A Study on

To analyze the marketing of consumer products (both durable and non durable products) in rural areas
A Dissertation report submitted to the National Institute of Technology, Kurukshetra.

In partial fulfillment of the requirement for the award of the degree of MASTER OF BUSINESS ADMINISTRATION Submitted to:Dr.P.J.Philip CHAIRMAN Submitted By:Rahul Saini 309392 9729799462
DEPARTMENT OF BUSINESS ADMINISTRATION

National Institute of Technology, Kurukshetra (136118) 2009-2011

Students Declaration To analyze the marketing of consumer products (both durable and non durable products) in rural areas. in INDIA is
the result of my own research work for the degree of Master of Business and it has not been submitted earlier by me to this or any other university. I hereby declare that the project repost entitled

Rahul Saini MBA (Final year) NIT (Kurukshetra). Place:- Kurukshetra Date:-

Acknowledgement
Writing a project of this kind is very difficult job. But it could be completed because of the help and support from many corners. It is my desire to mention my fillings about support sources here. Every research, in any field, needs proper guidance of experts and knowledgeable person. I feel immense pleasure in expressing whole hearted thanks towards my project guide for his outstanding guidance, enthusiastic suggestions immensely valuable encouragement throughout the course of the study. Without the pillars of his support and co-operation I could not have even taken a single step towards completion of this project. I would like to express my deepest sense of gratitude toward Chairman Dr.P.J.Philip for their sincere help and constant encouragement. I shall be failing in my duty if I dont acknowledge enormous support and assistance received from my family members throughout this endeavors. Their kind blessings lead me to see these days of achievement and satisfaction. I am also thankful to all my dear friends who motivated me in accomplishing this project work. Last but the foremost important I would like to thank God for sending so many people in my life to help me.

Rahul Saini MBA (Final year) NIT (Kurukshetra 3

INDEX
TOPIC INTRODUCTION RESEARCH METHODOLOGY FINDINGS AND ANALYSIS CONCLUSIONS SUGGESTIONS AND RECOMMENDATIONS APPENDIX BIBLIOGRAPHY PAGE NUMBER 5-42 43-45 46-55 56-58 59 60-66 67

INTRODUCTION
India lives in her villages. As described by Adi Godrej, Chairman , Godrej Group The rural consumers is discerning and the rural market is vibrant . At the current of growth , it will soon outstrip the urban market. The rural market is no longer sleeping but we are. Before gamboling into issues like where the Indian rural market stands and the opportunities for corporates to explore there... let's look at the definition of urban and rural India. The Census defined urban India as - "All the places that fall within the administrative limits of a municipal corporation, municipality, cantonment board etc or have a population of at least 5,000 and have at least 75 per cent male working population in outside the primary sector and have a population density of at least 400 per square kilometer. Rural India, on the other hand, comprises all places that are not urban!"

In our country over 70%of the total population live in villages. There are states like U.P, M.P, Bihar, Rajasthan and Orissa where rural population varies form 8 to9 percent.

Agriculture and agriculture related activities contribute to about 75%of the income in rural areas. 5 inputs like seeds, fertilizers and pesticides, cattle feed and agricultural machinery. More than 50%of the national income is generated in rural India and there are opportunities to market modern goods and services in rural areas and also market agricultural products in urban areas.

Khaitan fans' ad on a horse cart

Wheel's wall painting

We can safely say that until some years ago, the rural market was being given a step-motherly treatment by many companies and advertising to rural consumers was usually a hit and miss affair. More often than not, the agenda being to take a short-cut route by pushing urban communication to the rural market by merely transliterating the ad copy. The company, on its behalf, has also been investing steadily to build their infrastructure to meet the growing needs of the rural market, which reiterates the fact that this multinational has realised the potential of the rural market is going strength to strength to tap the same.

In 2000, ITC took an initiative to develop direct contact with farmers who lived in far-flung villages in Madhya Pradesh. ITC's Echoupal was the result of this initiative. Clearly the main challenge that one faces while dealing with rural marketing is the basic understanding of the rural consumer who is very different from his urban counterpart. Also distribution remains to be the single largest problem marketers face today when it comes to going rural. "Reaching your product to remote locations spread over 600,000 villages and poor infrastructure - roads, telecommunication etc and lower levels of literacy are a few hinges that come in the way of marketers to reach the rural market," says MART managing director Pradeep Kashyap.

INDIA INFRASTRUCTURE
The best barometer of countrys economic standing is measured by its GDP. India, the second most populated country of more than 1100 million has emerged as one of the fastest growing economies. It is a republic with a federal structure and well-developed independent judiciary with political consensus in reforms and stable democratic environment .In 2008-09 Indias economy-GDP grew by 6.5% due to global recession.The Indian economy is expected sustain a growth rate of 8% for the next three years upto 2012. With the expected average annual compounded growth rate of 8.5%, India's GDP is expected to be USD 1.4 trillion by 2017 and USD 2.8 trillion by 2027. Service sector contribute to 50% of Indias GDP and the Industry and agriculture sector 25% each.

Investment Opportunities In Indian Infrastructure

8 The robust current growth in GDP has exposed the grave inadequacies in the countrys infrastructure sectors. The creation of world class infrastructure would require large investments in addressing the deficit in quality and quantity. More than USD 475 bn worth of investment is to flow into Indias infrastructure by 2012. No country in the world other than India needs and can absorb so many funds for the infrastructure sector. With the above investments Indias

infrastructure would be equal to the best in the world by 2017.

Rural Marketing
Rural marketing involves the process of developing, pricing, promoting, distributing rural specific product and a service leading to exchange between rural and urban market which satisfies consumer demand and also achieves organizational objectives. It is a two-way marketing process wherein the transactions can be:

Urban to Rural: A major part of rural marketing falls

into this category. It involves the selling of products and services by urban marketers in rural areas. These include: Pesticides, FMCG Products, Consumer durables, etc.

Rural to Urban: Transactions in this category

basically fall under agricultural marketing where a rural producer seeks to sell his produce in an urban market. An agent or a middleman plays a crucial role in the marketing process. 9

Rural to Rural: This includes the activities that take

place between two villages in close proximity to each

other. The transactions relate to the areas of expertise the particular village has. These include selling of agricultural tools, cattle, carts and others to another village in its proximity. Rural marketing requires the understanding of the

complexities. Indian agricultural industry has been growing at a tremendous pace in the last few decades. The rural areas are consuming a large number of industrial and urban manufactured products. The rural agricultural production and consumption process plays a predominant role in developing the Indian economy. This has designed a new way for understanding a new process called Rural Marketing. Rural marketing scientists also term it as developmental marketing, as the process of rural marketing involves an urban to rural activity, which in turn is characterised by various peculiarities in terms of nature of market, products and processes. Rural marketing differs from agricultural or consumer products marketing in terms of the nature of transactions, which includes participants, products, modalities, norms and outcomes. The participants in case of Rural Marketing would also be different they include input manufacturers, dealers, farmers, opinion makers, government agencies and traders. 10

INDIAN RURAL MARKET:

Sourc Pha se Major Origin Function Products Marke t I Before Mid-1960 (from ind.to green revolu) II MidSixties (Green revolu to Pre-lib period) III MidNineties (Postliberaliz period on 20th century) IV 21st century Developm ental marketing All products & services Urban & Rural Rural Marketing Consuma bles And Durables For Cons.& Productio n Urban & Rural Mkting Of Agricultur Urban Agricultur al Marketing Agricultur al Produce Rural e

Destinat ion Market Urban

Rural

Agr.Inputs al Inputs

Rural

Urban & Rural

 Phase I ( from Independence to Green Revolution):

Before the advent of the Green revolution, the nature of rural market was altogether different. Rural marketing then referred to the marketing of rural products in rural & urban products.

Phase

II

(Green

Revolution

to

Pre-

liberalization period):
During these times, due to the advent & spread of the Green Revolution, rural marketing represented marketing of agriculture inputs in rural markets & marketing of rural produce in urban areas.

Phase III (Post-liberalization period on 20th century):

The third phase of rural marketing started after the liberalization of the Indian economy. In this period, rural marketing represented the emerging, distinct activity of attracting & serving rural markets to fulfill the need & wants

Phase IV (21st century): Learning from its rural

marketing experiences after the independence, the corporate world has finally realized the quick-fix solutions & piecemeal approaches will deliver only limited results in the rural markets.

The objective of rural marketing in the current phase is the improvement of the quality of life by satisfying the needs & wants of the customers, not through atand-alone products or services, 12

RURAL INFRASTRUCTURE:
In the early 2000s, around 700 million people, i.e. 70% of the Indian population lived in 6,27,000 villages, in rural areas. Of this, 90% were concentrated in villages with population less than 2000.3 According to a study conducted in 2001 by the National Council for Applied Economic Research (NCAER), there were as many "middle income and above" households in rural areas as there were in urban areas. There were almost twice as many "lower income households" in rural areas as in urban areas. There were 2.3 million "highest income" households in urban areas as against 1.6 million in rural areas. NCAER projections indicated that the number of "middle income and above" households was expected to grow to 111 million in rural India by 2007, compared to 59 million in urban India.

FMCG
There was a time when the FMCG companies ignores rural market,they took no any interest to produced or sell products in rural market in India.It was the initial stage of FMCG companies in India.As per as the time had passed,the strategy and marketing style of FMCG companies had been changed.

The rural market is the one of the best opportunity for the FMCG sector in the India.It is wider and less competitive market for the FMCG.As the income level of the rural consumers increasing,the demand of FMCG is increasing continuously.

Top Players in FMCG Sector

1.Hindustan lever limited (HLL) 2.ITC (Indian Tobacco Company) 3.Nestle India 4.GCMMF (AMUL) 5.Dabur India 13 Secondary Players 1.Colgate-Palmolive (India)Ltd. 2.Godrej Consumers Product Ltd. 3.Nirma Ltd. 4.Tata Tea Ltd. 5.Parle Agro Rural consumers spend around 13 per cent of their income, the second highest after food (35 per cent), on fast moving consumer goods (FMCG), as per a RMAI study. The FMCG sector saw rural markets post 20 per cent growth, ahead of the 17-18 per cent growth from urban India, aided by three years of good monsoon, higher prices of farm produce and farm-loan waiver.

Retail
The rural retail market is currently estimated at US$ 112 billion, or around 40 per cent of the US$ 280 billion retail market. Major domestic retailers like AV Birla, ITC Reliance and many others have already set up farm linkages. Hariyali Kisan Bazaars (DCM) and Aadhars (Pantaloon-Godrej JV), Choupal Sagars (ITC), Kisan Sansars (Tata), Reliance Fresh.

Pharmaceuticals

According to a report by McKinsey, the rural and tier-II pharma market will account for almost half of the growth till 2015. The tier-II market will grow to 44 per cent by 2015, amounting to US$ 8.8 billion. This growth will be further augmented with the government increasing the allocation under National Rural Health Mission (NRHM) by US$ 424.3 million over interim budget estimate 2009-10 of US$ 2.49 billion. .

Telecommunication
A Gartner forecast revealed that Indian cellular services revenue will grow at a compound annual growth rate (CAGR) of 18.4 per cent to touch US$ 25.6 billion by 2011, with most of the growth coming from rural markets. 14

In a bid to acquire rural subscribers, most Indian telecom operators have started investing in infrastructure to roll out their services in these areas. Realising this as a huge potential, small Indian handset manufacturing companies, including Micromax, Intex Technologies and Karbonn, have lined up a marketing spent of around US$ 21.02 million for the financial year 2009-10.

Automobiles
For the auto industry, semi-urban and rural markets contribute close to 40 per cent of sales, led by demand for two-wheelers, entry-level cars and tractors. Significantly, car sales grew 8.3 per cent in June 2009, aided by rising demand in semi-urban and rural markets. Mahindra & Mahindra is bullish on the rural and semi-urban markets, with its utility vehicle, Scorpio clocking 60-65 per cent sales from the rural markets as against 20 per cent earlier. TVS Motor also registered around 50 per cent of its sales from the rural and semi-urban markets. 15

Consumer durables
A survey carried out by RMAI has revealed that 59 per cent of durables sales come from rural markets. Whirlpool, is eyeing rural markets in India for its next phase of growth. The company is set to tap markets with a population between 100,000 and 500,000 in the first phase, and in the next phase, will look at expanding the base in villages with a population of 50,000.

Nature of Rural Market

Large, Diverse and Scattered Market

Major Income of Rural consumers is from Agriculture

Standard of Living and rising disposable income of the rural customers Traditional Outlook
16

Rising literacy levels

Diverse socioeconomic background

Infrastructure Facilities

Some Myths:
Myth-1: Rural Market Is a Homogeneous Mass
Reality: Its a heterogeneous population. Various Tiers are present depending on the incomes like Big Landlords; Traders, small farmers; Marginal farmers: Labors, artisans. State wise variations in rural demographics are present viz. Literacy (Kerala 90%, Bihar 44%) and Population below poverty line (Orissa 48%, Punjab 6%).

Myth-2: Disposable Income Is Low

Reality: Number of middle class HHs (annual income Rs 45,000- 2, 15,000) for rural sector is 27.4 million as compared to the figure of 29.5 million for urban sector. Rural incomes CAGR was 10.95% compared to 10.74% in urban between 1970-71 and 1993-94.

Myth-3: Individuals Decide About Purchases

Reality: Decision making process is collective. Purchase process- influencer, decider, buyer, one who pays can all be different. So marketers must address brand message at several levels.Rural youth brings brand knowledge to Households (HH).

17

Is rural marketing transactional or developmental in its approach?

It is true, rural markets have become an attractive

proposition for commercial business organizations. The role of rural marketing as such is more developmental than transactional. It is more a process of delivering better standard of living and quality of life to the rural environment taking into consideration the prevailing village milieu.

Transactional Vs Developmental:

For better

comprehension of this role let us distinguish development marketing and transactional marketing. Table brings out the differences in brief.

Transactional Vs Development Marketing

S.N o 1. Concept Consumer orientation, Marketing concept 2. Role Stimulating and conversional marketing 3. 4. Focus Key task Product-market fit Product Social change Social innovations and Catalytic and transformation agent Society orientation, societal concept Aspect Transactional Development

innovations and communications 5. 6. Nature of activity Participants Corporate enterprises, Sellers 7. Offer Products and services 8. 9. 10. Target group Communicati on Goal Profits, Customer satisfaction Brand image 11. 12. Time-Frame Motivation Short-medium Profit-motive Business policy Buyers Functional Commercial

communications Socio-cultural, economic Government, voluntary agencies, corporate enterprises, benefactors Development, projects/schemes/prog rams Beneficiaries and buyers Developmental Market development Corporate Image Medium-Long Service-motive Ideological or Public policy

19

Model:

The model of rural marketing represents a of the transactional and developmental

combination approaches.

Rural marketing process is both a catalyst as well as an outcome of the rural development process. Initiation and mgt of social and economic change in rural sector is core of rural marketing process

Innovation is the essence of marketing. Innovative methods of social change for successful transformation of traditional society are virtual. Such a change narrows the rural-urban divide. The process of transformation can be only evolutionary and not revolutionary. The growth of the rural market can be a planned evolutionary process based on strategic instruments of change rather than constitute just short-term opportunities for commercial gains. The exposure of ruralites to a variety of marketing transactions during the change process puts them in the role of beneficiaries than of just `buyers' of modern inputs and infrastructural services. Communication is the vital element of rural marketing. It should serve to resolve social conflicts, encourage cooperation and strengthen competitive spirit during interactions between rural and urban as well as within rural areas.

20

Classification of rural consumers

The rural consumers are classified into groups based on economic status:

The Affluent Group: They are cash rich farmers

and a very few in number. They have affordability but not form a demand base large enough for marketing firms to depend on.

The Middle Class: This is one of the largest

segments for manufactured goods and is fast expanding. Farmers cultivating sugar cane in UP and Karnataka fall in this category.

The

Poor:

This

constitutes

huge

segment.

Purchasing power is less, but strength is more. They receive the grants from government and reap the benefits of many such schemes

Roadblocks of Indian Rural Market

The major problems are listed below.

Standard of living

Low literacy levels Low per capita income Ineffective distribution channels

Transportation and warehousing

Many languages and diversity in culture Lack of communication system

21

Spurious brands

Large Population

Rising Rural Propensity:

Income Group Above 200001 Rs. 1.6 2005 -06 3.8 4.7 13.0 41.1 37.4 200809 5.6 5.8 22.4 44.6 20.2

100,000 Rs. 77,001- 2.7 100,000 Rs. Rs. 50,001- 8.3 25,001- 26.0 77,000 50,000 Rs.25,000 & 61.4

below 22 Thus we see that population between income level of Rs. 25,000- 77,000 will increase from 34.3% in 1994-95 to 67.0% in 2006-07. The rural consuming class is increasing by about 3-4% per annum, which roughly translates into 1.2 million new consumers yearly.

Growth in consumption: Per capita household expenditure (in Rs.)

Level N o. Punjab Kerala Haryana High (Above 382/-) Rs 7 Rajasthan Gujarat Andhra Pradesh Maharashtr 384 a Average (Rs. 382/-) 5 West Bengal Orissa 381 382 States Expendit ure 614 604 546 452 416 386

Tamil Naidu Uttar Pradesh Karnataka Low (Below 382/-) Rs. 3 Assam Madhya Pradesh Bihar

381 373 365 338 326 289

Distribution

households

income

wise

(projection in Rs Crore) 2001 02 Income groups Rural Tot al High Middle Low Total 0.26 12.0 4 5.7 18.0 4 No. % 0.0 7 7.7 3 5.0 9 12. 89 2006 07 Rural Tot al No. % 0.1 2 10. 32 3.5 2 13. 96 0 2 23 .1 61 .8 95 .7 66 .7

26 0.52 .9 64 16.7 .2 .7 71 20.9 .4 88 3.68

Spending pattern (Rural Households in Rs.)

Item % Ric Po h Food Articles 4 14 4 7 Toiletries Washing Material Cosmetics Otc Products Others Total 2 0 1 3 1 0 67 43 33 or 73 33 22 17 6 15 Avera ge 95 43 28 21 9 19

4 13 9 30 33 3

166 215

Average rural household spends on consumables excluding food grains, milk & vegetables are Rs. 215/-.

Life style changes:

Income vs. usage of packed consumer goods (% of household using) 25 Goods Monthly household income (Rs.) Up to 351 751 150

350 Washing Cakes/Bars shampoos Tooth Paste/Powder bathing soaps Tea (Packaged) 20 22 57 22 60

750 78 72 36 25 30

1500 86 89 65 41 48

1+ 91 93 85 63 64

Life cycle advantage: Stages in life cycle

Product Urban Market Growth Rate % Popular soaps Premium soaps Washing powder Skin creams Tea Maturit y Late growth Late growth Maturit y Maturit 4 Growth 1.1 6 11 Early growth Early growth Growth 2 Growth Rural

Market growth rates higher: Growth rates of the

FMCG market and the durable market are higher in rural areas for many products.

Rural marketing is not expensive: Conventional

wisdom dictates that since rural consumers are dispersed, reaching them is costly. However, new research indicates that the selling in Rural India is not expensive.

Remoteness

is

no

longer

problem:

Remoteness in a problem but not insurmountable. The rural distribution is not much developed for the reasons, Lack of proper infrastructure such as all-weather roads, electrification and sanitation, and Lack of marketers imagination and initiative. Marketers have so far, failed in analyzing the rural side and exploiting rural Indias traditional selling system- Haats & Melas

Rural Vs Urban Marketing

N o. 1 Philosophy Marketing & Societal Concepts & Relationship Marketing & Societal Concepts, Development Aspect Urban Rural

Marketing

Marketing & Relationship Marketing

Market Demand Competition High Among Units In Organized Sector Consumers Location Literacy Income Expenditure Needs ption Concentrated High High Planned, Even High Level Widely Spread Low Low Seasonal, Variation Low Level Slow Low Mostly From Unorganized Units

Innovation/Ado Faster 3 Product Awareness Concept Positioning Usage Method Quality Preference High Known Easy Easily Grasped Good

Low Less Known Difficult Difficult Grasp Moderate To

Price Sensitive level desired Yes Medium-high Very much Medium-low

distribution Wholesalers, stockists, retailer, channels supermarket, specialty stores, & authorised Transport Facilities Product Availability showrooms Good High Average Limited Village shops, Haats

Promotion Print, audio visual media, Advertising outdoors, exhibitions etc. few languages Personal Selling Sales Promotion Door-to-door, frequently Contests, gifts, price discount Gifts, price discounts Occasionally TV, radio, print media to some extent. More languages

Publicity

Good opportunities

Less opportunities

CONSUMER BEHAVIOR IN RURAL MARKETS:

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. Indian Marketers on rural marketing have two understanding (I) The urban metro products and marketing products can be implemented in rural markets with some or no change. (ii) The rural marketing required the separate skills and techniques from its urban counter part. (i) The rural market has the opportunity for. (ii) Low priced products can be more successful in rural markets because the low purchasing, purchasing powers in rural markets. (iii) Rural consumers have mostly homogeneous group with similar needs, economic conditions and problems.

30

RURAL CONSUMER PREFERENCES:

In order to assess the buyer behavior towards certain critical aspects of marketing, the preferences of consumers is directly related to: Price Quality Credit

 Variety Dealer advice

PURCHASE BEHAVIOR:
Rural people can buy only from three places includes: From the shop in the same village Weekly bazaar From the shop of nearby town.

Factors influencing buying behavior

The various factors that affect buying behavior of in rural India are:

Environmental of the consumer Geographic influences Family Economic factors

Place of purchase

Creative use of product

Brand preference and loyalty

31

Cultural factors influencing consumer behavior

few cultural factors that influence buyer behaviour are:

Product (colour, size, design, and shape): There

are many examples that support this point. For example, the Tata Sumo, which was launched in rural India in a white colour, was not well accepted. But however, when the same Sumo was re-launched as Spacio (a different name) and in a bright yellow colour, with a larger seating capacity and ability to transport good, the acceptance was higher.

Social practices: There are so many different

cultures, and each culture exhibits different social practices. For example, in a few villages they have common bath areas. Villagers used to buy one Lifebuoy cake and cut it into smaller bars. This helped lifebuoy to introduce smaller 75-gram soap bars, which could be used individually.

Decision-making by male head: The male in

Indian culture has always been given the designation of key decision maker.

Changes

in

saving

and

investment

patterns: From gold, land, to tractors, VCRs, LCVs

32

4 As approach of Indian Rural Market

The rural market may be appealing but it is not without its problems: Low per capita disposable incomes that is half the urban disposable income; large number of daily wage earners, acute dependence on the vagaries of the monsoon; seasonal consumption The more daring MNCs are meeting the consequent challenges of availability, affordability, acceptability and awareness (the so-called 4 As)

Availability
The first challenge is to ensure availability of the product or service. India's 627,000 villages are spread over 3.2 million sq km; 700 million Indians may live in rural areas, finding them is not easy

Affordability
The second challenge is to ensure affordability of the product or service. With low disposable incomes, products need to be affordable to the rural consumer, most of who are on daily wages.

Acceptability
The third challenge is to gain acceptability for the product or service. Therefore, there is a need to offer products that suit the rural market. Awareness

Brand awareness is another challenge. Fortunately, however, the rural consumer has the same likes as the urban consumer 33

Evolving a New Marketing Mix for Selling to Rural Indians

The marketing mix in the case of Indian rural markets consists of 4Ps i.e. Product, Price, Promotion, Place combined with 1 P that is Packaging and one R i.e. Retailer as special focus areas. However, at the base of this marketing mix will be 2 Es of Education and Empowerment. EMPOWEREMENT EDUCATION CUSTOMIZATION The traditional marketing hypothesis tends to ignore the requirement of a developing countrys rural needs. The concept of marketing has to be taken in conjunction with economic, psychological and social implications. Hence, the concept of Mega-Marketing where all such factors are taken into consideration 12.2% of the world lives in Rural India. Put in a different context, this works out to 1 in 8 people on Earth. Being able to successfully tap this growing market is every marketers dream. However, myths abound. Indias rural markets are often misunderstood. A clear distinction needs to be made

with regard to the reality versus the image of rural 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. It is therefore essential to develop an accurate Marketing Mix for selling to rural Indians.

Product

34

Authentic marketing is the art of identifying and understanding customer needs and creating solutions that deliver satisfaction to the customers, profits to the producers and benefits for the stakeholders. ................... Philip Kotler The product offerings have to be not only customized but also at a different plane altogether in case of rural markets. The various product levels as outlined by Philips Kotler, namely Core Benefit, Basic Product, Expected product, augmented product and Potential Product should be adequately taken into consideration and the product offerings should be henceforth customized according to the needs.

Pricing
A significant portion of the rural population is paid in daily wages. Daily wage earners tend to have little stock of money, and therefore tend to make purchases only to meet their daily needs. The implication is that pack sizes and price points are critical to sales, and importantly, that rural consumers view the purchase-tradeoff dilemma across a much wider range of product categories.

Promotions & Advertising

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. Another unique feature of rural markets is that the Decision making process is collective. The persons involved in the purchase process influencer, decider, buyer, one who pays can all be different.

35
So marketers must address brand messages in their campaigns at several levels.There are other attributes in the promotion strategy which are explained as under: 1. Mass media: In the present world mass media is a powerful medium of communication. The following are the mass media generally used: Television. Cinema. Radio

Print media: Handbills and Booklets, posters, stickers, banners, etc.

2. Personal

selling

and

opinion

leaders:

In

personal selling it is required that the potential users are

identified and awareness is created among them about the product, its features, uses and benefits. This can be achieved only by personal selling by highly motivated sales person. In fact the word of mouth information holds lot validity in rural areas even today. This is the reason why opinion leaders and word of mouth are thriving among rural consumers 3.

Special

campaigns: During crop harvest and

marketing seasons it is beneficial to take up special promotion campaigns in rural areas. Tractor owners (tonee) conducted by MRF Limited is one such example. Brooks Bond carries out marches in rural areas with band, music and caparisoned elephants to promote their brand of tea.

Mandi and Mela magic

36

At last count, India witnessed 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.

Place

place is the major reason behind the evolution of rural marketing as a distinct discipline. A village as a place for promotion, distribution & consumption is very different from a town or city, thus the general marketing theories cant be applied directly in rural markets.

Significance of Distribution
No matter how well devised a companys product, pricing or promotion strategy, the most crucial link in ensuring the success of rural marketing efforts is distribution. Distribution must be strengthened and this would raise investment cost barriers for new entrants. 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 approximately 3 million retail outlets.

37

The distribution of outlets however shows that a marketer need not be present in all markets at all times Rural wealth and demand is concentrated typically at satellite towns, assembly markets

Haats
Haats are the nerve centre of Rural India. They are a readymade distribution network embedded in the fabric of rural society for over 1000 years. They have been held on a regular basis across the length and breadth of the country for over 1000 years. Right from time of Chandragupta

Maurya, Haats are asplace for social, cultural and economic interchange. 38

MARKETING STRATEGIES TO CAPTURE RURAL INDIA

SEGMENTATION OF RURAL MARKET BY PROPER COMMUNICATION IN INDIAN LANGUAGE BY TARGET CHANGING PERCEPTION BY UNDERSTANDING CULTURAL AND SOCIAL VALUES BY PROVIDING WHAT CUSTOMER WANT BY PROMOTING PRODUCTS WITH INDIAN MODELS AND ACTORS BY ASSOCIATING THEMSELVES WITH INDIA BY PROMOTING INDIAN SPORTS TEAM BY TALKING ABOUT A NORMAL INDIAN BY DEVELOPING RURAL-SPECIFIC PRODUCTS BY GIVING INDIAN WORDS FOR BRANDS BY ACQUIRING INDIAN BRANDS

 BY EFFECTIVE MEDIA COMMUNICATION BY ADOPTING LOCALISED WAY OF DISTRIBUTING BY ASSOCIATING THEMSELVES WITH INDIAN CELEBRITIES
39

Product Strategies
1. Small unit packing 2. New product designs 3. Sturdy products 4. Utility oriented products 5. Brand name

Pricing strategies
1. Low cost/ cheap products 2. Refill packs / Reusable packaging 3. Application of value engineering 4. Large volume-low margins (Rapid or slow

penetration strategy)

5. Overall efficiency & passing on benefits to

consumers
6. Low volume-low price strategy 7. Ensuring price compliance

40

Promotion strategies
The following strategies can be considered while developing promotional campaigns for the rural markets:

Think Global Act Local Think in Local Idiom Simplicity & Clarity Narrative Story Style Choice of Brand Ambassador

Distribution Strategy
Many companies view the rural markets as great opportunity for expanding their sales but find distribution as a major problem it is almost impossible to transplant strategies

which work successfully in urban markets onto rural markets. The road blocks to reach the rural customers are: Lack of adequate transport facilities. Large distances between villages. Lack of pucca roads connecting villages to nearest townships. Lack of proper retail outlets Lack of mass media infrastructure.

41 The following distribution strategies formulated for the rural category. 1. Coverage of villages with 2000 and above

population
2. Segmentation 3. Use of co-operative societies 4. Utilization of public distributory system 5. Utilization

of

multipurpose

distribution

centers by petroleum/oil companies

6. Distribution up to feeder markets 7. Shandies/Haaths/Jathras/Melas

8. Agricultural Input Dealers 9. Joint distribution by Non-competing

Companies
10. Personal Selling Network

42

RESEARCH METHODOLOGY
OBJECTIVES OF THE STUDY:
Any task without sound objectives is like Tree without roots. Similarly in case of any research study undertaken, initially the objectives of the same are determined and accordingly the further steps are taken on. A research study may have many objectives but all these objectives revolve around one major objective which is the focus of the study. In this study, the focus is on the emergence of Rural markets as the most happening market on which every marketer has an eye. And so this study will be based on studying the emergence of rural market in various contexts.

The main objective of the study is to analyse and present the marketing of consumer products in rural areas. The following objectives have been set forth. They are to: Present a rural marketing perspective. Present a profile of Indian Rural market.

Study and analyse the consumer behavior in rural areas. Examine the product and brand penetration in rural markets. Analyze marketing of consumer product in rural markets. Present marketing strategy frame for marketing consumer products in rural areas.

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SCOPE OF THE STUDY:

The study is restricted to selected districts of UTTAR PRADESH. Further, product and brand penetration is examined. As regards marketing of consumer products in rural areas, the study analyzes products from non durable category ( a bathing soap, detergents, tea, coffee, shampoo) and from durable category ( a wrist watch, television, refrigerator, fan and bicycle).

Data collection
Sample unit:
1. working people (including men &women), basically farmers. 2. college students 3. school students 4. senior citizen

Sample size:
1. 2. 3. 4. working people:32% college students:29% school students:23% senior citizens:16%

Sampling region:
I have selected uttar pradesh, of Uttar Pradesh as the area of study. I have chosen BHOWAPUR, MORTI, SHAHPUR and ATTOR as areas of research. The population status of these areas can be shown in a tabulated manner, which is given as follows:

Area Population
BHOWAPUR MORTI SHAHPUR ATTOR

44 2500 3000 5000 4000

Data collection method:

1.Primary data: it will be collected with the help of a self
administered questionnaire. This questionnaire aims to gather information related to various Branded products.

Questionnaire design:
As the questionnaire is self administrated one, the survey is kept simple and user friendly. Words Used in questionnaire are readily Understandable to all respondent. Also technical jargons are avoided to ensure that there is no confusion for respondents.

2.Secondary data: it will be collected with the help of

books, research papers, magazines, news papers, journals, Internet, etc.

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FINDINGS AND ANALYSIS

Which soap u prefer to use?

The reaction of people towards various SOAP brands can be tabulated in the following manner:

BRANDS PERCENTA GE

LUX 36

DETTOL 18

LIFEBUOY 22

OTHERS 24

In the survey, it could easily be concluded that LUX, the product of HUL was highly in demand. LUX, the product of HUL covers 36%of the market share. After LUX, the other brands (EXCEPT LUX, DETTOL, LIFEBUOY) covers 24%of the market share. This is then followed by LIFEBUOY, the product of HUL with a market share of 22%,which is then followed by DETTOL, the product of RECKITT BENCKISER with a market share of 18%. This data can be graphically explained with the help of the following bar graph:

Which pack u prefer to use?

In order to determine the income pattern of the consumers, it was necessary for the researcher to distribute the consumers on the basis of their demand for the various packs of SOAP brands available in the market. However, the reaction of people towards various packs of SOAP can be tabulated in the following manner: PACK OF SOAPS PERCENTAGE SINGLE PACK 56 FAMILY PACK ( 3 IN 1) 44

In the survey, I tried to differentiate amongst people with below average household income, average household income &above household income. This classification can be done on the basis of the daily expenditure that people make.56% consumers demand single pack.44% consumers demand family packs i.e.3 in 1 pack. This data can be graphically explained with the help of the following bar graph:

 Which tea u prefer to use? The reaction of people towards various TEA brands can be tabulated in the following manner: BRANDS PERCENTA GE TATA TEA 32 BROOKE BOND 28 TAJ MAHAL 18 OTHERS 22

In the survey, it could easily be concluded that TATA TEA, the product of TATA has a market share of 32%.This is followed by, BROOKE BOND, with a market share of 28%.Followed by other brands (EXCEPT TATA TEA,BROOKE BOND,TAJ MAHAL)with a market share of 22%.This is finally followed by TAJ MAHAL, the product of HUL which holds18%of the market share. This data can be graphically explained with the help of the following bar graph:

 Which tea pack u prefer to use? In order to determine the income pattern of the consumers, it was necessary for the researcher to distribute the consumers on the basis of their demand for the various packs of TEA brands available in the market. However, the reaction of people towards various TEA packs can be tabulated in the following manner: TEA PACKS PERCENTAGE SACHET 48 MEDIUM PACK 32 LARGE PACKS 20

In the survey, I tried to differentiate amongst the people, with below average household income, average household income & above household income. This classification can be done on the basis of the daily expenditure that people make. However, it can be concluded that sachets are most

commonly used by the people .i.e. 48%consumers demand sachet packs. 32%consumers demand medium pack. 20%consumers demand large pack. This data can be graphically explained with the help of the following diagram:

Which tooth paste u prefer to use? In the initial years, the rural consumers preferred tooth powders, datoons etc. But from the last decade, the preference of consumers towards toothpaste has been changed. A huge number of toothpastes of different companies are sold in rural market. However, the reaction of people towards various TOOTH PASTES can be tabulated as follows: BRANDS PERCENTA GE PEPSODENT COLGATE 27 35 CLOSE UP 22 OTHERS 16

In the survey that the researcher conducted, it could easily be seen that COLGATE, the product of COLGATE PALMOLIVE is the market leader, which covers 35%of the total market.

After that, PEPSODENT, the product of HUL is demanded by the customers, which covers 27%of the market share. Followed by CLOSE UP, the product of HUL is demanded by the customers, which covers 22%of the market share. Which is then followed by others brands (EXCEPT PEPSODENT, COLGATE, CLOSE -UP), which covers 16%of the total market share. This data can be graphically explained with the help of the following bar graph:

Which coffee u prefer to use? The reaction of people towards various COFFEE brands can be tabulated in the following manner: BRANDS PERCENTA GE BRU 26 NESTLE 32 NESCAFE 32 OTHERS 10

In the survey, it can be easily concluded that all the brands are facing tough competition. NESTLE, the product of NESTLE S.A.& NESCAFE, another product of NESTLE S.A., shares equal market share of 32%each.This means that they are in a very tough

competition. This is followed by BRU, the product of HUL which holds, 26%of the market share. While the other brands hold only 10%of the market share. This data can be graphically explained with the help of the following bar graph:

Which cream u prefer to use? The reaction of people towards various CREAM brands can be tabulated in the following manner: BRANDS PERCENTA GE PONDS 28 FAIR & LOVELY 32 AYUR 14 OTHERS 26

In the survey, that I conducted, it can easily be concluded that FAIR &LOVELY, the product of HUL, holds the major market with a share of 32%.This is followed by, POND s, another product of HUL, which holds 28%of the market share. This is followed by, other brands (EXCEPT, PONDS, FAIR &LOVELY &AYUR), which captures 26%of the market share. This is followed by AYUR, the brand of AYUR ACADEMY OF NATURAL BEAUTY (AANB) which holds 14%of the total market share. This data can be graphically explained with the help of the following bar graph:

which hair oil u prefer to use? The reaction of people towards various HAIR OIL brands can be tabulated in the following manner: BRANDS PERCENTA PARACHUT E 37 DABUR AMLA 29 DABUR VATIKA 19 OTHERS 15

GE In the survey, it can easily be concluded that PARACHUTE, the product of MERICO captures 37%of the total market share. This is followed by DABUR AMLA, the product of DABUR which captures 29%of the total market share. This is followed by DABUR VATIKA, another product of DABUR which captures 19%of the market. And after that, followed by other brands (EXCEPT PARACHUTE, DABUR AMLA, DABUR VATIKA) captures 15% of the market share. This data can be graphically explained with the help of the following bar graph:

Which biscuits u prefer to use? The reaction of people towards various BISCUITS brands can be tabulated in the following manner: BRANDS MARIE GOLD GOOD DAY PARLE G OTHERS

PERCENTA GE

24

21

38

17

In the survey, it can easily be concluded that PARLE-G, the product of PARLE , holds a major market share of 38%.This is followed by MARIE GOLD, a product of BRITANNIA which holds 24%of the market share. After that, GOOD DAY, another product of BRITANNIA, holds 21%of the market share. This is followed by other brands (EXCEPT MARIE GOLD, GOOD DAY, PARLE-G) which hold a market share of 17%. This data can be graphically explained with the help of the following bar graph:

Which detergent u prefer to use? The reaction of people towards various DETERGENT brands can be tabulated in the following manner:

BRANDS PERCENTA GE

SURF 27

RIN 35

TIDE 22

OTHERS 16

In the survey, it could be easily concluded that RIN, the product of HUL captures 35%of the total market share. This is followed by SURF, the product of HUL which has a market share of 27%.This is followed by TIDE, the product of PROCTER & GAMBLE which has a market share of 27%.This is finally followed by other brands (EXCEPT SURF,RIN,TIDE)which captures 16%of the market share. This data can be graphically explained with the help of the following bar graph:

Conclusions
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. The rural market is very large in compare to the urban market as well as it is more challenging market. The consumer wants those products which are long lasting, good, easy to use and cheaper. The income level of rural consumers is not as high as the income level of urban consumers thats why they want low price goods. It is one of the reasons that the sell of sachet is much larger in the rural area in all segments. It is necessary for all the major companies to provide those products which are easy to available and affordable to the consumers. It is right that the

profit margin is very low in the FMCG products, but at the same time the market size is much large in the rural area. The companies can reduce their prices by cutting the costs on the packaging because the rural consumers dont need attractive packaging. Application of 4A* is also a major task for the major companies in this area.

56 Rural market has an untapped potential like rain but it is different from the urban market so it requires the different marketing strategies and marketer has to meet the challenges to be successful in rural market. In this report, it can very easily be concluded that HUL, holds major portion of the FMCG market. It holds major shares in the soap, detergent, shampoo & cream s category. HULs products are mainly in demand, because they provide these products in different packs. They consider the fact that rural consumers do not have that much money to be spent on these products. So, they prefer buying the small or the medium packs. However, large or family packs are still been bought by few consumers, who are from a well off families. In the case of TEA, TATA holds a major share. In the case of COFFEE, NESTLE & NESCAFE holds the major share. Rural consumers favor TATA because it is an old organization &it has gained a lot of BRAND EQUITY which finally creates BRAND LOYALTY. In these products, consumers do get brand loyal, because they do not want to take a risk with their tastes. So they prefer sticking to one

brand. These organizations supply their products in various packs (small, medium &large), considering the buying capacity of their consumers. As in the case of BISCUITS, PARLE-G holds the major market share. Rural consumers favor PARLE-G because it is an old organization & it has gained a lot of BRAND EQUITY which finally creates BRAND LOYALTY. In case of BISCUITS, consumers do get brand loyal, because they do not want to take a risk with their tastes. So they prefer sticking to one brand. Though it is the cheapest biscuit but still the taste is same and unique. ACHA, SASTA AND TIKAU. In the case of TOOTH PASTES,COLGATE PALMOLIVE holds a major market share. Consumers are very concerned about their health, 57

them they prefer sticking to that product. And this product is also available in various packs, so rural consumers can se it according to their buying capacity. In the case of HAIR OILS,MERICO holds the major market share. MERICO is a much known organization & its product PARACHUTE has reached all the places. So it is a known product, which has created a good amount of goodwill for the organization. Consumers have confidence & trust in their product. Therefore, they prefer buying it. And in the case of durable goods like tv, fan etc. in rural areas people generally dont buy the company products, they prefer to buy local products because of lack of knowledge and the main factor is because of income

factor, which is quite low in rural areas. Illiteracy is also a main factor. For them there is no such thing status symbol. Although, there is a brand loyalty but the percentage is very low.

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Suggestions &recommendations
The researcher would like to suggest the following points, so that the organizations can easily sell their products to their consumers: 1.However,the demand of a product is also affected by its life cycle. If the product is in the introduction stage, then it will definitely take some time to capture the market, because in the introduction stage, consumers are not much aware about the product. Therefore, it is the responsibility of the organization to create awareness amongst the consumers.

2.They should adapt rigorous marketing strategies, in order to sustain in the market. 3.There is immense competition in this sector. Therefore, the organizations should try to gain competitive advantage against their competitors. 4.They should try to reach as many people as possible. 5.For the organizations that are not much popular amongst the consumers, should adopt Sales Promotion, as their marketing strategies. 6.Application of 4A s has also become an important task for all the organizations. (*4A=Availability, Affordability, Acceptability, Awareness)

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APPENDIX
1. Some Facts about the rural market 70 % of Indias population lives in 627000 villages in rural areas. 90 % of the rural population is concentrated in villages with a population of less than 2000. 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. Packaged consumer products: More than Rs. 2000 crores

Market for Non-food items: Rs. 20000 crores growing at 2.5% p.a. Consumption of pesticides: 68,000 tonnes, growing at 12%p.a. Share of Rural market in overall consumption Toiletries Safety Razor Blades Premium Soaps Tooth Paste Hair Oil OTC products Medicated dress Cold Analgesic Antiseptic Creams 48% 24% 20% 20% 25% 42% 28%

2.) Product Adoption: Hair products were introduced to rural India in an attempt to capitalize on a culture where hair grooming is taken extremely seriously by women. While rural women may wear faded saris and little jewelry, few step out without ensuring that their hair is in place. Consumer goods companies introduced a transplanted product from developed markets, the 2-in-1 shampoo/conditioner 60 used shampoo and did not value or understand the full benefits of conditioner. However, several years back, Hindustan Lever focused on product development strategies for rural consumers who still did not use shampoo in India. Their research indicated that a prevailing consumer habit in rural India was to use soap for hair and body care. Rather than try to change instilled consumer behavior, product developers focused on creating an opportunity. Consumers wanted a product that was convenient and low-cost. The result was a new 2-in-1 soap, a product that cleans the hair and body, and is targeted towards consumers in rural areas.

SOME STRANGE FACTS

Amazing innovator With a queer psychology of purchase and usage, Indian rural market is still a puzzle to marketers. In many a case, it stretches its imagination to find surprisingly different uses of some of the products. And the red-faced marketers admit that they actually sell their products in areas they would otherwise find difficult, simply because there are other uses for them. For instance, Buffaloes displayed at the haats for sale are dyed an immaculate black with Godrej hair dye. Horlicks is used as a health beverage to fatten up cattle in Bihar. In villages of Punjab, washing machines are being used to make frothy lassi in bulk. Iodex is rubbed into the skins of animals after a hard day's work to relieve muscular pain. 3.) Communication Adaptation: Both, washing and for taking bath - one requires water. Now for rural markets there are three sources of water - wells, handpumps and ponds. For the first in the history of advertising - these were branded. Special stickers were put on the handpumps, the walls 61 of the wells were lined with advertising tiles and tinplates were put on all the trees surrounding the ponds. The idea was to advertise not only at the point of purchase but also at the time of consumption. This case shows that the brand was some how relating to the consumer. It was right there when the consumer wants it and responds to his needs when wanted.

So the customer could also see the advertising when he was bathing or washing. Now, the customers who bought these brands got a sense of satisfaction by seeing their choice being advertised in these places while a question was put in the minds of the customers who had bought other brands.

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Questionnaire
name: occupation: monthly salary: a.less than 10,000

b.10,000 25,000 c.25,000 50,000 d.More than 50,000 address:

Which soap u prefer to use? Lux Lifebuoy Dettol Others

Which pack u prefer to use? Medium pack Family pack

Which tea u prefer to use? Taj mahal Tata tea Brooke bond Others Which tea pack u prefer to use? Sachet Small pack Medium pack Which tooth paste u prefer to use? Colgate Close up

 Pepsodent Others Which coffee u prefer to use? Nestle Nescafe Bru Others Which cream u prefer to use? Ponds Fair and lovely Ayur Others which hair oil u prefer to use? Parachute Dabur amla Dabur vatika Others Which biscuits u prefer to use? Good day Marie gold Parle G Others Which detergent u prefer to use? Surf Rin Tide Others Which shampoo u prefer to use? Sunsilk Head and shoulders Clinic plus

 Others Which pack u prefer to use? Sachet Small pack Medium pack Which Television you prefer to use ? Onida Beltek Crown others Which bicycle you prefer to use? Avon Atlas Hero Others Which refrigerator you prefer to use? Videocon Kelvinator Godrej Others Which wrist watch you prefer to use? Titan Hmt Maxima Others Which fan you prefer to use? Local fans Khaitan Polar 66

BIBLIOGRAPHY

 UTTAR PRADESH DEVELOPMENT AUTHORITY

http://business.mapsofindia.com/rural-economy/statedevelopment/marketing.html http://www.ibef.org/economy/ruralmarket.aspx http://en.wikipedia.org/wiki/Rural_markets http://www.indianmba.com/Faculty_Column/FC213/fc21 3.html http://www.123eng.com/forum/viewtopic.php?p=76117

http://ezinearticles.com/?Challenges-In-RuralMarketing&id=1092597 http://www.infibeam.com/Books/info/t-pgopalaswamy/rural-marketing-environment-problemsstrategies/9788125916178.html http://www.naukrihub.com/india/fmcg/ http://www.naukrihub.com/india/fmcg/overview/

http://www.naukrihub.com/india/fmcg/consumerclass/income/ 67