ST. ANDREWS COLLEGE OF ARTS, SCIENCE AND COMMERCE BANDRA (W), MUMBAI 400050.

RURAL MARKETING STRATEGIES THE METRO CASH & CARRY WAY

Submitted for the Course ECONOMICS OF GLOBAL TRADE AND FINANCE IN SEMESTER I MASTER OF COMMERCE PROGRAMME OF THE UNIVERSITY OF MUMBAI BY DOMENICO GOUVEIA ROLL NO: 9034

UNDER THE GUIDANCE OF PROF. PARVEEN

2013 2014

DECLARATION
I hereby declare that this project report entitled
RURAL MARKETING STRATEGIES THE METRO CASH & CARRY WAY

which is being submitted in partial fulfilment of the requirement of the course on Economics of Global Trade and Finance leading to the award of the Master of Commerce Degree by the University of Mumbai is the result of the research carried out by me under the guidance and supervision of Prof. Parveen I further declared that I have not previously submitted this project report to any other institution/university for any other degree/ diploma or for any other person.

Date: Place: Mumbai Signature of Student

CERTIFICATE
It is certified that this project
RURAL MARKETING STRATEGIES THE METRO CASH & CARRY WAY

has been prepared and submitted by DOMENICO GOUVEIA , ROLL NUMBER 9034 under my guidance during the academic year 2013-2014.

Date: Place:

Signature ( ________________) (Associate Professor)

Signature of the Internal Examiner

Signature of the External Examiner

Signature of the Principal

ACKNOWLEDGEMENT
ACKNOWLEDGMENT
I hereby acknowledge all those who directly or indirectly helped me to draft the project report. It would not have been possible for me to complete the task without their help and guidance. First of all I would like to thank the principal Dr. Marie Fernandes and the coordinator Prof. Kevin Miranda who gave me the opportunity to do this project work. They also conveyed the important instructions from the university from time to time. Secondly, I am very much obliged of Prof. Parveen for giving guidance for completing the project.

Last but not the least, I am thankful to the University of Mumbai for offering the project in the syllabus. I must mention my hearty gratitude towards my family, other faculties and friends who supported me to go ahead with the project.

EXECUTIVE SUMMARY
A debate continued for a long time amongst the Indian marketers, both practitioners & academicians, on the justification for the existence of the distinct discipline of rural marketing. Consequently, two schools of thought emerged. The first school belived that the products/services, marketing tools & strategies that are successful in urban areas, could be transplanted with little or no more modifications in rural areas. However, the second school saw a clear distinction between urban & rural India, & suggested a different approach, skills, tools & strategies to be successful in rural markets.

What differentiates the two markets is not mere income, but a host of other infrastructural & socio-cultural factors. Thus, the rural market cannot be tapped successfully with an urban marketing mindset & would definitely require its thorough understanding. In other words, the approach toward rural markets needs to be distinct from the one adopted for the urban markets. Thus, in a large rural economy like Indias, rural marketing has emerged as an important & distinct internal sub-division within the marketing discipline. This sub-division clearly highlights the differences between rural marketing & mainstream marketing.

The topic that was taken up for detailed study is Rural Marketing Strategies. The procedure, not only varies in different sectors but also in different companies. The marketing strategies that companies adopt to launch their various new products keep changing with time and the prevailing market situations. This study was undertaken to get a deep insight into the marketing strategies adopted in rural areas. Companies have to use different combinations of Marketing mix variable for Rural Markets.

Index Sr.No.
Chapter I 1.1 1.2 1.3 1.4 Chapter II

Topic
Introduction to the Study Aim of the Study Objectives of Study Importance of the Study Scope of Study Rural Markets

Page No.

Chapter III

Case Study

Chapter III Chapter IV Chapter V Chapter VI Chapter VII

Research Methodology Case Study Suggestions , Findings and Recommendations Limitations to Study Conclusion

Chapter VIII Chapter IX

Bibliography Annexures

CHAPTER I Introduction to the Study

1.1 Introduction to rural markets.

The rise of rural markets has been the most important phenomenon of the 1990s, providing volume growth to all leading companies. Many corporates have been trying to get a grip on rural market. But challenges are many: how to make the product affordable, how to penetrate villages with small populations, connectivity, communications, language barriers, spurious brands, etc. Marketers and manufacturers are increasingly aware of the burgeoning purchasing power, vast size and demand base of the once neglected Indian hinterland. Efforts are now on to understand the attitude of rural consumers, and to walk their walk and talk their talk. The marketing mix of many companies is now being tailored to rural tastes and lifestyles. Government agencies like IRDA (Insurance Regulatory and Development Authority) and NCAER (National Council for Applied Economic Research) define rural as villages with a population of less than 5000, with 75% of the male population engaged in agriculture, etc. Twothird of the countrys consumer (more than 700 million) live in rural areas and almost 26% of the national income is generated there. And 10 consecutive good monsoons have lead to improved returns from agriculture (which is Indias largest economic sector and accounts for 26% of GDP, increasing the spending power in India s rural areas. India is divided into 597 districts, and has 638,667 villages, of which 32% can be reached and are connected by pucca roads. However, 68% of the rural market lies untapped due to various reasons ranging from inaccessibility to lack of awareness. In all, there are more than 3.8 million retail outlets in rural India, 5.8 shops per village (the term shop refers to any type of premises haats, stalls, shacks-that sell goods). Overall, the rural market has been growing at 3-4%per annum, adding more than 1 million new consumers every year, and now accounts for close to 50% of the volume of consumption of fast-moving consumer goods (FMCG) in India. As a result, it is becoming an important part of the market development strategies of all FMCG companies, including multinational ones, as well as consumer durables business and services companies as well.

Further, the vast untapped potential of the rural markets is growing at a rapid pace. The policies of the government largely favour rural development programmes. This is clearly highlighted by the fact that the outlay for rural development has risen from Rs 14000 crores in the 7th plan to Rs 30000 crores in the 8th plan period. Thus, with the rural markets bulging in both size and volume, any marketing manager will be missing a great potential opportunity if he does not go rural.

1.2 History

At the time of independence in 1947, the rural markets were practically non-existent. They consumed what they produced. What they bought as manufactured goods (products) used to be only some salt, tea , tobacco, kerosene, gold and silver ornaments etc. For shelter they depended on the construction material available in the village; for agricultural implements, the blacksmith; for clothes, the weaver; for vessels, the potter. They went to local quacks and vaids for medicine and maternity. For fuel, fertilizer transport and ploughing, there was the cox and oxen. For water, either the pond or well or the wayward monsoons. In the post Independence period considerable thinking has been laid by the Indian planners in developing the rural areas by giving substantial emphasis on promoting the social and economic status of rural people. The need for overall development in rural areas has been stressed in India planning all through the years. The era of rural development started with the Second Five Year Plan which emphasized the implementation of various community development projects in different sectors through the Panchayat Raj Institutions (PRIs). Even in 1940s and 1950s many manufacturers invested in rural markets. They were mainly consumer product manufacturers as Levers with Sunlight and Dalda; Geoffrey manners with Anacin; Union carbide with Eveready batteries and few others. By the 1960s there was a flood of other manufacturers in rural markets. The green revolution was started in 1960. With green revolution many companies like Siemens with a package of products for water drilling; marketers of fertilizers, pesticides, seeds, bicycles, motor cycles etc. took their products to rural consumers. Later, in 1969, the government formulated schemes with direct intervention to assist the rural poor. In the subsequent years many programmes and schemes have been designed and floated in rural areas assessing the local needs and programme objective at micro level. Many of these development programmes have undergone considerable changes in implementation process observing setbacks at different levels of functionaries.

In late seventies, reviewing the efforts made to uplift the rural economy through various development programmes in successive five year plans, the policy on rural development has largely stressed on achieving the sustainable development within the broad objectives. Since 1980s Indias industrial sector had gained in strength and maturity. Its contribution to GNP increased substantially. Mean while due to the development programmes of Central and State governments, service organizations and socially responsible business groups like Mafatlal, Tatas, Birlas, Goenkas and others, the rural areas witnessed an all round socioeconomic progress. The National Council For Applied Economic Researchs (NCAER), Market Information Survey of Household (MISH) shows that the 1980s saw a faster improvement in the distribution of income in rural than in urban India. This trend accelerated from 1989-90 number of households with income over Rs 25000 per annum of nine million(around 50 million people), and above Rs 12500 per annum of 35 million households (around 160 million people). The economic reforms of 1991-92 further accelerated the process by introducing competition in the markets. Steadily the rural market has grown for household consumables and durables.

Prominent rural markets in India in 1999.

STATE

NUMBER OF VILLAGES 5,000 9,000 POPULATION ABOVE 10,000 POPULATION 330 313 129 208 1007 192 100 75 74 14

TOTAL

BIHAR ANDRA PRADESH UTTAR PRADESH WEST BENGAL KERALA MAHARASHTRA KARNATAKA GUJARAT HARYANA PUNJAB

1604 1474 1336 1117 252 762 570 575 364 202

1934 1787 1465 1325 1259 954 670 650 448 216

Current Distribution of No of villages and population in villages Population Less than 200 200-500 501-1000 1001-2000 2001-5000 5001-1000 Total no of villages No of villages 92,541 127,054 144,817 129,662 80,313 18,758 593,154* % of total villages 15.6 21.4 24.4 21.9 13.5 3.2 100.0

*Inhabited villages, total number of villages is 638, 691 .

Features of Indian Rural Markets

Large and Scattered market:

The rural market of India is large and scattered in the sense that it consists of over 63 crore consumers from 5,70,000 villages spread throughout the country. Major income from agriculture: Nearly 60 % of the rural income is from agriculture. Hence rural prosperity is tied with agricultural prosperity. Low standard of living: The consumer in the village area do have a low standard of living because of low literacy, low per capita income, social backwardness, low savings, etc. Traditional Outlook: The rural consumer values old customs and tradition. They do not prefer changes. Diverse socio-economic backwardness: Rural consumers have diverse socio-economic backwardness. This is different in different parts of the country Infrastructure Facilities:

The Infrastructure Facilities like roads, warehouses, communication system, financial facilities are inadequate in rural areas. Hence physical distribution becomes costly due to inadequate Infrastructure facilities.

1.3 Profile of the Rural Consumer

1) Low Literacy levels: It is estimated that the literacy level in Rural India is 45% as compared to 52% for the whole country. The literacy rate is low so this comes in way for promotion. Therefore marketer cannot use Print media and Hoardings, he has to adopt Product Demonstrations.

2) Low Income Levels: Though Rural incomes have grown in the past decade the per capita incomes of rural consumer are low compared to urban counterpart. A large part of the income is spent on basic necessities, leaving a smaller portion for other consumer goods.

3) Location pattern of rural consumers: Indias urban population is concentrated in 3,200 cities and towns, whereas the rural population is scattered over 638,667 villages. Of these, only 6,300 have a population of more than 5000 persons. More than three lakh villages are in the category of 500 people or less (55 percent of the total), and more than 1.5 lakh villages have 200 people or less( 25 percent of the total). Rural consumers therefore are scattered over a large area, unlike their Urban counterparts who are highly concentrated.

4) Reference Groups: Typically, in a rural area the reference groups are primary health workers, doctors, teachers and panchayat members. The village trader or the grocer, commonly called Baniya or Mahajan may also be an important influence in decision making of the rural customers. This is because the trader extends credit to the farmers. Today, another person who is considered a change agent is the rural banks officer or manager. 5) Occupation: Typically, in a rural area the principal occupation is farming, trading, crafts, and other odd jobs like plumbing, electric works etc. There are also primary heath workers and teachers. The different types of farming activities include growing crops, cattle and

poultry farming. The basis for differentiation is obviously the size and ownership of land. Consumption patterns differ according to income levels.

6) Media Habits: Rural people are fond of music and folklore. In rural Maharashtra a popular form of entertainment is the Tamasha. Rural folk listen to the brave deeds of their hero Shivaji. Likewise, in Uttar Pradesh, Nautanki entertains the Rural customer. And then there are T.V, Radio and Video films.

7) Other variables: Culture, language, religion, caste and social customs are some other important variables for profiling a rural consumer. Rural consumers have a lot of inhabitations and tend to be rigid in their behavior. A company has to take intense care while targeting them

1.4 Evolution of Rural Marketing

The Glorious Past (1940-1990) In 1949 Asian Paints was the first company to enter rural markets. In the 1960s Hindustan Lever Ltd (HLL) saw rural markets as an opportunity and entered with Lifebuoy soap. Today HLL dominates rural markets and has a presence in more than one lakh villages. Major players like Colgate, Dabur, etc followed suit. In the 1980s. young companies like Nirma, CavinKare and Marico entered rural markets. MNCs like Proctor & Gamble also started rural marketing. The Pulse of Present (1999-2000)

Today around 70 percent of the population lives in rural India (more than 700 million). A one percent increase in their purchasing power would lead to an increase of Rs 10,000 crore in government revenues. Companies are launching a plethora of products to cater to changing lifestyles in rural India. MNCs like LG, Samsung and Revlon, and insurance biggies like Birla Sunlife, Max New York life and Prulife are entering the rural market in a big way; currently, however, these companies have tapped only one lakh of the 6 lakh-odd villages.

The Furious Future (2000 onwards)

The media explosion and satellite invasion have brought about drastic changes in the consuming habits of rural Indians and the future would hold a lot in store for companies entering rural markets. New players like Nestle, Mc Donalds and MTV are eyeing rural markets, and companies like HLL plan to extend their reach to almost 2.5 lakh villages in the next 5-6 years (2006-2007).

1.5 Current Scenario of rural market.

Rural market - A world of opportunity GONE are the days when a rural consumer went to a nearby city to buy branded products and services". Time was when only a select household consumed branded goods, be it tea or jeans. There were days when big companies flocked to rural markets to establish their brands. Today, rural markets are critical for every marketer - be it for a branded shampoo or an automobile. Time was when marketers thought van campaigns, cinema commercials and a few wall paintings would suffice to entice rural folks under their folds. Thanks to television, today a customer in a rural area is quite literate about myriad products that are on offer in the market place. Trends indicate that the rural markets are coming up in a big way and growing twice as fast as the urban, witnessing a rise in sales of hitherto typical urban kitchen gadgets such as refrigerators, mixer-grinders and pressure cookers. According to a National Council for Applied Economic Research (NCAER) study, there are as many 'middle income and above' households in the rural areas as there are in the urban areas. There are almost twice as many 'lower middle income' households in rural areas as in the urban areas. At the highest income level there are 2.3 million urban households as against 1.6 million households in rural areas. According to Mr. D. Shivakumar, Business Head (Hair), Personal Products Division, of Hindustan Lever Limited, the money available to spend on FMCG (Fast Moving Consumer Goods) products by urban India is Rs. 49,500 crores as against is Rs. 63,500 crores in rural India. As per NCAER projections, the number of middle and high income households in rural India is expected to grow from 80 million to 111 million by 2007. In urban India, the same is expected to grow from 46 million to 59 million. Thus, the absolute size of rural India is expected to be double that of urban India. Even in lifestyle products, rural India will be significant over next five years. There is a need to differentiate the brand according to regional disparities. The differentiation may not necessarily be in terms of product content. It may also be in terms of packaging, communication or association with the brand. The brand has to be made relevant by understanding local needs. Even offering the same product in different regions with different brand names could be adopted as a strategy. At times it

is difficult to pass on an innovation over an existing product to the rural consumer unlike his urban counterpart - like increased calcium or herbal content or a germ-control formula in toothpaste. According to Mr. Shivakumar, of HLL, the four factors which influence demand in rural India are - Access, Attitude, Awareness and Affluence. HLL has successfully used this to influence the rural market for its shampoos in sachets. The sachet strategy has proved so successful that, according to an ORG - MARG survey, 95 per cent of total shampoo sales in rural India is by sachets. The company had developed a direct access to markets through wholesale channel and created awareness through media, demonstration and on ground contact. This changed the attitude of the villagers.

1.6 RURAL PRODUCT STRATEGIES

Typical shop in rural India stocked with sachets and various products.

The and rural consumers:

following are the product strategies for the rural market

1. Small Unit Packing: This method stands a good chance of acceptance in rural markets. The advantage is that the price is low and is easily affordable by the rural consumer. Products like shampoos, pickles, biscuits, etc have tested this method.

2. New Product Designs: The manufacturer and the marketing men can think in terms of new product designs, keeping in view the rural life style.

3. Sturdy Products: Sturdiness of the product either in terms of weight or appearance is an important criterion for rural consumers. For the rural consumers, heavier weight means that the product is more durable,

4. Utility Oriented Products: Rural consumers are more concerned with the utility of the product and its appearance.

5. Brand Name: The rural consumers do give their own brand name on the

name of an

item. A brand name or logo is very important for a rural consumer for identification purposes.

Branding: Brand is the term, name, sign, symbol, design or a combination of them, which helps to identify the seller products & identify them from competitor products. Its primary purpose is creating an identity of the product. The brand names should be easily understood & recognized by the rural consumer. Unfamiliar & absurd brand names cause hesitation in the minds of the consumer. The rural brands are recognized through symbols, logos and colours. E.g. -Billi waali cell - Battery with the cat as a symbol- Eveready. Packaging: It is providing a container/wrapper for a product for the purpose of handling & protection. The three levels arei.Primary package- To hold the product, e.g. bottles. ii.Secondary package- To hold the primary package, e.g. cardboard boxes. iii.Shipping package- To carry the secondary package from one place to another e.g. corrugated boxes. All products need shipping package. HLL has made bubble pack shampoos. They are neither sachets nor bottles & works on the principle of capillary action. The rural markets were kept in mind & this type of package was developed keeping in mind the convenience of storage after use. The following strategies must be adopted by a marketer launching a product in rural markets. 1. The product for rural market has to be simpler and easy to use . 2 .The product has to be conveniently packaged for low price and convenient use. Sachets

were one of the popular methods through which companies targeted rural markets.

. The product literature has to be simple enough for the rural customer to understand.

There should be no product frills: only functional benefits should be communicated even on

the packs. Lack of information has led to rural folks finding alternative uses for the same products. 4. Brand identity in rural markets is often created through the brands logo or the colour of the product, at times even the taste of the product. Packaging Strategies Packaging is defining new paradigms in rural marketing, making it perhaps the most vital component in marketing mix. According to the survey of National Council for Applied Economics and Research (NCAER) in 1998, it is the low-income group which now comprises of overwhelming majority of consumers for mass consumption products. The study indicated that almost 90% of goods surveyed were purchased by people earning less than 18,000 per annum. Marketers have realized, To enter the rural market, it is necessary to offer products at the lowest unit price. At the same time, innovative packages are necessary to add value to the premium products. Particularly, Innovations, which help lower the price, are desirable. Small packs and combi-packs have become a major attraction in rural India. a) Small packs: The reasons for high preference to small pack low-unit prices are (i) Affordability : The income of rural consumers is unsteady. The sources of income as well as the size of income earned per day vary. They cannot hence make planned purchases and large purchases. Small pack sizes help the rural consumer pick the product at a price that he can afford. (ii) Usage : Certain products like detergent and paste are bought in larger quantities, whereas shampoos, toilet soaps, eatables are bought in small pack sizes. The reason for this is: The products that are common to family members are bought in large pack sizes whereas individual-use products are preferred in small packs. (iii) Storability : The storage life of a product also has a bearing on this decision. Edibles, for example, cannot last long unless preserved and kept under ideal conditions. Further shelf space of rural consumers is also limited as they live in small huts or semipucca houses. (iv) Benefits to Retailer : The small pack sizes are convenient to the retailer to do his business and promote the national brands. The shelf space of rural retailers is less. He cannot afford big premises. Small pack sizes do not demand shelf space. (v) Display : Smaller sizes are easy to display. They increase the visual appeal they carry compared to large ones, the colors on the smaller packs are looked at with more interest.

(vi) Implications to marketers : Manufacturers prefer producing large pack sizes. The economies of scale indicate that small pack sizes are less feasible. However, on the marketing side, benefits are revealing. They induce strongly rural consumers to buy. Trail sales of national brands are on the rise. Regular sales are growing up for many products. The regional\ local players are finding it difficult to face competition from the big players on their home turf.

b) Combi-packs: Another packaging innovation is combi-packs . When related products are packed together and sold at economy prices, the consumer finds it a better option to buy. The combi-pack may become an assortment when more than two products are packed together

c) See-through packs: Many companies are coming up with new packages that are attractive as well as economical.

1.7 RURAL PRICING STRATEGIES:

Pricing strategies are linked to product strategies. The product packaging and presentation also keeps the price low to suit the rural consumer. I. Low Cost/Cheap Products: This is a common strategy widely adopted by manufacturing and marketing concerns wherein the price can be kept low by low unit packing like paisa pack of tea, shampoo sachets, etc. To decrease the cost and thereby the price, company adopts the following methods:1) Refill Packs/Reusable Packaging: Health drinks available in the urban areas. The containers can be put to multipurpose uses, which can have a significant impact in the

rural market. E.g. tea, coffee & many other consumer goods re available in refill or reusable packages.

2)

Application of Value Engineering: In the food industry, Soya protein is being used instead of milk protein. The nutrition content of both being the same, Milk protein is expensive whereas Soya protein is cheaper. The basic aim being to reduce the value of the product so it becomes affordable to a larger segment, thus expanding its market.

3)

Discriminatory pricing:

Discriminatory pricing is employed to charge different customer groups differently projecting differences in quality of offer. a) Product from pricing: Different versions of product are priced differently but not proportionately to their respective costs. Eg: Beverages are offered in different sizes and packs. The unit price differs. New Lipton Tazgi tea is available in 50 gms (Rs. 7.50), 100 gms (Rs. 14.50), 250 gms (Rs. 42) and 500 gms (Rs. 84). b) Location pricing: The same product is priced differently at different locations through the cost of offering at each location is the same c) Time Pricing: Prices are varied by day or season. Eg: Umbrella is demanded in season so priced high during that time. 4) Penetration Pricing:

Penetration is chosen when market is highly price sensitive, and a low price stimulates market growth. Products like Chik shampoo, Rin detergent penetrated the market with lower prices in the initial stages and later went up the price ladder. 5) Value Pricing:

It involves setting prices reasonably at a lower level compared to competitors through careful streamlining of operations to become a low-cost firm without sacrificing quality. It involves human development, quality management, supply chain management, etc. In India many companies are adopting this approach as the markets are saturated and competition has intensified. 6) Psychological Pricing:

Some smart sellers quote their prices that end in an odd number e.g. Rs. 99.95 paise. It conveys two notions.

i. ii.

There is a discount or bargain It belongs to a lower price range.

Eg;- Bata Shoe Company has been using this price tactics since long. It is present in both Rural and Urban markets. a) Reference Pricing: Marketers position and sell products at higher prices by endorsement of products by celebrities, placing product along with classy products, referring to the purchases made by aspiration or associate group members or by stating that the current price is lower than the original one. Eg: A shampoo is referred to Re 1, Match box at 50 paise , etc.

1.8 RURAL PROMOTION STRATEGIES:

The promotion measure should be cost effective. Word of mouth is an important message carrier in the rural areas and opinion leader play a significant role in influencing the prospective rural consumers about accepting or rejecting a product or a brand. Other attributes are explained as under: 1. Mass Media: Mass media is a powerful medium of communication. The mass media generally used are: a. Television b. c. d. Cinema Radio Print Media: handbills, booklets, posters, 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. A highly motivated sales person can achieve this. Word of Mouth holds a lot of validity in the rural areas. This is the reason why opinion leaders are thriving among rural consumers.

3. Special Campaigns: These should be undertaken during harvest & marketing seasons in rural areas. E.g. Tractors owners meet (tonee) conducted by MRF.

1.9 Media Mix for Rural markets

The firm has to choose a combination of formal & non-formal media in the rural context. Media is the channel for promotion of products in rural markets. The possibilities are enlisted below:

A)

The Formal Organised Media: 1. T.V.: T.V is the prime medium for delivering a campaigns Advertising message. It has the potential to become the primary medium for rural communication, 77% of the villages in India receive T. V. transmission & 27% of all rural people actually watch T. V. E.g HLL uses DD1 to promote its brands in rural areas through advertisements.

2. Cinema: 29% of rural people watch cinema as a part of their regular lifestyle. Most villages have cinema house. Advertisements, documentaries combining knowledge and entertainment can be employed for rural promotion of products. Eg In western Indian Villages film stars like Govinda have been used to promote Wheel of HLL.

3. Radio: It is a well-established Expansions in broadcasting facilities have taken place over the years medium in rural areas. Radio has a reach of 99% of rural India.. FMCGs brands mostly use radio in rural marketing. 4. POPs: The POPs point of purchase promotion tools area is quite useful in rural markets. They should be designed to suit rural requirements, using symbols & bright colours.

5. Print: Print is gaining dominance as a advertising medium because of the increasing literacy levels amoung rural folk. Newspapers like Dainik Bhaskar, Navbharat times, Eenadu and Malayala Manorma are very popular in Indian villages.

6. Outdoor: Many companies are using Hoardings, Wall Paintings, etc., as part of their outdoor medium. Wall paintings are an effective and economical medium for advertising in Rural areas. Eg: Some FMCGs like HLL use wall-paintings to capture the attendance of their audience for products as Wheel, Lifebuoy etc. B) Informal/Rural Specific Media: 1. Music Records, Harikatha, and Puppet Shows: Music cassettes/records are a very effective, inexpensive and appealing medium, which can be used in cinema houses etc. where people gather regularly. The traditional art forms such as puppet shows, harikathas render themselves for communication in rural society and can be used at melas.

2. Melas and Haats:- According to the Indian Market Research Bureau, around 48000 haats and 25000 melas are held in rural India every year and annual sales at melas amount to Rs.350 crore. Besides these melas, rural markets have the practice of fixing specific days in a week as Market Days when exchange of goods and services are carried out. NCAER estimates half of these brands sold at haats and melas are FMCG brands.

3.Wall Paintings:- Wall paintings are an effective and economical medium for advertising in rural areas. They are long-lasting, and remain as long as the weather permits. The message should be clear. The best way of attracting attention is to use bright colours that do not fade. Some FMCGs like HLL, Pepsi, HMT use wall painting to capture the attention of their audience. A wall painting in rural area

4.Group Meeting, Demonstration, and House-to-House Campaigns: The promotion staff of the firm can effectively carry the product messages and demonstrations to the target audience at the group meetings. Promotion squads make house-to-house visits. They carry along product samples and promotion literature along with them.

For eg:- HLL runs the program of Self-Help Groups (SHG), which operate like direct-to-home distributors. 5.Audio Visual Publicity Vans (AV Vans): The AV unit is very useful for rural communication. The firm can exhibit films, presentations, slide shows etc. The van can be used for sales campaigns in addition to promotions campaigns. They are quite popular with rural marketing firms. 6.Syndicated AV Vans: In recent years, rural publicity vans have become a purchasable service. Firms which afford to operate publicity vans of their own can utilize the syndicated AV vans service offered by independent agencies. 7.Interpersonal Media: They have a special merit since they facilitate two-way interactions. They also bring market feedback to the firm. Advantages of interpersonal media are they are segment specific, market specific and score high when it comes to participation and involvement of the audience. 8.Booklets/Calendars for Rural Areas: There are booklets in rural areas on folk heroes, folk songs and religious activities. There are also rural calendars (Panchang) which are effective promotion tools for rural advertisers. E.g Lifebouy prints Laxmi calendars with soap packaging.

1.10 RURAL DISTRIBUTION STRATEGIES .

I. The Private Village Shops: Private shops are the main channels in the rural market for a large variety of products. They are also the cheapest and the most convenient channel to align with. The village shopkeeper is forced to deal in a large number of products in order to make his operations viable, which means a large inventory. The larger lead-time for replenishments from urban based production point enlarges the inventory holding further. And as his sales are not uniform throughout the year, he has to carry inventory over a longer period of time, leading to the blocking up of his capital.

II.

Satellite Distribution: A concept known as Satellite Distribution can be tried in developing a distribution channel in the rural market. Under this system, the firm appoints stockist in feeder towns, who take care of financing, warehousing the goods and subdistribution of goods. The firm also appoints a number of retailers in and around the feeder towns and attaches them to the stockist. The goods are supplied to the stockist either in cash or credit or on consignment basis.

The sales volume of the retailers will vary depending on the potential of the area covered and the capacity on the dealer concerned. Over a period of time, some retailers grow in terms of business turnover. If such retail points also happen to be transportation centers within the feeder town area, the firm elevates them as a stockist. The area of operation of the original stockist shrinks in this process, but care has to be taken to see that his volume of business does not shrink. This is achieved, in practice, on account of growth in demand and deeper market penetration. If twenty retailers operate in the network of an original stockist, five or six of them get elevated over a period of time as stockist. Out of the retailers some remain attached to the original stockist and other relevant factors. The process continues as long as the market keeps expanding. And at any point of time, enough retail points in variably hover around or particular stockist, hence the name Satellite Distribution. The main advantage of this system is that it facilitates market penetration in the interiors of market. However, the firm must ensure is that it facilitates market penetration in the interiors of the market. The firm must ensure that in the process, the motivation of the earlier generation stockist is not destroyed due to overzealous and premature elevation of the retailers into stockist. III. Syndicated Distribution

Channels of distribution are a major problem for a new company targeting the rural market for the first time. The biggest problem a new company faces is that there are too many levels in the channels (multiple-tier), and setting up a distribution channel for rural markets is a costly proposition. Coca Cola India purchased the Parle brands (Thums Up, Limca, etc.) for Rs. 550 crore in 1993 mainy to use Parles existing distribution network. But small companies cannot afford to buy another company for distribution. The solution for small companies : tie up with a leading company that already has a presence in the rural market to distribute products through its distribution network. The golden rule is the small companies should not deal in the same product that the leading company sells. A successful model of syndicated distribution is P&G using the rural distribution network of Marico to sell Ariel, Tide, etc. In the initial stages, CavinKare uses the distribution network of Amrutanjan Pain Balm for its Chik shampoo. Other Possible Experiments

Marketers can use the existing pattern with adaptations when necessary, they can also undertake new experiments in the field of rural distribution. Some strategies are discussed here. a) Integrated marketing outlets: There has been some discussion recently on developing outlets in the rural market to sell a variety of related products from the same point. The package approach and integrated marketing approach have been tried in some areas, particularly in the field of marketing agricultural inputs. Such grouping of products has some disadvantages. It may not necessarily contribute to distribution efficiency. Though both these functions are related to agriculture, they call for different types of resources, talents and facilities.

b) Combining in and out operation in rural marketing: In some sectors, rural marketing outlets are already combining the two operations of buying and selling. Cooperative marketing societies, in particular, help in the marketing of agricultural products and supply agricultural products and supply agricultural inputs to farmers. They also act as suppliers of credit in cooperatives with credit cooperative societies at the village level. But whether it is wise to adopt this pattern to cover the entire marketing structure in rural areas is a debatable point. The in operations are quite different in nature from out operations. The decision to combine or not will have to be taken depending on products and individual dealers. However, the distribution infrastructure is common to the in as well as out operations. One should always look for possibilities of combined planning and action covering the two operations.

c) Rural supermarkets: It is quite likely that the supermarket concept will sooner or later invade the rural market. Both cooperative supermarkets and departmental stores could function side by side.

Physical distribution Physical Distribution is the process of delivering products to the marketing channels and consumers. It encompasses the various activities involved in the physical flow of the product, from the manufacturer to the consumer. a) Transportation

The transportation infrastructure remains underdeveloped in rural India. India has railway network, road transport, Waterways are an easy transport option in states like Kerala, Jammu and Kashmir etc. Strategies: Many marketers, like HLL and LG use animal carts to carry their goods. Mobile traders are of immense help to FMCG companies that are penetrating rural India. There are around two lakh mobile cycle traders in rural India, who sell brands like lifebuoy etc.. b) Communication

Communication plays a pivotal role in distribution for rural markets. Strategies: Companies like ITC are using Internet (e-choupal). Others like n-Logue Communications are harnessing the power of Internet for communication in rural areas. It provides e-mail services in vernacular languages. Companies that are in rural markets can take the help of such organizations and use them to communicate with dealers. c) Warehousing

Companies find difficult to find suitable godowns in many parts of rural India. There are no public warehousing facilities in the interiors of Rural India. Strategies: HLL and ITC, the pioneers in rural marketing in India, have a fleet of delivery vans for rural distribution. The vans take the products to retailers in every nook and corner of the country. It is better for companies to have their own mobile warehouses rather than using cooperative or central godowns. And thereby they save on the cost of constructing warehouses of their own. CHANNELS OF DISTRIBUTION The various channels of distribution include ; Wholesaler, Retailer, Vans, Weekly Haats, Bazaars and Shandies.

(i) Wholesalers
More than 70 per cent of the rural markets are still beyond the pale of direct distribution, the consumer boom not withstanding. Since, wholesale trade in India has remained largely unchanged over the years, there is a need to revitalize it. The Indian wholesaler is principally a galla-kirana (food-grain) merchant who sustains the belief that business is speculative rather than distributive in character. He is a trader/commodity merchant rather than a distributor and therefore, tends to support a brand during boom and withdraws support during slump. The reasons for this speculative character and dormant role of wholesalers are: Indian market was largely sellers market. There was no need for active sales approach. Companies laid more emphasis on retailers in urban areas, who are very large in number.

As a result of retail based distribution, wholesale-based distribution was weakened. Rural markets were neglected by many. The occurrence of retail outlets was low.

Therefore many companies were dependent on wholesalers. Few companies operated mobile vans to distribute products to village shopkeepers.

The current need is to activate and develop wholesaler of the adjoining market as a distributor of products to rural retail outlets and build his loyalties to the company. It is necessary to adopt a conservative, go-slow approach. Overzealous marketers do not like to depend on the uncertain loyalties of wholesalers. They may aggressively draw up and implement direct service plans to reach retail outlets and village consumers. This will adversely affect the interests of wholesalers.

(ii) Retailers
Village retailers have traditionally been amongst the most mobile of rural residents. Often doubling up as money lenders, their occupation facilities multi person interaction in the closed village society. As a result retailer plays the significant role: (a) Credibility

He enjoys the confidence of the villagers. His views are accepted and followed by the rural people whose awareness and media exposure levels are low. The urban retailer is not trusted . He is seen as a businessman with s profit motto. His viewpoints are evaluated wit other sources of information. (b) Influence leader

His role as influence leader is indisputable. From tender twig of neem to washing powder, retailer testimony has been vital part of the product adoption process. The role of urban retailer, on the contrary, is weak. The urban consumers have numerous sources of information. While the retailers opinion is sought it may not be hundred percent believed and followed. (c) Brand promoter

With the increasing number of brands in the place of commodities, concept selling has come to a close. Brand choices are easy as the brand characteristics and benefits are communicated through different promotion media. Despite the direct one-to-one communication, the retailer remains the deciding factor to sell a particular brand. There are no shelf displays or point of purchase influences. It is the retailer who helps in identification and selection of brands. The presence and sales of spurious brands is an ample testimony to this view. Higher retail margins with lower end consumer prices, supported by pack formats identical to the original, these spurious brands sell on the premise of maximum retailer push though maiming returns to the retailers. No promotion, ads, customer pull .. the retailer does all. The urban retailer has a limited role as a brand promoter. He cannot directly , recommend the brands. He has to intelligently drive home his recommendations, as urban consumers do not trust him completely. It is through shelf displays and incentive offers that he has to push the brands. (d) Relationship marketer

Village retailer practices relationship marketing. He caters to a set of buyers who have incomes derivative from immovable land resources and would be static over a such longer time span. The relationship could extend beyond three generations, backed by historical credibility of the retailer as a product referral. On the contrary, the urban retailer has to make an effort to adopt relationship marketing. His customer base comprises largely the mobile service class prone to shift residence atleast once, if not more, in less than a decade. This limits the time span and perspective of the retailer-customer relationship. (e) Harbinger of change

Village shopkeeper has not been merely a seller of wares. In an environment relatively isolated from external developments, he has been harbinger of change. He is one of the main sources of information and opinion as well as supplier of product and services. As against this, we find urban retailer, wielding limited influence in changing the product choices and quality of life of consumers. The retail outlets are now in for a change with the corporate marketers finding then as right places for promoting their products.

(iii) Vans
Marketers need to make more on- ground contact with their target audience as well as make demonstration of products as consumers in rural markets rely on the 'touch and feel' experience. One of the ways could be using company delivery vans which can serve both the purposes.

Mobile vans long since have an important place in distribution and promotion of the products in villages.

(iv) Weekly haats, Bazaars , Shandies

The haats are the oldest outlets to purchase households goods and for trade. These markets are very well organized with shopkeepers having pre-assigned spaces for them to sell their wares. A typical market is an open field with ample space for displaying all sorts of goods. Its location changes every week. These markets have different names in different regions. But they are strikingly similar in what they sell. It is reported that there are, in all, about 47,000 haats held throughout the country. (a) Merits 1. Convenience: The entire market can be related to large departmental stores in cities, where the advantage is one stop shopping exercise. These outlets crop up every week, providing consumers immense choice and prices. 2. Attractive: The weekend shopping is not only convenient but also entertaining. The markets start early and will be over by lunch. Afterwards there will be entertainment. In respect of transactions, it is an attractive place to those who want to buy second hand durables and to those who prefer barter transactions. Further the freshness of the produce, buying in bulk for, a week and the bargaining advantage attract the frugal and week long hard working rural folk. 3. Availability: It is a market for every one and for everything. Household goods, clothes, durables, jewellery, cattle, machinery, farming equipment, raw materials and a host of products are available. (b) Implications to Marketers : Pradeep Kashyap, Director, Mart, who has conducted many studies on these markets observed: These markets have high potential that corporate are now waking up to. They offer good scope for distribution. For urban marketers, who have stockist and distributors that dont service remote areas, this form of selling can be a boon. A simple redistributorship arrangement can be worked out.

(v)

Melas and Fairs

This is another low cost distribution channel available to the marketers. It is comparable with urban events like Wills Trophy, India International Trade Fair (IITF), Sajavat or Cnsumex in which audience participation varies from a few thousands to a few lakh people. These melas are ancient and part of Indian cultural heritage.

Most of the fairs are associated with either a religious event or a festival. Among the most famous melas in the mighty Kumbh Mela at Allahbad (Triveni Sangam), Pushkar mela Rajasthan, Kullu Dusshera mela in Himachal Pradesh, Sonepur mela in Bihar and Makar Vilakku in Kerala. People from all over the country gather to taste the wonders of India. According to the Indian Market research Bureau (IMRB) around 8000 melas are held in rural India every year year and annual sales at melas amount to Rs.3,500 crore. According to Rural Scan (Quarterly News letter by MICA (Mundra institute of Communications, Ahmedabad) there are on an average, 1000 melas held in a state annually. The average duration of a mela is anywhere from one to 45 days. At a mela there can be as many as 854 stalls. Some 18.4 per cent of these are local stalls (belonging to a few hundred villages), 40.8 per cent are regional (they belong to a few districts ) and 40.8 per cent are national. An interesting statistic is that the share of manufactured goods at melas in around 42 per cent. Like urban events these melas need little or no pre-publicity. They have come to occupy a firm position in the rural calendar of festivities. Most of the fairs are associated with a religious event or a festival. As with religious events, the dates of most fairs are determined by the Hindu calendar, not the Gregorian one. Most fairs are expressions of local need to celebrate. A villager, who has attended it since childhood looks forward to it month in advance. A majority of the melas are held during October-November and January-April. This coincides with the Kharif and Rabi harvests when the Farmers purchasing power is high. With both money and leisure at hand, he is inclined to indulge his family with a day out at the mela. He also looks forward to updating himself on the latest farming practices and on consumer goods. Visitors to fairs are thus highly receptive to try out new products and also come with enough money to do so.

Besides these melas, rural markets have the practice of fixing specific days in a week as Market Days when exchange of goods and services are carried out. Also, every region consisting of several villages is generally served by one satellite town where people prefer to go to buy their durable commodities. The problems faced by companies in Rural Distribution are as follows:1) Multiple tiers, Higher Cost and Administration Problems: The distribution chain in the rural context requires a large number of tiers as compared to the urban context. In the rural context, at the minimum level the chain needs the village shopkeeper, the wholesaler, etc., whereas at the top level involves the manufacturers own warehouses, office operations at selected centers. Such multiple tiers make channel management a major problem area.

2) Scope for Manufacturers own Outlets Limited: Greater Dependence on Dealers: Scope for manufacturers direct outlets such as depots or showrooms is limited in rural markets unlike in the urban context since it is expensive and unmanageable. 3) NonAvailability of Dealers: There is also a problem of availability of dealers. Suitable dealers are limited even if the firm is willing to start from scratch and try out rank newcomers; the choice of candidates is limited.

4) Poor Viability of Retail Outlets: Sales outlets suffer from poor viability in the rural market. Scattered nature of market and the multiplicity of tiers in the chain use up the additional funds the manufacturer is prepared to part with. Moreover the business volume is not adequate enough to sustain the profitability of all groups and the retail tier is the worst sufferer.

5) Inadequate Bank Facilities: Due to lack of bank and credit facilities distribution in rural markets is handicapped. Rural outlets need banking support for 3 important purposes; -In facilitating remittances to principals and to get fast replenishment of stocks. -In receiving supplies through bank (retiring documents with the bank). -In facilitating securing credit from banks. It is estimated that there is only one bank branch for every 50 villages.

6) Inadequate Credit Facilities from Banks: Another constraint is the inadequacy of institutional credit. Rural outlets are unable to carry adequate stocks due to lack of credit facilities. The vicious circle of lack of credit facilities leading to inadequate stocking and loss of business, finally result in poor viability of outlets, getting perpetuated. Case Study

Introduction To Metro Cash & Carry A Business (B2B) concept Focuses on meeting all the needs and requirements What is "Cash & Carry" Food and nonfood assortment It includes physical evidence audit

Objectives Of Metro Cash & Carry As a we are currently in the cooperative market, we decided to expand and adapt into the rural market. To develop the knowledge regarding rural and urban markets. The corporative are able to focus on economic development from the rural development that would take place. How to become a member GET YOUR METRO CARD IN 4 EASY STEPS 1. Fill in the application form 2.Present your business license and your Photo ID along with a copy at the Distribution Centre. 3.In case of proprietorship firm, a self declaration is needed and for the rest, a declaration by the authorized signatory stating that the purchases are for their business is required. 4. You will receive your temporary METRO Card. Our customer consultant would personally visit you and introduce you to the concept and hand over your METRO card to you About the Card

Personalized cards are issued to the representative of the business to facilitate business purchases at any of the METRO Distribution Centre across the globe.

Metro Card

Benefits Provided To Rural Markets . Best Prices 2. It's your Warehouse 3.Everything under One roof 4. Extended business hours 5. Quality guaranteed

6 After sales Service 7. Offers at your fingertips

8. Great value for money WHY COMPANIES GO RURAL? Over the years Rural India has seen an impressive growth. Substantial improvement in purchasing power, increasing brand consciousness, changing consumption pattern and rapid spread of communication network in rural areas has presented a growing potential for the corporate sector. Its better to target the rural market as it is growing by the day. Rural India is emerging as a large market for a number of goods and services financial services, health care, education and telecommunicationthe list seems to be endless. Today rural markets are as critical as urban markets for marketers. Here are some of the reasons: Urban Markets Are Getting Saturated There is cutthroat competition in urban markets, with a wide variety of choices of products. Its becoming difficult for existing companies to maintain their market shares in urban markets. For example, it is reported that there are around 86 branded cosmetic soaps in the urban markets! So there is no point for a new company to enter the urban market. The rural markets provide better opportunities. A Huge Untapped Market

With only around 1,00,000 of the 6,38,667 villages tapped so far, there is huge potential and market areas. With a rural population of more than 700 million, it is a huge market. Rising Disposable Incomes Good monsoons during the past 10 years have raised farmers incomes. Nonfarm sectors now account for almost 50% of total rural incomes. Its a market that corporates cannot afford to ignore. Another reason for the rising disposable incomes of villages is that agricultural income is not taxed.

Remittances from Abroad.

Many households in rural India have one of their family members abroad , mostly in Gulf countries . People working there send their saving to their families in India , which is an additional source of Income. Impact of the Media

The growing rich of the electronics media has created a huge change in the lifestyles of rural consumers because of TV programmes like soaps and other serials. Rural people are spending more on lifestyle products like lipsticks. Modi, Revlons, for instant, sells more lipstick in the rural market than in urban areas. The Indian rural market with its vast size and demand base offers a huge opportunity that MNCs cannot afford to ignore. To expand the market by tapping the countryside, more and more MNCs are foraying into India's rural markets. Among those that have made some headway are Hindustan Lever, Coca-Cola, LG Electronics, Britannia, Standard Life, Philips, Colgate Palmolive and the foreign-invested telecom companies. Problems in the Booming Rural Marketing Although the rural market does offer a vast untapped potential, it should also be recognized that it is not that easy to operate in rural market because of several problems. Rural marketing is thus a time consuming affair and requires considerable investments in terms of evolving appropriate strategies with a view to tackle the problems. The major problems faced are: Underdeveloped People and Underdeveloped Markets:

The number of people below poverty line has not decreased in any appreciable manner. Thus underdeveloped people and consequently underdeveloped market by and large characterize the rural markets. Vast majorities of the rural people are tradition bound, fatalistic and believe in old customs, traditions, habits, taboos and practices. They face frustrations of intermittent, inconsistent electrical power , archaic , scarce and unreliable and telephony , non-feudal politicobusiness associations that hinder development efforts, deeply ingrained ideologies of caste hierarchy , gender inequality , and religious-communal difference , as well as significant deprivations of basic human needs. Lack of Proper Physical Communication Facilities:

Nearly fifty percent of the villages in the country do not have all weather roads. Physical communication of these villages is highly expensive. Even today most villages in the eastern

parts of the country are inaccessible during the monsoon. Morever, 3,00,000 villages in the country have no access to telephones. Media for Rural Communication:

Among the mass media at some point of time in the late 50's and 60's radio was considered to be a potential medium for communication to the rural people. Another mass media is television and cinemas. Statistics indicate that the rural areas account for hardly 2000 to 3500 mobile theatres, which is far less when compared to the number of villages Many Languages and Dialects:

The number of languages and dialects vary widely from state to state, region to region and probably from district to district. The messages have to be delivered in the local languages and dialects. Even though the numbers of recognized languages are only 16, the dialects are estimated to be around 850. it is difficult for marketers to design promotional strategies in different languages and local dialects. Facilities such as phone , telegram , fax are less developed in villages , adding to communication problems faced by marketers in distribution of goods etc. Dispersed Market:

Rural areas are scattered and it is next to impossible to ensure the availability of a brand all over the country. Seven Indian states account for 76% of the country's rural retail outlets, the total number of which is placed at around 3.7 million. District fairs are periodic and occasional in nature. Manufacturer and retailers prefer such occasions as they allow greater visibility and capture the attention of the target audience for larger spans of time. The fairs at Pushkar , Ujjain , Kota and Bulandshesher are major sources of attention for the rural buyer but arent concentrated unlike urban markets. Advertising in such a highly heterogeneous market, which is widely spread, is very expensive.

Low Per Capita Income:

Even though about 33-35% of gross domestic product is generated in the rural areas it is shared by 74% of the population. Morever, demand for goods in rural markets depends upon the agricultural situation, as agriculture is the main source of income and agriculture to a large extent depends upon the monsoon. Therefore the demand is not stable or regular.

Hence the per capita incomes are low compared to the urban areas. Low Levels of Literacy:

The literacy rate is low in rural areas as compared to urban areas. This again leads to problem of communication for promotion purposes. Print medium becomes ineffective and to an extent irrelevant in rural areas since its reach is poor and so is the level of literacy. Prevalence of spurious brands and seasonal demand:

For any branded product there are a multitude of 'local variants', which are cheaper, and, therefore, more desirable to villagers. Rural consumers are cautious in buying and decisions are slow. They like to give a product a trial and only after getting personal satisfaction do they buy it again.

Different way of thinking:

There is a vast difference in the lifestyles of the people. The kind of choices of brands that an urban customer enjoys is different from the choices available to the rural customer. The rural customer usually has 2 or 3 brands to choose from whereas the urban one has multiple choices. The difference is also in the way of thinking. The rural customer has a fairly simple thinking as compared to the urban counterpart. Life in rural areas is still governed by customs and traditions and people do not easily adopt new practices.

Research & Development Backbone of the company Analyze the needs and changing trends Includes Market Survey Researches the profile of the rural markets Enviromental Analysis Focus on Entire profile of rural market. Suitability of Market

 Able to create strategies. Market Segmentation Process Segmentation Basis Segmentation Process Segmentation Identification Examination Evaluation Targeting The targeting strategy depends on the segmentation. The whole customers are taken into consideration We are targeting the small groceries and retail stores owner Try to attack consumer mindset Selecting Target Market Segmentation Positioning Now we are able to launch our service Firstly we identify the competitors We portray the departmental wholesale store in various aspects

Questionnaire / Survey We are doing a survey on Metro Cash & Carry and would be grateful if you could please fill up the form below: 1. Name ________________ 2.Age ________ 3.Occupation ______________ 4.Location _________________ 5.Monthly Income below 100000[ ] 100000-200000[ ] above 200000[ ]

 6.Preference of Purchase wholesale store[ ] market[ ] cash & carry[ ] 7.Have you heard of Metro Cash & Carry ? Yes[ ] No[ ] 8.Do you expect any services from metro ? Specify Yes[ ] No[ ] ____________________________________________ 9. What is your opinion about the prices offered by your wholesaler? Excellent[ ] Good[ ] Average [ ] Below Average[ ] 10. What do you say about the quality offered? Excellent[ ] Good[ ] Average [ ] Below Average[ ] 11.Are you satisfied with the packaging? Yes[ ] No[ ] 12 . Any feedback you would like to provide? ______________________________________________________________________________ _______

Strategies Applicable It includes Integration Strategies: Backward Integration Forward Integration Penetration Pricing Strategy Establish Relations With Retailers Relation With Retailers Create loyalty Will conduct a meeting

 Create trust Benefits to Retailers Provision of free consultancy services The rickshaw scheme Cost advantage Employment Opportunities Marketing Mix Place A proper location for goods distributed is necessary Ratnagiri is where the wholesale unit is stationed at i.e , Metro India ltd. The goods come to the unit from a large no. of carriers from Chinchpokli in Mumbai

Villages in Ratnagiri Anjarle 3 stores

Ashti, Khed 2 stores Asurde 1 stores Bahirwali nil Bhoo, India- 2 stores Borundi 6 stores Kelane 4 stores Kondivali -6 stores Kurang 2 stores Rajwadi - 15 stores Saitavde 5 stores Sasale 4 stores Shirgaon, Ratnagiri - 8 stores Shirshi -2 stores Shringarpur -6 stores Mandangad 4 stores Palgadh 20 stores Total no.of retail stores within the radius of 30km =90 stores Promotion Set up billboards Personal selling Mouth publicity Sales Promotion Ways of advertising a) Radio b) Banner c) Paint up ads d) Put posters e) Hire a autorickshaw Products Durable Goods Non Durable Goods

Pharmaceutical Good

Soap Shampoo Toothpaste Body Lotion Conditioner Hair Oil Cream Dairy products Baby Products Mens Razor Kit

Pulses Cereals Fruits Vegetables Snacks Hot beverages Cold beverages Ghee Sugar Cooking Oil Ready to cook meals

Tablets Syrup Ointment

Price Used the strategy of: a) Mark Up Pricing Strategy b) Competitor based pricing A intermediary between the manufacturers and retailers. We charge a very nominal amount of profit Supply Chain

 Supply chain gains their cost advantage. It has foreign suppliers as well as local suppliers The supply chain management function helps the organization in many ways Wholesale unit is in Ratnagiri It is supplied to the our branches Modes Of Transportation Transportation We have developed synergies in transportation and logistics, we have refrigerated vans and backup staff running the whole day to ensure fresh and dedicated supply of our items at all times.

Metro Vans

Rickshaw

Competitors Couple Of Competitor a) Makro wholesale competitor b) Kashi Jarnal shop c) Aakanksha FMCG shop Ways to compete with our competitors

Swot Analysis Strengths First on the market Store concept and a wide variety of brands One stop shopping Supply chain Low prices and high quality Cost advantage Friendly and cooperative staff Weakness Poor HR management

 Matrix organisational structure Slow reaction to market changes Opportunities Economical growth Growing market of cash and carry Contracting with other small retail shops Threats Market competition International crisis Lack of professionals Rural psychology Low income Low saving capacity Poor law and order situation in rural areas High inflation rate Challenges Of Rural Market Infrastucture Transportation Communication Mentality of people in rural areas Traditional methods Problems of promotion and advertisement Job Employment Created due to low purchasing power Employ locals to promote the wholesale sector. Benefits to promoters Conclusion While doing this project on Metro Cash & Carry we learnt about the rural markets including the critical situations and problems they face, and we understood and learnt how the urban/ corporative markets provide a helping hand to the rural market.

This report is about the significance and objectives of a Strategic Marketing and implementations in the real market. This report is mainly concerned with the marketing plan for METRO Cash & Carry, the departmental chain business. In this report we have discussed that on what grounds the METRO has divided its market into different segments, how they present the product in the mind of the customers. We have surveyed the market and identified such segment of market which is not responding in that way which the company is expected from it. And after this process we select the retailers as customers of METRO store. Moreover, this report shows the competitive advantage of METRO and we check it out whether this advantage is actually working efficiently. Analysis of external (task and macro environment) or PEST analysis and Porters five forces model and focused internal environmental audit is included in this report. After assessing all these things we identify that in which sector the problem arises and after analyzing we suggests certain recommendations to the company to become more efficient and profitable company and satisfy their retail customers. Mission Statement

METRO is a Cash & Carry Wholesaler for businesses and professionals. METRO provides quality products and business solutions at the lowest possible prices

Vision Statement

METRO will dominate the Cash & Carry wholesale segment globally, through our unique business formula which improves the competitiveness of our customers all over the world. Introduction of METRO METRO Cash & Carry is a leading international company in self-service wholesale and operates more than 600 outlets in 29 countries. It is 3rd largest trader in world, 2nd largest in Europe and the Largest in Germany with a turnover of 59.9 billion in 2006. METRO is operating around 2,378 locations in 29 countries, with employees numbering over 263,000 At the operational level, the groups five sales divisions conduct business independently in their respective markets. With over 100,000 employees worldwide, the company achieved sales of 31.7 billion in 2007. By generating almost 50 percent of the total sales, METRO Cash & Carry is the top-selling sales brand of the METRO Group. Assortment and service of METRO Cash & Carrys unique business-to-business model are targeted only towards professional customers such as hotels and restaurants as well as small and mid-sized retailers or institutions. The company offers these special groups a high level of assortment competency both in food and nonfood as well as attractive wholesale prices. An efficient and internationally conferrable concept ensures success in entering new markets. Following is the structure of METRO Group:

History of METRO The first METRO Cash & Carry store was opened in Germany in 1964, the first store abroad in 1971. Since then, the concept has continuously proven to be robust and apt for successful operations in all kinds of market environments. Three different store formats, "Classic", "Junior" and "Eco" allow choosing the best solution for a given environment. They differ in store and assortment size. Lately, the expansion into new markets has been on Eastern Europe and Asia, using mainly the middle sized "junior" store format. Till now, METRO Cash & Carry has had stores in the following countries: Metro all over the World METRO in Pakistan

METRO Cash & Carry announced its operations in Pakistan in January 2006. Since then, it has established itself as a potential market leader in wholesale. Under the supervision of Managing Director Mr. Giovanni Soranzo, METRO Cash & Carry Pakistan has opened its first store in the city of Lahore in October 2007.The Companys country head office is also based in Lahore and currently employs over 400 people in two offices. It has done total Investment of US$ 180 Million and plan to build & operate 10-15 Cash & Carry Stores in Pakistan. There are about 250300 employees per store and the head office is at Multan Road. Objectives Acknowledged first choice Cash & Carry Wholesaler Continuous focus on customer needs and satisfaction Commitment to ethical and environmental values Open communication Innovative in all we do Commitment to give our customers more value for their money Win-win partnership with our suppliers Our employees are our main asset

Market METRO cash and carry business lies in the Monopolistic Competition. There are few sellers and each has its own specialization and it charge the prices according to the product quality and characteristics. There is no entry or exit barrier in this market. Even five more cash and carry businesses are allowed by government to open their branches in Pakistan Chapter 2 The Marketing Process

Customer Driven Marketing Strategy

Segmentation I design the proper segmentation of the METRO Cash and Carry: Geographic Region South Asia Country Pakistan State Punjab City Lahore, Islamabad Demographic Occupation HoReCa Income Level Minimum Rs.20000 Economic factor Inflation, reduced Productivity Psychographic Social Class Working Class (Retailers and Professionals) Buying Habits Convenience Perception High Quality with low price Personality Profit Conscious

Behavioral Benefits Shopping at one place, Customer Care Usage rate weekly Occasion Regular Loyalty status Strong customer relationship Readiness Stage Desirous Targeting At this time METRO cash and carry is concerning with the differentiation strategy. They can also come up with the focus strategy for the retailers so that they think that METRO cares them and conducting a major portion of business just for the retailers. It will convince and internally force them to come to METRO just to admire its services and respect to the

retailers. Positioning METRO at this time although trying to get the low price as the image of this services but they are not properly using the positioning strategy. They have to come up with the positioning statement that conveys the true picture of the METRO along with the benefits of the customers. The following can be a good positioning statement for METRO Cash and Carry. Provide wide range of quality products at lowest prices.

LOGO

SLOGAN cash & cary Marketing Mix PRODUCT Lahore In the growth stage the firm seeks to build brand preference and to increase market share. Product quality is maintained and additional features and support services may be added. Pricing is maintained as the firm enjoys increasing demand with little competition. Pricing to cover development costs Place and distribution channels are added as demand increases and customers accept the product.

Promotion is aimed at a broader audience Islamabad In the introduction stage the firm seeks to build product awareness and develop a market for the product. The impact on the marketing mix is as follows: Product branding and quality level is established and intellectual property protection such as patents and trademarks are obtained. Pricing may be low penetration pricing to build market share rapidly of high skimming pricing to cover development costs Place is selective until consumers show acceptance for the product. Promotion is aimed at innovators and early adopters. Marketing communications seeks to build product awareness and to educate potential consumers about the product.

PRICE As far as pricing is concerned METRO is doing well in this section because METRO has not its own product. It just acts an intermediary for the manufacturers, so it charges very nominal profit on the prices given by the manufacturers. PLACE It should provide carriage facility to the customers on reasonable charge. It should open another branch in Lahore at Gulberg so that people of DHA , Cannt, Garishahu , Shadman and Gulberg can easily visit it. PROMOTION We are suggesting the three months promotional campaign for the METRO cash and carry. For this purpose we suggest the following media and their significance to capture and target the retailers and professionals. Ambient Advertising We will publish our ads on the back side of the electricity commercial bills through out three

months all over the Lahore and Islamabad. Per month charges = Total charges for the three months campaign =

Press Advertisement Our customer is the retailers so we just confine our promotion in newspaper ads in AWAZ in Lahore. Because retailers usually read this newspaper. Ads will be published on Friday and Sunday. Per day charges Weekdays =Rs 963 Sundays =Rs 1060 We publish 27 cm by 4 columns ads on the back page. Ads for the three months campaign Weekdays (13 ads) = (27*4*963)*13 =Rs 1352052 Sundays (13 ads) = (27*4*1060) *13 =Rs 1488240 In Islamabad we opt the Daily Jang newspaper for these two days for initial two months campaign. Ads will be published in colors on Friday and Sunday on the back page. Per day charges Weekdays =Rs 2850 Sundays =Rs 3270 We publish 27 cm by 4 columns ads on the back page. Ads for the three months campaign Weekdays (13 ads) = (27*4*2850)*8 =Rs 24,62400 Sundays (13 ads) = (27*4*3270) *8 =Rs 28,25280 Outdoor advertisement We are placing the billboards at the specialized whole sale markets with the respective products, such as Shah-Alam Market we will place the different house hold accessories ads and in Abid market the electronics ads and Akbari mandi the grocery ads and at the liberty

round about in Lahore and in Islamabad in G-9, Faizabad and commercial markets. Lahore Abid Market (quarterly) size 90*30 =Rs 12,00,000 Ichra (quarterly) size 60*30 =Rs 9,00,000 Akbari Mandi (quarterly) size 60*30 =Rs 9,00,000 Liberty Round About (quarterly) size 90*30 =Rs 2,125,000 Islamabad G-9 Sector (quarterly) size 90*30 =Rs 1,250,000 Faizabad near Ojari camp (quarterly) size 90*30 =Rs 1,325,000 Commercial market (quarterly) size 60*30 =Rs 5,00,000 Outside transport advertising Print the METRO ads along with the product lines and features on the local public transport of Lahore Deawoo service at the rout no 10 and 16 and New khan services on route no 22. Four buses on each route Daewoo rate for 500 sq ft (quarterly) =Rs 1,56,250 Total 8 buses on different routes =Rs 1,250,000 New Khan rate for 500 sq ft (quarterly) =Rs 6,8750 Total 4 buses on different routes =Rs 2,75,000 Personal selling We will send our representatives to the professionals, restaurants and hotels and large bakeries to visit our store and purchase the products from METRO for their uses in services. We also provide carriage facility to our key accounts.

Sales promotion We will provide discounts on specific items such as grocery, clothes and shoes in the month of Ramadan. We will confine our profit margin from 3% to 1.5% just in Ramadan. We will introduce a sales promotion week after every two months in which we will drop our

profit margin by 1%.

Chapter 5 Conclusion and Recommendation Conclusion Summarizing on the whole we have analyze maximum points which might be the resultants of failures and we have suggested the methods to rectify them in order to be efficient in every manner and hold its situation and be the market leader of the cash and carry business in Pakistan.

Competitors Makro is a chain of self-service wholesale stores, so called cash and carry. The first one opened in 1968 in Amsterdam. In the following years stores were opened in the Netherlands and in several other countries within Europe. During the 1970s and 1980s Makro extended its business to America and Asia. Makro later closed its North American sites, however. The stores are not open to the general public, only to businesses which must be registered members in order to gain entry to the store. The still privately owned SHV originated in 1896 from a merger between a numbers of large coal mining companies, some of which had been active since the 18th century. In 1998 the European Makro stores were acquired by METRO a German based retailand wholesale company founded in 1964. The Non-European Makro stores are still owned by except for the ones in South Africa and Zimbabwe. Recommendations Apparently, METRO appears a planned and controlled environment but room for improvement is always there. I suggest the following recommendations to METRO which will help it to sustain its market position and to become market leader in Pakistan.

 Telemarketing Exhibitions and fares promotions Customer panel Metro bags for free Gift certificates etc

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