NEW PRODUCT DEVELOPMENT

MODULE - 5
• Given the rising interest of the companies in
the rural market, developing new products
suitable for the rural market has become an
imperative
 NPD Process
• Idea Generation
• Concept testing
• Product Development
• Test Marketing
 New Products
• 5 kg gas cylinder by HPCL
• Jolly battery operated colour television
• Free Power Radio
• Jugaad the rural public transport
• Kisan Credit Card
 Failure of Products
• The product is not fit with the rural lifestyle and
environment

• Therefore, it is important :
• To conceive of a product idea and build a product
concept in the rural environment by gaining a
first hand understanding of consumer lifestyles
and behaviour patterns through consumer
surveys
 Rural Product Design
• MAX GAS LPG CYLINDER
• Rural consumers reluctant to switch to LPG for
cooking because they worry the cylinder would
burst automatically and there is no way to check
the quality of the gas
• Max gas, a private player, developed a cylinder
with the following features:
– Auto cut off regulator, which shuts off the gas supply
in case of leakage
– Double sealed cylinder to ensure the correct weight
• Special steel braided hose pipe, which is rat
resistant
• Wider base of cylinder to ensure stability even
on uneven rural kitchen floors
 HPCL 5 kg GAS CYLINDER
• New connection – Rs. 1600
• Refilling – 270

• Small cylinders new connection – Rs. 800

• Refilling – Rs. 99
• Can be used for both cooking and lighting
• Innovative credit schemes using the kisan
credit card and self help groups
 Concept Testing
• Need to be done in different regions
depending upon the characteristics of that
area
• A concept of a low cost dry toilet promoted by
UNICEF was appreciated in water scarce
regions of Rajasthan, but was opposed in
other regions where water availability is not a
problem
 Test Marketing
• Water purifier – Jalshodhak
• DCM Shriram decided to develop a low cost
water purifier specifically for rural areas.
• Test market the product in Nalgonda district of
AP with SHG
• But project called off as it was not able to
purify the fluoride content of the water
 Eicher Tractors Idea
• To generate electricity through its tractor
• With the use of generator powered by tractor
engine
• Failed to address the rural consumers need for
power for agricultural purposes, it was only
found suitable for domestic purposes
 IMPORTANT
• Sensitizing the marketers to the ground
realities in rural markets and the need to
develop products that can address the needs
of villagers in the best possible manner
 CONSUMER ADOPTION PROCESS
• Low adoption of new products and services
• Due to poor awareness of new products
because of low media access
• Resistance to try new products in the absence
of demonstrations
• The sarpanch, school teachers, salaried people
become early adopters
• International Development Enterprise launched
a low cost foot operated treadle pump for
drawing water from ground, merely display
didn’t help the company

• But when a bore was made in the haat and the

pump mounted on the pipe for live
demonstrations, farmers started operating the
pump and this led them to purchase the product
 PRODUCT LIFE CYCLE
• Earlier urban products were pushed into the
rural areas
• Recent years companies have started
developing rural market specific products
• PLC in rural market is longer than it is in the
urban areas
• Products without proper planning fail like HLL’s
aim toothpaste, ruf n tuf ready to stitch jeans
• The strategies during the different stages of
PLC remain similar in both rural and urban
market, but the length of each stage depends
on consumer acceptance, innovativeness,
price propositions and the nature of the
product
• Most companies are trying hard to grow the
market
• This is forcing to re-engineer their products
(free power radio)
• Introduce low price packs (sachets, chota pepsi)
• Change consumption pattern by educating the
villagers (increasing soap usage frequency from
weekly to daily)
• Adopting alternate channels to reach deeper
(HUL’s Project Shakti, haats, mandis) to grow
the market
 PRODUCT MIX
• Simple unlike urban markets
• Only few companies like HUL, Dabur hav e
more than one product available in the rural
product basket
• Sometimes product and pack size both are
pushed by the retailers
 RURAL PACKAGING
• Has significant role in rural areas as it is
associated with:
• Affordability
• Ability to recognize
• Convenience of usage
• Product appeal
• Packaging for rural areas need specific
because of the following problems:
• Poor transport system
• Difficulties of safe storage
• Poor facilities (erratic power supply)
• Packaging in rural areas should have:
• Have a longer shelf life
• Able to withstand extreme weather conditions
• Able to withstand jerks and sudden
movements on dusty roads
• Alternate storage arrangements (ice box for
cold drinks)
• Marketers need to consider the following
factors in packaging:
• Packaging material
• Pack size and convenience
• Packaging aesthetics
 Pack size and Convenience
• Chick Shampoo
• Rasna sachet at Rs.5
• Close up toothpaste and fair and lovely with a
cap
• Parachute oil bottles in Re.1 plastic bottles
 BRANDING IN RURAL INDIA
• The Concept of branding has been a late entrant
in rural markets.
• Consumers have graduated from unbranded to
branded products with the increased affordability
as a result of increasing rural incomes in recent
years.
• Branded consumption now accounts for 80% of
total sales in as many as 18 product categories,
• Brands may be national , regional or local
• The Unusual Trend
– The brand association is mainly with colours, numbers and
visuals and not necessarily with the name of the brand

• Colors : Lal dant Manjan, Lal sabun (Lifebuoy), red

Battery (everady)
• Numbers: 555 detergent bar, 502 Pataka Chai
• Visuals: Ghari detergent, Rath Vanaspati, Bagh Bakri
Tea, 3 Roses Tea,
• Retailers play a major role in brand promotion in
rural areas
• Due to the strong bonding between customers
and retailers, coupled with low brand
awareness, consumers often do not ask for the
product by brand but instead will request the
retailer , “Paanch rupayue waali chai dena”
• And now its up to the retailer to push the brand
that he chooses
• The first mover brands have become generic
brands .
• Clinic Plus, Lifebuoy, Katchua Chaap, Dalda
 Brand Building in Rural Areas
• Brand Name Development
– Name that appeals and easy to remember
– Sampoorna TV, Babool, Ajanta, Sansar sewing
machines
• Creating a Brand Identity
– Need to relate the brand to the rural lifestyle
– Tata steel corrugated sheets – Tata Shakti,
Britannia Tiger Biscuits
• Building a Brand Image
– Brand connection should establish
– It should emote, empathize and talk to its
consumers
– Mahindra & Mahindra – Bhumiputra series of
Tractors and Sarpanch Series
 Brand Spectrum in India
• Brand choices in rural areas are often limited
due to the small market size
• Limited investment capacity available with the
rural retailer
• Some of the biggest urban brands such as
Parle-G, Lifebuoy Active and Lux are also big
draws in rural areas
 Brand Loyalty Vs Stickiness
• Low levels of literacy and awareness make
rural people less likely to switch brands as
they do not have the required knowledge or
information to exercise a choice
• They feel more comfortable in purchasing
tried and tested brands
• They are therefore, brand sticky rather than
brand loyals
• Rural Areas suffer from the problems of low
penetration and poor availability of branded
products
• Although there exists a huge demand for
branded products, there are no distribution
channels to make the product to reach the
customer
• This has led to the growth of spurious brands to
fill this gap in the demand
 Fake Brands
• An ORG MARG retail audit found that for every
100 strips of genuine Vicks Action 500, there
were 54 counterfeit strips sold in the market
• Bond’s for Pond’s
• Fair and Lonely to Fair and Lovely
• Likeboy for Lifebuoy
• Clamic for clinic plus shampoo
• Fighter for Tiger Biscuits
 The Fakes Market
• The entire range of products available into
three distinct categories:
• LOOKALIKES
• SPELLALIKES
• DUPLICATES
 LOOKALIKES
• The colour scheme on the packaging material
closely resembles that of a popular brand but
pack carries a different name
 SPELL ALIKES
• Fakes of original brands packaged in colors'
and designs similar to those of the originals
but have names that are subtly and cleverly
misspell for example

• Paracute for Parachute

• Fare & Lovely for Fair & Lovely
• Pomes for Pond’s
 DUPLICATES
• Exact replicas of original brands
• The colour, design and name on the package
are the same as those of the original brands
 Strategy to Counter Fake
• Several companies have taken recourse to
legal action, many have found that this
strategy brings them negative publicity as
well, with consumers avoiding the brand in
question as it could be a fake
 Structure of Competition in Rural India

• Is very complex and non-uniform

• The competition dynamics change from one
village to another, visible in form of a new
local or regional brand on the shelf competing
with the national brands
• Classification of Competition:
– Other Urban national branded products
• Proliferation of national brands
– Regional Urban Branded Products
• Regional or brands of unorganized sectors like detergent powder,
talcs
– Local Urban Products
• Washing products, confectionery items, ribbons, bangles
– Local Village Products
• Manufactured in village itself- hardware, ropes, fooditems
– Substitute products or indirect competition