotest village and the smallest town. Marketing in Rural India is undoubtedly a long-haul
exercise and one that involves great expense. Only those with a strong mind, a tough heart and
stiff hands will survive. It is observed that the three C’s

Customer
Competence Competitiveness
relation

helps a marketer understand the reality, the rightness and the optimum levels of utilization of
resources that are required to achieve success.
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Furthermore, the 3 I’s Image, Innovation and
Initiative, ensure that short term gains get translated
Initiati
into long term rewards. While formulating any ve
strategy therefore, the use of drishti (sight) to
Innov
understand the problem and shrishti (insight) to ation
look into deeper aspects of the problem are the
IMAGE
starting point to develop the needed Insight and
Foresight required formulating a marketing plan.
Training must receive a high priority and retraining
is even more important. This is required to debrief the sales force of the old ways of doing things
and transform the selling behaviour into that which is required at present. There is no doubt that
divides do exist between urban and rural markets. However, with a silent revolution that has
already begun, a seamless integration of rural and urban India is obvious. Once this happens the
gulf that divides the two markets will become bridges. For this, change needs to be engaged and
managed. Once this happens, there is no limit to the growth of rural India. Product life cycles as
are becoming shorter and these are having their impact on company life cycles. Thus for any
company and its products to move into next market conditions with confidence, allegiance to the
classic American P-A-L Principle of Partnership - Alliances - Linkages is a basis for survival.
Enhancement of knowledge and inter personal skills is specifically required to share the rewards
of prosperity with posterity.

Rural Communication and Advertising


It was indeed surprising that in the year 1997 headlines of perhaps every marketing journal and
business magazine screamed ―Rural markets, the future is now!‖ Today in 2009, once again the
headlines say "The Future lies in Rural India!", we now have to comprehend where our markets
are - Rural ? Semi Urban ? Semi Rural ? Urban Hinterland ? District Head Quarters ? Taluka
Headquarters ? Village agglomerations? Where is it that the classic Pareto's 80:20 ratio tends
towards ?

In other words, where is that we receive 80% of our business from and where does the remaining
20% come from. Today's buzzword is rural ―mass‖ markets. Such a concept can never be

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realized in practice. There are a lot of barriers that militate against homogenous media and
message delivery. These barriers stem from the fact that rural markets vary immensely in terms
of tastes, habits and preferences leading to different expectations of every segment of the
population. The classic conundrums of reach and coverage of the media are shattered. Marketers
need to factor in blackout times for electricity and fugitive community sets. In all this first hand
experiential learning is essential. Equally important are market visits to the dealers. Without such
first hand knowledge, we would have never known that Duliajan, a village in the North- East had
videos at least a quarter of a century before Bombay had them. This village was a silent wage
island. Similarly, Chindwara a village in M.P. had built antennas that 20 years ago were
considered strange but could catch TV signals including the BBC and PTV - way before India
came across the cable TV revolution. In the words of a noted Economist, ―By some means, India
is an economic giant - one of the world‘s 12 largest industrial economies - a country that has
everything from off-shore drilling to satellite launching‖. Considering this, it is very important
for rural marketers to search and look for wage islands of prosperity hidden amongst India‘s
6,30,000 villages.

Importance of the 'trade' as a medium -


Intermediaries are the key to rural distribution. If the intermediary understands and is constantly
reminded about the product, then the end user will not be allowed to forget. The companies must
reinforce this highly effective medium and use all their innovation and money to develop more
dramatic point of sale and point of contact material. This becomes all the more important when
in rural India, more often than not, the overlap between the product categories sold in a single
outlet in tremendous. For instance, a store may call itself as a grocery store but will stock
everything from groceries to vegetables to fertilizers and may at times even stock medicines. In
such cases, the point at which the customer actually comes in contact with a product may not be
the point at which the sale is affected.Several creative communication media have been used by
various companies to tackle the problem of having to use visual communication and non-verbal
communication to reach the rural audience. This is required because a large proportion of the
rural population cannot read or write. Alliances with cottage industries, dharmsalas, panchayats

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and police stations for advertising have also helped immensely. In rural India, experience has
proved time and time again that word of mouth is the key influencer.

Mandi and Mela magic - it works !!


India witnesses over 50,000 melas. Of these 25,000 meals are held to signify religious, cultural
festivals as well as local fairs and events. On an average, visitors at these melas spend between
Rs. 5,000 to Rs. 50,000 a day. For example, 3 lakh people visited the annual mela at Navchadi
which lasts for 7 days in Meerut. The largest such mela is the Maha Kumbh Mela which is
visited by an average of 12 crore people. There is however, a caveat when an organization is
considering using mela for marketing their products. Is the audience at this mela fit for
promotion of the product at hand ? What are the psychographics of this audience ? What is the
motivational and behavioural impetus that brings visitors to each of these melas. On considering
these questions, it has been observed that melas are fit to generate product exposure, package
familiarity, brand reminder and word of mouth. However, for products that need concept
marketing and those that have high prices, such melas are not suitable promotion media. This is
because the time and the mood of the people that visit these melas is not right to digest technical
information or for making large purchases. People come to melas to have a good time and are not
reminded of such high technology or high priced products when they return home. In the words
of Mr. Neville Gomes, Managing Director of Multimedia Aquarius, promotion at melas is like a
―one night stand‖. There will be no reminder later. Thus, a large amount of qualitative judgment
is indeed in planning promotions at melas by media planners.

Trends in Rural Markets


The joint family is not the standard unit. Nuclear families are the rule rather than the exception.
In poor households, it is seen that 71% of households are nuclear families. The joint family
influence increases as affluence increases. Even then, only 56% of affluent families live in joint
families. Women are not housebound in rural India. 36% of women work outside the house
either full or part time. This figure is as high 50% in West India and 45% in South India going
down to 28% in the North and 21% in the East of the country. Rural India is not as illiterate as
expected. 3% of 1,066 lakh rural households have at least one graduate. 16% have atleast one

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member who has passed SSC, HSC levels. Keeping these figures in mind, Rural India has 5
times the population of Singapore and a little less than the population of Australia who have
already attained minimum educational qualifications.

Strategies for Rural markets


1. Focus beam strategy - Marketers can aim to penetrate the rural outback by carrying the
campaign planning to micro levels. This would involve moving from planning for a region to
planning for a State or district head quarters, or taluka headquarters or even to the level of rural
agglomerations. In fact, the deeper you go, the more successful and focussed your strategy will
be.

2. Pincer communication grid - In this form of strategy, a company can take Talukas or
Districts on a map and decide on a minimum population cut off per area to be covered. Once this
is done, concentric circles can be drawn on the map. A media plan can be made for each
concentric circle thus plotted. Initially, focus should be laid on the innermost circle. Because,
word of mouth is a powerful medium, the message delivered here will trigger responses even in
surrounding talukas. Indeed ―Rural India talks and travels a lot‖.

3. Innovation – Innovative media must be used in order to deliver "double-duty" messages.


These are messages in which more than one job is done using the same message and different
responses are generated at different localities or with different audiences.

4. Monitoring -Publicity using press campaigns or Point of contact material can be monitored by
issuing a direct coupon or response coupon along with the message that readers of the message
can be induced to return. In case of van campaign, a systematic taluka itinerary must be
formulated including a house by house record format which includes travel schedule, area
covered and publicity material distributed. It must also contain reports of audience feedback.
Research and media feedback forms must be developed and regularly used. At all times, local
campaigns must proceed with required validation and the local supervisor should ensure that
interactivity is maintained at all times.

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Role of Technology -
In today‘s information era, it is very important for companies to wise-up on emerging
technologies. It has in fact become a medium to attract larger audiences for product
demonstration. Technology must be used to prepare a database of customers and their
requirements. The use of video using mobile vans and even large screen video walls at events
can be arranged. Farmers have a lot of money at certain points of the year. Banks that begin
issuing debit cards instead of credit cards will certainly increase consumption expenditure in the
villages. The cellular phone is today seen as a modern day bioscope. Many big traders in Rural
India are seen using these on a regular basis to keep abreast with their businesses. Market
mapping is being done on a regular basis by media planners and by Government agencies and
can be extremely useful while planning sales territories and promotional efforts. More
importantly, considering the importance of point of sale and point of contact material, digitized
image printing does wonders to improve the quality of a company's literature, posters, banners
and similar other promotional aids. In the words of J.Krishnamurthy ― The only way to solve
your problems is to go beyond thought, beyond knowledge, beyond time.

Product Marketing Strategies for Rural India


Around 12.2% of the world lives in Rural India. To put in a different context, this works out to 1
in 8 people on Earth. The population of India is seen as India‘s biggest economic problem.
However, for marketers, this very same population turns into their biggest opportunity. This is
because; there are more than one billion people to consume everything. Further, 1.2 million users
are added every month to India‘s population. This is indeed a marketing man‘s dream.

Come to Rural Country !!!


Indian markets are fast changing. In the words of Rama Bijapurkar, India is moving from being
two Indias (Rural and Urban) to many Indias. Mr.D.Shivkumar, Marketing Manager, Hindustan
Uni Lever., says "The classical distinction between rich and poor, urban India and rural Bharat is
changing to many shades of rich, the not so rich, the not so poor and the poor. This opens
tremendous number of opportunities to which companies need to understand to tailor make their
offerings. According to the latest Census, the consumer classes in India are divided into 5 groups
namely the very rich (annual income greater than Rs.2,15,000), the consuming class, climbers,

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aspirants and destitutes (annual income below Rs.16,000). Rural India‘s distribution of these
consuming classes is expected to radically change by 2006 to 2007. The major question that
comes up is whether ―There really is a mythical middle class‖. Most studies show such a class
does exist. However, the myth behind it will exist only until the time that marketers have no
answers.

According to ORG-MARG surveys several surprising facts have emerged about rural markets.

 9 in 10 households use branded washing powder or cakes.


 2 in 5 uses more than 1 brand of soap. This statistic throws the loyalty factor out of the
window.
 More than 1/2 of households use branded skin creams.
 The penetration of toothpaste in Rural India is higher than that of tooth powder.
 For every joint family, there are more nuclear families. Thus, it is observed that the gap
between urban and rural India is faster narrowing. This only proves that the learning
curve of Rural India is much faster.

What are Rural Indians consuming


In the area of fast moving consumer goods and agricultural inputs, 80% of branded goods in
18 categories were consumed in Rural India. There has been a significant growth of premium
products and 10 to 40% of consumers are seen using multiple brands of the same product type.
Another significant factor as far as distribution is concerned is that 25% of products are bought
from nearby towns rather than from the village itself. Brands are seen to enter the household
from 3 different sources. The child is the first source. The next most significant influence is the
confluence of marriage where new tastes, habits and brands enter the house from the homes of
the respective spouses. The third influence is that of travel between towns and villages.
Considering that the rural contribution to frost free refrigerator sales is 40% of the top 7 cities in
India substantiates the fact that consumption habits are changing. In just 3 months, Dena Bank
approved subscriptions to 11,000 Farmers' credit cards. Just like the UAE frog-leaped from
camels to Rolls Royce‘s, Rural India frog-leaped directly into cellular phones and satellite
telephony. This is because, the villager who today is aware about land phones, will
wholeheartedly accept satellite phones provided the are made affordable. In fact, Cellular phone
operators who operate in rural India have observed that the average air- time used by rural

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subscriber is 400 minutes compared to a much lower 120 minutes usage by a subscriber in
Bombay or Delhi. It is clear that if prices are made affordable and the consumer feels that the
features he is being provided with give him adequate value for money, then the market can
explode. There are however, four major barriers to such leapfrogging:

Literacy

To overcome this barrier, marketers need to create a language for the semi- literate and illiterate
consumer. This can be achieved using visuals, symbols, colour, pictures, music and the
spoken word. Once we are able to use media in these forms for knowledge transfer, the barrier
can be effectively tackled. This is possible just like a child learns to use and play with toys much
before she learns to read or write. The language barrier is has already broken in the case of the
youth. The youth of rural India are seen with the same three accessories as they are urban
counterparts. They are almost always seen with a cap turned backwards, kids or sport shoes and
the quintessential pair of jeans. The only difference is that the rural youth will most probably be
wearing a local brand which is much less expensive than the Nike or Adidas or Reebok worn by
the urban youth.

Distance

The distance barrier is most effectively tackled with communication using STD and ISD booths,
cellular phones and such other forms of communication. For instance, an STD booth was placed
in a village were no outstation calls could be made. Trade in this village increased by 25% in less
than a month this increased further by use of cellular phones. The barrier can also be overcome
by co-operation with large institutions, which have a greater reach. For instance, messages and
advertising can be spread using the postal department (India Post has already allowed for
advertising on post cards, envelops etc.) and bank representatives. In a few years,
commercialization of these services and their sponsorship might even lead to the creation of a
―branded postman‖. The answer seems to be in changing the theorems of retailing. The most
effective in this is the practice of sampling. Indeed there is nothing quite as successful as a
promotional tactic as giving something for free. It must be remembered that the rural consumer
does not have a budget problem instead he has a cash flow problem. This is because the villager
receives funds only twice a year. At these times, he is capable of making high volume purchases.

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At all times, however, the unit price is critical and so is the pack size. Because of this, in the lean
season when there is a cash flow crunch, marketers need to provide financial products or
solutions that suit the needs of the rural folk.

Incentivise spending

This can be achieved by using discount coupons, household credit cards and similar products that
encourage spending.

Redefine value

The rural consumer is out to look out for value for money. The day it is possible to offer branded
Tea at the cost of loose Tea, a shampoo sachet at less than a price of 1 egg, it is only then that the
consumer will feel he is getting true value. Further local brands and the grey area products will
be effectively curtailed.

Fig : How do rural consumers upgrade their wants?

Thus, in rural markets making a product available is not the only factor for success. A marketer
must understand that the rural consumer has a distinct identity. He is not just a non-urbanite
without money. There is a tremendous need to educate the rural consumer and this involves
going beyond simply providing information. The consumers need to be guided in the proper
direction in order to make a decision. All in all it must be borne in mind that they are not looking
for the lowest price, but to MAXIMUM VALUE.

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Channel Selection and Distribution
In Rural India, the selection and use of distribution channels is a nightmare. The reason for this is
very clear when we consider that on an average, Urban and Rural India both have approx. 3
million retail outlets. However, Urban India has only 4,000 towns where these outlets are
located. On the other hand, Rural India‘s 3 million outlets are located in 6.3 lakh villages. Thus,
marketers are faced with the problem of feeding 3 million shops located in vastly diverse areas
each of which records an average sale of only Rs.5,000 per outlet. Further compounding this
problem is the fact that even this meager sale is mostly on credit. The diversity in the distribution
of shops is the self-limiting factor in terms of servicing the rural distribution network. Further,
Rural India does not buy from shops as there is no possibility of bargaining and a very limited
variety. The rural folk are more at ease purchasing from haats and melas.

Haats – Haats are the nerve centre of Rural India. They have been held on a regular basis across
the length and breadth of the country for over 1000 years. Right from the time of Chandragupta
Maurya, Haats are seen as a place for social, cultural and economic interchange. Typically, an
average haat will have close to 300 stalls. A haat usually serves around 5000 visitors.
Considering that the average population of an Indian village is approximately 1000, each haat
serves 5 villages. Everything is sold on the ground and the variety and range are very large.
Haats not only sell loose commodities, but a significant amount of packaged goods are also sold.
Urban arrogance led to the virtual ignoring of this very potential means of distribution. In fact,
the first systematic study of haats was conducted only in 1995. It was found that all states in the
country except Haryana, Western Rajasthan and some North Eastern states conducted haats. The
reasons why these States did not have haats ranged from the fact that Haryana is almost urban,
Western Rajasthan has a very low population density and the North eastern States are in
accessible. The study estimates that 47,000 haats are conducted in rural India. These rural super
markets are much larger than all the world's K-marts and Wal-marts put together. The sale per
haat per day is over Rs.2.25 lakhs and the average sale per outlet is approximately Rs.900. Sales
are usually effected on a 10% margin which gives each stall owner an average daily income of
approximately Rs.90. The average purchase per visitor is Rs.50 and the command area i.e. the

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number of villages catered by each haat, is on average between 5 and 10. The study also came up
with estimates regarding the type of outlets that exist in each haat. These are listed below :

Sellers at Haats are typically mobile. They sell in one haat on one day and move to another on
the next. The reason for this is that villagers in Rural India are paid on a weekly basis. Haats are
usually scheduled on the day that employees get their "Hafta". Since the payment days differ
from village to village, haat sellers also move accordingly. It is therefore said ―Hat taa jaata hai
haat‖! 81% of visitors to haats said that they did not make purchases from their respective
villages and regularly visited haats for their requirements. 58% said that they specifically come
to buy a particular product and that the purpose of visiting the haat is to complete their ―shopping
list‖. That haat was not seen as a place of fun. What is very surprising is the fact that 58% of
people who visited haats said that the same product was available in their own village but that
the shops and the village did not offer them the same variety, price and choice of bargains.

Advantages of companies marketing through haats


Haats are a readymade distribution network and this large rural marketing system has been
embedded in the fabric of rural society for over a 1000 years. A lot of re-distribution also occurs
through haats. This is because, a large number of retailers and sub-wholesalers buy from haats
for their village stores.

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Melas – India is a country of melas. Over 25,000 are held every year all over the country. It is
seen that 5,000 of these are commercial melas, 2,000 are cultural melas, while the majority of
18,000 are held with religious significance. Exposure of a company‘s product at the 500 ―big‖
melas should be sufficient enough to generate product awareness in the rural market. Statistics
reveal that the number of visitors per mela is approximately 7.5 lakhs. The largest such mela is
held once every 12 years called the Maha Kumbh mela and attracts close to 2.5 crore people.
This is the population of Delhi and Bombay put together converging at one place - indeed a
tremendous marketing opportunity. On average, 850 outlets are set up in every mela. In fact, the
Vali Yatra mela is held from the time of the Ramayan and has over 3,000 stalls. Sales at the
Sonepur mela of Bihar averages Rs.40 crores. The average sale per day at a mela is Rs.25 lakhs.
The efficiency of this system of distribution is evident from the fact that melas have been used
for over 1,300 years and have continued to remain popular inspite of India going through so
many rulers, invasions and conflicts. This speaks volumes of the rigidity and strength of this
rural marketing system.

Advantages to companies using melas


The Statistics presented above clearly indicate that the visitor turnout at melas is very high. In
fact, what is more significant is that women and children participate in melas on a large scale. In
fact, melas are one place where women have collective social sanction to leave their respective
villages. This is very special because rural women are usually restricted from leaving their
homes to visit other villages. A high proportion of sales made at melas are of factory made
products. The mood at melas is very conducive to making rural folk try out new things. Sampling
at melas is thus very successful in building awareness to new innovations and initiating trials.
Visitors to melas are usually cash rich as most melas are held immediately post harvest. 73% of
visitors to melas claimed that they came to buy a specific product. However, the difference here
between haats and melas was that only 14% of products purchased at melas were available in the
visitor's village. This is because melas are generally used to sell durables, high priced items and
new product types. The survey of melas indicated the type of outlets that exist. These are
presented below:

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The clear distinction between haats and melas become apparent here. Where almost 40% of stalls
in haats sold agro related products, only 5.8% of stalls in melas sold such goods. On the other
hand, only 24.3% stalls in haats sold manufactured goods. This number increased to 42% of
stalls in melas.

6.3 HUL SWOT Analysis of Distribution Strategy (Rural)


Strengths
HUL enjoys a formidable distribution network covering over 3400 distributors and 16 million
outlets. This helps them maintain heavy volumes, and hence, fill the shelves of most outlets. The
new sales organization named 'One HUL' brings "Household and Personal Care" and foods
distribution networks together, thereby aligning all the units towards the common goal of

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achieving success. HUL has been continuously able to grow at a rate more than growth rate for
FMCG Sector, thereby reaffirming its future stronghold in Indian market.

Project Shakti - Rural India is spread across 630,000 villages and possesses a serious
distribution challenge for FMCG. HUL has come up with a unique and successful initiative
wherein the women from the rural sector market HUL products, and hence, are able to reach the
same wavelength as of the common man in village. Apart from product reach, the initiative also
creates brand awareness amongst the lower strata of society. This has brought about phenomenal
results.

Weaknesses
HUL's market dominance, originating from its extensive reach and strong brand presence, allows
it to raise the prices even as raw materials get cheaper. Hence, though the volumes decreased, the
margins grew, and company was able to earn more profits. But higher margins attracted
competition in areas of operations. HUL's strategy remained focused on creating power brands
and earning higher margins. It was not left with any other option but to try cutting down the costs
in order to protect volumes, if not increase it.

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As shown in above figure, the key differentiators for an FMCG player are ability to call shots
and pricing power, and HUL has shown weakness over both these factors.

HUL's weakness was its inability to transform its strategies at the right time. They continued
with the same old strategy which helped them gain profits but was not genuine in this changed
environment. HUL's risk aversion and market myopia led to stagnation of business, and ferocity
of competition forced it into a defensive mode. Lack of pricing power in core business and
absence of growth drivers have put HUL on a deflationary mode.

Opportunities
 India is one of the world's largest producer of FMCG goods but its exports are miniscule as
compared to production. Though Indian Cos. have been going global, their focus is more towards
Asian countries because of the similar preferences. HUL is one of the top companies exporting
FMCG goods from India. An expansion of horizons towards more and more countries would
help HUL grow its consumer base and henceforth the revenues.

 Opportunity in Food Sector - The advent of modern trade has opened up greater opportunities
for HUL to diversify its brand and strength its food division. It could look at introducing
products from its parents stable like margarines and could also look at expanding its Knorr range
of products.

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 Well-placed to take advantage of future FMCG Growth - HUL reach out 80% of 207 million
households in the country through various brands. It has a very well-defined product portfolio
spread across many product categories.

Penetration levels for some major categories like skin-cream (22%), shampoo (38%), toothpaste
(48%) and processed foods, continue to remain low offerings but great growth opportunities
products.

Threats
 ITC has reduced its dependence on the cigarettes business - Contribution of the core business
in revenues has come down from 87% in FY99 to 70% in FY05. Over a period of five years, ITC
has extended its presence into areas like foods, retailing, hotels, greetings, agri, paper, etc. These
are businesses that can give it growth impetus in the long run. With ITC gaining momentum in
each of these businesses, it is turning into a consumer monolith, and hence, the greatest threat to
HUL's Business.

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SSKI India has gone on to say, "We maintain Out performer on ITC with a price target of Rs.
2200, while our Under performer call on HUL remains unaltered (price target of Rs. 160)."

Figure: ITC Has Overtaken HUL in Gross Sales

Source: Coolavenues.com

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6.4 Rural Market Perspective
The future lies with those companies who see the poor as their customers."

- C. K. Prahalad, Addressing Indian CEOs.

Concept
In recent years, rural markets have acquired significance, as the overall growth of the 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 Markets Attractive?


Rural market has following attributes and the following facts substantiate this: -

 742 million people.

 Estimated annual size of the rural market -

FMCG Rs. 65,000 Crore


Durables Rs. 5,000 Crore
Agri-Inputs (including tractors) Rs. 45,000 Crore
2 / 4 Wheelers Rs. 8,000 Crore
 In 2001-02, LIC sold 55% of its policies in rural India.

 Oftwo million BSNL mobile connections, 50% are in small towns / villages.

 Of the 6.0 lakh villages, 5.22 lakh have a Village Public Telephone (VPT).

 41 million Kisan Credit Cards have been issued (against 22 million credit-plus-debit cards in
urban), with cumulative credit of Rs. 977 billion resulting in tremendous liquidity.

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 Of the 20 million Rediffmail sign-ups, 60% are from small towns. 50% of transactions from
these towns are on Rediff online shopping site.

 42 million rural households (HHs) are availing banking services in comparison to 27 million
urban HHs.

 Investment in formal savings instruments is 6.6 million HHs in rural and 6.7 million HHs in
urban.

Opportunities
 Infrastructure is improving rapidly -

 In 50 years only, 40% villages have been connected by road, in next 10 years another 30%
would be connected.

 More than 90% villages are electrified, though only 44% rural homes have electric
connections.

 Rural telephone density has gone up by 300% in the last 10 years; every 1000+ pop is
connected by STD.

 Social indicators have improved a lot in the last decade.

 Number of "pucca" houses doubled from 22% to 41% and "kuccha" houses halved (41% to
23%).

 Percentage of BPL families declined from 46% to 27%.

 Rural literacy level improved from 36% to 59%.

 Low penetration rates in rural areas, so there are many marketing opportunities -

Durables Urban Rural Total (% of Rural HH)


CTV 30.4 4.8 12.1
Refrigerator 33.5 3.5 12.0

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FMCGs Urban Rural Total (% of Rural HH)
Shampoo 66.3 35.2 44.2
Toothpaste 82.2 44.9 55.6
 Marketers can make effective use of the large available infrastructure -

Post Offices 1,38,000


Haats (periodic markets) 42,000
Melas (exhibitions) 25,000
Mandis (agri markets) 7,000
Public Distribution Shops 3,80,000
Bank Branches 32,000
 Proliferation of large format Rural Retail Stores, which have been successful also -

 DSCL Haryali Kisan Bazar Kendra


 M & M Shubh Labh Stores
 TATA / Rallis Kisan Kendras
 Warnabazaar, Maharashtra (Annual Sale Rs. 40 crore)

Rural Consumer Insights


Rural India buys –

 Products more often (mostly weekly).


 Buys small packs, low unit price more important than economy.
 In rural India, brands rarely fight with each other; they just have to be present at the right
place.
 Many brands are building strong rural base without much advertising support.
 Chik shampoo, second largest shampoo brand, Ghadi detergent, third largest brand.
 Fewer brand choices in rural areas; number of FMCG brand in rural is half that of urban.
 Buy value for money, not cheap products

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Why Different Strategies?
Rural markets, as part of any economy, have untapped potential. There are several difficulties
confronting the effort to fully explore rural markets. The concept of rural markets in India is still
in evolving shape, and the sector poses a variety of challenges. Distribution costs and non-
availability of retail outlets are major problems faced by the marketers. The success of a brand in
the Indian rural market is as unpredictable as rain. Many brands, which should have been
successful, have failed miserably. This is because most firms try to extend marketing plans that
they use in urban areas to the rural markets. The unique consumption patterns, tastes, and needs
of the rural consumers should be analyzed at the product planning stage so that they match the
needs of the rural people.

Therefore, marketers need to understand the social dynamics and attitude variations within each
village though nationally it follows a consistent pattern. The main problems in rural marketing
are as stated below: -

 Understanding the Rural Consumer.


 Poor Infrastructure.
 Physical Distribution.
 Channel Management.
 Promotion and Marketing Communication

Dynamics of rural markets differ from other market types, and similarly, rural marketing
strategies are also significantly different from the marketing strategies aimed at an urban or
industrial consumer.

Strategies to be Followed
 Marketing Strategy

Marketers need to understand the psyche of the rural consumers and then act accordingly. Rural
marketing involves more intensive personal selling efforts compared to urban marketing. Firms
should refrain from designing goods for the urban markets and subsequently pushing them in the
rural areas. To effectively tap the rural market, a brand must associate it with the same things
the rural folks do. This can be done by utilizing the various rural folk media to reach them in

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their own language and in large numbers so that the brand can be associated with the myriad
rituals, celebrations, festivals, "melas", and other activities where they assemble.

 Distribution Strategy

One of the ways could be using company delivery van which can serve two purposes - it can take
the products to the customers in every nook and corner of the market, and it also enables the firm
to establish direct contact with them, and thereby facilitate sales promotion. However, only the
bigwigs can adopt this channel. The companies with relatively fewer resources can go in for
syndicated distribution where a tie-up between non-competitive marketers can be established to
facilitate distribution. Annual "melas" organized are quite popular and provide a very good
platform for distribution because people visit them to make several purchases.

According to the Indian Market Research Bureau (IMRB), around 8000 such melas are held in
rural India every year. Rural markets have the practice of fixing specific days in a week as
Market Days (often called "Haats') when exchange of goods and services are carried out. This is
another potential low cost distribution channel available to the marketers. Also, every region
consisting of several villages is generally served by one satellite town (termed as "Mandis" or
Agri-markets) where people prefer to go to buy their durable commodities. If marketing
managers use these feeder towns, they will easily be able to cover a large section of the rural
population.

 Promotional Strategy

Firms must be very careful in choosing the vehicle to be used for communication. Only 16% of
the rural population has access to a vernacular newspaper. So, the audio visuals must be planned
to convey a right message to the rural folk. The rich, traditional media forms like folk dances,
puppet shows, etc., with which the rural consumers are familiar and comfortable, can be used for
high impact product campaigns.

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Some Live Examples
 One very fine example can be quoted of Escorts where they focused on deeper
penetration. They did not rely on TV or press advertisements, but rather concentrated on
focused approach depending on geographical and market parameters like fares, melas,
etc. Looking at the 'kuchha' roads of village, they positioned their bike as tough vehicle.
Their advertisements showed Dharmendra and Govinda riding Escort with the punch line
'Jandar Sawari, Shandar Sawari'. Thus, they achieved whopping sales of 95000
vehicles annually.
 HUL started 'Operation Bharat' to tap the rural markets. Under this operation, it passed
out low-priced sample packets of its toothpaste, fairness cream, Clinic plus shampoo, and
Ponds cream to twenty million households.

 ITC is setting up e-Choupals, which offers the farmers all the information, products and
services they need to enhance farm productivity, improve farm-gate price realization and
cut transaction costs. Farmers can access latest local and global information on weather,
scientific farming practices as well as market prices at the village itself through this web
portal - all in Hindi or local language. It also facilitates supply of high quality farm inputs
as well as purchase of commodities at their doorstep.
 BPCL introduced Rural Marketing Vehicle (RMV) as their strategy for rural marketing.
It moves from village to village and fills cylinders on the spot for the rural customers.
BPCL considered low-income of rural population, and therefore introduced a smaller size
cylinder to reduce both the initial deposit cost as well as the recurring refill cost.

Conclusion
Thus, looking at the challenges and the opportunities, which rural markets offer to the marketers,
it can be said that the future is very promising for those who can understand the dynamics of
rural markets and exploit them to their best advantage. A radical change in attitudes of marketers
towards the vibrant and burgeoning rural markets is called for, so they can successfully impress
on the 230 million rural consumers spread over approximately six hundred thousand villages in
rural India.

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6.5 Lifebuoy – Success Story (As per HUL)
Introduction
When we talk about HUL the first name that comes to our mind is Lifebuoy. It is the world‘s
largest selling soap and offers a stronger health benefit to the entire family Launched in the year
1895, Lifebuoy, for over a 100 years, has been synonymous with health and value. The brick red
soap, with its perfume and popular Lifebuoy jingle have carried the Lifebuoy message of health
across the length and breadth of the country, making it the largest selling soap brand in the
world. In 2002 Lifebuoy was relaunced, marking a new turning point in its history. The new mix
includes a new formulation and a repositioning of the brand to make it more relevant to both new
and existing consumers.

“Lifebuoy is no longer a carbolic soap with cresylic perfume. It is now a milled toilet soap
with a new health fragrance”. The new formulation has an ingredient, Active-B, which offers
protection against germs, which can cause stomach infection, eye infection and infections in cuts
and bruises. The new health perfume has been selected after one of the most extensive perfume
hunts in the industry. The new milled formulation offers a significantly superior bathing
experience and skin feel. The new formulation, new health perfume and superior skin feel, along
with the popular red colour, have registered conclusive and clear preference among existing and
new users. The new Lifebuoy is targeted at today‘s discerning housewife with a more inclusive
“family health protection for my family and me” positioning. Lifebuoy has made a deliberate
shift from the male, victorious concept of health to a warmer, more versatile, more responsible
benefit of health for the entire family. The new Lifebuoy range now includes Lifebuoy Active
Red (125gm, 100 gm and 60 gm) and Lifebuoy Active Orange (100gm). Lifebuoy Active Orange
offers the consumer a differentiated health perfume while offering the health benefit of Lifebuoy.
At the upper end of the market, Lifebuoy offers specific health benefits through Lifebuoy
International (Plus and Gold). Lifebuoy International Plus offers protectionagainst germs which
cause body odour, while Lifebuoy International Gold helps protect against germs which cause
skin blemishes.

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Repositioning of Lifebuoy
FMCG major Hindustan Uni Lever (HUL) embarked on a massive rural campaign using the
concept of hygiene as a platform to reposition its leading brand, Lifebuoy. Lifebuoy was the
single largest soap brand — with 20 lakh soaps sold every day and an estimated value of Rs 500
crore (600 million users annually). HUL has identified 8-9 key States for commencing its rural
contact programme wherein the concept of hygiene will be highlighted. The relaunch of the 107-
year-old Lifebuoy has been done in a bid to drive growth in a sluggish soap market. It is
expected to propel the growth to double-digit levels during 2002. Lifebuoy has been declining by
15-20 per cent in volume terms until HUL launched Lifebuoy Active during the second half of
2001. The new Lifebuoy is a completely new product with a new formulation, fragrance, lather
profile and a shift in positioning from being a male soap to a family soap. The carbolic
segment, under which Lifebuoy fell, shrunk in the process giving way to an explosive growth in
the discount segment in which HUL's Breeze is positioned. Seventy per cent of the Lifebuoy
sales were from rural India. Rural consumers' query `why do I need Lifebuoy when all soaps
clean' was indicative of the decline of the brand, prompting HUL to launch Lifebuoy Active and
Lifebuoy Extra Strong in mid 2001. "These launches led to a marginal turnaround, but 2002 is
the year of growth. Lifebuoy is no longer a carbolic soap with cresylic perfume, it is a toilet
soap with a different `health' fragrance.

With this launch, the carbolic segment has been wiped out as Lifebuoy accounted for 95 per cent
of this segment previously. In the process of change, HUL challenged everything that Lifebuoy
stood for - perfume, formulation, size and shape. "Every element of communication was
changed" The first phase of communication was to tell consumers that Lifebuoy has changed.
From an earlier focus on men, the focus has shifted to family with the message that Lifebuoy is
for effective protection from germs that cause health problems. The new range includes Lifebuoy
Active Red, Lifebuoy Active Orange, Lifebuoy International Plus and Lifebuoy International
Gold. In 2001, HUL's soaps and detergents turnover was at Rs 4,295 crore, accounting for 39 per
cent of its total net turnover of Rs 10,972 crore. Hindustan Lever Ltd (HUL) is attempting to
give a new lease of life to its 107-year-old heritage brand by extending it to talcum powder and
also testing a herbal variant of this power brand. While the upper-end consumers would use
deodorants, a Lifebuoy powder could work for consumers in the lower strata who are already
familiar with the soap."

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Promotion
Media's strategy for Lifebuoy soap's re-launch:

Lifebuoy contributed 30 per cent to the Hindustan Lever detergent business turnover and
hadn't undergone a major restructuring and repositioning in 107 years. However, the sales were
declining as the consumers were moving away from the carbolic based soaps to beauty soaps -
perceived to be superior; with better fragrance and lather; aspirational image. The agency
devised a strategy to ensure that it advocated family health rather than personal hygiene. There
were large chunks of the users who were in "unreachable areas" - rural markets. Through TV
and print campaigns, the agency team focused attention on the family health themes, conducted
consumer education exercise using "Germ tests" through multimedia; and established the
brand's credentials as an authority in a credible manner. The agency also explored the
communication options during important days such as World Health Day. For rural markets, it
created the Lifebuoy Swashthya Chetana project wherein 450 teams of health officers tapped
8000 villages in 11 states. Nearly 40 million people in rural areas were covered. The brand
registered a 30 per cent increase in volumes and the share of contribution to HUL's detergent
division turnover increased to 55 per cent. HUL was also offering cross company product mixes
- a 200 gm Bru packet comes with one Cadbury's Dairy Milk; Red Label tea packet comes with
Cadbury's Five Star depending on the size; 100 gm Lifebuoy comes with a small Amrutanjan.
HUL used Mahakumbh mela as an opportunity to change hand-washing and bathing habits in
rural India. "The Mahakumbh‖ at Allahabad is the biggest mela in India and, with its focus on
`cleansing' is a good fit for the `Lifebuoy for health' message of the brand". innovative
communication tools were used at the mela to communicate the importance of health and
hygiene. The company had 14 stalls at various points in the mela grounds. Some hand-carts
have also been deployed for increasing access. The numbers of both was increased based on
response. ―The activity aims to build awareness in the target audience about hygiene and health
through product demonstrations‖. People in Mela were asked to put there hands below some
special camera where they could see the germs on their hands and were asked to wash their
hands with lifebuoy and then see the difference. These types of promotional activities worked in
these melas.

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Cinema van operations: These are typically funded by the Redistribution Stockists. Cinema
Van Operations have films and audio cassettes with song and dance sequences from popular
films, also comprising advertisements of HUL products.

Operation Harvest: The reach of conventional media and, therefore, awareness of different
products in rural markets is weak. It was also not always feasible for the Redistribution Stockist
to cover all these markets due to high costs involved. Yet, these markets are important since
growth opportunities are high. Operation Harvest endeavoured to supplement the role of
conventional media in rural India and, in the process, forge relationships and loyalty with rural
consumers. Operation Harvest also involved conducting of product awareness programmes on
vans.

Hindustan Lever Limited's Lifebuoy, recently announced the launch of Lifebuoy Swasthya
Chetna, the first single largest rural health and hygiene educational program. Lifebuoy will
make multiple repeat contacts in nearly 15,000 villages in 8 states across rural India. The
campaign aims to educate children and the community about the threat of unseen germs and
basic hygiene practices. Lifebuoy has already successfully conducted pilot studies in Madhya
Pradesh, Chhattisgarh, Uttar Pradesh, West Bengal, Orissa and Bihar. This campaign teaches
people about maintaining good health through practice of basic hygienic habits including the
hand wash habit. Lifebuoy is among HUL's power brands, which the company is focusing on,
selected on the basis of their absolute size, brand strength, brand relevance, competitive
advantage and potential for growth. The new Lifebuoy range now includes Lifebuoy Active Red
(125 gm, 100 gm, and 60 gm) and Lifebuoy Active Orange (100 gm). Lifebuoy Active Orange
offers the consumer a differentiated health perfume while offering the health benefit of Lifebuoy.
At the upper end of the market, Lifebuoy offers specific health benefits through Lifebuoy
International (Plus and Gold). Lifebuoy International Plus offers protection against germs which
cause body odour, while Lifebuoy International Gold helps protect against germs which cause
skin blemishes.

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Price

Hindustan Lever Ltd (HUL) currently on a price discount include 150 gm Lifebuoy Gold
(Rs 3 off),TRYING to match prices with the smaller players, large FMCG companies have been
on a price-cutting spree. Of late, Hindustan Lever have announced `new' prices for their various
brands to beat sluggish sales, combined with the introduction of lower-sized packs to get
volumes. HUL is also expected to follow suit with its Surf sachets with the obvious purpose of
gaining volumes at the lower end of the market. HUL managers describe the exercise as that of
dropping price barriers to induce growth for their brands rather than trying to beat the
smaller players with their pricing. More than benchmarking competition, dropping prices is all
about triggering growth and this has always been an integral part of their strategy. Straddling
almost every price segment with its SKUs, HUL has also been trying to upgrade its consumers,
even at the cost of cannibalising its own brands. Besides, freebies and promotions have finally
been replaced by direct price reductions to lure consumers. Observes Sujoy Mishra, an analyst at
Kotak Securities.

"Promotions have shifted to the trade while freebies have been replaced by price cuts."
Considering almost every FMCG brand was doling out a freebie, it was time for FMCG players
to differentiate themselves. Observes A. Sundarajan, Managing Director of market research firm,
Market Search, "The round of freebies has already been played out by the FMCG
companies. They are now coming back to their core brands at a lower price." In spite of the
slowdown in rural demand, FMCG companies continue to focus on the rural markets in the hope
of salvaging their sales turnover. Majors such as HUL have deliberately introduced small pack
sizes. Lifebuoy, HUL's largest selling soap brand, recently introduced a Rs 2 SKU of 18 gm
targeted at the rural market in the BIMARU States.

Place
70% of India's population resides in villages. Penetrating the rural markets is, therefore, one of
the key challenges for any marketer. While rural markets present a great opportunity to
companies, they also impose major challenges. At HUL, they have been at the forefront of
experimenting with innovative methods to reach the rural consumer.

[99]
Single Distribution Channel
For rural India, HUL has established a single distribution channel by consolidating categories. In
a significant move, with long-term benefits, HUL has mounted an initiative, Project Streamline,
to further increase its rural reach with the help of rural sub-stockists. It has already appointed
6000 such sub-stockists. As a result, the distribution network directly covers about 50,000
villages, reaching about 250 million consumers. Distribution will acquire a further edge with
Project Shakti, HUL's partnership with Self Help Groups of rural women. The project, started in
2001, already covers over 5000 villages in 52 districts of Andhra Pradesh, Karnataka Madhya
Pradesh and Gujarat, and is being progressively extended. The vision is to reach over 100,000
villages, thereby touching about 100 million consumers. The SHGs have chosen to adopt
distribution of HUL's products as a business venture, armed with training from HUL and support
from government agencies concerned and NGOs. A typical Shakti entrepreneur conducts
business of around Rs.15000 per month, which gives her an income in excess of Rs.1000 per
month on a sustainable basis. As most of these women are from below the poverty line, and live
in extremely small villages (less than 2000 population), this earning is very significant, and is
almost double of their past household income. For HUL, the project is bringing new villages
under direct distribution coverage. Plans are being drawn up to cover more states, and provide
products/services in agriculture, health, insurance and education. This will both catalyse holistic
rural development and also help the SHGs generate even more income. This model creates a
symbiotic partnership between HUL and its consumers, some of whom will also draw on the
company for their livelihood, and helps build a self-sustaining virtuous cycle of growth.

[100]
7. Secondary Research – Data Findings

7.1 Opening the Rural Eye


By: Dr. R Satish Chandra (BSc, MDP, MFAMM, PGDEP, DCP, DISM, Ph.D, Asst.
Professor and Researcher Department of Management Studies AMC Engineering
College, Bangalore)
& Ms. B Sowmya Shankar, Research Scholar, Institute of Development Studies, Mysore.

Findings

The marketing opportunity for companies - Under penetrated rural market


India is the second largest consumer market in the world with over 1 billion potential consumers
and therefore, many companies are now seeing India as a fertile ground for expansion and
growth of their market.

Rural and urban potential

Rural – urban profile Urban Rural


Population 2001-02 (mn household) 53 135
Population 2009 – 10 (mn household) 69 153
% Distribution (2001 – 02) 28 72
Market (Towns/Villages) 3,768 627,000
Universe of outlets (mn) 1 3.3
Source: Statistical Outline of India, NCAER

Penetration and per capita consumption Rural - urban penetration

Category Market size Urban penetration Rural Penetration Total penetration


(US $ million) (%) (%) (%)
High penetration categories > 50%: Drive up gradation and consumption
Fabric wash 1210 89.6 82.9 84.9
Personal wash 938 79.9 90.7 92.8
Packet Tea 635 91.2 82.2 84.9
Low penetration categories: Drive penetration
Toothpaste 409 69.8 32.3 43.5
Skin 312 36.6 19.8 24.7
Hair wash 230 40.1 16.3 23.3
Talcum powder 148 66 36.8 45.1
Branded Atta 107 44 30.2 34.3
Instant coffee 55 - - -
R & G Coffee 30 - - -
Ketchups 25 12.5 0.7 4.2
Deodorants 19 - - -
Jams 13 - - -
Source: HLL, Indian Readership Survey, 2007

[101]
The NCAER (National Council for Applied Economic Research) study throws some interesting
information on the Indian consumer and there behavior and purchasing power. The following
inference can be drawn for the consumer study. First of all the consumers were classified by their
propensity to consume. At the Bottom end of the scale are consumers who are in the market for
manufactured essential consumables and basic durables. At the top end of the scale is a relatively
small but rapidly growing segment for branded international products ranging from automobiles
and electronic to cosmetics and garments, often at international price. The middle segment is
itself highly differentiated, depending on the products and price sensitive, requiring a targeted
approach to product design and pricing. Over the years, the bottom layer is expected to more
narrow further while the top level is expected to expand.

India's consumer classes - Distribution of people income-wise


Income 2001-02 2006-07
groups Total Rural No. % Total Rural No. %
High 1.48 0.41 27.7 2.96 0.7 23.6
Middle 69.18 4.83 64.8 90.25 59.85 66.3
Low 32.29 29.52 91.42 20.41 95.8 95.7
Total 102.95 74.76 72.6 114.52 80.96 70.7
Source: HLL, NCAER

Projection of Household income distribution for 2015

Very Rich 5%
Consuming class 54%
Climbers 34%
Aspirants 4%
Destitute 3%

The NCAER study also highlights that the key to growth lies in the rural area, where over 70%
of India live. During the period of 90's the main marketing phenomenon is to provide volume
growth to all leading companies. Higher rural income driven by the agricultural growth,
education, penetration of television has induced the propensity to consumer branded and value
added products in rural areas.

[102]
Till 1994 Indian government protected the domestic economy and public sector from regulation,
and excessively high tariffs. This resulted in low quality product, lack of product differentiation,
high price for high quality products. This has leaded some of the companies to monopolize the
market. But after the India joined the world trade organization and adopted the Liberalization,
privatization and Globalization policy and opened its market for foreign producer there has been
a significant change in the situation. This market-oriented reform has helped to create a favorable
environment for Multinational Companies to enter the Indian market.

A Brief description of the Indian FMCG industry - Product wise production


Segment Unit Size Key players Share of
market
leader (%)
Household care 62
Fabric wash market Mn tones 50 HLL, P&G, Nirma, SPIC 38
Laundry soaps/bars US$ mn 1102
Detergent cakes Mn tones 15
Washing powder Mn tones 26
Dish wash US$ mn 93 HLL 59
Personal care
Soap & Toiletries Mn tones 60 HLL, Nirma, Godrej
Personal Wash Market US$ mn 989 HLL, Nirma, Godrej
Oral care US$ mn 537 Colgate Polmolive, HLL 40
Skin care & cosmetics US $ mn 274 HLL, Dabur, P & G 58
Hair care US $ mn 831 Marico HLL, CavinKare P&G, 54
Dabur, Godrej
Feminine hygiene US $ mn 44 P&G, Johnson and Johnson
Food and Beverages
Bakery products Mn tones 30 Britannia, Parle, ITC
Tea 000 tonnes 870 HLL, Tata Tea 31
Coffee 000 tonnes 20 Nestle, HLL, Tata Tea 49*
Mineral water Mn crates 65 Parle Bisleri, Parle Agro, Coca
Cola, Pepsi

[103]
Soft drink Mn crates 284 Coca Cola, Pepsi
Branded atta 000 tonnes 750 Pillsbury, HLL, Agro Tech, Nature 15
Fresh, ITC
Health beverages 000 tonnes 120 SmithKline Beecham, Cadbury, Nestle,
Amul
Milk and dairy US$ mn 653 Amul, Britannia, Nestle'
products
Chocolates US$ mn 174 Cadbury's Nestle'
Culinary products US$ mn 326 HLL, Nestle 78
Edible oil Mn tones 13 Ruchi Soya, Marico, ITC, Agrotech 28

Note: * R&G, Source: ORG Marg, AC Nielson, FICCI, India Stat and HLL

Finding of the survey conducted by MART and Anugrah Madison Consumer goods
1. Babool and Navaratna hair oil: Attraction and acceptability
Babool Navratna hair oil
Urban Rural Urban Rural
Only music good The song and dance is Good presentation Music is very good it
good is nice to hear
Message not clear. I like the child. It is Entertaining thanda The ice cubes and the
Not explained smiling nicely thanda cool cool music is given a chill
properly feeling
Runs baboolki to din Dancing with dog! Govinda ka dance Entertaining attractive
tumhara very quickly Why a dog is coming acchahai or gana bhi thanda thanda cool
in this tooth past achhahair cool
advertisement
Interesting and draws Entertaining and Navaratna tel lagane
attention attractive subah se sardad dur hota hai
baboolki to din
tumhara

[104]
2. Asian paints and Samsung TV: Attraction and acceptability

Asian paints Samsung TV


Urban Rural Urban Rural
Mr. Chandru's friend Kalakare chandru, The race from TV Yes, the couple looks
who comes in motor pramadham it has look good attractive. I like the
cycle is good become very popular red flower which come
from the TV
When he says The friend character. I The complete mood Only Chennai people
padmadham. It sounds like him very much. and acting is good can understand the
good His acting is good advertisement
Funny hwa sunil babu The whole advertising The narration is good It is only for educated
badhiya hai is attractive top people
Anth mein asian paints Cannot understand, no Boring, band
nahi bolta to pata hi interest statement recall
nahin chalta
Ghar, gadi aur aurat do Jo kahana chahte hain Cannot understand. No
dikhat hai saaf saaf interest
Pata nahin kis cheez
ka advertisement hai

7.2 Promotion of Brands in rural market of India


By: Mr. Hitendra Bargal (Research Associate, IIM-I), Dr. Ashish Sharma (Lecturer,
University School of Management, Jaipur) and Dr. Vijay Pithadia (Assistant Professor,
Amreli)

Conceptual Framework

Given the Literacy scenario in to consideration the promotion of Brands in rural markets requires
the special measures. Due to the social and backward condition the personal selling efforts have

[105]
a challenging role to play in this regard. The word of mouth is an important message carrier in
rural areas. Infect the opinion leaders are the most influencing part of promotion strategy of rural
promotion efforts. The experience of agricultural input industry can act as a guideline for the
marketing efforts of consumer durable and non-durable companies.

Relevance of Mass Media is also a very important factor. Door Darshan had already acquired
high penetration in rural households. Now the cable and other Channels have also penetrated in
rural households. The newspapers and other printed Media are also gaining strategy but their role
is still secondary in this regard.

Results and Discussions

The field exercise has given the various inputs about the rural consumers. This experience was
unique from a marketer's point of view that the companies must have a proper understanding of
rural marketing environment at a region wise basis. The data has tabulated in following manner.

Advertisement of Coca-Cola (Acceptability pattern)

Contents Favor Non-Favor No Comment

Language and content of Ad. 72% 20% 8%

Back ground effect of Ad. 50% 20% 30%

expressions and communication styles of Aamir Khan 85% 15% -

The Ad plays an important role for giving boost to rural consumers feeling. The feeling plays
very important role. The Language and content (72%) and expression style of Aamir Khan
(85%) play significant role.

[106]
BPL advertisement

Contents Favor Non-Favor No Comment

Amitabh Bachchan as a brand Ambassador 75% 20% 5%

The Action style of Amitabh Bachchan 65% 30% 5%

The language of Advertisement. 62% 20% 18%

Amitabh Bachchan is a leading player in the ad feature. The Action style of Amitabh Bachchan
is a very delighted factor for rural Consumers.

Rating of Amitabh Bacchan as Brand Ambassador

Contents Favor Non-Favor No Comment

Style of Presentation 77% 20% 3%

The concept of advertisement. 65% 20% 15%

Interesting and delightful Ad. 63% 17% 20%

Style of presentation plays an important role. 77% is a high figure as this affects the whole
creativity aspect of any ad. The total concept and delight fulness is a strong factor for this ad.

Different Modes of promotions in rural market

Modes Favor Non-Favor No Comment

Hats 65% 30% 5%

Wall Paintings 40% 53% 7%

Melas 65% 20% 15%

[107]
8. Primary Research – Data Findings & Interpretation

8.1 Most Prominent Mode of Communication


The table 8.1 shows the responses of the respondents‘ for the most prominent mode of
communication used by various companies for promotion in the rural areas. The table includes
for FMCG as well as Agri inputs and does not include Consumer durables.

Table 8.1 Showing responses for mode of communication n = 100


Area (BH) Area (MH)
Variables Total
V1 V2 V3 V4 V5 V1 V2 V3 V4 V5
Print medium 3 2 1 2 2 2 3 2 1 2 20
Electronic med 3 2 1 1 1 2 1 1 1 2 15
Campaigns 2 3 5 4 5 3 3 4 5 3 37
Direct Contact 2 3 3 3 2 3 3 3 3 3 28
Total 10 10 10 10 10 10 10 10 10 10 100

Finding and Interpretation:

It was found in the survey that most of the companies use Campaigns (37%) as the mode of
communication for the promotion of their products. About 65% of the total respondents
suggested that Campaigns and Direct Contacts were the most prominent modes.

Thus we can interpret that although the


penetration of media (audio and video) has
increased but the companies rely on other modes
and want the rural consumers to be aware at their
door step. This increases the trust for the brand
and generates the need which otherwise remains
latent due to lack of awareness and enthusiasm.
This also gives the touch-and-feel experience and
increases the sense of satisfaction among the rural
mass.

[108]
8.2 Modes used in Print Medium
The table 8.2 shows the responses for the mostly used modes in the print medium by the
companies in the rural areas for their product (includes FMCG and Agri inputs only) promotion.

Table 8.2 Showing modes used in Print Medium n = 100


Area (BH) Area (MH)
Variables Total
V1 V2 V3 V4 V5 V1 V2 V3 V4 V5
Poster/ Banner 4 3 4 4 3 4 3 3 3 3 34
Newspaper 3 2 2 1 3 2 3 2 3 3 24
Magazines 1 2 2 4 2 1 2 2 2 2 20
Pamphlets 2 3 2 1 2 3 2 3 2 2 22
Total 10 10 10 10 10 10 10 10 10 10 100

Finding and Interpretation:

It was found that the about 1/3rd of the print medium was utilized by Poster and Banners which
had no or minimum text material and contained pictorial representations. News paper contributed
24% share and mostly the local newspapers in vernacular languages. Magazines were rated the
least with 20% share and was popular among
only the literate class of the rural mass.

The fact that the literacy level is low in rural


areas is clearly depicted from this finding.
Owing to this fact, the companies go for posters
and banners rather than other modes, this is
because it looks attractive and more convincing
to these group of people. Vernacular
newspapers and local magazines have also
some presence. The basic motive of the
companies to go for posters and banners is easy
understandability of these modes, any rural
customer can see and analyse the picture which he/she would not have been able to do for the
written or text material. More over it eliminates the dullness of the text and catches attraction.

[109]
8.3 Modes used in Electronic Medium
The table 8.3 shows the responses for the modes used by companies for electronic promotion in
rural areas.

Finding and Interpretation:

The above data suggests that TV and radio covers almost 80% of the electronic communication
for rural promotions of FMCG and Agri Inputs. It was found that mobile promotions were totally
absent in one of the regions and 80% (12 out of 15 responses) of the total internet promotions
were in the western zone. Audio promotions via radio top the chart.

The power supply in rural areas are


intermittent and irregular, so the best source
must utilize alternative sources of power,
radio is one such mode which utilizes the
cheapest source of power. Most of the rural
males take decisions at the daily gathering at
some common place in the area. Radio is the
portable source and can be easily carried to
any of such places. The programs are aired in
local language and are easy to understand.
Thus, the essence of awareness and
acceptability is high. With the advent of high
tech era, TV and Radio are slowly being
replaced by internet based information systems.

[110]
8.4 Modes used in Campaigns
The table 8.4 shows the responses for the modes used by the companies in the Campaigns. The
responses include only the FMCG and Agri inputs and not the Durables.

Finding and Interpretation:

It is evident from the table that the most important mode of Campaigns is the road shows, this is
generally common for the FMCG sector. The Agri input sector focuses more on the
Demonstration as mode of Campaigns. It was found that 46% of the companies‘ promotion
through campaigns was based upon road shows whereas demonstrations were the second with
27%.

The interpretation from the above finding


can be that the companies focus on
touch-see-feel methods while promoting
their products in the rural areas. The road
shows and demonstrations let them see
the things infornt of them before they
execute the purchase behaviour, this
induces the sense of satisfaction and
eliminates the feeling of being cheated.
These kinds of activities are very near to
the heart of rural mass and they are
involved psychologically in the
promotions.

[111]
8.5 Modes used in Direct Contact
The table 8.5 shows the number of responses for various modes used in direct contact while
promoting the products in the rural areas by FMCG and Agri Input companies.

Finding and Interpretation:

It was found that 1/3rd of the direct contact promotions were the demonstration of the products
and its usage. Almost 50% of the direct contacts were occupied by success examples and
literature of the products. The success example shared 25% of the total promotions by direct
contact.

Demonstration gives the feel of


the product and the consumers see
the product and its effects in front
of them, it reduces any chance of
cheating or forgery and the trust is
build up. Citing of success
examples of some products and its
usage in any nearby place with
reference to the target helps in
understanding the product and its
nature. This also provides the
required consultation regarding
the products and the various other beneficial and harmful effects and the means to tackle them.
This makes the product very clear in the minds of the rural masses and identifies the product in
their needs and requirements.

[112]
8.6 Rating of Promotional Activities
The following graph shows the rating of the promotional activities as rated by the rural
respondents. Each respondent (out of total 100) was asked to rank any one mode of
communication as
rank 1(which he/she
feels is the best). It
was found that
Direct Contact was
voted the best by 38
percent respondents,
Campaigns was
voted by 34
respondents as the
best. 15 respondents voted Print medium as the best whereas 13 respondents voted the Electronic
medium as the best mode of communication. It is evident from the graph shown below.

8.7 Reasons for Rating the Promotional Activities


The most important reason reflected by the respondents while rating the promotional activities
was ―On the spot‖ by 31% respondents. Second most important reason was ―Better realization‖
of the product by 28% respondents. Third most important reason was ―Understandability‖ by
21% respondents. The
most important
finding is that all these
reasons correspond to
Direct Contact and
Campaigns. Thus,
these two modes are
the most important
promotional modes.

[113]
8.8 Likeness towards Promotional Activities
The table 8.8 gives the response of the respondents towards their likeness for promotional
activities followed by the companies in their locality.

Table 8.8 Likeness towards promontional activities n = 100


Area (BH) Area (MH)
Variables Total
V1 V2 V3 V4 V5 V1 V2 V3 V4 V5
Yes 8 6 7 9 5 7 8 7 8 8 73
No 2 3 3 0 3 2 0 1 1 1 16
Cant say 0 1 0 1 2 1 2 2 1 1 11
Total 10 10 10 10 10 10 10 10 10 10 100

Finding and Interpretation:

It was found that almost 2/3rd of the respondents liked the way
companies promoted their products in their areas. 16% of the
responses were against the way promotions were done in the
areas. 11% of the respondents could not respond to the question.

8.9 Purchase due to Promotions


The table 8.9 shows the responses for any purchase done due the promotional activities of the
companies in the local areas.

Table 8.9 Purchase due to promontional activities n = 100


Area (BH) Area (MH)
Variables Total
V1 V2 V3 V4 V5 V1 V2 V3 V4 V5
Yes 10 9 9 10 9 10 9 10 10 8 94
No 0 1 0 0 1 0 1 0 0 0 3
Cant say 0 0 1 0 0 0 0 0 0 2 3
Total 10 10 10 10 10 10 10 10 10 10 100

Finding and Interpretation:

It was found that 94% of the respondents had purchased at least


once due to promotional activities. 3% of the respondents had
never purchased 3% could not recall.

[114]
8.10 Product Category purchased due to Promotions
The table 8.10 gives the number of responses for the product category purchased by the
respondents in their areas due to the promotional activities.

Table 8.10 Product purchased due to promotional activities n = 100


Area (BH) Area (MH)
Variables Total
V1 V2 V3 V4 V5 V1 V2 V3 V4 V5
FMCG 7 6 8 6 5 7 8 6 7 6 66
Agri Input 3 3 2 4 4 3 2 3 3 4 31
Others(Durables) 0 1 0 0 1 0 0 1 0 0 3
Total 10 10 10 10 10 10 10 10 10 10 100

Finding and Interpretation:

It was found that 66% of the purchases due to promotions were in the FMCG sector and 31%
was in the agri input sector. 3% of the respondents purchased other category goods due to
promotions. It is
evident from the table
that promotional
activities play a very
important role for the
FMCG sector as it
governs about 2/3rd of
the total purchases
due to the influence of
promotions.

It can be easily understood that the FMCG sector has products that have low consumable life and
need to be replaced and repurchased soon. Thus the promotions of these products need to be
extensive and at the door steps of the customers. On the contrary, the agri inputs although are
highly promoted do not show such a huge purchase behaviour after promotions because the
usage of these inputs decides the fate of the poor farmers. A risk in these products might lead
them to crop failure and push them to extreme poverty. This is the reason for not purchasing new
agri input products even after heavy promotions. FMCG products are not related to livelihood
but agri inputs are directly related to sustainability of their livelihood.

[115]
8.11 Need for Promotions
The table 8.12 shows the responses for the need of promotions felt by the respondents. The need
for promotions was specifically asked for FMCG and Agri Inputs.

Table 8.11 Need of Promotions n = 100


Area (BH) Area (MH)
Variables Total
V1 V2 V3 V4 V5 V1 V2 V3 V4 V5
Yes 10 9 8 10 9 9 10 8 8 9 90
No 0 0 0 0 0 0 0 0 0 0 0
Cant say 0 1 2 0 1 1 0 2 2 1 10
Total 10 10 10 10 10 10 10 10 10 10 100

Finding and Interpretation:

It was found during the survey that for both the eastern as well as western regions, none of the
respondents opted against the idea of promotions. Although 10% of the respondents had no idea
to support the promotions but they were not against the promotional activities. Strikingly evident
is from the table that 90% of the respondents wanted the promotions and felt the need of
promotions of different products.

It can be interpret form this finding that rural


mass are positive towards information sharing and
want themselves to be well informed about the
products before they patronize these products.
The gigantic figure of 90% for the need of
promotions makes it loud and clear that any
product which is not promoted well enough will
not be a success in any of these areas. This
explains one of the major reasons of why all the
companies go for extensive promotions and try to
attach their products with the lifestyle and
behaviour of these rural people. People have high
awareness and accessibility for the products by
the way of these local promotions.

[116]
8.12 Advantages of Promotions
Table 8.12 highlights the advantages of the promotional activities by the respondents.

Table 8.12 Merits/ Advantages of Promotions n = 100


Area (BH) Area (MH)
Variables Total
V1 V2 V3 V4 V5 V1 V2 V3 V4 V5
Awareness 8 7 6 7 4 6 5 6 5 4 58
Satisfaction 1 1 2 1 3 2 3 2 4 3 22
Reach 1 2 2 2 3 2 2 2 1 3 20
Total 10 10 10 10 10 10 10 10 10 10 100

Finding and Interpretation:

58% of the respondents feel that the awareness increases due to


promotions whereas 22% responded that the satisfaction for
using the product increased after going through the promotion
of the product. 20% of the respondents reported increased
access to the product after promotions.

8.13 Disadvantages of Promotions


Table 8.13 shows the responses for the disadvantages of the promotions.

Table 8.13 Demerits of Promotions n = 100


Area (BH) Area (MH)
Variables Total
V1 V2 V3 V4 V5 V1 V2 V3 V4 V5
Wrong Info 1 2 1 3 2 2 2 1 2 3 19
Time consuming 6 5 1 2 3 4 5 4 3 5 38
None 3 3 8 5 5 4 3 5 5 2 43
Total 10 10 10 10 10 10 10 10 10 10 100

Finding and Interpretation:

43% of the respondents did not found any demerit or disadvantage in


the promotions. 38% of the respondents reported that majority of the
time in the promotion was focused on other things than product such
as the celebrities and glamour. 19% respondents reported for wrong
and spurious information of the product during the promotions.

[117]
8.14 Highly Promoted products
Table 8.14 shows the responses for the degree of promotions of the different product categories
as experienced by the respondents.

Table 8.14 Degree of Promotions in Product Categories n = 100


Area (BH) Area (MH)
Variables Total
V1 V2 V3 V4 V5 V1 V2 V3 V4 V5
FMCG 7 5 4 6 5 7 5 4 4 3 50
Agri Input 1 2 3 2 2 2 2 3 2 2 21
Others 2 3 3 2 3 1 3 3 4 5 29
Total 10 10 10 10 10 10 10 10 10 10 100

Finding and Interpretation:

Out of the total 100 respondents, 50% feel that FMCG sector has heavy promotions where as
21% feel Agri inputs are heavily promoted. A sizeable proportion of 29% feel consumer durables
are heavily promoted.

The product nature of FMCG is such that it


needs to be replenished very quickly, the
products such as biscuits, bathing soaps,
detergent powders, toothpaste, hair oil etc.
The chances of competitors‘ product being
purchased by the customers are very high in
these categories of products. In order to
maintain the customer base and trust of the
customer for repeat purchase and regular
use, the FMCG companies have no other
option than heavy promotions of their
products. This is one of the major reasons of high promotion of FMCG goods. Second highly
promoted is the consumer durable goods because the companies are well aware of the fact that
the repeat purchase will not occur quickly, hence they promote their products heavily for
catching the maximum market share. On the contrary, Agri Inputs are sold on word-of-mouth
basis and trust. This is the reason for respondents‘ behaviour towards the promotions of different
product categories.

[118]
8.15 Similarity among Promotions
Table 8.15 shown below highlights the responses of the respondents for similarity in the
promotion of different companies for similar product categories.

Table 8.15 Similarity of Promotions n = 100


Area (BH) Area (MH)
Variables Total
V1 V2 V3 V4 V5 V1 V2 V3 V4 V5
Yes 2 1 3 3 4 3 3 4 4 3 30
No 5 7 5 4 5 5 4 5 3 5 48
Cant say 3 2 2 3 1 2 3 1 3 2 22
Total 10 10 10 10 10 10 10 10 10 10 100

Finding and Interpretation:

It was found that 48% of the total


respondents preferred to say that the
promotional activities of the various
companies were not totally similar.

This is can be understood from the chart


that almost half of the respondents believe
that all promotions are different from the
competitors‘ promotion although the main
objective remains the same. Only 30%
suggested that the promotions were similar in nature and had the same angle of presentation. A
sizeable percentage of 22% could formulate their opinion over this matter. It was found form the
secondary data that all the companies have something or different in their promotions from their
competitors‘ and that becomes their USP and they bank upon it. When 48% of the respondents
confirm that all promotions are different, it confirms the move of the companies but some more
clarity is required so that the remaining 52% also get the exact idea of the promotions. The
segment of 30% needs immediate attention.

[119]
8.16 Focus of companies in Promotions
During the primary survey, question regarding the focus of companies in their promotion was
asked to the respondents. It was asked to confirm that whether the customers were getting the
information given to them by way of promotions. Table 8.16 shows the responses for the various
options against the objectives.

Table 8.16 What companies focus in Promotions n = 100


Area (BH) Area (MH)
Variables Total
V1 V2 V3 V4 V5 V1 V2 V3 V4 V5
Price 3 3 2 2 1 2 1 2 1 2 19
Utility 2 0 1 2 1 1 1 1 2 1 12
Need 1 1 1 1 2 1 2 0 0 0 9
Ambassador 3 5 4 4 2 2 3 5 4 3 35
Competitors 1 1 2 1 4 4 3 2 3 4 25
Total 10 10 10 10 10 10 10 10 10 10 100

Finding and Interpretation:

Striking results regarding the promotions were obtained for this question. It was found that only
9% of the respondents said the promotions focused on the need of the product. The maximum of
35% flatly responded that the companies focused only the brand ambassadors and nothing else.
Respondents gave examples of Sachin Tendulkar,
Amitabh Bacchan, Shahrukh Khan, Aishwarya Rai and
Irfan Pathan. 25% respondents said the promotions
targeted the competitors and only 12% respondents
replied that the promotions featured the utility of the
product. Only 19% of the respondents confirmed that the
promotions featured the pricing of their products.
Although they responded that pricing was involved in the
promotions but only to highlight how their price was
more economical and better as compared to other players
in the market.

We can interpret form this finding that the companies hire the brand ambassadors for promoting
their products but the same celebrity appears for many different products, this reduces the trust

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and adoptability of the product. It was evident that for Agri Inputs the promotions are generally
not done by high paid and popular celebrities, rather the agri companies hire local people and
make them endorse their products. In fact this idea of promotions in the rural areas is a big hit.
The FMCG companies should also focus on similar trends and explore the potential of the
untapped rural market. The companies should concentrate more on Utility than Brand
Ambassadors.

8.17 Areas to focus in Promotion


Referring to the fact realized in the previous question, it becomes the prime responsibility to find
out what the customers really want in the promotions and how do they want it to be delivered.
This is important because the main aim of the promotion is to inform the customer about the
product and its utility to them. The table 8.17 shows the responses for the question and the
opinion of the respondents for this.

Table 8.17 Areas to focus in Promotions n = 100


Area (BH) Area (MH)
Variables Total
V1 V2 V3 V4 V5 V1 V2 V3 V4 V5
Price 3 2 3 2 3 2 3 1 2 3 24
Utility 3 3 2 3 3 3 2 1 2 3 25
Specificity 1 1 2 1 1 1 1 2 1 1 12
Ambassador 0 1 1 1 1 2 2 1 3 1 13
Communication 3 3 2 3 2 2 2 5 2 2 26
Total 10 10 10 10 10 10 10 10 10 10 100

Finding and Interpretation:

It was found that almost 3/4th of the respondents


wanted a complete change in the format currently
followed by the companies. 26% of the
respondents wanted the promotions to focus on
communication that too in the local language. An
equal number of 25% respondents wanted the
promotion to focus on the utility of the product

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rather than just pushing it into the life cycle of rural people. 24% of the respondents wanted fair
price to be declared on the promotions so that they could decide upon the purchase and also
prevent them from being cheated by dealers. Only 13% respondents wanted high class
ambassadors in the promotions.

It was striking to find that people wanted complete reverse of the process. It is very clear that the
life-cycle and life-style of the rural people are completely different than their urban counterparts.
To have a same strategy for both these categories will not work. It is loudly expressed by the
rural respondents that they value the utility and communication and not the pomp and show from
the ambassadors. This is exact opposite to the urban class which desires for high class
ambassadors and glamour rather than utility of the product. In order to tap the rural market and to
rule the heart of these people with confidence and faith, it is necessary for the companies to focus
on the above expressed parameters in the promotion rather glamorizing the promotions.

8.18 Brand Ambassador Recognition


In order to know about the brand ambassadors, the respondents were asked to recall a few of the
brand ambassadors and whether they knew any brand ambassadors. It was found that all the
respondents knew at least one brand ambassador and the product he/she endorsed. All the
respondents answered this question. The table 8.18 reflects the responses for the knowledge of
the brand ambassadors.

Table 8.18 Brand Ambassador Recognition n = 100


Area (BH) Area (MH)
Variables Total
V1 V2 V3 V4 V5 V1 V2 V3 V4 V5
Yes 10 10 10 10 10 10 10 10 10 10 100
No 0 0 0 0 0 0 0 0 0 0 0
Cant say 0 0 0 0 0 0 0 0 0 0 0
Total 10 10 10 10 10 10 10 10 10 10 100

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8.19 Role of Brand Ambassadors in Purchase
The table 8.19 shows the responses for role of Brand Ambassadors in purchase of products. It
includes for both FMCG and Agri Inputs.

Table 8.19 Role of Brand Ambassador in Purchase n = 100


Area (BH) Area (MH)
Variables Total
V1 V2 V3 V4 V5 V1 V2 V3 V4 V5
Yes 4 5 6 7 9 5 7 8 6 5 62
No 3 2 2 1 0 2 2 1 2 2 17
Cant say 3 3 2 2 1 3 1 1 2 3 21
Total 10 10 10 10 10 10 10 10 10 10 100

Finding and Interpretation:

It was found that although rural people


value more on communication and product
utility but the purchase due to
Ambassadors was opted by 62% of the
respondents. 17% said ambassadors had no
role in purchase while 21% were not
confident. Thus it can be concluded that
the majority of the people believe that
Ambassadors have and impact on the
purchase but not totally.

8.20 Popular Brand Ambassadors


The following table shows the brands and
their ambassadors‘ popularity rating as
felt by the rural customers. It was found
that Cine Star Shahrukh Khan was the
most popular brand ambassador followed
by Cricketer Sachin Tendulkar. Cine
Legend Amitabh Bacchan held third

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position preceding his daughter-in-law Aishwarya Rai in the fourth place.

Table 8.20 Showing Brand and Ambassadors' Popularity


Brand Associated Brand Ambassador Popularity Rating
Dabur Himani Amitabh Bacchan 18%
Pepsi Airtel Shahrukh Khan 21%
Lux Lakme Aishwarya 15%
Lux Priyanka Chopra 7%
Colgate Tooth powder Suniel Shetty 9%
Tiger Biscuit Sachin Tendulkar 19%
Asian Paints Saif Ali 4%
Idea mobile Abhishek Bacchan 7%
The comparative chart of popularity of the brand ambassadors along with the brands they are
known for among the rural people is given below.

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8.21 Market Development Due to Promotional in Rural areas
It was evident to know the development of market due to the promotional activities of the
various FMCG and Agri Input companies. The table 8.20 shows the responses of the respondents
for this question of market development.

Table 8.21 Market Development due to Promotions n = 100


Area (BH) Area (MH)
Variables Total
V1 V2 V3 V4 V5 V1 V2 V3 V4 V5
Yes 9 6 8 8 7 4 7 8 9 7 73
No 0 2 1 0 1 2 1 0 1 1 9
Cant say 1 2 1 2 2 4 2 2 0 2 18
Total 10 10 10 10 10 10 10 10 10 10 100

Finding and Interpretation:

It was clearly observed that 73% of the respondents believed that there was some improvement
in their buying after the promotional activities by the companies. Only a small segment of 9%
reported to have no improvement in buying after promotions and 18% could not formulate their
idea to this question.

It is again evident form the fact


realized during the survey that many
respondents do not understand the
motive of the promotions. It was
earlier found out that many
respondents like the promotions but
could not get the theme of the
presentation. This leads them for poor
purchase and requires sincere
attention. The segment of 9% as well
as 18% need to be addressed properly, this can only be done when the communication is correct
and to the point. In order to achieve the market share the promotions should be specifically
targeted towards the need of the people and the utility of the product in their day-to-day life.

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8.22 Factor contributing to development
The table 8.22 shown below shows the responses of the respondents for the factors contributing
to the market development because of the promotions.

Table 8.22 Factors contributing to Market Development n = 100


Area (BH) Area (MH)
Variables Total
V1 V2 V3 V4 V5 V1 V2 V3 V4 V5
More Info 2 3 2 1 2 2 2 3 4 2 23
High Awareness 4 4 4 3 5 2 4 3 4 5 38
Competition 2 2 1 2 1 3 1 1 1 1 15
Availability 2 1 3 2 2 3 3 2 1 2 21
Other 0 0 0 2 0 0 0 1 0 0 3
Total 10 10 10 10 10 10 10 10 10 10 100

Finding and Interpretation:

It was found that 38% of the respondents believed that the market development was due to the
increased awareness among the buyers because of the promotional activities. 23% respondents
responded that along with the increased awareness about the product it was more information
about the existing and available products that made decisions easier. 21% responded that because
more number of campaigns and door-to-door promotions it was higher availability of the
products that developed the market. A considerable percent of 15% responded that it was all due

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to the competition that developed the market as the competitors in order to capture the market
made Awareness, Availability, Affordability and Accessibility of their products better than other
players.

This brings out the most fascinating inference that the competition and promotions are the major
source of market development. All those factors highlighted by the respondents concentrate on
the single phase of awareness and availability along with affordability. By means of print,
electronic, direct contact or campaigns the companies (FMCG as well as Agri Inputs) made it
clear to the respondents that the new products are better and efficient than the earlier counter
parts. The contribution to the society by way of local languages and utilization of pictorial and
examples at every stage led to the development at each and every site. It is because of this
extensive marketing that has evolved the rural market and opened a new avenue for the future.
Promotions provide that connecting link to the rural consumers‘ which was needed from very
beginning.

8.23 Role of Development in Prosperity


The table 8.23 shows the responses for the question asked to the rural people about the role of
development in their prosperity.

Table 8.23 Role of Development in Prosperity n = 100


Area (BH) Area (MH)
Variables Total
V1 V2 V3 V4 V5 V1 V2 V3 V4 V5
Highest 4 6 4 3 5 4 3 4 3 3 39
High 3 2 2 3 2 2 3 1 1 2 21
Moderate 3 1 1 2 1 2 2 2 3 3 20
Low 0 1 2 1 1 1 1 2 2 1 12
Lowest 0 1 1 1 1 1 1 1 1 8
Total 10 10 10 10 10 10 10 10 10 10 100

Finding and Interpretation:

It was found that about 80% of the respondents believed that development was some way or the
other related to their prosperity, only 20% felt against this. Out of this only 8% was the share of
the respondents who felt that market development was no way related to their prosperity.

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It was found that the majority of the population in the rural areas believed that the development
of the market was related to their individual prosperity. Only 20 of the respondents were against
the motion. This 20% needs to be addressed. Critically analyzing it was found that out of the 20
responses obtained for this question, 8 were replied by people in Bihar where as 12 from
Maharashtra. It was striking to find out that the belief was prominent more in Maharashtra. It is
also evident that the companies focus more on the eastern region as it is comparatively so called
less developed, this alone leaves the other regions. The companies should have a balanced focus
on all regions.

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9. Results & Recommendations
With the present secondary data and primary survey following results were generalized. The
result has been discussed on objective wise basis and represents the opinion of the various
authors on the subject as well as the point of view of the respondents of the selected villages.

Objective 1

To analyze the present promotion strategy of rural brands (FMCG and Agri Inputs) in
rural markets.

a. To study the modes of communications used and their effectiveness.

b. To find out the role of promotion in rural sales.

c. To find out the promotional strategies of different players in the market.

Result generalized:

It was found that mostly four modes of communications were used by the companies in the rural
areas. The most prominent mode was campaigns, other modes were electronic and print media
along with direct contact. It was also found out in the survey that promotions played a very
important role in rural sales; they increased the penetration of the products along with increasing
the awareness of the rural people. It was found in the primary survey that people wanted to have
the promotions which made them aware about the utility of the product in their daily life. This
identified the need of the product in the life-cycle of rural people. Thus promotions played a very
important role in generating the sales. It was found that most of the companies focused on the
brand ambassadors and their products in their promotions, few of them also focused on the price
and affordability. It was found that the basic strategy of the companies is to allure the rural mass
of its product and generate sales. The customers reported the glamour and usage of sex-appeal in
all the promotions of FMCG as well as Agri Input products, this is strategically done by the
companies to associate attraction towards the product and to feel like or with the brand
ambassador while using or after using the product.

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Recommendation:

It is recommended that the companies (FMCG and Agri Input) should focus more on the utility
of the products while promoting in the rural areas. The life-style of these people is different form
those in the urban areas. These people want value for their money, so they want the promotions
to be more informative rather being more glamorous. The ―value-for-money‖ means that people
will definitely buy, but they will buy only that product which suits their needs. If once they
purchase a wrong product they will never purchase it again. This word-of-mouth may spread
across and company might loose in the long run.

Objective 2

To measure the success of rural marketing campaigns of the brands (FMCG and Agri
Inputs) in terms of consumer appreciation.

a. To study the determinants of specification factors which decide the success of


rural promotion strategy

Result generalized:

It was found in the survey that rural people wanted the promotion to be more focused on the
usage and need of the product. Although the people wanted promotions but they did not liked the
way promotions are done these days. They wanted informative promotions.

Recommendation:

The companies should provide full information in the rural promotions starting for the need,
utility, availability, price and the pack sizes available. It is recommended that the pack sizes
should be small and the pricing should be done in coinage system example: Re.1, Rs.2, Rs.5,
Rs.10 etc. This increases the affordability among the rural consumers.

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Objective 3

To evaluate the effects of adopting the specific brand ambassadors for different products
in the rural marketing context.

Result generalized:

Brand Ambassadors are the most important part of promotions, in the FMCG promotions by
celebrities is very common, in Agri inputs this is done by local people and opinion leaders as
these products are the determinants of their livelihood and people do not want to take any risk in
this regard. Brand Ambassadors promote products and enhance the sales.

Recommendation:

It is recommended that the brand ambassadors should be relevant to the product and must look
like he/she would be using the product in the daily life style. Merely promoting the product by
glamorous model may generate sales in urban areas but for rural areas, information is of prime
importance than glittering dances and models. The companies should be vey specific for
choosing the brand ambassadors for the rural areas as it may either boost up the sales or
completely wash them out of the market.

Objective 4

To analyze the market opportunity and potential for existing as well as new entrants in
the rural market for FMCG as well as Agri Inputs.

a. To find the growth of rural market over a period of 5 yrs.

b. To find the behavioral changes in the rural consumers.

Result generalized:

It was found for the various sources of secondary data the rural India has that huge potential
market that can drive the whole nation. NCAER survey reflects that by 2015A.D the proportion
of the consuming class will be more than 50%. This is shown in the table below:

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Very Rich 5%
Consuming class 54%
Climbers 34%
Aspirants 4%
Destitute 3%

Thus with lesser penetration in the rural areas, the companies are fighting hard to reach the
remotest areas to gain the advantage of capturing the market first and having an impact on the
customers mind which is till date unoccupied. The population drain form the villages have
dropped by some percent and people have found new ways to sustain their livelihoods in the
villages. Government is helping to maintain this sustainability. The increase educational status in
the villages, high propensity to consume and high per capita income has forced the companies to
penetrate into the untapped rural market. This untapped market would server 70% of the Indian
population. The results form the secondary data suggest that the companies like HUL, Dabur,
P&G, ITC have extensively started to tap this market. Among the Agri Input companies, the
giant MNCs like Monsanto, Seminis, Bayer, Syngenta are extensively utilizing the potential.
Indian companies like Aditya Birla Group, Paradip Phoshate Limited, Ankur Seeds, Rallis are
also not far behind to utilize the market potential.

Recommendation:

It is recommended that the companies should have separate strategies for rural as well as urban
markets and should take care of addressing the needs of the rural people in their promotions.
They need information so they should be provided with it. The rural promotions should use high
profile celebrities but only to an extent and not in all products. The rural mass is very specific
and may discard the product completely if not satisfied. For new entrants in this market it is
recommended to have a start from a small portion and then increase gradually. This is because
rural people purchase mostly by word-of-mouth promotions among themselves. Thus, if success
is achieved at one place then it becomes easy to expand as market is already awaiting you. Thus
the promotions should be simple and loaded with information and not with glamour.

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10. Conclusion
The rural India harbours 70% of the total population. This vast population has now a high
propensity to consume and they have much more per-capita income than earlier. With higher
education and better sense of things they can rule the world in a much better way. The various
local languages and the dialects make the promotion in far interiors very difficult but these are
the most potent areas that are still untapped, so it is a daunting but rewarding task for the
companies to make a move and t understand the needs and the requirements of the rural people.
The companies have started to follow this track and exploit the market.

The Indian growth story is now spreading itself to India's hinterlands. With rising incomes, both
consumption and production have increased significantly. Food grain production was in excess
of 227.3 million tonnes in 2007–08 which was an increase of an increase of 4.6 per cent over the
previous year. In 2008, the rural market has grown at an impressive rate of 25 per cent compared
to the 7–10 per cent growth rate of the urban consumer retail market.

In most of the rural areas in different parts of the country, there is considerable awareness on
various latest products that are available in the market. This has been possible due to the
penetration of cable and satellite channels that have brought down the world at the finger tips of
the common man. The media influenced the mindset of the rural consumer to such an extent that
people who had money started purchasing the products unmindful of the costs, just to satisfy
their needs as well as their ego. But, the growth of rural market could be attributed to many other
reasons that in one way increased the sales as well as the profits of the companies. Some of the
important causes for the growth of rural markets are –

 The rise in disposable income of the rural families


 The economic boom
 Timely rains
 Rural population involved themselves in business other than agriculture
 Increase white-collar jobs in nearby towns
 Commercialization of agriculture
 Saturation of the urban markets
 Media penetration in rural areas (particularly satellite channels)

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 Globalization
 Economic liberalization
 Revolution in the Information Technology
 Women empowerment
 Improving infrastructure

However, there was a significant role of the corporate enterprises simultaneously in the
development of rural market. Their timely intervention into the rural areas, their appropriate
planning, their perception and identification about the growth of rural markets and the use of
marketing strategies all have equally contributed for the progress of rural markets. Even though
corporate houses were hedged with so many problems in the rural areas, they saw a galore of
opportunities in the rural market and converted all the pessimistic characteristics of the rural
market into affirmative attributes. They satisfied themselves with the availability of limited
infrastructure, saw a sign of prosperity rather than fear during the entry of competitors into the
rural markets, showed excitement at the availability of satellite channels in the rural households,
visualized their cash bells ringing with the increase in purchasing power of the rural masses that
came equivalent to their urban counterparts. They traced a constant rise in the demand for those
products that were once confined mostly to the urban houses. But, blame it on the kind of
awareness created by the companies – people started using the products for other purposes as
seen earlier.

In many villages, it is seen today the alternate use of the products other than for their actual
purpose. People in the state of Bihar feed the cattle with Horlicks as a health drink to fatten
them! Similarly, people in Punjab use washing machine not for washing clothes but to make
frothy lassi in huge quantities. Animals are rubbed with Iodex on their skins to relieve them from
muscular pains after a day's hard work. Paints meant for houses are used on the horns of cattle
for easy identification and theft prevention. The weavers in North India wear condoms on their
fingers as gloves to weave fine threads while its lubrication allows them fine control on threads
and protect their sensitive fingers. If companies felt happy with their increased sales and profits
through this means and thought that they captured the rural markets, then it is time for them to
review their marketing strategies. They should understand that these results do not coincide with
the application of the marketing tools and the technical expertise that are generally used to

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satisfy the customers as well as the company objectives. The implications of 4 Ps of marketing
mix or the use of 4 As for successful rural marketing have sometimes produced wrong results.

All companies usually claim that they provide the right product at the right place at right price
with right kind of promotion. Yet there are differences in the opinions and beliefs of rural people.
There was something missing in the marketing strategies of the companies while serving the
rural markets. Otherwise, the results should have been more astonishing where the sales turnover
or the balance sheet would have shown much more than what is presently achieved.

Though, only few products were used by the consumers in this way, that use might be the result
of the accidental or wrongful application by the rural consumers. The marketer's planning about
the product and the communication with the target customers should be perfect that produces the
desired results. Thus it is important to understand the nature and behaviour of the consumers and
to communicate them through the right set of modes. It is only promotions that matter a lot for
generation of sales at these levels.

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11. Annexure
11.1 Questionnaire for Survey

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11.2 Fertiliser Consumption Trend
The consumption of fertilizers increased to much more than it was being consumed in the pre-
independence era. The following graph shows the trend of fertiliser consumption from
independence. The source of this data is the annual report 2007-08 of the Ministry of Fertilisers,
Government of India.

The graph shown below gives the trend of consumption, it can be seen that after the era of green
revolution, the consumption increased to the mammoth amounts. With the advent of more hybrid
varieties, the consumption further increased after 1980.

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11.3 Seed Replacement Rate 2007 (State-wise)

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[139]
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