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Objectives
Marketing mix challenges.
Product concept and classification.
New product development with adoption
process of consumers.
Lifecycle of a product and Strategies in
rural packaging and after sales service.
Product Acceptability
Price- Affordability
Place- Availability
Promotion- Awareness
Availability
First challenge- To ensure the availability
of product or services.
638000 villages spread over 3.3 million sq
km ; 742 million Indians may live in rural
areas but finding them is not easy.
Poor state of roads a greater challenge
to send products to far flung villages on a
regular basis.
Solution strong distribution system.
Example
HLLs strong distribution
system- uses auto-rickshaws ,
bullock carts and even boats in
the backwaters of Kerala.
Coca-cola uses hub and spoke
model.
Affordability
With low disposable incomes products need to
affordable to rural consumers.
Most of them are daily wage earners.
Some companies addressed the problem by
introducing small unit parks.
Example includes
Godrej 3 brands of cinthol, fairglow and godrej
in 50gms pack prices rupees 4-5.
HLL lifebuoy at Rs 2 for 50 gm.
Coca cola Returnable 200 ml glass bottle at
Rs.5/-.
Acceptability
Need to provide product that suit the rural
market.
L.G.Electronics- Customized television
and christened it Sampoorna.
Coca cola low cost iceboxes, tin box for
new outlets and thrmocol box for seasonal
outlets because of lack of electricity and
absence of refrigerators.
Awareness
Large parts inaccessible to conventional
media. Only 41 percent got access.
Outing confined to local fairs and festivals
Television viewing to state owned channelDoordarshan.
HLL relies on its own company
organised media.
Godrej uses radio to reach people in
their own language.
Rural Product
Categories
FMCGs
Consumer Durables
Agri Goods
Services
FMCG Market
According to NCAER survey, the rural
market accounted for 53% of the total
consumption in the country in 1998-99
The estimated size was around
Rs. 484 billion in 1998-99
Rs. 650 billion in 2002
FMCG Growth
Rural market has grown consistently in the 1990s
A spatial distribution of the FMCG rural market
shows that four states namely Uttar Pradesh,
Andhra Pradesh, Maharashtra and West Bengal
account for 50% share of this market
High income households spends 3.6 times more
than the lower income households on FMCGs.
FMCG Products
About 50% of sale of soaps, detergents
and beverages, 37% of personal products
(shampoo, toothpaste and skin cream)
and 12% of food products comes from the
rural market.
Market Growth
The average annual per capita spend on
FMCGs in rural is Rs. 9400 as compared
to Rs. 13000 for urban among rich
households.
70% of the population accounts for only
50% of even relatively well-penetrated
categories such as soaps and detergents.
Consumer Durables
Durable goods include products like home
appliances, automobiles, watches,
funrniture.etc
Main Players
Rural Share
The rural share of durables has risen from
54% in 1989-90 to over 60% in 1998-99.
Number of durables with over 75% share
has increased from one to four products.
For several high priced products, the rural
share continues to below 50%
Durable Products
The rural penetration of most products is
very low compared to urban except for
bicycles, radios and mechanical wrist
watches.
The rural-urban disparity is highest in case
of electrical goods.
Market Growth
The mid 1990s witnessed impressive
growth rates
It increased from 8.8% in the mid 1990s
to 11.5% from 2000 onwards.
Agricultural Goods
Agri products are goods that are used for
farm activities.
The agri inputs market accounts for Rs.
450 billion annually.
The major players are Rallis India,
Monsanto, DCM Shriram, Chambal
Fertilizers, IFFCO, Mahindra & Mahindra,
Eicher and Escorts
Services
Major services in rural include
telecommunication, transport, health care,
banking, insurance and education, ITES
like the internet, DTP and mobile phone
services.
This category is led my LIC, SBI, BSNL,
Reliance infocomm, ITCs e-Choupal,
ICICI Prudential Life Insurance,etc.
e.g
EXAMPLE
Mahindra maxx
Hpcl,5-kg cylinder
Vardhanm free bidi by Dalmia consumer
care
Water purifier-jalshodhak
Value added product: an aborted idea
Phillips mahasangram
Product Mix
Simple- mostly only one product of a
particular company registers its availability
on rural shelves due to
limitations of investments in stocks,
slow movement and replenishment of stocks,
dominance of retailer in the rural market
Rural Packaging
Plays significant role as it is associated with
Affordability,
ability to recognize,
convenience of usage
product appeal
Packaging Material
Packaging Aesthetics
Lower literacy levels in rural market
Consumers appreciate bright colours
Eg: Lifebuoy identified as red soap
FAKE BRANDS
Bonds for ponds talc
Fair & lonely for Fair & Lovely
Likeboy for Lifebouy
The main problem of rural market is the low
penetration and the poor availability of branded
products.
No distribution channel to reach the customer.
Led to the growth of spurious brands to fill the
gap in the demand.
2. Spell-alikes
Names are subtly and cleverly misspelt
Eg: Paracute for Parachute
Pomes for Ponds
3. Duplicates
Exact replicas of original brands
FEATURES
DUPLICATES
SPELL-ALIKES
LOOKALIKES
Brand Name
Original
Misspelt
Different
Pack appearance
Replica
Identical
Similar
Manufacturers
address
Original
Incomplete
Own Nam
Price
M.R.P
40% low
10-15% low
Margins
200-300%
100-150%
60-70%
Quality
Very poor
poor
Reasonable
Intention of retailer
To cheat
To mislead
To freeload
Consumers
unaware
unaware
Want cheaper
products
Identity
none
Only literate
Majority
Other
none
discounts
schemes
STRUCTURE OF COMPETITION
IN RURAL INDIA
Competition from other urban national products
branded tea and detergent powder
Regional urban branded products - brands of the
unorganised sector, like soaps, talc.
Local urban brands ribbons, bangles
Local village brands ropes, bread, food items
Substitutable products or indirect competition neem
twigs.
CONCLUSION
Product at the heart of marketing
Products must achieve the best fit with
rural conditions.
The shift of rural consumers from product
generalisation to product specialisation
promises better growth for urban centric
products.
The first mover in new product categories
will benefit.
PRICING STRATEGY
Pricing Strategy
Affordability is, in determined by two factors1.Income of consumer
2.Price of the Product & Services
External influences
Customers
the price sensitivity of customers depends on personal, social, economic,
geographical factors.
eg.chic shampoo introduced 50 p targeting daily and weekly labourers,
sampoorna CTV from LG
Suppliers
Pricing Strategies
Optional-product pricing
Captive-product pricing
Market-Entry strategy
Penetration pricing
Economy pricing
Value pricing
Coinage pricing
Psychological pricing
Price adjustments
Discounts and allowances
Free gift
Schemes for retailers
Discriminatory pricing
THANK YOU