ASSIGEMENTS RURAL MARKETING SOLVED QUESTION

SUBMITTED TO

MR.PETER BRIAN BENJAMEN ASSISTENT PROFESSOR ST. JOSEPH ENGINEERING COLLEGE VAMANJOOR

SUMITTED BY

AKSHAYA RAO 2ND YEAR MBA ST. JOSEPH ENGINEERING COLLEGE VAMANJOOR

SUMITTED ON

8/6/2013

1.

Define Rural Marketing.

Ans: 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: i. 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. ii. 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. The following are some of the important items sold from the rural to urban areas: seeds, fruits and vegetables, milk and related products, forest produce, spices, etc. iii. 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.

2.Discuss scop of rural maeketing Ans:Opportunities and Challenges This chapter captures situations that refl ect the growing interest and enthusiasm of business towards rural markets. Opportunities in the rural market are examined in the light of intense and growing competition in urban markets. The market opportunities are clearly perceived through a comparison of consumption patterns for durables as well as non-durables between the rural and urban markets. Identifying opportunities and clarity in decision-making requires an unambiguous defi nition of rural marketing. Rural marketing and rural markets are conceptualised to clearly distinguish them from urban marketing and urban markets. Limitations in the approach used for identifying the rural markets are also examined. THE ROAD MAP Indias 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 behaviour that the marketer may fi nd diffi cult to contend with. The understanding of Indias rural markets is an important objective of this book. The other major objective is to comprehend infl uences on this market

with emphasis on understanding consumer response to marketing decision variables. The third objective of the book is to develop appropriate methods to research rural markets. Appropriate research methods are important in the context of the rural market for two reasons: (a) the consumers ability to discriminate varies; and (b) the reference points used by rural consumer differ from those of the urban consumers. The researchmethods to measure perception, attitudes and behaviour in rural markets vary from the approach used in researching urban markets. Research methods unsuitable in rural markets create a distorted picture of the consumer and result in failure of marketing efforts. The opportunities in the rural market are demonstrated by comparing consumption levels in urban and rural markets for different product categories. Their volumes and growth show the importance of this market. Understanding demographic profiles of consumers and their response to brand offering is a useful approach to analyse the rural market. A large number of caselets in the book capture the consumer response to brand offering. The need for appropriate methodology for researching consumers is demonstrated by non-applicability of the urban reference points and measures in the context of rural markets. Literature available on rural development provides alternative methods to research rural markets. The understanding of the rural consumers is utilised in decision-making situations. Organising the chapters according to marketing decision variables provides the focus on decisionmaking. The critical aspect of reaching the consumer with the message and the product offered is examined in great detail. Short cases and data illustrated later in this book provide the decision-maker with important criteria for evaluation of options in these markets. The infl uence of consumer perceptions on product design in different productmarket situations

Rural Marketing: Opportunities and Challenges is identified. Consequently, the concepts and the framework developed are relevant for marketing decisions. The use of the existing network of channel members in rural markets is the key to connecting with the rural heartland. Haats and melas, which are unique to rural markets, supplement the retailer route to rural markets. The interaction between consumers and these unique institutions provides information for use in marketing decisions. The marketing strategy is examined in the context of the competitive situations in the rural market. Competition is categorised into (a) generic competition, (b) competitionwith the unorganised sector,

(c) new entrants, and (d) meeting the challenges created by imitations. The challenges faced by the marketer in these competitive situations lead, at the same time, to the opportunities available in rural markets.

CORPORATE INTEREST IN RURAL MARKETS When rural customers discover the new and exciting choice of brands available in urban markets, a demand for these brands is created in rural areas. Marketers have entered the rural markets by extending the distribution of their existing offering or developing a separate marketing strategy for the rural markets. When Titan, the watch manufacturer, found rural consumers purchasing their Sonata brand of quartz watches, they formulated a marketing strategy tailored to the requirements of the rural market. There is an increase in the launch of new products and brands in rural areas. In many product categories like cigarettes, biscuits, soaps, etc., specifi c brands are developed only for rural markets. The rural market, in both durables and non-durables, can be developed through new products and suitable positioning

3. Mentions the components of rural marketing Ans: COMPONENTS OF MARKET i. Two parties are necessary ii. Goods or commodity for transaction iii. Business relation and communication between buyer and seller iv. Demarcation area or place there, uniform price or competition is not a condition

4. Explain the different type of rural marketing Ans: i. Area of Coverage Local market Tehsil Level markets Regional Level markets National Level

ii. Location Village Market

Primary Market Wholesale Markets Terminal Market

iii. Volume of Trade Retail Markets Wholesale Markets

iv. Time Span Short Period Markets Long Period Market Permanent Markets

v. Number of Commodities General Market Specialized Markets

5. Differentiate Between Rural Markets and Urban Markets. Ans: The differences between rural markets and urban markets are
No. 1. ASPECTS URBAN RURAL

Marketing & Societal Concepts &

PHILOSOPHY

Marketing & Societal Concepts, Development Marketing & Relationship Marketing

Relationship Marketing

2.

A. MARKET B. DEMAND C. COMPETITION High Among Units In Organized Sector CONSUMERS Low Mostly From Unorganized Units

LOCATION LITERACY INCOME EXPENDITURE NEEDS INNOVATION/ADOPTION

3.

Concentrated High High Planned, Even High Level Faster

Widely Spread Low Low Seasonal, Variation Low Level Slow

PRODUCT AWARENESS CONCEPT POSITIONING USAGE METHOD QUALITY PREFERENCE High Known Easy Easily grasped Good Low Less Known Difficult Difficult to grasp Moderate

4.

PRICE SENSITIVE LEVEL DESIRED Yes Medium-high Very much Medium-Low

5.

DISTRIBUTION CHANNELS Wholesalers, stockiest, retailer, supermarket, specialty stores, & authorized showrooms Village shops, Haats

TRANSPORT FACILITIES PRODUCT AVAILABILITY

6.

Good High

Average Limited

PROMOTION ADVERTISING Print, audio visual media, outdoors, exhibitions etc. few languages PERSONAL SELLING Door-to-door, Frequently SALES PROMOTION Contests, gifts, price Gifts, price discounts Occasionally TV, radio, print media to some extent. More languages

Discount PUBLICITY Good opportunities Less opportunities

6. Differentiate between rural and urban consumer Ans:

Attributes Population Density Rural market Low Urban markets High

Occupation Economy Infrastructure Attitude to modernization

Agriculture Closed and less monetized Poor and weak Tradition bound

Trade, Industry and service Open and monetized Abundant and strong Ready for adaptation and change

Family structure Possession of household assets Mobility Literacy Exposure Attitude of life Manufacturing activity

Joint Low Low Low Low Fatalistic Low

Nuclear High High High High Scientific High

7.Mention the profile of rural consumer Ans: Large population A/c to 2001 census, rural population constitutes about 73% of the Indian population. Year In 1901 In 1951 In 1971 In 1981 In 1991 In 2001 Rural Population 89 per cent 83 percent 80 percent 76 per cent 74 per cent 73 per cent

Occupation pattern Agriculture and related activities are the major source of income for majority of the rural population. More than 60% of rural income is from agriculture. In the event of crop failure, the income of the rural masses is directly affected.

Large, diverse and scattered market Though large, the rural market is geographically scattered. There may be less number of shops available to market products. Diverse and heterogeneous market in terms of religious, linguistic, social and cultural factors. About 700 million Indians live in 6 38 365 villages across India.

Socio-economic position Majority of rural people have low purchasing power and per capita income. More than 60% have income less than 25000 rupees. About 14% have income greater than 50000 rupees. Low disposable income.

Low literacy level It is estimated that rural India has a literacy level of 36% as compared to 62% in the urban areas. Low standard of living Low income, low purchasing power, overall social and economic backwardness lead to low standard of living. In general a rural consumer spends less on non-food items. Socio-economic position

Majority of rural people have low purchasing power and per capita income. More than 60% have income less than 25000 rupees. About 14% have income greater than 50000 rupees. Low disposable income.

Low literacy level It is estimated that rural India has a literacy level of 36% as compared to 62% in the urban areas. Low standard of living Low income, low purchasing power, overall social and economic backwardness lead to low standard of living. In general a rural consumer spends less on non-food items. Inadequate infrastructure facilities Infrastructure facilities like cemented roads, warehouses, and communication system are inadequate in rural areas. About 20% of the six lakh villages are without telephone facility even today. About 50% of the markets are not connected by road. Most of the roads are kachha and become unusable during rainy season. Traditional outlook Villages develop slowly and have a traditional outlook. They accept changes gradually.

Distance Villages nearer to towns have elements of the urban life. Interior villages are more traditional. Diverse socio-economic background Due to dispersion of geographical areas and uneven land fertility, rural people have diverse socio-economic background. Conservative lifestyle Lifestyle bounded by tradition, culture, religion and community. Media reach The media reach in rural household is low. Statistics indicates that the reach of Print media is 10%, followed by TV 31%, Radio 32% and Cinema 36%. Medical facilities Medical facilities are quite inadequate and the villagers have to travel long distances for getting medical treatment.

8.what are the basic concept of rural economy Ans:Profi le of the Rural Market The attractiveness of the rural market is its size. The number of individual consumers and households in rural markets is compared with that in the urban markets. The demographic profi le indicates the heterogeneity of rural consumers in terms of occupation, income and literacy. The literacy levels are also examined by gender and the variations observed suggest a two-level segmentation of rural markets. The market volume is also examined in terms of consumption expenditure. The per capita consumption expenditure and also the total consumption expenditure are compared between the rural and urban markets. The consumption levels between the rural and urban markets are examined for both markets. The size of rural markets, demographic profi le of the rural market and market volume help us to draw a broad mental picture of the rural markets. The number of villages, population and the number of households indicates the market size. The demographic profi le of the rural market is described in terms of household size, sex distribution, literacy levels, occupation and income. Market Size The number of villages, population and number of households captures the rural market size. Physical Coverage The number of villages in India is more than .64 million. The number of villages or locations that are to be served is 124 times that of the urban markets as the number of urban locations or towns is 5,161. Number of Towns and Villages in India Item Year Number No. of towns 2001 -5,161 No. of villages 2001- 640,000 Source: Census of India, 2001. The large population and number of households suggest a large potential in the rural market. Population Distribution in Urban and Rural Regions (In millions) Year All India Urban 1971 1981 548 683 1991 846 2001 1029

109.1 159.1 217.4 286.1

Rural

438.9 523.9

628.6 742.9

Source: Central Statistical Organisation, 2004.

The large number of villages indicates a widely spread out market and it is a challenge for the marketer to service this dispersed market. Households and Houses Over Time in Rural Regions (In million) No. of Occupied Year 1971 1981 1991 2001 Source: 1. Central Statistical Organisation, 2004b. 2. Census of India, 2003. Demographic Profi le of the Market The demographic profi le of the rural market is captured by the household size, sex distribution, literacy level, occupation and income Household Size and Sex Distribution Item Average household size Average no. of adults per household Average no. of children per household Sex ratio (no. of females per thousand males) Rural 5.07 3.25 1.82 951 Urban 4.43 3.11 1.32 901 No. of Households 79.6 90.9 111.6 138.27 Residential Houses 72.7 86.1 107.9 135.1

Source: National Sample Survey Organisation, 2005. Literacy Rate Literacy rate is available from National Sample Survey (NSS) 60th round (JanuaryJune 2004), listed in Table 2.5. The rural markets have lower levels of literacy as compared to the urban market The difference in literacy between the rural and urban markets is much more among the female population than the male population. The reach of the print media in rural markets is therefore limited; and this is more so for the female population when compared to the male population.

Occupation The details on occupation are available from National Sample Survey and NCAER data. Although majority of the rural population is employed in agriculture, yet a large percentage of more than 30 per cent employed is in the non-agricultural sector. Salary earners in the rural areas are a signifi cant group with more than 11 per cent of the head of the households as salary earners. About 50 per cent of the rural population Literacy Rate by Geography and Gender (In percentage) Location Rural Urban Male 72 88 Female 49 75 All 61 82

Source: National Sample Survey Organisation, 2005.

Distribution of Households by Occupation in Rural India (Nos. per thousand households) July 2000June 2001 JanuaryJune 2004 Occupation (NSS 56th round) (NSS 60th round) Self-employed in non-agriculture 145 144 Agricultural labour 267 274 Other labour 110 89 Self-employed in agriculture 368 356 Others 110 135 Source: National Sample Survey Organisation, 2005. self-employed. The income stream for the self-employed differs from those working for others. The labour constitutes more than 35 per cent of the population and their income is on daily basis. In addition to designing suitable pricing, the marketer needs to design suitable product and also delivery channels to take into account the variations in the rural market. The need for segmentation and targeted marketing strategy is clearly indicated. Income It is short-sighted to view rural markets as an extension of urbanmarkets. The issue facing the rural marketer is not of adequateconsumers who can afford what the urban market consumes. The situation, instead, requires the marketer to identify and reach out to consumers with offers that meet variations in their ability to purchase. In rural India, about half the households are in the income category of less than Rs 35,000 per annum but more than 17 per cent Distribution of Households by Annual Income This distribution pattern is true for the north and south regions. In the eastern region, the number of households with less than Rs 35,000 income is more than 50 per cent and those with income over Rs 70,000 is 11 per cent. In contrast, in the western region only about a

third of the households are with income of less than Rs 35,000 and more than one fourth households have income exceeding Rs 70,000 per annum (see Table 2.9). Distribution of Households by Income and Region (Percentage) Annual Income < 35,000 35,00170,000 70,001105,000 105,001140,000 >140,000 Total Source: NCAER, 2003. Income Distribution by Occupation Income Distribution by Occupation The profi le indicates lower literacy levels and lower income with agriculture as the main occupation. A small percentage of the rural population includes businessmen, professionals and wage earners who are in the middle income or the higher income groups. Slightly less than one-fourth of the cultivators are in the middle and higher income groups. The middle and highincome groups in the rural areas are the high potential consumers and these total more than 17 per cent of the population. The middle-income and high-income group constitute 47.3 per cent of the urban population, but in terms of number the group is 135.3 million in size. In rural areas, the population in this group is 128.5 million. The potential in the rural market is, therefore, close to that of the urban market in terms of middle and highincome groups. The income distribution suggests two distinct audiences for communicating with in rural India: (a) the rural rich, and a set of educated middle class with exposure to mass media and purchasing power; (b) a vast majority of illiterate and poor and who cannot be easily reached through mass media North 46.50 34.89 10.84 4.01 3.76 100.00 South 49.17 34.76 10.14 3.71 2.21 100.00 East 57.97 30.97 6.90 2.28 1.89 100.00 West 34.14 40.44 15.17 6.03 4.21 100.00

9.Write a note on rural entertainments

Ans: Media Preferences It has been recognised that the effectiveness of media depends largely on the audience. As observed earlier, consumers in the higher income category have access to mass media and are more receptive to it. Traditional media are likely to be more effective with the average rural audience that is less cosmopolitan and have a lower income. In a study on communication of health information to rural people, the media channels were ranked on effectiveness. Interpersonal communication was ranked most effective followed by television/VCR, print and then radio. Channel and Programmes Viewed It has been observed that the rural viewer does not switch channels. Brand loyalty to a programme is fairly high. This is infl uenced by the presence of large number of black and white televisions and lower-priced colour televisions that have limited channels. DD1 is the channel with the highest viewership. For mass products, popular network programmes can be used to the marketers advantage. The cost per thousand contacted works out to as low as Re 1. The viewership patterns of the popularly watched programmes on Doordarshan help illustrate this. Viewership Patterns on DD1 (in million nos.) Programme Rangoli Hindi Film Source: Dhawan, 1996. Programmes that are popular in urban areas are also popular among rural audiences, though it has been observed that a large group does not fully comprehend the main theme. A fairly large section of the audience feels that advertisements are not related to their world and do not view them favourably. This is observed in a study covering multiple locations. Audience Response to T.V. Commercials A study on audience response to Television commercial was conducted in Purulia (West Bengal), Erode (Tamil Nadu), and Kheda (Gujarat). Its fi ndings were: People below the age of 35 years watch more television. Around 70 to 80 per cent were males, 30 to 40 per cent were illiterate and majority were farmers or farm labourers. More than 60 per cent of viewers watch national programmes. Urban 52 59 Rural 42 57 Total 94 116

 In the south and north, fi lms and musical programs like Chitrahaar are viewed but news programmes are more popular in the south. Around 60 per cent understand the main theme, 10 to 20 per cent remember only the visuals and do not comprehend the meaning while only 12 per cent understand the words. Programmes in English are understood by a minority. Around 26 per cent do not like advertisement slots between programmes while 70 per cent like them. Those who dislike advertisements feel that visuals mostly show a different world and are not able to identify with them. In Purulia, 15 per cent consider the attire depicted vulgar while in Erode 10 per cent consider it vulgar. Regarding toiletry items, more than television exposure, the proximity to urban area was a stronger factor in changing rural habits. Television did however assist trials in affordable brands. Audience Behaviour Audience behaviour is examined for important media like television, radio and newspaper as their behaviour infl uences media decisions. Television Viewing Behaviour Media decisions are guided by viewing habits. Television in rural markets means Doordarshan. Since the rural routine is not as dominated by the clock as in urban areas, a prime time television programme may mean that the viewer switches on the set 20 to 30 minutes earlier. Typically, about 10 minutes before prime time there is a switchover to the national network. Advertising rates before this happens are relatively low and could bring in the same kind of mileage as prime time advertising does. Radio Listening Radio is a popular media. Besides AIRs primary channel programmes, Vividh Bharati is also heard regularly. It is not only farm news and Samachar but fi lm music that is popular. This is because rural consumers listen in to the radio throughout the day, unlike in urban India where people listen to the radio in the mornings. The sponsor has to exercise care in the media and its usage as otherwise the message is unlikely to be heard among the target audience. For instance, a tractor jingle at 11.00 p.m. in the night hardly has any rural audience and is of little advantage to the advertiser. Access to Newspapers Newspapers normally reach the feeder market or small towns and are read in shops or roadside hotels. People sometimes buy newspapers here and take them back home where they

are read by other people. In some cases, the newspaper is read at the common gathering/meeting. Social gatherings or friendly gettogether differs from village to village. In Nayadih village near Jamshedpur, the mosque was a common meeting place in the evening or after prayers. The younger generation also frequently meets in the evening (Sirbhaiya, 1994).

10. Explain the issues related to rural marketing environment. Ans: The factors influencing the rural marketing environment are i. Population: Around 70 percent of India lives in rural areas. The figures of different years are as given below: As per Census Data Year Population in million Density per kmsq Person per household Villages inhabited 000 Rural Population Urban Population Rural population as % of total population 2011 1180 320 5.2 620 812 368 70 2001 1027 324 5.5 627 742 285 72.2 1991 846 273 5.52 627 629 218 74.3 1981 683 230 5.55 579 524 159 76.7

ii.

Occupation: The main occupation of rural people is Agriculture. Other occupations

are Farm Labourer, Priest, Blacksmith, Carpenter, Washerman, Barber, Shoe maker, Potter and Milkman. There are also rural occupations such as village postman, teacher, village nurse and health worker, village doctor, policemen, street vendor, grocerer, shops for repairing cycles, automobiles and electrical gadgets. The proportions are given below

S No 1. 2. 3. 4.

I Occupation

Proportion to total rural population (%)

Agriculture Agricultural Labour Business Non-agricultural Labour

50 27 10 9

5. 6.

Salary earners Not gainfully employed Total Rural Population

2 2 100

iii.

Income: The village income is generated mostly by sale of agricultural produce. Also

there are income generated by sale of animal produce, service, interest on investment, Government subsidies and grants, mortgage of properties and gold, Charities and donations, The labour and Others.The proportion is as given below

SI No Sources of Income 1. 2. 3. 4. 5. 6. 7. Agriculture Agricultural wages Business and craft

Proportion to Total Rural Income (%) 59 16 9

Non-agricultural wages 7 Salaries Current Transfers Others Total Rural Income 3 2 4 100

iv.

Location of rural population: As per Census 1991. There are 3,697 urban cities and

5,80,779 rural villages. The location and concentration of rural villages are as below: SI No Population Range (No. Number of Proportion Population in Proportion to of persons) villages to (%) 1 2 3 4 5 6 7 Less than 200 200 to 499 500 to 999 1000 1999 2000 4999 5000 9999 10000 and above 1,03,952 1,41,143 1,44,998 1,14,395 62,915 10,597 2,779 17.9 24.3 25.0 19.7 10.8 1.8 0.5 10.53 48.46 104.36 160.29 185.57 69.84 43.76 1.7 7.8 16.8 25.7 29.8 11.2 7.0 total millions total (%)

Total

5,80,779

100

622.81

100

v.

Education: Education level is increasing year after year in India. The statistics are

given below:

Census Year 1961 1971 1981 1991 2001

Persons 29.40 34.45 43.57 52.21 64.84

Male 40.40 45.96 56.38 64.14 75.85

Female 15.35 21.97 29.76 39.29 54.16

vi.

Land Distribution: India has a large geographical land area of 3.288 million square

kms. Land classification is based on the use of land like Forest Land, Uncultivable Land, Land not available for cultivation and Cultivate Land. Classification of land based on topography is Mountains, Hills, Plateaus and Plains. vii. Irrigation: Government are having different projects to connect the irrigation

facilities all over India. Many places have been irrigated are doing well. Punjab and Haryana has 75% of irrigation cropped area. Uttar Pradesh has 63% of irrigation cropped area. Sardar Sarovar Project across river Narmada has irrigated 19 lakh hectares. Nearly 80% of the wheat area is irrigated. Rice is 45%, cotton is 31% and maize 20% are irrigated. viii. Rural Development Programmes: A lot of developmental programmes are being

arranged by the Government to support the rural people and for their improvement. ix. Infrastructure facilities: Different Infrastructure facilities are provided to rural India.

Rural Electrification: 88% of the villages have electricity connection in India. 496 villages has been declared non feasible for electrification. Electricity tariff charged is very low in rural areas. In Karnataka and Tamil Nadu, the supply of electricity is almost free for agricultural purposes. In certain states, fixed charge is levied Rural Communication System: The road network of over 3 million kilometers in India is the largest in the world. Still the road connectivity and the quality of roads are poor. A network of rural roads has connected about 70% of the Indian villages and all weather roads serve over 40% of the villages, while 605 remained inaccessible during rainy seasons. Rail network covering a total length of 64,015 kilometers. It is the 4th largest railway network in

the world. New cinema houses are set up in semi-urban and rural areas. Temporary cinema houses in sheds, with a thatched roof or zinc sheet roof

11.How HUL implemented PROJECT SHAKT? Discuss. Project Shakti HLL uses its traditional channels to effectively reach urban, semiurban and large rural villages. Its traditional models are not cost effective to reach villages with less than 2,000 population. The Project Shakti model experimented in the state of Andhra Pradesh uses self help groups (SHGs) of women. The SHGs are formed by the District Rural Development Authority. SHGs are micro-credit bodies that encourage savings among the women members and convert these savings into micro enterprises. HLL selected women members who were trained to educate on the product benefi ts and sell the products. Typically, a woman from an SHG selected as a Shakti entrepreneur receives stocks at her doorstep from the HLL rural distributor and sells direct to consumers as well as to retailers in the village. They received training and handholding for the fi rst three months from HLL. The women, guided by the company representative (called Rural Sales Promoters, or RSPs), would sell both door-todoor (at MRP) as well as to retailers (at a discount typically given out by distributors). They would get different margins for each different sale. The shopkeepers did not feel threatened because these women were not undercutting the MRP; also, the stocks reached their doorstep. The Shakti entrepreneur borrows from her SHG for starting the business. Each Shakti entrepreneur services 610 villages in the population strata of 1,0002,000 people. Initially, the Shakti entrepreneur starts with 45 chief brands from the HLL portfolioLifebuoy, Wheel, Pepsodent, Annapurna salt and Clinic Plus and then adds on other products that have demand (Gupta and Rajshekhar, 2005).Typically, unit packs are small. The contribution of this model was that earlier retailers used to stock only fast moving brands like Lifebuoy and Rexona but by going from home to home, the company ensures that a larger range is stocked. The company built its toothpaste brand Pepsodent and brand of iodised salt Annapurna through the Shakti model. The model piloted in 50 villages of Nalgonda district in Andhra Pradesh is now extended to other parts of the state and to the states of Karnataka, Gujarat, Madhya Pradesh, Uttar Pradesh, Tamil Nadu, Chattisgarh and Orissa (Kamath, 2003). Shakti also includes the Shakti Vani programme of health and hygiene education and creating access to relevant information through the iShakti community portal. Shakti Vani is a social communication programme. Women, trained in health and hygiene issues, address villages

communities through meetings at schools, village baithaks, SHG meetings and other social forum. In 2004, Shakti Vani covered 10,000 villages in Madhya Pradesh, Chattisgarh and Karnataka. The vision is to cover 50,000 villages in 2005. iShakti, the internet-based rural information service, has been launched in Andhra Pradesh, in association with the state governments Rajiv Internet Village Programme. iShakti has been developed to provide information and services to meet rural needs inhealth and hygiene, agriculture, animal husbandry, education, vocational training and employment, and womens empowerment. The service is now available in Nalgonda, Visakhapatnam, West Godavari and East Godavari districts. The vision is to have 3,500 kiosks across the state by 2005 (Hindustan Lever Limited, 2005).

12.Discuss the feture of rural marketing

The future of Rural Marketing

Introduction:
The Ex-Chairman of Hindustan Lever observes that Most marketers realize that India is on the cusp of momentous change. The economy is vibrant, incomes are rising; and the habits, preferences, and attitudes are changing rapidly. But nowhere is this more evident than in rural India. There is, thus, an emerging need to build expertise in rural marketing. From the income dispersal projection by NCAER for 2006-07, that the number of poor households will shrink by half to 2.8 crore from 6.1 crore in 1997-98, whereas the middle income households will double and the rich households will treble over the decade, in rural India. This upward push-taking rural people from poverty to prosperity-will lead to greatly increased purchasing power. Todays non-consumers comprising the rural poor will enter the market as first-time buyers in large numbers. To claim a larger share of the growing rural pie will call for a radical shift in management thinking, from the one-solution-fits-all mentality, to market innovations. Focused Marketing Strategies: To succeed in the rural market, companies will need to adapt the 4Ps of marketing and the 4 As their strategy- Awareness, Access, Availability, and Affordability. We have seen some efforts in this direction already, low unit packs, use of IT, use of traditional media, but we are likely to see a lot more attention and innovation from marketers. Product Developing relevant products to meet the specific needs of rural consumers will exercise the minds of marketers. For example, know that voltage fluctuation is a major problem in our villages, because of which bulbs last but a few days. Companies will put their R & D teams to develop filaments that can withstand violent fluctuations, thereby extending the life of the bulb. A rural-centric approach to product development, will hasten the growth rate in the rural market. Also increased literacy and awareness levels will lead to an influx of new product categories, like educational and lifestyle products. Marketers will have to be alert to these opportunities, to gain the first mover advantage in these new markets. Price

Price will continue to be an element of the marketing mix. However as rural incomes continue to rise in the coming years, we may see the share of low unit packs coming down somewhat and economy packs gaining share. Also as the reach of media and awareness level improve, we are likely to see companies shift their focus trade to consumers. Another factor favoring consumer schemes in the future is the expected proliferation of multi-brand open format stores, which will take competition directly to the consumer and better offer would be a definite incentive for the buyer, to choose a particular brand. Distribution Challenge of reach-markets are small and scattered- will be addressed through innovation. Project Shakti of Hindustan Lever is one such successful example. Nehru Yuva Kendra volunteers model through haats being piloted by MART for Colgate, is another such new model. Amway is already selling bio-fertilizers in rural India, through its famous mutilayer distribution model. A large number of independent mobile traders visit interior villages and sell a variety of products. No company has used them so far for last mile distribution of their products. If mobile traders could be or organized, given official recognition through branded uniforms and offered an attractive business model, this virtual army of sellers could offer a cost effective solution to service remote locations. Communication While companies will continue to have a national communications strategy, they will have to think and act locally. The need for focused communication aimed at the rural markets should not be underestimated. This calls for innovation and substantive changes. If the Indian advertizing industry is to reach rural India, it has to be firmly grounded in rural perception, values and traditions. It has to drown itself in local colors, customs and models of communication, to make itself relevant to rural society. It has to gain the trust of masses, by manipulative claims on the other. It has to reach out and relate to the level that it can bring about the behavioral changes. Finally, it has to find ways to reincarnate innovation. The four components are not mutually exclusive: they share mutual feeding relationships. The fact that multinational giants like Coca-Cola and Pepsi have recognized this need for at least regionalizing their advertising, by featuring locally popular heroes in their TV commercials, is a step in the right direction. Mass media will have to be supplemented with traditional media. Haats, melas, jatras, puppet shows and street theatre are integral to village life and these platforms allow the much needed two way communication process, to create a strong connect with rural audiences. The opinion leaders are changing from the earlier Pradhan and the postman to rural youth and people having good jobs in nearby towns, as the latter have higher level of exposure to media and urban lifestyle. Similarly Sachin Tendulkar and Sharukh Khan are appropriate role models, as cricket and movies are as popular in villages, as in our cities.

Market Research:
As the rural market develops in the next few years, more qualitative studies will be needed to understand the rural consumer, his lifestyle, aspirations and motivations. Research agencies will also have to develop relevant rural segmentations models. However Western techniques and tools often evoke inappropriate responses from less literate people. Agencies will therefore need to evolve a set of tools that can capture responses accurately. PRA is one such tool used in the social sector which involves rural people in research process and they enjoy sharing and analyzing about themselves. Another area that needs the attention of research agencies is the complete lack of intelligent data on rural markets. For example a company wanting to use haats for promotion, does not know how to select relevant haats for its purpose as besides the number

of haats there is no data on the number of visitors, profile of visitors, purchase per visitor, availability of different products ,sale of branded products and other similar data. Reliable data the rural sector and detailed mapping of haats, mandis, melas and folk media forms will become a priority for effective market planning, for which companies will need to join hands to sponsor syndicated studies. Quantitative studies on demand estimation, nmarket shares, customer satisfaction which have been restricted to the urban market, will need to be undertaken in the rural market as well, as demand grows and rural India becomes more attractive for marketers.

Consumer Finance:
The evolution of urban markets in the 90s was fueled by the entry of consumer finance products as an outcome of the financial sector reforms in the Indian economy. Initially, consumer finance was limited to housing and vehicle loans. Sale of 4-wheelers crossed an impressive 1 million vehicles in 2004. Of these majorities were financed. The advent of non banking finance companies and private sector banks led to spread of consumer finance to the durables category. This resulted in an unprecedented boom in the sale of TVs, VCDs, refrigerators etc. With banks like ICICI and HDFC and others moving aggressively into the rural markets and durable companies like LG, Philips and others extending their distribution, it can be expected that the urban boom of the 90s should be repeated in the rural market during the current decade.

Rural Vertical:
Companies will need to equip themselves, if they want to succeed in the dynamic rural market. To begin with, top management commitment would be absolutely essential. The CEO would need to articulate a strong commitment to rural marketing, only then will the marketing team its focused attention and sustained support to this growing market segment. Companies will need to treat rural marketing as a separate area of work, in the same manner that the export market or urban market is given special attention. Hindustan Lever has already created a separate rural vertical with a team of RSMs, ASMs, SOs, and RSPs committed exclusively to servicing the rural market. Rural has been given separate sales targets and the company is in the process of allocating separate sales promotion and advertising budgets for this market. These decisions have helped the company focus more sharply on the growing rural market. VIP industries have also created a separate rural vertical for its recently launched low priced range of Alfa luggage. In the coming years more companies are likely to set up a separate department, to tap the growing potential of the rural market.

Retail and IT models:

India boasts of a huge unorganized rural retailing system through the 42,000 haats. However organized rural retailing has not taken deep roots in rural India. ITC has recently set up the first Choupal Sagar in Sehore and has announced plans to set up 25 large format stores in M.P. by the end of 2005 and the company has ambitious plans of ultimately having 1,000 Choupal Sagars spread across the country. Godrej, Tatas, Reliance, Escorts and others are also busy finalizing their rural retailing plans. These open format stores will change the shopping experience, empowering the consumer as he would now decide what he buys, after comparing the different brands displayed in open, easy-reach shelves. This will reduce the influence of the retailer forever. In the existing kirana store model, products are out of reach of the consumer and he is forced to buy what the zealous shopkeeper offers. IT and connectivity will also impact the way business is done. Earlier village retailers had to block investment in stocking large quantities of products, as fresh supplies took weeks from the time the post card order was sent out. Today with STD facility, the retailer can dial

the town distributor instantly and fresh stocks would reach him in just a couple of days, because of better road connectivity. He can therefore manage his business with a far lower inventory. The funds so released can now be invested in stocking a greater variety, offering more choice to the consumer, resulting in higher sale. Rural retail trade will thus become more attractive for companies and they will be compelled to directly service village shops through the distributor van, rather than leave it to the wholesaler, as has been the situation in the past.

Rural Managers:
As the rural market is already bigger than its urban counterpart, there is need to develop a good understanding about it among corporate managers. For this to happen rural marketing should be taught as a subject in every business school. Most management institutes do not offer even as a elective, very few offer it as a core subject. There is an urgent need to make this subject compulsory and assignments should be so designed, that the students visit villages and get sensitized to rural life. There are few institutes such as IRMA, XIM, Narsee Monjee and HRM that offer specialized rural marketing courses. Companies should target, as well as regional business schools, to create a dedicated, empowered and distinct rural marketing team.

Glamorize Rural Marketing:

It is a well-known fact that students at Business schools prefer e-Marketing or Retail or International Marketing, to Rural Marketing as an elective subject. This is because rural is considered unglamorous. Industry seminars on these subjects also evoke a similar response. This must change as the rural market in size is bigger than any of the other markets mentioned here. Industry associations, government agencies and academic institutions, should take upon themselves to give due importance to rural marketing. We have awards for the best marketer, best advertizing person, best IT manager and several others, but none for rural marketing.

Public-Private Partnership:
In the coming years, it is hoped companies will not fight for a share of the limited rural pie. Instead they should join hands with the government in self-interest to increase the size of the pie, by creating economic activity in villages through micro enterprises and mainstream these efforts, by linking them with large industry. The efforts of these publicprivate partnerships which have already begun, will create the much needed affluence resulting in greater purchasing power in our villages and lead to greater purchasing power in our villages and lead to greater demand for corporate products. The fast improving rural infrastructure and higher exposure to city life the sharp divide between urban and rural will get blurred in the coming years, as has already happened in Kerala and Punjab. This will lead to rural people looking up to urbanities and imitating their life style. But this process has only just begun.

e-Rural Marketing:
In very simple terms e-Rural Marketing refers to customized application of e-marketing for the rural markets. As the technology usage environment and the corresponding benefits that are sought in the rural markets are very different from urban markets, the overall implementation of e-marketing in the rural areas becomes quite different from that of the urban markets. Therefore, e-rural marketing represents application if Internet based technologies as a tool, to facilitate efficient and effective exchange with and from the rural market. As it appears, Internet has the potential to deliver results in rural terrain. It offers an opportunity to develop a direct contact with rural consumers sans the traditional distribution network or the inefficient intermediaries. It has the potential to solve many of the distribution

problems which were acting as hindrance in the way of the development of rural market. Organizations can use this medium to provide a web space, which can be one stop solution to many problems of the rural market. This whole approach can act catalyst in the development of the rural markets. Companies can integrate their marketing efforts online for the rural markets as well. Amazing thing experienced by the companies that employed the Internet tool in the rural market is that illiteracy, unawareness and existing digital divide is not as big a barrier as it is perceived to be.