hitesh kumar pandey contompary report

8/9/2019 Hitesh Kumar Pandey Contompary Report

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A

PROJECT REPORT

ON

STRATEGIES & TACTICS IN RURAL MARKETING

(Submitted as a requirement of partial fulfillment for the degree of master of

business administration)

RAJASTHAN TECHNICAL UNIVERSITY

Session: 2010-2011

UNDER THE GUIDENCE OF: SUBMITTED BY:

Ms. SAKSHI SHARMA HITESH KUMAR

PANDEY

FACULTY OF SESGI, PGC MBA PART-I

FACULTY OF MANAGEMENT STUDIES

SHANTI EDUCATION SOCIETYS GROUP OF INSTITUTION BT-1,

BIO-TECHNOLOGY PARK, SITAPURA, JAIPUR (Raj.)-302022

Preface

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Rural India has changed tremendously. The data published by the National Council of

Applied Economic Research shows that in the last ten years, the income of rural India has

grown several-fold. There is a definite shift from middle to upper middle class and from

lower to middle class segments.

For the last 10 consecutive years, we have had good monsoons. So, agriculture is

prospering. Of course, there have been setbacks in the last couple of years.

Another interesting aspect is, today rural India is not 100 per cent dependent on an

agrarian economy. Unlike in the past where the ratio between those who involved in

agriculture and in other business was 75-25, today the estimated ratio is 50:50, if not

60:40.

So today, 50-60 per cent of the rural population is involved in other businesses. A lot of

people belonging to the second generation are getting white-collar jobs in nearby towns.

So, there is a growing middle class with a monthly income in rural India and it is a drastic

change from the past where their income was totally dependent on the monsoon, cropping

season, etc.. Because of these reasons in near future India rural market has so much

potential and so much growth.

Villages are the integral parts of a nation, not just as places of abode, but more than the

custodians, traditions and the spirit of the nation itself. They become even more important

in the Asian context, where a majority of the population resides in any hamlets.

The topic strategies and tactics in rural market in India have more significance today

because in urban area now there is no wide scope for corporate world.

Corporate world need that to be successful in the rural market, first understand the

profile of rural area, consumer behavior of rural customer, marketing mix in rural area,

and the achievement their target in rural area company should go with a clear strategy

.I sincerely hopes that this piece of information provides delight to the learners in the

Field of rural marketing.

ACKNOWLEDGEMENT

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The beatitude, bliss and euphoria that accompany successful completion of any task

would not be complete without the expression of appreciation of simple virtues to the

people who made it possible. So, with reverence, veneration honor I acknowledge all

those whose guidance and encouragement has made successful in winding up this.

I take this opportunity to thank Mr. R. K. agrawal, advisor, Dr. Rakesh Duggal , campus

director of SESGI, Ms. Shakshi Sharma, project guide & faculty members for their

support and encouragement which helped me in the completion of this report.

I extend my gratitude and thankfulness to shanti education society group of institutions .

Last but not the least Im also grateful to my parents for providing me the continuous

support to motivate me to successfully complete my report.

(Signature of student)

TABLE OF CONTENTS

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S.NO. CONTENTS PAGE NO.

1. INTRODUCTION 1

2. INDIAN RURAL MARKET :A BRIEF

PROFILE

3

3. FEATURES OF RURAL MARKETING 4

4. CHALLENGES & OPPORTUNITIES OF

RURAL MARKET

5

5. BEHAVIOR OF RURAL CONSUMER 6

6. DEMAND IN RURAL MARKET 19

7. PRODUCT BRANDING AND PROTECTION IN

RURAL MARKET

21

8. MARKETING MIX

-PRODUCT HANDLING IN RURAL AREA

-4 PS OF MARKET

29

9. RESEARCH METHODOLOGY 35

10. CASE STUDY OF ITC e-CHOPAL 37

11. RECOMMENDATION 47

12. CONCLUSION 48

13. BIBLIOGRAPHY 49

Introduction

Conceptual Framework

Given the Literacy scenario in to consideration the promotion of Brands in rural markets

requires the special measures. Due to the social and backward condition the personal

selling efforts have a challenging role to play in this regard. The word of mouth is an

important message carrier in rural areas. Infect the opinion leaders are the most

influencing part of promotion strategy of rural promotion efforts. The experience of

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agricultural input industry can act as a guideline for the marketing efforts of consumer

durable and non-durable companies. Relevance of Mass Media is also a very important

factor. Door Darshan had already acquired high penetration in rural households.

Now the cable and other Channels have also penetrated in rural households. The

newspapers and other printed Media are also gaining strategy but their role is still

secondary in this regard.

According to the national commission on agriculture: Rural marketing is a process

which start with a decision to produce a saleable farm commodity and it involves all the

aspects of market structure or system, both functional and institutional, based on technical

and economic considerations and includes pre and post harvest operations, assembling,

grading, storage, transportations and distributions.

In recent years, rural markets of India have acquired significance, as the overall growth of

the Indian economy has resulted into substantial increase in the purchasing power of therural communities.

On account of green revolution, the rural areas are consuming a large quantity of

industrial and urban manufactured products. In this context, a special marketing strategy,

namely, rural marketing has emerged.

Rural India with its traditional perception has grown over the years, not only in terms of

income, but also in terms of thinking. The rural markets are growing at above two times

faster pace than urban markets; not surprisingly, rural India accounts for 60% of the total

national demand.

Today, rural market occupies a larger part of our economy and it is expected to grow at

least four times the existing size. Another contributing factor for rural push was growing

saturation in urban markets. To be precise, rural marketing in Indian economy covers two

broad sections: -

1. Selling of agricultural products in the urban areas.

2. Selling of manufactured products in the rural regions.

In present situation, our huge population is helping marketers to think new marketing

strategies. 630 Billion Rural populations are greater than total consuming markets of

many countries like Canada, South Korea, etc.

Review of Literature

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The Marketing Mastermind (2003), Hindustan Lever rural marketing Initiatives by "A

Mukund" Marketing Mastermind has given the perspectives in which HLL has

approached towards rural markets.

The Economic Times (2003), "The rural market likes it strong" the strength of rural

markets for Indian companies. Financial express, June 19, 2000 has published the strategy

about FMCG majors, HLL, Marico Industries, Colgate Palmolive have formula had for

rural markets.

Research Modules Operating and Design.

The research methodology for this research work is based on the survey technique. Few

brands like Coca-Cola, BPL, And Asian Paints have been chosen to conduct the research

work.

The Gram Panchayat areas have been selected on random basis from the list of availableGram Panchayat. The four-Gram Panchayat have been short-listed and 60 respondents

have been selected in each Gram Panchayat so the total sample size N = 240.

The respondents were organized in a group and asked about their views on following

advertisement actions and theme.

1) In case of Coca-Cola how does the role of Aamir Khan affect the rural consumers?

2) In case of BPL Television how does Amitabh Bachchan give the impression about BPL

Brand

3) How does the advertisement of Asian Paints with the Slogan "Sunil Babu" influence

the rural consumers

Profile of rural marketing

1- There are 42,000 rural supermarkets in India that exceed the total number of

retail chain series in US (35,000).

2- In 2001-02 the life insurance corporation sold 55% of its policies in rural India.

3- Of the 20, 00,000 BSNL mobile phone connections 50% are in small towns

and villages.

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4- Of the 6, 00,000 odd villages in entire country, 5.22 lacs had a village public

telephone as ofmarch, 04.

5- The billing per cell phone in small town in Andhra pradesh is higher than the

billing in the capital hyderabad city.

6- Of the 2 crore who have signed up forrediff mail, 60% are from small towns.7- Internet access in semi urban and rural areas has increased through the

Sanchar Dhabas of BSNl, operating in 3617 out of6332 blocks in the

country.

8- The 41 million Kisan Credit Cards issued in rural India exceed the 40

million Credit plus Debit cards issued in urban India..

9- Electricity consumption by the agriculture sector has shown a sharp increase

from 17.6% of total consumption in 1980-81 to 29.2% in 1999-2000.

10- 742 million rural consumers.

11- A 230% increase in the flow of institutional credit for agriculture between

1997-98 and 2004-05.

12- According toNCAERIndian market demographics report 1998 the

consuming class households in rural India equals the number in urban India.

13- The largest FMCG company Hindustan Lever get more than half of its annual

sales ofRs. 11700 crore from the rural market.

Features of rural marketing

Large and scattered market.

Major income from agriculture

Improvements in agricultural productivity.

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Improvements in standard of living.

Traditional outlook, but no stereotype consumer.

Diverse socio-economic backgrounds.

Infrastructure facilities

Challenges and opportunities in rural market

Challenges in rural market

Distribution problem

Understanding the psyche of the rural consumer

Limited knowledge

Communication problem

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Cost per contact

Sales of fake and spurious products

These are the list of some products:-

Sr. original product Limitation product

1 ponds Polons

2 Rin Run

3 501 bare 509 bar

4 Cadbury clairs Choudharys clairs

5 lifebuoy Lifejoy,life boy

6 Colgate College

7 fair & lovely Friend and lovely

Opportunities in rural markets

Rising rural prosperity

Lesser dependence on agriculture and monsoon

Increasing rural consumption

Rural marketing efforts

Increasing sale of branded products

Large population

Consumer behavior in rural area

Consumer Buying Behaviour refers to the buying behaviour of final consumers -

individuals and households who buy goods and services for personal consumption. All ofthese final consumers combined make up the consumer market.

The consumer market in this case is Rural India. About 70% of Indias population lives in

rural areas. There are more than 600,000 villages in the country as against about 300 cities

and 4600 towns. Consumers in this huge segment have displayed vast differences in their

purchase decisions and the product use. Villagers react differently to different products,

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colours, sizes, etc. in different parts of India. Thus utmost care in terms of understanding

consumer psyche needs to be taken while marketing products to rural India.

Thus, it is important to study the thought process that goes into making a purchase

decision, so that marketers can reach this huge untapped segment.

Factors influencing buying behavior

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

1. Environmental of the consumer - The environment or the surroundings, within

which the consumer lives, has a very strong influence on the buyer behavior, eggs.

Electrification, water supply affects demand for durables.

2. Geographic influences - The geographic location in which the rural consumer is

located also speaks about the thought process of the consumer. For instance,

villages in South India accept technology quicker than in other parts of India.Thus, HMT sells more winding watches in the north while they sell more quartz

watches down south.

3. Influence of occupation The land owners and service clan buy more of Category

II and Category III durables than agricultural laborers/farmers.

4. Place of purchase (60% prefer HAATS due to better quality, variety & price)

Companies need to assess the influence of retailers on both consumers at village

shops and at haats.

5. Creative use of product ex Godrej hair dye being used as a paint to colour horns of

oxen, Washing machine being used for churning lassi. The study of product endprovides indicators to the company on the need for education and also for new

product ideas.

6. Brand preference and loyalty (80% of sale is branded items in 16 product

categories)

Cultural factors influencing consumer behavior:

Cultural factors exert the broadest and deepest influence on consumer behavior. The

marketer needs to understand the role played by the buyers culture. Culture is the most

basic element that shapes a persons wants and behavior.

In India, there are so many different cultures, which only goes on to make the marketers

job tougher. Some of the few cultural factors that influence buyer behavior are:

1. Product (colour, size, design, and shape): There are many examples that support

this point.

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For example, the Tata Sumo, which was launched in rural India in a white colour,

was not well accepted. But however, when the same Sumo was re-launched as

Spacious (a different name) and in a bright yellow colour, with a larger seating

capacity and ability to transport good, the acceptance was higher.

Another good example would be Philips audio systems. Urban India, the

viewpoint is totally opposite. That is the main reason for the large acceptance of

big audio systems. Thus Philips makes audio systems, which are big in size and

get accepted in rural India by their sheer size. looks at technology with the

viewpoint of the smaller the better. However, in rural

2. Social practices: There are so many different cultures, and each culture exhibits

different social practices.

For example, in a few villages they have common bath areas. Villagers used to

buy one Lifebuoy cake and cut it into smaller bars. This helped lifebuoy tointroduce smaller 75-gram soap bars, which could be used individually.

3. Decision-making by male head: The male in Indian culture has always been given

the designation of key decision maker.

For example, the Mukhiyas opinion (Head of the village), in most cases, is shared

with the rest of the village. Even in a house the male head is the final decision

maker. In rural areas, this trend is very prominent.

4. Changes in saving and investment patterns From gold, land, to tractors, VCRs,

LCVs

The Differences in Buyer behavior

Rural Urban

Conservative Innovative

Values, aspirations, needs - traditional and based on

culture, social customs, beliefs

Follow trends

(including

International)

Eldest Male Member KDM Varies11


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Collective Sanction Unheard

Brand Protection in India

This is the latest initiative by the consumer goods industry in India in association with

Federation of Indian Chambers of Commerce and Industry to fight a long standing

menace - that of counterfeits and pass-off products.

Be it Soap, shampoo, toothpaste or hair oil, biscuit, soft-drink or confectionery,

batteries or balm - go to any market in India and you will find a plethora of products that

are available in look alike packages under slightly twisted names Fair & Lovely could

be Pure & Lovely or a Parachute could be Parashudh. The packaging, color and design of

the pass-off product is so similar to the original, that it is impossible to distinguishbetween the two if you are not the sort who reads product names before picking them up.

Leave alone the vast uneducated masses that live in this country, hardly any of the

educated informed consumer would also be in a habit of verifying the accuracy of the

product name or manufacturer before buying goods at the local kirana shop. A recent

study conducted by AC Neilson reveals that 80% of consumers realize they have brought

a counterfeit or fake product only after they have consumed it. And there may be a large

number of those who never realize the same even after consumption!

While the problem of fakes is witnessed all across the country, it is more severe in the

North. Counterfeiting is rampant in the states of Delhi, Punjab, Haryana and UP. Procter

& Gamble, which has embarked on a major drive against counterfeits of its popular Vicks

Action 500 brand, found through a study that 54 strips in every 100 strips of Action 500

being sold in the market were counterfeits. The companys sales growth in this sector has

been stated to have been affected by 10% due to this menace of counterfeits. Counterfeits

and pass-off products are reportedly affecting sales of several brands to the extent of 20-

30%. It is estimated that the counterfeit products contribute to about Rs17bn worth of

sales of the Rs60bn FMCG market. Government would be losing almost Rs6bn in

revenues that would have been generated on excise, octroi, sales and income taxes that

would have been paid on these sales. For companies, besides loss of revenues, an even

greater loss would be through damage to brand reputation or loss of customer loyalty

caused by the poor quality of these look alike brands. And the customer unwittingly is

using products that may sometimes cause bodily harm or even danger to life.

The problem of counterfeits is not confined to India alone. It is estimated that counterfeits

account for Rs200bn i.e. about 5-7% of total world trade.

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The consumer goods industry in India has therefore come together to launch on offensive

against these unscrupulous players. A Brand Protection Committee has been formed

under the aegis of the Federation of Indian Chambers of Commerce and Industry (FICCI).

The Mission of the Committee is to stem the sale of counterfeits and fakes in India.

Directors of leading consumer non-durable companies such as P&G, HLL, Marico,

Smithkline Consumer, Britannia, Indian Shaving and research agencies such as A C

Neilson and CERC are members of the Brand Protection Committee. The committee aims

to work in close conjunction with industry, consumer associations, trade associations and

regulatory authorities to eliminate counterfeit and pass-off sales in the country. The

Committee proposes to focus on enforcement of applicable laws, measure and publicize

negative economic impact of counterfeits and create consumer awareness, and take action

against errant manufacturers, wholesalers, distributors and retailers with the help of

regulatory authorities. This is a concerted effort on part of the FMCG industry to stem the

loss that accrues to the companies, the Government and the consumers.

The problem of fakes is more rampant in rural areas due to low literacy levels and

consumers reliance on product identification through pneumonic. Companies are trying to

educate customers to look for certain packaging identification marks before purchase.

Product Strategy: This is a strategy which companies apply to their product according

to the market needs and the target group. It is a strategy which best suits the company and

also targets the consumer of that particular region. Some product strategies are such that

they encapsulate the whole of rural India.

e.g.: Coca-Cola targeted the whole Indian rural market with the positioning of ThandaMatlab Coca-Cola advertisements because most of the villagers say when wanting a

drink refer to it as Thanda so Coca-cola used that word.

Product Market Selection :

While launching product variants for different markets, a company has to consider two

things:-

- Reach: the company must ensure that the rural area they are targeting should be

easily reachable by road and should also be well connected with a major town

nearby. This is important because regular supplies have to be transported to the

village from the major town.

- Cost-effectiveness: in order to supply to the village area, a company must assess

their costs and other charges so as to maximize returns. Only if cost-effective,

must the market be selected and product variants (if any) be launched.

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Product Features: this is the most important factor in reinforcing positioning because

rural folk will purchase products only if they have functional benefits and features that

appeal.

- The consumer should experience the product benefits. They should be able to

use, touch and feel the product, and benefit from the it, only then will they buy it

again.

- Demonstration: an example of this would be Colgate showing video films

wrestler with a weak tooth; highlighting the importance of oral hygiene; and other

examples would include free shampoo washes, etc. and companies can get very

innovative with their demonstrations.

- Product Education: companies need to educate the rural consumers about their

products and their advantages. E.g. Colgate Palmolive shows video films on oral

hygiene to the rural masses.

Most of the companies build their strategy linking consumer perceptions and their

product features.

- Size: sizes are altered or increased in accordance with the consumer perceptions

which can be found out by surveys and by in depth interviews with the rural

consumer. E.g. torches and audio systems, Tata Spacio was a bigger rural version

of the Tata Sumo.

- Shape: companies have changed product features like wide bodied cookers with

handles on both the sides for chulha cooking.

- Colour: an example would be that mostly all hair oils are green in colour. Tata

launched the Spacio in a bright yellow colour.

- Consistency: Cadbury came out with harder chocolates so as to delay the melting

process.

- Taste: the villagers tastes and preferences should be incorporated in food items.

- Technology: companies came out with better technology to enable their products

to perform better under the tough rural circumstances. E.g. Philips eye-fi (to

improve satellite reception), LML scooters with stronger suspension, electronic

instruments to withstand voltage fluctuations and Philips also came out with

power free radios.

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Packaging: (Sachets, bubble packs) Packaging of the product largely depends on

these factors:

- Affordability: companies should consider the fact that rural consumers largely

depend on daily wage. A product should be packaged by keeping this in mind.

E.g. Videocon came out with a washer priced at Rs. 3000.

- Perceptions: social and cultural perceptions should be taken care of while

packaging the product. E.g. Tata Spacio came out in a bright yellow colour and

not in the traditional white colour because the rural people in some parts of India

perceive white as a symbol of death.

- Ability to read: the product should be packaged so that the rural consumer should

identify it. Since literacy levels are low symbols, logos and visuals are important

associating it with a symbol. E.g. lightning picture of Rin.

Pricing: pricing should be kept in accordance with the financial strength of the

villagers or the people one aims to target. One should remember that a major part

of the rural consumer base earns a daily wage, so their savings are minimal. A

company should not emphasize on price but on value. It should provide value to

the rural consumer for the least possible price.

The Consumption Basket of the villagers is allocated among different needs

among the villagers and they prioritize and spend their meager earnings.

Examples of good pricing strategies are Philips 14 TV for Rs. 8000 which

provides good value for the price and Videocon washer for Rs. 3000.

THE SEGMENTATION PROCESS

- This process includes:

- Identification of the segmentation variable,

- Segmentation of the market,

- Development of the profile.

The different variables are:-

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1 . GEOGRAPHIC : Segmentation on the basis of geography is done depending on

various factors such as

-Region: North, South, East and West.

-Village Size: < 500 people

501 2000 people

2001 5000 people

> 5000 people

Proximity to the feeder town

Density: The no. Of people per sq. km

Climate: Moderate, rain fed or dry with scanty rainfall.

Level of Irrigation: Whether good, moderate, scanty or none at all.

2. DEMOGRAPHIC: Segmentation based of demographics takes into consideration

factors such as Age, Income, Occupation, Literacy (Level of Education) and Caste.

3. PSYCHOGRAPHICS/BEHAVIOURAL : Such segmentation is done using

variables such as Lifestyle of the people, (whether rigid, traditional, changing orimitatingurban), Occasion, (whether on a regular day or a special occasion), Benefits sought from

the product (such as Quality, Price and Service), and Loyalty to brands, (whether Low,

Medium or High.)

Rural Consumers majorly look into the value that the product offers. They associate value

with the Benefits that the product offers, its Availability, and its Cost. When talking of

Benefits, they look at the features of the product as well as the Packaging and

attractiveness, Availability, whether or not the products are available at Retail Shops and

Haats, Cost, whether or not the product is reasonably priced.

Rural Branding

It is the process of creating and publicizes the brand name so that it is instantly

understood by the customer. It is different from branding in rural areas as there people

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dont understand English names of brands. They rather associate the product with the

picture on the package. E.g. Laal sabun or red soap for lifebuoy.

Creating an Identity under this process an identity is created in the minds of the

customer. E.g. TATA Namak Desh Ka Namak here what TATA has done is they have

given the salt a national image. They have associated it with the country and as a result

rural consumers tend to connect with it and trust it more & they also remember it well.

Enhance Recognition The brand should be recognizable to the consumer and create top

of the mind (TOM) consumer recall. E.g. Fevicol majboot jod.

Building a brand Image The brand should have a personality of its own. E.g. Mahindra

& Mahindra has built its brand image in the tractor sector. Bhumiputra series of tractors,

Sarpanch series have done very well in the rural areas. Brand name has connected well

with villagers.

Researching the Rural Markets

- Marketer has limited understanding of the rural consumer.

E.g. The consumer research people in the rural areas of the south find researching very

difficult as the people do not answer in Hindi. As a result the marketer should make note

of such points in order to market his product well.

- Consumer responses to variables in urban markets may need to be unlearned. The rural

consumer must be handled differently due to the vast psychographic difference.

Essentials (points to remember)

Sceptism of villagers the villagers do not trust a person from a big company. Some

people do not even answer an official well. Thus when marketing, promoting or

advertising a product, one should take care that it is done in the regional language. This

makes the customer willing to listen or see.

Informal (Dress, Greeting) Dressing at the first meet should be very informal in orderfor them to receive u well. Informal greeting helps generally researchers to get

information out of rural consumers.

Be a good listener and always explain the objective of the research at the outset.

Dont write down too much as it again creates doubts in the minds of the consumer.

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Never refuse their hospitality. It feels like an insult to them when someone does so.

Rural Market of Telecom Sector

With a total telephone subscriber base of over 200 million (fixed plus mobile), India isone of the fastest growing telecom markets in the world. While Indian telecom players

have consolidated their position in the last ten years or so of operations by carving out a

nationwide footprint, foreign telecom majors have also set their sights on this growing

market. The world's largest telecom company by revenues, Vodafone, is the latest to enter

the country by acquiring a controlling stake in the fourth largest mobile operator Hutch

Essar from Hutchison Telecommunications International Ltd (HTIL).

Though the average revenue per user (Arpu) is falling with declining tariffs, telecom

companies are still profitable and are expanding their networks largely because tele-density levels are still low (just 18.26 mobiles per 100), with penetration levels of just

13% (rural penetration is an abysmal 4%). Naturally, while the country boasts over 160

mobile subscribers, there's plenty of scope to grow and this explains why India is seen as

the most promising place in the global telecom space.

While urban markets are lucrative and would continue to be the focus of all operators,

interestingly there is a sudden interest to tap the rural market, largely untouched by the

telecom revolution. Last year, the government amended the Indian Telegraph Act, 1885,to give private players access to the Universal Service Obligation (USO) fund as well.

The USO fund aims to expand rural telephone services, and each operator contributes 5%

of its adjusted gross revenue to it. The fund has a total corpus of around Rs 3,488 crore.

The recent tender floated by the department of telecommunications (DoT) for assistance

under the USO fund in two parts-creation of infrastructure and providing services-even

saw some negative bids by operators; instead of taking funds out of the USO fund, they

were willing to pay the government to let them provide rural services.

Clearly, with 70% of population in rural areas, private operators have finally realised

the potential of the rural market. The government now plans to come out with a similar

tender under the USO fund for broadband expansion in the rural areas. According to the

vision plan drawn up by DoT, 200 million rural telephone connections are envisaged by

the end of 2012, translating into a rural tele-density of 25%. An exercise carried out by

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DoT and the Planning Commission aptly reflects why private operators are bullish about

rural India and why today's digital divide would be greatly bridged in coming years. The

total number of rural households would be around 160 million, assuming five members

per household, of which 130 million households would be above the poverty line.

Considering one telephone for every three households and one telephone for every two

households by the year 2012, the number of rural telephones would be around 80 million

by conservative estimates.

Taking into account lower tariffs and thereby affordability, there will be on average 1.5

telephones for every rural household above the poverty line by the end of the 11th Plan.

Therefore, around 195 million rural telephone connections would be required by the year

2012. It is further expected that one out of every three households below the poverty line

would also have a telephone, adding a further requirement of 10 million rural telephoneconnections. Thus, there will be a total requirement of 205 million rural telephone

connections.

Rural tele-density will increase as telecommunications is seen as a fundamental

requirement for economic and social activities in rural areas. Itis an accepted fact that 1%

increase in tele-density results in a 3% increase in the growth of GDP. Private operators

have already entered into infrastructure sharingagreements amongst themselves to

achieve faster rollout. For its part, the government is clear that this time, rural telecomgrowth targets will not be missed.

Insurance and rural market

The insurance industry market in India was liberalized in 2000 and the first private

insurance companies opened shop that November. The industry has now witnessed more

than two years of private sector participation. However, the overall market has not really

expanded, in real terms, beyond the urban domains.

The penetration of insurance in India is pitiably low at just about 1.6 per cent of GDP. If

the overall market has to grow and expand, insurance companies will need to look at

newer segments rather than fight for a share in the same pie.

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Saving habit

The strong saving habit is underscored by the finding that even the relatively low-

income families tend to save about a third of their annual earnings.

Annual household money flows

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The average annual incomes are Rs 54,000 in segment A, Rs 40,000 in segment B and

Rs 32,000 in segment C. In segment A, the annual income range is Rs 20,000-2, 00,000;

in Segment B it is Rs 15,000-1, 50,000 and in Segment C Rs 5,000-80,000.

While the prospects in the rural sector are promising, the real challenge lies in

distributing and delivering systems cost-effectively and efficiently. It is common

knowledge that the cost of building exclusive delivery systems for selling insurance

would be prohibitive. However, valuable data are available on the existence of extensive

network built by the rural development agencies, banks, cooperative institutions, NGOs,

micro-financing institutions, women's SHGs, youth clubs, panchayats and some industrial

houses in the rural sector. Insurance companies would, therefore, be well-advised to

harness this infrastructure and work out collaborative arrangements with these institutions

to their mutual advantage.

Since delivery channels would really hold the key to a successful strategy, a look at

some:

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Demand in rural market

Demand from rural India is becoming increasingly attractive for manufacturers of fast

moving consumer goods (FMCG), automobile and organized retail businesses despite the

severe downturn in the globaleconomy and its spillover effects on India's growthstory,

according to a study paper of the Associated Chambers of Commerce and Industry of

India (Assocham).

In a report titled 'The Rise of Rural India' the industry chamber said companies in the

FMCG sector are upbeat about their prospects in rural India as it contributes substantially

to their bottomlines. " Majority of FMCG firms such as DCM, ITC have been recording

higher growth rates and sales of their products in rural areas compared to urban markets, "

the report said.

Assocham estimates the size of FMCG industry in India at Rs.200, 000 crore. Out of this,

domestic consumption accounts for Rs.17, 189 crore. "FMCG sector in rural areas isexpected to grow by 40 per cent compared to 25 per cent in urban areas. Rising rural

incomes, healthy agricultural growth, boost in demand, rising consumerism across India,

better penetration of FMCG products in the rural market are contributing to high growth

and rapid expansion of the FMCG industry in rural India."

As far as the auto sector is concerned, the rural market has been largely restricted to

tractors and two-wheelers. The two-wheeler penetration in villages is only 10% compared

to 25% in urban areas. High investment involved, poor conditions o f rural roads, lack of

finance facility, lack of service network have limited the scope of passenger cars in ruralareas, it was said.

Of late, auto firms have also begun tapping the countryside, the report said and cited the

example of Maruti Suzuki, which generates about 10 percent of its sales from rural sales,

amounting to 32000 cars.

Maruti has already launched its marketing campaign for rural India "Ghar Ghar Mein

Maruti" (Maruti in every Household"). On the other hand, Hero Honda, the two-wheeler

market leader, is planning to cover 1 lakh out of the six-lakh villages by end of this

financial year under a campaign called Har Gaon, Har Aangan (Every Village, everyHousehold). Mahindra and Mahindra has plans to foray into the two-wheeler market in

the hinterland with an initial investment of Rs.110 crore.

According to Hyundai, almost 50 per cent of the 220 million households in rural India are

potential car-buyers due to the agricultural subsidies extended by the government and also

on account of an increase in productivity of agri-based products.

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Another potential area, the Assocham said, is the highly unexplored rural retail market

ACAEA currently estimated at $112 billion, or around 40 per cent of the $280-billion

retail market and growing at around 10 percent of the size of the Indian GDP.

Rural India provides a highly unexplored market for the expansion of retail activity. The

penetration of the organized retail specifically is very low, as approximately only ten

thousand out of six lakh villages in India have access to organized retail services.

"In view of the large investments made by the government in rural infrastructure, pushing

income and demand level, the prospects for organized retail are seen bright for rural India.

With the empowerment of rural people with education, employment, higher purchasing

power, better media exposure and better connectivity with outside world, they provide a

massive unexplored pool of consumers," the report said.

Product branding and strategies in rural market

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Promotion of brands in rural markets requires the special measures. Due to the social and

backward condition the personal selling efforts have a challenging role to play in this

regard. The word of mouth is an important message carrier in rural areas. Infect the

opinion leaders are the most influencing part of promotion strategy of rural promotion

efforts. The experience of agricultural input industry can act as a guideline for the

marketing efforts of consumer durable and non-durable companies. Relevance of Mass

Media is also a very important factor.

The Indian established Industries have the advantages, which MNC don't enjoy in this

regard. The strong Indian brands have strong brand equity, consumer demand-pull and

efficient and dedicated dealer network which have been created over a period of time. The

rural market has a grip of strong country shops, which affect the sale of various products

in rural market. The companies are trying to trigger growth in rural areas. They are

identifying the fact that rural people are now in the better position with disposable

income. The low rate finance availability has also increased the affordability of

purchasing the costly products by the rural people. Marketer should understand the price

sensitivity of a consumer in a rural area. This paper is therefore an attempt to promote the

brand image in the rural market.

PERCEPTION OF RURAL MARKET IN MORDERN MARKETERS:

Indian Marketers on rural marketing have two understanding (I) the urban metro products

and marketing products can be implemented in rural markets with some or no change. (ii)The rural marketing required the separate skills and techniques from its urban counter

part. The Marketers have following facilities to make them believe in accepting the truth

that rural markets are different in so many terms.

(i) The rural market has the opportunity for.

(ii) Low priced products can be more successful in rural markets because the low

purchasing, purchasing powers in rural markets.

(iii) Rural consumers have mostly homogeneous group with similar needs, economic

conditions and problems.

(iv) The rural markets can be worked with the different media environment as opposed to

press, film, radio and other urban centric media exposure.

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How reality does affect the planning of marketers? Do villagers have same attitude like

urban consumers? The question arises for the management of rural marketing effects in a

significant manner so than companies can enter in the rural market with the definite goals

and targets but not for a short term period but for longer duration. The Research paper

will discuss the role of regard. The strategy, which will be presented in the paper, can be

either specific or universally applicable.

Realities before the Marketers

70% of India's population lives in 627000 villages in rural areas. 90% of the rural

population we concentrated in villages with a population of less than 2000, with

agriculture being the main business. This simply shows the great potentiality rural India

has to bring the much - needed volume- driven growth. This brings a boon in disguise for

the FMCG Company who has already reached the plateau of their business urban India.

As per the National Council for Applied Economic Research (NCAER) study, there are asmany '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 the NCAER projections, the

number of middle and high-income households in rural India is expected to grow from 80

million to 111 million by 2007. In urban India, the same is expected to grow from 46

million to 59 million. Thus, the absolute size India is expected to be doubles that of urban

India.

HLL chairman MS Banga Says, "This exercise may not pay in the immediate future, but

will definitely give long-term dividends. Incidentally, over 50 percent of the sales of

HLL's fabric wash, personal wash and beverages are in rural areas. And we see a future in

going rural in a major way".

The improved agricultural growth is expected to boost rural demand, through not at too

sizzling a rate. Moreover, the price drop in personal products, after the recent excise duty

reductions, in also expected to drive consumption. "Better agricultural yields will give

farmers more spending power, making the rural markets bullish," says an analyst.

As a result, HLL has planned a rural marketing program that is expected to result in a

marked growth in the consumption of the company's products in the rural market. HLL

will adopt three-pronged marketing strategy- new price points, sizes and awareness

campaigns for its detergents and soaps segment to augment rural growth.

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The Indian established Industries have the advantages, which MNC don't enjoy in this

regard. The strong Indian brands have strong brand equity, consumer demand-pull and

efficient and dedicated dealer network which have been created over a period of time. The

rural market has a grip of strong country shops, which affect the sale of various products

in rural market.

The companies are trying to trigger growth in rural areas. They are identifying the fact

that rural people are now in the better position with disposable income. The low rate

finance availability has also increased the affordability of purchasing the costly products

by the rural people. Marketer should understand the price sensitivity of a consumer in a

rural area. The small sachet packs are the examples of price sensitivity. Colgate has done

this experiment with launching of sachet packs for rural markets.

The Strategies & Tactics

Dynamics of rural markets differ from other market types, and similarly rural

marketing strategies are also significantly different from the marketing strategies

aimed at an urban or rural consumer. This, along with several other related issues,

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havebeen subject matter of intense discussions and debate in countries like India

and China and focus of even international symposia organized in these countries.

Rural markets and rural marketing involve a number of strategies, which include:

Client and location specific promotion

Joint or cooperative promotion..

Bundling of inputs

Management of demand

Developmental marketing

Unique selling proposition (USP)

Extension services

Business ethics

Partnership for sustainability

Client and Location specific promotion involves a strategy designed to be suitable

to the location and the client.

Joint or co-operative promotion strategy involves participation between the

marketing agencies and the client.

'Bundling of inputs' denote a marketing strategy, in which several related items are

sold to the target client, including arrangements of credit, after-sale service, and so

on.

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Management of demandinvolve continuous market research of buyers needs and

problems at various levels so that continuous improvements and innovations can

be undertaken for a sustainable market performance.

Developmental marketing refer to taking up marketing programmers keeping the

development objective in mind and using various managerial and other inputs of

marketing to achieve these objectives.

Media, both traditional as well as the modern media, is used as a marketing

strategy.

Unique Selling Propositions (USP) involves presenting a theme with the product

to attract the client to buy that particular product. For examples, some of famous

Indian Farm equipment manufacturers have coined catchy themes, which they

display along with the products, to attract the target client that is the farmers.

English version of some of such themes would read like:

The heartbeats of rural India

With new technique for a life time of company

For the sake of progress and prosperity

Extension Services denote, in short, a system of attending to the missing links

and providing the required know-how.

Ethics in Business. Form, as usual, an important plank for rural markets and rural

marketing.

Partnership for sustainability involves laying and building a foundation for

continuous and long lasting relationship.

Building sustainable market linkages for rural products: Industrys role, scope,

opportunities and challenges

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Market linkages for rural products:There are, broadly speaking, three ways in

which they can be connected to the markets. They can do it on their own

through cooperatives. Or, the state can do it for them through its procurement

engines. Stages one and two, in a manner of speaking.

Across India, previous attempts to create such linkages have floundered. Take

Assam and other eastern states itself. Around the Eighties, the state government

here decided that cooperatives were a great way to consolidate its political base.

Loans went to the undeserving. Debts were written off. The institutions slowly got

corrupted. As forthe linkages provided by the state, these offer uncertain

sustainability. Given this context, one can conclude that profit-oriented industry

linkages are a more sustainable, more scalable alternative. In this scenario,

companies can use the social infrastructure (the self help group et al) as analternative procurement and distribution chain and vice versa.

Industrys role in building market linkages:To make an effective market linkage,

industries have to play as an engine of market, which can generate a brand image

of the rural products. This initiative of industries will also strengthen the backward

and forward linkages of the rural market, besides, accelerating the innovations of

the rural products. Definitely, this strategy will also give a remarkable dividend to

the industries & profit making companies. In micro level, it is observed that tocreate a sustainable market linkage for rural products, industries can develop an

ecosystem of Self Help Groups (SHGs) by involving the local communities

through village level empowerment. It is nothing less than the next phase in the

democratization of commerce. Under this paradigm, industries can create a

network with viable marketing channels covering all the linkages from villages to

the global level. This architecture provides the right value of procurement through

the village procurement centres and rural entrepreneurs can sell their products

faster with better price realization. This model is also capable of generating a

consumer business and an output business in a win-win scenario, where rural

producers can get a wide marketing horizon and the industries shall get a new,

lower cost sales force. Another role of industries in building market linkages for

agro-based rural products can be the dynamic contract farming. If a conventional

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industry can kick off a contract farming business, and export niche horticulture

crops like cucumbers, the small and marginal farmers who could grow these small

cucumbers would make Rs 30,000 in profits in a year. KRBL, one of Indias

largest basmati exporters, has contract farming agreements with 24,000 farmers;

Global Green buys from about 12,000 farmers. Moreover, in the current era of

information technology, industry and private companies can also creatively use

ICT for building sustainable marketing linkages. This approach creatively

leverages information technology (IT) to set up a meta-market in favour of small

and poor producers/rural entrepreneurs, who would otherwise continue to operate

and transact in 'uninvolved' markets where the rent-seeking vested interests exploit

their disadvantaged position. ITC e Choupal is the best example in this context.

Through creative use of Information Technology, ITC eChoupal has been creating

sustainable stakeholder value by reorganizing the agri-commodity supply chains

simultaneously improving the competitiveness of small farmer agriculture and

enhancing rural prosperity. eChoupal alsosidesteps the value-sapping problems

caused by fragmentation, dispersion, heterogeneity and weak infrastructure. ITC

takes on the role of a Network Orchestrator in this meta-market by stitching

together an end-to-end solution. It eliminated the traditional 'mandi' system which

involved lot of middlemen as a result of which farmers failed to get the right value

for their produce. The solution simultaneously addresses the viability concerns ofthe participating companies by virtually aggregating the demand from thousands

of small farmers, and the value-for-money concerns of the farmers by creating

competition among the companies in each leg of the value chain.

The basic scope of this novel initiative will be the mutual benefits of the rural

entrepreneurs and industries. The entrepreneurs primary beneficiaries, SHGs

bridge with the community, participating companies/industries and rural

consumers have befitted through a robust commercial relationship. These models

of marketing linkages demonstrate a large corporation which can play a major role

in reorganizing markets and increasing the efficiency of a rural product generation

system. While doing so it will benefit farmers and rural communities as well as

shareholders. Moreover, the key role of information technologyprovided and

maintained by the industry/company for building linkages, and used by local30


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farmersbrings about transparency, increased access to information, and rural

transformation. Besides, this strategy of market linkage, addresses the challenges

faced by rural entrepreneurs dueto institution voids, numerous intermediaries and

infrastructure bottlenecks. Moreover, the prime scope of this model is the creation

of opportunities for the rural entrepreneurs for product differentiation and

innovation by offering them choices. Because of this sustainable market linkages,

rural producers can participate in the benefits of globalization and will also

develop their capacity to maintain global quality standard. Nonetheless, it creates

new stakeholders for the industry sector. And subsequently, they become part of

the firms core businesses. Theinvolvement of the private /industrysector at the

rural product and market development can also provide opportunities for the

development of new services and values to the customers, which will find

application in the developed markets. It will be worth mentioning that building a

sustainable market linkage through industrys intervention will also empower the

rural mass (producers, farmers & entrepreneurs) to cope with socio-economic

problems in the rural society and will ensure economic self reliance.

There are significant challenges to the entire process the most important being the

capacity building of the rural entrepreneurs. For decades, the entrepreneurs

associated with very conventional/traditional knowledge of business, humiliation

with government, so they are likely to look at these initiatives with skepticism.

Only consistent performance can convince the skeptics. Therefore, the industries

must play a catalytic role to cope with this challenge and should also train the

entrepreneurs to develop their managerial and IT skills. On the other hand, the

products of the existing and popular brand also stand as threat to the rural

products. These global giants (brand) may try to suppress the rural products in the

markets with its communication hype. Therefore, developing alternative and

additional market linkages for these products is an absolute necessity. Moreover,

the low volumes of rural products, high operating costs, high attrition, and absence

of local know how and relationships may also create problem in the process.

Henceforth, it is essential to make a way out to cope with these odds.

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These issues gain added complexity under globalization, where markets are

characterized by extreme competition and volatility. While rural products has been

perceived traditionally as catering to thelocal market, or at best, to a wider

national

market through limited formal channels, the reality of globalization since the 1990s

introduced a new dimension to the market for such products. The issue of rural product

generation through industrialization, therefore, needs to be viewed from a new angle and

on far more scientific lines. The core of a scientific approach is to understand the market

opportunities for rural products along with the country's development priorities and to

chalk out a strategy where rural industrieshave animportant role to play. While rural

products are forced to increasingly become part of globalsupply chains, these products

need to adapt themselves, not only according to the changingtastes ofthe national

market, but also according to changes in tastes in the international market. Therefore, a

process is essential to explore the market linkages and capacity building for SHGs

through a bottom up approach and continuous dialogue with stakeholders of rural

enterprise. This process should ensure the participation of rural people as consumers and

producers in the globalization mechanism, with better livelihoods and global access to

markets. The real challenge of building a sustainable market linkage starts here.

Marketing mix in rural market

What motivates me to buy? Is it feared of the dire consequences that i might face if i dont

have the product? Is it the emotional connect with the brand that makes me buy the

brand? Is it the guilt that if i dont buy the product, i might not do justice to the people i

love? or is it the greed for the feeling of pride that will overwhelm me after i possess the

product? But, do all these emotional triggers take a back seat and only play a passive role

when i talk of rural consumers? But again, all rural consumers are not misers. They all

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are not looking for the cheapest product, they are probably looking for the most value for

money. It is not about a cheap buy, but a smart buy.

There is more to rural marketing than just offering LUPs ( Low Unit Packagings ),

reducing a products price or making an inferior product and dubbing the national ads in

vernacular. It might rather do more harm than good. It is very important to understand the

psyche of the rural consumer and modify the marketing mix so as to be fit to cater to the

rural demographics. Let us have a look at some of the companies, which, made the efforts

to understand a rural consumer, customized the offerings and revolutionized the rural

marketing mix.

PACKAGING

There are two reasons why a rural consumer prefers LUPs.

a. Since they dont have a big dwelling place, they might not have place for storage.

b. Many of them earn their wages daily so they cant spend in bulk.

Let us look at some instances where some of the companies have taken up a strategic

move to introduce LUPs in the market.

HUL - Under operation Bharat, they introduced sachets of clinic plus, ponds, close up

and fairness cream to make sachet buying a habit for these consumers. Seeing that the

rural retailers sell the cut lifebuoy cakes to the consumers, it came up with 75 gm soap

cake and later launched 18 gm lifebuoy soap, priced at Rs. 2.

Asian paints - It introduced oil paints in 250 ml packaging, to cater to the rural

consumers need to paint the horns of their livestock and to paint their buffaloes for

selling.

Colgate - Understanding the paucity of space for rural consumers, it came up with caps

for their toothpaste sachets, to facilitate extended storage while usage of its product.

Rural consumers identify a brand by its logo and package color rather than the letters(attributed to the low literacy levels). Hence the loud and bright colors on the packaging.

This has, though, not proved a deterrent for the imitation product industry, which hitch-

hikes on the years of brand building exercises of the veterans.

PRODUCT

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Catering to 70 crores residents in 6 lakhs villages, where the habits, customs and culture

change every 100 kms is commensurate to catering to 2 demographically rich countries

thousands of miles apart. Customization of products to suit the requirements of such

diverse demographics hence becomes logical. Many consumer durables companies have

just removed the value added features from their products and relaunched them in the

rural markets. (e.g. Refrigerators without frost free technology, LGs Sampoorna TV).

Though, changing your product seems to be a time consuming and tedious exercise, it has

brought some mentionable and fabulous results for the companies who have used

consumer insights to bring in these changes.

HUL - Let us see 2 examples of he forerunner in interpreting and gaining from insights

bringing in changes in its product range to cater to the profit storehouse.

1. Indias 16% contribution to the world population and 28% to worlds hair shows the

latters role in accentuating the physical appearance of an individual. Indigence forced the

rural community to use the same soap for hair and skin, since a Rs. 2 shampoo sachet

categorized itself as a luxury item for them. HUL, having taken a cue from this insight,

introduced Breeze 2 in 1, a multipurpose soap for hair and skin !

2. The premium positioning of Taj Mahal tea did not prevent them from launching Taj

Mahal Janata for the rural markets by using chicory and tapioca flour to decrease costs.

Arvind Mills - Being used to get their clothes stitched, the Rs. 300 price tag on a

readymade entry level jeans was a major deterrent for the rural youth. None other than

Arvind mills executed theinnovative idea of distributing ready to use stitch kits to therural tailors, priced at Rs. 195. Arvind mills sold 5 million kits in 2 years !!

Britannia - They launched Probisk biscuits which used soya proteins instead of milk

proteins as its ingredient, hence making a biscuit cheaper without altering its nutrition

conten.

Hawkins - Unlike in urban areas, the use of coal and wood madethe control on the

flame of the burner difficult. To help the rural women avoid hand-burns and facilitate the

handing of the pressure cooker, it came up with a new product with 2 long handles onboth sides of the cooker.

Philips - The rural mindset of Sturdier the product, more powerful it is led to their

Mahasangram campaign where they introduced larger and louder radios for rural

demographics.

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PLACE

Complexities galore in these distinctive yet blended markets of rural consumerism. A

rural consumer who takes 2 years to make a watch-buying decision definitely does not

believe in impulse buying of consumer durables, but timely availability becomes an

important factor in their buying decisions for consumer goods. The following distribution

structure enumerates various touch-points with respect to the rural consumers.

Research shows that on an average the daily sales figure of a shandy with average 314

outlets are close to a whopping Rs. 2 lakhs per day and that of an individual outlet is Rs.

874. These rural supermarkets have the potential to challenge all the worlds K-marts and

Wal-marts put together in their size and sales!

HUL - Initiated Project Harvest, Project Bharat and Project Shakti (which utilized

the concept of self help groups) to extend their distribution to the villages with a

population of 2000, 1000 and less than 1000 respectively. Each state has one or two

Carrying and Forwarding Agents (C&FAs) who are assisted by Redistribution Stockiest

(RS), who are allotted a specific area and are responsible for the physical distribution of

the products. RS, in the vans provided to them cover the areas allocated to them called

Indirect Coverage (IDC). The frequency of the RSs visit to these IDC depends upon the

kind of business these IDCs generate.

LG - This is a perfect example of a brand which has maintained a premium positioning

in the urban market and still has managed to cater to the rural markets. When LG

launched its Sampoorna TV range, it understood that shops in all the villages wont beprofit centers since a rural consumer usually buys such high-priced items from assembly

markets or from the markets of nearby towns and cities.

There are plethora of examples of co-operative societies ( Amul ), SHGs ( Shakti ), e-

Choupal, distribution in rural financial services, but i will restrict myself to just touching

the periphery of the topic and not dig deeper into these models.

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PROMOTION

When in Rome, be a Roman. Er, When in Rome, speak Roman. To make the

Promotions/Advertisements in rural markets successful, you have to connect instantly

with the consumers. You not just have to use the local dialect, but the psycho-graphic

inclinations that a rural consumer has so long been trained to develop should be built

upon. The strategy of shock-and-awe might not be as successful as a fighting teaser

campaign that sinks in easily. Also, a promotion that establishes an emotional connects

will lead to returns, sooner than later.

CavinKare - Appreciating the cost-concern of consumers, it did a pre-launch campaign

where it went to the village schools and gave a free head-wash to children and then

launched its chic brand at a meagre 50 paise per sachet. Consumers, having seen the

live results, liked the value proposition and hoarded the shops!

HUL - The company has continuously designed innovative promotions to reach the rural

markets.

1. Lifebuoy in its rural contact program called Lifebuoy Swasthya Chetna, where it

spread information on how washing hands can keep diseases away, targeted a population

of 5 crores in 15000 villages. It applied a 2 prong approach.

HUL employed Health Development Officers and Health Development Assistants who

went to all the villages and educated the community through lectures and community

meetings.

They returned to the villages after 2 months, offered toys, badges and medals to children

who had made it a habit to wash hands regularly ( read saved Lifebuoy soap wrappers )

and a certificate to the children who had won these badges most often.

2. HUL capitalized on the huge gathering of 70 million odd pilgrims ( read prospective

customers ) in kumbh mela - They showed people using an ultra violet wand where germs

and dirt resided on their hands and how regular usage of soap can keep their hands clean.

ITC - The promotion done by ITC during its Hero cigarettes brand launch in 1993 is

unforgettable. In a campaign extended to 3 days, on the first day a person just went on

cycle or a rickshaw saying on a P.A. system Hero aa raha hai. On the 2nd day, an36


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elephant draped in a large Hero logo embossed sheet and carrying a huge cut-out of the

hero cigarette packet went through the villages distributing free samples of the product.

And finally on the third day, a video van came to the villages playing popular movie

songs to attract crowd. The campaign was so successful that the villagers actually started

waiting for an event to happen in those 3 days. It was done in u.p. and bihar in october

1993, and the sales figure reached 175 million sticks in just a matter of months.

There can be many such promotional exercises cited that companies have undertaken to

capture the mind share of a rural consumer. For instance, M&M organized nukkad nataks

and used paintings on the well walls, since people gathered there. LIC has used vans and

puppet shows to sell its policies.. Asian paints painted the house of the Sarpanch and the

post office to show that the paint can stand against time and weather. Castrol tried to gain

its consumers heart-share with its jaago jaago jug jug jiyo campaign aimed at

motivating the villagers to get together the issues that bother them when their new brand

CRB-plus was not doing well in the rural markets

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Research methodology

Research Objectives

The research paper consists of following objectives:

(i) To analyze the present promotion strategy of few brands in rural markets.

(ii) To measure the success of rural marketing campaign of few brands in Terms of

consumer appreciation.

(iii) To study the determinants of specification factors this can decide the success the

rural promotion strategy.

(iv) To evaluate the effects of adopting the specific brand ambassadors in the rural

marketing context.

(v) To present suffocate on above-mentioned objectives.

Research design

The research design applied for this purpose is experimental with descriptive. The

descriptive part explores its significance, characteristics, nature, need

of study, usage of study, impact of study in our society and

environment. The experimental design was suitable as the rural consumers fell interest

about it and descriptive design depends on the explanation past about the campaign of

these Brands.

Operational definition of the concept

Rural Markets are defined as those segments of overall market of any economy, which

are distinct from the other types of markets like stock market, commodity markets or

Labor economics. Rural Markets constitute an important segment of overall economy.

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Source of data

Data collection is an integral part of the marketing research. There are several ways of

collecting the appropriate data, which differ considerably in context of money costs,

time and other resources at the disposal of the researcher. the researcher should keep

in mind two types of data viz. primary and secondary.

The secondary data are those, which have already been collected by someone else like

various journals and publications of the company and that are used for quick

compilation of the report. This study has been conducted by using secondary sources

viz. websites, journals, newspaper, magazines.

Case study of ITC E-choupal success in rural market

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ICT has potential to make significant inroads in a traditional agrarian economy like India.

Indian agro-sector has been exploiting the benefits to ICT. Innovative ICT application

platforms are being created by private sector players in conjunction with local farmers.

One such private initiative has been by ITC Ltd in the state of Madhya Pradesh. It has

helped the farmers in many ways, such as developing of local leadership, shared

ownership of the assets created in this initiative, access to the latest knowledge for the

agro-sector, sustainable income levels and skill development for productivity

improvement. This initiative from ITC has become a benchmark today in the ICT

initiatives in agro-sector. Several best practices can be learned from this initiative,

namely:

ease of replicability and scalability

Customization to meet the specific local needs and

Organizational commitment.

The success of e-choupal has heralded a new era in the Indian agro-sector. The work

needs to be carried forward and replicated in the other untapped areas. Creating business

channels that can create a win-win situation both business and farming community has

enormous economies of scope. Once a channel is created it could be used for many

products and services as shown in this case study. The main reasons for the success of the

platform have been the involvement of local farmers and maintenance of the rural IT

network by the corporate entity.

Internet will extend electronic marketplace and make it the ultimate go-between, the

universal middleman.- Bill Gates

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Introduction

India is second most populous country in the world. Majority of its population lives in

villages & earns their livelihood through farming. Agriculture is the backbone of Indian

economy. It contributes around 26% of the total GDP. 65% of Indian population lives

mainly in its 600,000 villages. Agriculture is the mainstay of the majority of the villagers

as they are employed in agriculture or agriculture related services. Presence of diverse

agro climate zones and a variety of soil and agro-climatic conditions have made possible

the cultivation of almost every item from cash crops to food grains. Agriculture provides

livelihood to about 65% of the labor force and accounts for 8.56% of India's exports.

After USA, India has maximum area of arable land but productivity per hectare is

nowhere near the world best. India is not in the top ten countries in terms of productivity

of rice and wheat. Despite green revolution Indian agriculture sector has not been able to

achieve the world level productivity. Cardinal reasons behind this are highly

Fragmented nature of Indian farming with close to 33% of arable land held in units of less

than 2 hectares per owner. It doesnt let farmers enjoy the economies of scale in

operations and modern farming equipment proves very expensive for them. Because of it

quality is also a problem. The fragmented farms are constraining the risk taking ability of

Indian farmer locking him up into a vicious cycle of low risk taking ability > low

investment > low productivity > weak market orientation > low value addition > low

margin > low risk taking ability. So there is a need to look for interventions that can help

the farmers realize higher level of income. This is a case study of the development of arural market hub using a set of information communication technologies. This is the

largest e-market initiative undertaken by any corporation in India and also it has been a

successful experience. Many others are tying to replicate this.

Rural Market e-Choupal 1

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Background

Indian farmers rely on Department of Agriculture for various inputs such as weather,

modern and scientific farming practices and insurance cover. All these are accumulated

by the VLW of Department of Agriculture from various sources like Government

Universities, Meteorological department, insurance companies etc. For seeds, fertilizers

etc. farmers approach input retailer who source them from wholesalers who are in direct

contact with the manufacturers. After harvest, farmers bring their produce to Mandis

(regional market yards) in small multiple lots throughout the year, where the beans are

auctioned to the traders and agents of the processing companies in an open outcry method.

The Government, to facilitate fair price discovery and enable aggregation of goods,

regulates these market yards. Successful bidders then bag the beans, weigh them, pay cash

to the farmers, and transport the cargo to the processing units (to whom it would have

been sold through a broker). Many intermediaries carry out this whole activity, each one

acting as a principal with the next leg in the transaction chain. But with every

intermediary the cost of produce increases to the processor as intermediary adds his profit

margin to the cost although the farmers get the

lowest price and margin in the whole value chain. Apart from this, intermediaries also

block the flow of market information to the farmers and use that information for their own

good. Here poor farmers are squeezed to the maximum without the benefits of their labor

accruing to them but to the intermediaries. International Business Division of ITC started

the new initiative namely e-choupal (village meeting place on an electronic platform).


About ITC-Inter Business

ITC Limited with an annual sale of US$ 2 billion from its diversified businesses is one of

Indias largest corporations with its presence in tobacco, hotels, paper boards, foods

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fashion retailing and commodity export. International Business Division (IBD) started in

1990, a division of ITC is engaged in exports of a range of agricultural commodities. It

contributes over 60% of ITC Group's total foreign exchange earnings. ITC-IBD has a

focused approach on strengthening its core competencies in select commodities. Today,

IBD continues to deliver agri-commodities like Feed Ingredients - Soyameal, Rapeseed

Meal; Foodgrains - Rice (Basmati & Non Basmati), Wheat & Wheat Products, Pulses;

Coffee, Black Pepper; Edible Nuts - Sesame Seeds, HPS Groundnuts, & Marine

products like Shrimps and Prawns. ITC IBDs largest item for exports is soybean meal (a

rich source of protein) which are exported to the animal feed mills around the world,

Competing with several transnational trading companies, mainly from the USA, Brazil,

and Argentina.

E-choupal concept

E-choupal is a Hindi word which means village meeting place. Market is a meetingplace where vendors and customers come together to do transactions. e-choupal is a

virtual market place where farmers can transact directly with a processor and can realize

better price for their produce. e-choupal has the advantages of the market but spans very

large varieties of vendors and customers. Geographical distances do not restrict

participation in the e-choupal. The main disadvantage of conventional market is that

information asymmetry is inherent in the market where as e-choupal provides for

transparent transactions. This enables the participation of smaller as well as larger players.

Elimination of some layers of intermediaries allows for larger share of profits to reach the

lower end of value chain. The main attractiveness of e-choupal is that it can be used forconnecting large producers/small producers and small users/large users, thereby

eliminating the need for hierarchy of brokers. Internet is used as a low transaction cost

backbone for communication. Physical delivery of produce to the processor is still done

through the existing intermediaries. e-choupal does not attempt total elimination of

intermediaries, as intermediaries are indispensable in economy like

India where intermediaries are adding value to the every step of value chain at a low cost.

Intermediaries have the expertise in storage, transportation, quality assessment and

counter party risk reduction, which are difficult to replicate. e-Choupal provides farmers

with all the market information and this helps them to become market oriented. In e-

choupal intermediaries are leveraged but they are disinterring mediated from the market

information flowing to the farmers.

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Idea Generation

The idea of creating and leveraging an electronic market place came from the

Brainstorming session done by senior executives of ITC-IBD. ITC believes in using a

business model that does well to society and helps in improving the standard of living of

stakeholders as well as add value to the shareholder wealth. He also believed that to tap

the Indian rural market opportunity, and to reach across a wide range in rural India, the

leaders have to understand and unleash the power of the small-scale entrepreneur in

village communities.

Idea InitiationThe challenge of servicing the changing needs of global customers,

competing with the aggressive transnational trading behemoths in a low margin agri-

commodity business, operating from a high cost economy like India and looking for

alternative markets in the period of recession were the basic business driver behind the

new business model. Apart from this ITC was increasingly looking to introduce service

element in its activities and improve the customer centricity. Service element was never

tried in commodity business in India before. ITC was aiming to introduce new lots, new

varieties, new packaging and non-standardized orders though the new model. ITC is the

major exporter of soya bean. It used to buy soya bean mainly from the local markets. This

created the problem of poor quality produce; need to handle a large variety and high cost

of intermediation. Indian market has inadequate physical, social and institutionalinfrastructure that is substituted by intermediaries and they also add value to the chain on

every step. ITC was looking for a solution that doesnt eliminate the intermediaries

entirely but at the same time leverage their strengths. Apart from this

Conceptualization of the Project

ITC-IBDs top executives had a major brainstorming session. ITC was looking for abusiness model that is customer centric but uses existing infrastructure. Questions like thefollowing were pondered upon:

Whats the best corporate business model for rural India?

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Does it require a new breed of leaders?

What are the challenges that these leaders are facing?

Will they have to work within new organizational structures?


The answers pointed towards an electronic market with low transaction cost. There are

numerous intermediaries in the value chain of the commodity business. But their total

elimination from the value chain would not be prudent for any business model as they

makeup for weak infrastructure, and deliver critical value in each leg at very low cost. But

their aggregate cost makes the chain uncompetitive. And many times, by blocking

information flow and market signals, they are able to extract abnormal profits for

themselves than the value they are adding. A more effective business model must be able

to leverage the physical transmission capabilities of these intermediaries, yet must disintermediate them from the flow of information and market signals. Answer to this question

was found in virtual vertical integration in the value chain. Creative use of information

technology through e-Choupal have strengthened the basic business by enabling reduction

of costs in the supply chain and deliver superior products /services to the customers like

real time information on monsoon, prices, better farming practices while it has facilitated

the interaction between company and village community. Apart from this, IT also gave

the opportunity to build a unique model of rural distribution on the same platform.

Identifying the Project Goals

The project was initiated with the objective of achieving a win-win situation for both

farmers and the company. So on the one hand more profits and larger share of

Commodity exports were ensured for the company and on the other hand farmers

Realized better prices for their produce and improved the productivity of their farms.

Initial goals were following:

Helps enhance farm productivity by

Disseminating latest information on district level weather forecasts for

Short & medium terms

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Best practices in farming (generic as well as specific) Supply of quality inputs (seed,

herbicide, fertilizer, pesticides etc) in the village itself

Helps improve price realization for farm produce by

Making available live data on markets viz. Location / Buyer wise prices

Offered

International market prices of relevant agri-commodities

Historical & Up-to-date information on supply & demand

Expert opinion on expected future price movements


Helps minimize transaction costs in marketing farm produce by

Buying output at the farmers doorstep

Through transparent pricing & weight management practices

Unique Business Model: e-Choupal

The e-Choupal model has been specifically designed to tackle the challenges posed by

the unique features of Indian agriculture, characterized by fragmented farms, weak

infrastructure and the involvement of numerous intermediaries, who block critical

marketing formation from passing to the farmers and use that information for getting a big

margin for themselves. The intermediaries capitalized on the econ

hitesh kumar pandey contompary report

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