Project on Rural Market

8/7/2019 Project on Rural Market

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I. ACKNOWLEDGEMENTS

We take this opportunity to express our sincerest gratitude to our

Project Guide, Prof.Shrivani, who lived up to her Designation and was a

constant source of guiding light for us at each and every stage of the

execution of this project.

Lastly we would like to thank our well-wishers and our colleagues whowere a constant source of inspiration and in some cases also motivation as it

ultimately has led to the completion of this project. Finally we would also like

to give due credit to people, who knowingly or unknowingly have guided,

supported and helped us in the completion of this project as without their

support this project would have never seen daylight.

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I. Introduction to Rural Market

The emergence of an active cash economy is bound to create is bound to

create a strong rural demand and promote rural consumption. The traditional

growth and dominance of urban industrial centers is undergoing rapid

changes. A more equitable distribution in rural areas would also help in

slowing down the rapidly increasing influx of people from rural to urban areas.

There are two sections of rural population:

A large portion has a low income and low consumption levels;

The rest are rural rich.

The rural population forms a major portion of the Indian population as seen

below:

Division of Population in India

Rural

74%

Urban

26%Rural

Urban

About 75% of the Indian people reside in rural areas. In other words, for every

consumer in the urban area, there are three of them in the rural areas. Though

the proportion of rural population is showing a slight decrease over the years,

but in absolute numbers, the rural population is growing at a higher rate than

the urban population. This large population will require a wide range of

consumable and durable goods and services. At the same time the need of

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the rural areas does not automatically guarantee a market, unless it is backed

by income and the resultant purchasing power.

For a vast majority of the rural population, the main occupation is agriculture

and allied activities. The graph below gives the distribution of rural population

as per their occupation pattern.

Occupation Pattern of Rural India

50%

27%

10%

9%

2% 2%Agriculture

Agricultural

LabourBusiness

Non-agricultural

Labour

Salary Earners

Notgainfully

employed

About half of the rural population own or lease land to cultivate it for their

livelihood. Another 27% are dependent on these cultivators for their jobs as

agricultural labourers. Thus, a total of 77% of rural population depend on land

only for their living and land is their source of living.

There are others, constituting small proportions, who are engaged in business

like petty shopkeepers or merchants and salary earners like teachers, health

workers and village level officials. The implication of this is that the income

generation in rural areas entirely depends on how the land is used, what crops

are cultivated, how much is marketed, how much is consumed and the

marketing arrangements for the production. If rainfall is adequate, weather

conditions are favourable and appropriate technology is available, the rural

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areas prosper as it has happened in the states of Punjab, Haryana and

Western Uttar Pradesh. So the disposable income in the hands of the rural

people is very much conditioned by the status of agriculture and other allied

activities. This also indicates that major part of income generated is a source

of agriculture. 75% of income generation in rural areas is from agriculture and

agriculture-related activities.

One of the deterrents for marketers to exploit the rural market potential has

been the vastness of the rural market in terms of areas covered and the

location of the rural population. It is much easier to cater to the needs of the

urban population because of their concentration, but it is very difficult in the

case of rural population because of their widespread nature.

The villages are also not uniform in size. Nearly 48% of the villages have a

population of less than 500 persons or about 100 households, which is

probably of no consequence to marketers. This may be acceptable since the

proportion of population covered by these 48% of villages account for only

12% of the total population. Yet it should be borne in mind that the people of

these villages also have land and cultivate and generate some income.

Thus the location and size of population of villages throw a challenge to

marketers. This phenomenon is not true for the whole country and there are

wide variations among the different states. In states with high irrigation and

fertile lands, the concentration of population is more when compared to states

with low irrigation facilities and lack of arable land.

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0

20

40

60

80100

Rural Urban

Literacy Levels in India

ILLITERATE

LITERATE

Given the distribution of rural and urban population, it can be seen that the

number of literates in rural areas are more than in urban areas. It is an

interesting got note that has been a considerable increase in the number of

literate persons in rural areas since the last two decades. This has its

implications in communicating with the rural population. It appears to prove

that communication should not prove to be such a big hurdle. Today,

television has proved to be an effective medium for communication with the

rural masses. The telecasting network in the country today covers about 93%

of the population.

Assuming that the entire urban population is covered by the television but the

television, which is only 23%, then nearly 67% of the rural population will be

covered by television. Thus, television reaches a larger segment of the rural

population than any other form of mass media. Though radio is also very

popular, people like to see to believe.

The above factors point that the potential for marketing of goods and services

depends heavily on agriculture, since it is the main occupation in rural areas.

The market for agricultural inputs fertilizers, pesticides, insecticides, tractors,

irrigation equipment and seeds has been expanding over the years in rural

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areas as the Indian farming is fast becoming market-oriented. But the rural

market has remained a dark area for those manufacturing and marketing

consumables and consumer durables. To successfully exploit the potential

offered by the rural market, there is a need to first understand the rural market

in terms of the characteristics mentioned above. Only a few established

companies HLL, Lipton, Brooke Bond, TOMCO, and P & G have been

trapping the potential of the rural market for a long time.

I. The Features of Indian Rural Markets

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1) 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.

2) Major Income from Agriculture : - Nearly 60 % of the rural income is

from agriculture. Hence rural prosperity is tied with agricultural

prosperity. Roughly speaking, a location is defined as rural, if 75 per

cent of the population is engaged in agriculture related activity. In India,

close to 70 per cent of the population is agrarian and contributes to

about one-third of Indias GNP.

3) Low Standard of Living : - The consumers in the village area do have

a low standard of living because of low literacy, low per capita income,

social backwardness, low savings, etc.

4) Traditional Outlook : - The rural consumer values old customs and

tradition. They do not prefer changes.

5) Diverse Socio-Economic Backwardness : - Rural consumers havediverse socio-economic backwardness. This is different in different

parts of the country.

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Profile of the rural consumer:

1. Size of the Rural Consumer :

The size of the rural consumer group can be understood from the

following details provided in the table:

Population of India

Rural v/s Urban: 1980, 1990, 2000 and 2010

Population Total % Total % Total % Total %

1980 1990 2000 2010

Rural Population 43.90 cr 82 50.20 cr 76.3 64.1 cr 76 74.2 cr 72.3

Urban Population 10.91 cr 20 15.62 cr 23.7 20.3 cr 24 28.5 cr 27.8

Total Population 54.81 cr 100 65.82 cr 100 84.4 cr 100 102.7 cr 100

Rural population forms a major portion of the Indian population as seen in

the table. If we consider the state level picture, in several states like Uttar

Pradesh, Rajasthan, Madhya Pradesh and Kerala, the rural population

constitutes more than 80% of the total population. In states like Bihar and

Orissa 90% of the population is in rural areas.

2. Location Pattern of Rural Consumer :

The urban population of India is concentrated in 3200 cities and towns

and the rural population is scattered over 6, 38,365 villages. Statistics

shows that out of the 6,38,3645 villages have populations of more than

5000 persons each. About 55% of the villages have population in the range

of 500 people or less.

The influence is clear, rural demand is scattered over a large area,

unlike the urban demand, which is highly concentrated.

3. Literacy Level:

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It is estimated that there are 23% literate in rural India as compared

with 365 of whole country. The rural literacy in the rural area is on an

increase. Among the rural population Kerala tops with 77%.

The literacy rate has its implication in communication with the rural

population. It appears that communication should not prove a hurdle,

provided appropriate means are chosen.

4. Rural Income :

An analysis of the rural income pattern reveals that nearly 60% of the

rural income is from agriculture. Rural prosperity and the discretionary

income with rural consumers are directly tied up with agricultural

prosperity. The pre-dominance of agriculture in the income pattern has one

more significance-rural demand is more seasonal.

5. Rural Savings :

The rural consumers have been drawn into the saving habit in a big

way. The commercial banks and the co-operative have been marketing the

saving habit in the rural areas for quite some years. Today nearly 70% ofthe rural households are saving a part of their income.

The habit is particularly widespread among salary earners and self-

employed non-farmers.

6. Significant Aspects :

It can be seen in general sense low purchasing power, low standard

of living, low per capita income, low literacy level and overall low social and

economic positions are the traits of the rural consumers.

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By and large, the rural consumers of India are a tradition bound

community; religion, culture and even superstition strongly influence their

consumption habits.

Changing Profile of Rural Marketing

The position in the rural market was totally different some twenty years ago. At

present there is a demand for certain articles like T. V., fans, radio, engine oil,

readymade garments, detergents, medicines, etc. New product like toiletries,

baby care products and consumer durables are now getting good support in

the rural market.

Parle Agro is marketing 80% of its sale in the rural areas. Batliboi and Co. Ltd.

is a leading marketer in agricultural implements. Hindustan Lever sells its

products like soaps, shampoos, face cream, etc. in all rural markets on a large

scale.

Kirloskar and Crompton are leading rural marketers in diesel engines and

agricultural machinery.

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In the service sector the Central Bank and Canara Bank are the largest banks

in rural India. More and more manufacturers are turning towards rural markets

because the urban are getting saturated.

The Indian rural markets have turned out to be gold mine for the marketers in

the nineties.

Factors contributing to the growth of rural

market:

1. New Employment Opportunities : The income from new employment and

rural development efforts launched in the rural areas has increased the

purchasing power among the rural people. Self employment policy with the

assistance from the bank has become a great success in the rural areas.

2. Green Revolution : A technological break through has taken place in

Indian agriculture. Rural India derived considerable benefit from green

revolution. Today, rural India generates 185 million tones of food grains per

year and substantial output of various other agricultural products.

3. Expectation Revolution among Rural Masses : More than the green

revolution, the revolution of rising expectation of the rural people

influenced the marketing environment of rural India. It brought about a

powerful change in the environmental dynamics. It enlarged the desires as

well as the awareness of the rural people.

4. Favorable Government Policies : As a part of the process of planned

economic development, the government has been making concerted

efforts towards rural development. The massive investment in the rural

India has generated new employment, new income and new purchasing

power. In the recent years as a part of new farm policy, high support prices

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are offered for farm products. Various measures like tax exemption in

backward areas, subsidy, concessions, incentives, assistances, literacy

drive in rural areas has brought rapid growth of rural markets.

5. Literacy Growth : The literacy rate is on the increase in the rural areas.

This brings about a social and cultural change in the buying behaviour of

the rural consumer. They are exposed to mass media which create new

demand for goods and services.

6. Growth in Income : The rise in the income resulting from the new farming

strategy is adding meaning and substance to the growing aspirations of the

rural people. Remittances from Indians working abroad have also made a

sizeable contribution to the growing rural income and purchasing power.

7. Attraction for Higher Standard of Living : The rural consumers have

been motivated to change their consumptions habits enjoy a higher

standard of living by the growing awareness about better living and easy

availability of information about the goods.

8. Marketing Efforts : Firms like Bajaj, HLL, etc., have started penetrating the

rural market realizing the rising expectations and the demand revolution in

the rural India.

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TECHNIQUES USED IN RURAL MARKETS

1. Rural Market

Strategies

(DEVELOPMENT

STRATEGIES FOR RURAL

MARKETING IN INDIA)

An appropriate segmentation

of highly heterogeneous rural

market and identification of the

needs and wants of different segments will form the very basis for rural

marketing strategies. The strategies of the 4 Ps of the marketing mix would be

an ideal one for the rural market.

a. PRODUCT STRATEGIES :

The following are the product strategies for the rural market and rural

consumers:

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. E.g. P.V.C. shoes and chappals can be considered suited ideally

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for rural consumers due to adverse working conditions. The price of

P.V.C. items is also low and affordable.

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, e.g.

the experience of torch light dry battery cell manufacturers supports this

because rural consumers preferred dry battery cells which are heavier

than the lighter ones.

4. Utility Oriented Products : Rural consumers are more concerned with

the utility of the product and its appearance. Phillips India Ltd.

developed and introduced BAHADUR (a low cost medium wave

receiver) during the early seventies. Initially the sales were good but

declined subsequently, on investigation it was found that the rural

consumers chose to purchase radios for entertainment purposes, not

only for news & information.

5. Brand Name : The rural consumers do give their own brand name onthe name of an item. A brand name or logo is very important for a rural

consumer for identification purposes.

b. PRICING STRATEGIES:

Pricing strategies are linked to product strategies. The product packaging and

presentation also keeps the price low to suit the rural consumer.

1. Low Cost/Cheap Products : This is a common strategy widely adopted

by manufacturing and marketing concerns wherein the price can be

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kept low by low unit packing like paisa pack of tea, shampoo sachets,

etc.

2. 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.

3. 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.

c. PHYSICAL DISTRIBUTION STRATEGIES:

While it is necessary to formulate specific strategies for distribution in rural

areas, the characteristics of the product - whether it is consumable or durable,

the life of the product and other factors have to be kept in mind.

1. Coverage of Villages with 2000 & Above Population : Coverage of

villages with up to 2000 and above population could be the break even

point for a distribution setup. By doing so the percentage of villages

covered comes to only 10% of all the villages but the rural population

covered will be substantial.

2. Use of Co-operative Societies : Co-operatives have an arrangement

for centralized procurement and distribution through their respective

state level federation. Such state level federations can be motivated to

procure & distribute consumable items and low value items to the

members of the society for selling to the rural consumers.

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3. Utilization of Public Distributor System : The PDS in the country is

fairly well organized, whose effective utilization should be explored by

the manufacturing and marketing men. Its purpose is to make available

essential commodities like food grains, sugar, kerosene etc. to the

consumers at a reasonable price. Fair price shops are run by the state

civil supplies corporation, co-operatives etc. Who have an arrangement

for centralized for procurement and distribution?

4. Utilisation of Multipurpose Distribution Centres by Petroleum/Oil

Companies: Petroleum/oil companies have evolved a concept of

multipurpose distribution centres in rural areas. These outlets can be

profitably used for selling consumable & durable items. In addition to

petrol, diesel etc. fertilizers, seeds, etc. can be stocked at these outlets.

5. Distribution upto Feeder Markets/Mandi Towns : Keeping in view the

hierarchy of markets for the rural consumers, the feeder markets and

the mandi towns offer excellent scope for distribution. From the feeder

towns and themandi

towns the stockist or the wholesaler can arrangefor distribution to the village shops in the interior places.

6. Shandies/Haats/Jathras/Melas : These are the places where the

consumers congregate as a rule. Shandies/Haats are held on a

particular day every week, Jathras and Melas are held once or twice a

year for longer durations, normally timed with religious festivals.

7. Agricultural Input Dealers : Fertilizers should be made available to the

farmers within the range of about four to five km. from their residence,

as per the essential commodities Act. There are about 2 lakh fertilizer

dealers in the country both in co-operative & private sector. E.g.

Varana-Nagar in Maharashtra, where sugar & milk co-operatives have

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totally changed the life styles of people. The supermarket in Varana-

Nagar caters to exclusively to rural consumers.

d. 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. Cinema

c. Radio

d. Print Media: handbills, booklets, posters, banners, etc.

2. Personal Selling and Opinion Leaders : In personal selling it isrequired 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.

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I. 2. Rural Product Categories

The NCAER has categorized the consumer goods into three categories.

Category I- Products are of immediate use to the family. E.g.- bicycles, fans

etc.

Category II- Products are a combination of entertainment products and

products that ease household work strain. E.g. - mixer grinder, cassette player

etc.

Category III- Here products are a combination of means to supplement

income, easy household working, and source of entertainment. E.g. - washing

machine, motorcycle, etc.

3.Product Item Decisions:

The product or service offered by the marketer has the ability to satisfy the

needs & wants of the customer. Products are physical and tangible. E.g.

footwear, motorcycle, etc. Services are intangible and people based. E.g. -

health care, etc. The main consideration in individual product/service offer is

developing of product at three levels,

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Namely-

1. Core Product Development : Core product refers to the advantages

that are specified by consumer needs. Core product developer has to

focus on the needs of the consumer. Business is to be viewed as a

customer satisfying process & not as a goods producing processing

process. A product that provides the important form utility and ensures

performance of the basic function is the core product. Products are

transient, but the basic needs of the consumer group remain the same.

For an e.g. the need for brushing teeth- old products were neem sticks,

charcoal, etc. whereas now toothpaste, tooth powder is used, still the

need for brushing the teeth remains the same.

2. Tangible Product Development : The product concept becomes

visible and operational when the psychological needs are specified in

physical terms. Every product has five characteristics:

a. Quality

b. Featuresc. Style/design

d. Packaging

e. Branding

Quality: Success in the market depends on offering products to the market

segments that will be profitable. Quality signifies the ability of the product to

meet the following expectations-

Reliability,

Economy,

Durability,

Capability,

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Efficiency

The product designers should interact with the marketers to know how the

consumers evaluate the quality of products, since consumers develop their

own norms, beliefs & notions about the quality of products.

Features: Features are extras to a product, which are of value to the buyers.

They are improvements provided for more comfort and convenience. They are

of two types

i. Rational, problem solving

ii. Emotional, fancy

The consumer is willing to pay for the solutions to the problems he has in

using the product. The features, which capture the attention of the buyer, are

less functional and fancier in nature.

Design and style: Design means the arrangements of parts, form, colour, etc.so as to bring out an artistic unit with functionality, aesthetics, convenience of

operation, ease of service of service, repair & costs, etc. Good design adds to

the product attractiveness and usefulness. The three components of

personalities are structure, shape & style, which are acquired through design.

Packaging: It is providing a container/wrapper for a product for the purpose of

handling & protection. The three levels are-

i. 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.

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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.

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.

3. Augmented Product Development : The marketer should have a

vision to look at the specific needs of the consumers and their related

requirements. He needs a broader view to have the whole picture of

consumption of the consumer. Augmentation requires fortifying theproduct strategy with extra force drawn from other Ps due to which the

product offers make buying a pleasant and exciting experience.

5. Price in Marketing Mix for Rural Market

1. PRICING FOR QUALITY CONSCIOUS CUSTOMERS :

These customers are basically concerned with functional benefits and

value-for-money. If a marketer wants to develop an effective pricing

strategy for these customers he must know whether the price quality

relationship holds good for the market.

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Six propositions emerge which are applicable to rural market as well as

urban market.

a. Quality Differences : Larger the perceived difference quality of

brands in a category, the price quality relationship is stronger.

E.g. home appliances.

b. Quality Uncertainty : Greater the uncertainty involved in judging

the quality of product, stronger the price quality relationship.

c. Price Consciousness : Higher the price consciousness of the

consumer and more price variations within a particular category

of product, the price quality relationship is stronger. Therefore

companies create a hierarchy of products establishing price

quality relationship.

d. Need Compulsion : Certain products that fulfill certain needs will

have a strong price quality relationship. For e.g. a reputed doctor

or lawyer would charge premium rates for their services becausetheir services are viewed essential.

e. Place Availability : Price quality relationship is stronger for the

brands sold to the premium market within the same product

category.

f. Social Consciousness : Shoes and shirts that are publicly

consumed products have a strong price quality relationship than

privately consumed products like tooth powder and underwear.

6. Pricing Methods

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Marketer can employ the following methods when price-quality relationships

are associated.

Discriminatory Pricing : This is employed to charge different customer

groups differently projecting differences of quality of offer. The

differences discriminatory pricing are

i. Product Form Pricing : Different versions of the product are priced

differently. E.g. Chota Pepsi Rs. 5

ii. Location Pricing : Same product is priced differently at different

locations. E.g. Residential places in city are costly.

iii. Time Pricing : Prices varies by days or seasons. E.g. During summer,

hill resorts charge higher rates.

Perceived Value Pricing : In order to enhance the customers perceived

value companies add features to their products. For each feature which

enhances attractiveness, reliability, durability convenience, etc., themarketer charges an extra price.

Psychological Pricing : Psychological pricing may be in the form of

reference pricing or image pricing. In reference pricing the marketers

position and sell products at higher prices by endorsement of products

by celebrities or placing products with classy products. Another form of

psychological pricing is image pricing. This pricing is effective in case of

ego sensitive products like cameras, sunglasses, cars, etc. Since price

acts as a signal of quality people prefer to buy expensive ones.

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7. General Pricing in Rural Markets

a) Low Cost/Cheap Products : The price can be kept low by low unit

packing like paisa packs of shampoo sachets etc. This is a very

common strategy which is being widely adopted by many marketers.

b) Refills/Reusable Packaging : The refill packs benefits the consumers

in terms of price. Such measures can have significant impact too, since

the price can be reduced to the advantage of rural consumers. In

addition the packaging material used should be reusable in rural areas.

Most fertilizers companies pack fertilizers in LDPE or HDPE sacks

which can be washed & reused, which are in demand by the farmers.

c) Application of Value Engineering : The application of value

engineering evolves cheaper products by substituting costly raw

material with a cheaper one. We now find costly materials being

replaced by cheaper reinforced plastic. This technique does not

sacrifice the technical efficiency of a product but lowers the product

price.

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8. Unique Traits on the Part of the Salesman for Rural

Market

Personal Selling is an essential element in rural marketing. Rural Marketing

involves more intensive personal selling efforts than Urban Marketing. The

basic traits of Personal Selling are enthusiasm, communication skill and

knowledge of selling techniques which are required in equal measures by

both urban & rural salesmen. In order to match the peculiar rural market

conditions, the rural salesman require certain additional traits & capabilities

listed below-

1. Knowledge of Local Language : This is the basic requirement for a

rural salesman that he should be well versed with the local language.

The rural salesman needs a strong background of the local language.

2. Willingness to Get Located in Rural Areas : It is common knowledge

that the rural areas lack modern amenities compared to urban areas.

Because of this factor salesmen are generally elected to work in rural

centres. It is only those who are genuinely happy in living and working

in the villages can become good rural salesman.

3. Cultural Congruence : The salesman must have proper acquaintance

with the cultural pattern of rural in the given rural territory. Since the

cultural patterns of the rural community differ from one another, a

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cultural background i.e. in consolance with the culture of given rural

community is a specific requisite of success for the rural salesman.

4. Attitude Factor : The rural salesman must have a great deal of

patience and perseverance as their customer is a traditional person. It

will not be possible for the rural salesman to clinch the sales quickly. He

may have to spend a lot of time with the customer and also make

several visits to gain a several response from him.

5. Capacity to Handle a Large Number of Product Lines : The rural

salesmen are often required to handle a much large number of product

lines as compared to their urban counterparts. The rural salesman

usually does not generate economic value of business if they handle

few products. They are compelled to handle a large variety of items and

basically become a jack of all trades.

6. Greater Creativity : Often the product concerned may be very new in

the rural context. The rural salesman must endeavor to introduce them

in the rural market through creative selling, using consumption pioneersand opinion leaders.

9. Managing Sales Force of Rural Market:

The task of sales force management carries certain added dimensions in

the rural context. In selecting the salesman, in giving the orientation, in

motivating them and in developing them the sales manager has to adapt to

the unique requirement of rural selling. The major concern in sales function

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is to constantly improve profitability of the territory. The salesperson has to

undertake the following activities in the field.

1. Increase Sales : The sales person has to identify his own and

customers potential, call on more customers consisting of farmers,

dealers etc. Training and motivating the distributors, dealers etc. help

improve trade sales. Organising campaigns with special emphasis on

farmers contacts and demonstration will be important in order to

increase demand for the product. The services of NGOs can be used

e. g. Colgate Palmolive used NGOs to promote its toothpaste Colgate

Supershakti.

2. Improve Companys Image : A sales person is the link between the

customers and the company. He is the companys ambassador in the

market. Transactions are based on trust in the salesperson. It is

therefore important that he creates a good impression of the company

in the eyes of the customers.

3. Develop Future Market : The salesperson will have to keep in touchwith the latest advancements in the market. He has to identify &

develop distribution system and undertaking demand generation

activities are necessary for the developing the market for the future.

4. Effective use of Resources : Salesperson should not resort to

dumping of stocks in order to achieve sales targets. He should ensure

that stocking of goods is proportional to expected sales; it will help him

in collecting dues as per the credit policy of the company.

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5. Self Improvement and Development : The salesman need

comprehensive on the job training in selected village markets. They

need to be educated about the rural marketing environment in addition

to be trained in salesmanship, and in selling techniques.

10. MAIN TASKS INVOLVED IN SALES FORCE

MANAGEMENT:

1. Determination of personal selling objectives

2. Formulation of sales policies

3. Structuring the sales force.

4. Decide sales force size.

5. Fixing targets and quotas.

6. Selection, recruitment and training.

7. Managing sales force compensation, motivation and supervision.

8. Sales communication and reporting.

9. Sales co-ordination and control.

11. Selecting Proper Media Mix:

The firm has to choose a combination of formal & non-formal media in the

rural context. The possibilities are enlisted below:

A) The Formal Organised Media :

1. T.V.: 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.

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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 communication.

3. Radio : It is a well-established medium in rural areas. Expansions in

broadcasting facilities have taken place over the years.

4. Outdoor : Many companies are using Hoardings, Wall Paintings, etc.,

as part of their outdoor medium.

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, harikathasrender themselves for communication in rural society and can be used

at melas.

2. 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.

3. 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

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promotions campaigns. They are quite popular with rural marketing

firms.

4. 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.

The biggest myth that exists in the minds of most marketers is that rural

is all about traditional dhoti clad villagers living in huts.

The reality however is very different. This clearly depicts that it is now

becoming difficult to differentiate between the rural and urban class. To

understand the case it is important to first understand some rural facts:

Facts on Ownership:

95.9 percent of rural households (HHs) are self-owned 31 percent of rural HHs owns a radio and an equivalent number own a

TV.

27 percent own wristwatches. 8.5 percent of the HHs owns a two-wheeler.

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Facts on Consumption:

95 percent of rural India uses toilet soaps. 76 percent uses detergent (powder/liquid). 48 percent uses dental products (toothpowder/toothpaste).

Facts on Living Standards:

45 percent of rural India haspucca houses. 3.6 Crore HHs have telephone connections. 6.5 Crore individuals in rural India are covered by life insurance

policies.

The COLGATE Case Study

Charcoal, neem sticks, husk, salt and powder mixtures have been some of the

traditional form of oral hygiene products used in rural India. But these products

are losing favor, especially due to the efforts of many organizations and

companies, foremost among them, Colgate. The company claims to have

persuaded about 300 million people into using oral hygiene products in the

country for the last 25 years.

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TOOTHPASTE MARKET SHARE

Colgate

HLL

Smithkline

Balsara Colgate

HLL

Smithkline

Balsara

Aggressive is the only word that could perfectly describe the advertising and

sales promotion strategy of Colgate. Colgate stepped up its rural promotion

drives with IDA (Indian Dental Association) to add value. This has been the

stepping stone to the high penetration in rural minds. Since 1976, Colgate has

been doing this through its rural promotion vans and Young India, Bright

Smiles, Bright Futures, schools dental education program.

After conducting a small research in the rural areas Colgate concluded with

five things that were common in all their rural consumers across India, they

were:-

Rural consumers are brand loyal.

They have disposal income (i.e. because their needs are limited, so

lesser scope to spend.)

Literacy level is on an increase.

Elderly person in the family have the decision authority.

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If a brand is turned down in a household in a village, the whole village

sooner or later boycotts the brand.

High quality products was always a plus point of Colgate all they had to do

was to now tap the still unattended rural markets and change their habits i.e.

from the usage of manjans and datoon to toothpaste and tooth powder. In

1998, Colgate contacted 6 million people in 20,000 villages of which 15,000

villages had not experienced the availability of toothpaste and toothpowder let

alone toothbrushes.

Colgate decided to do this by controlling various advertising and promotional

activities. Suggesting and implementing a rural promotional scheme was what

Colgate called Sampark for, as they were specialist in rural advertising

category.

Samparkhad limited budget to their disposal. Going in for mass media would

not prove to be costly but the reach would be limited as, still only very few

people own and possess a T.V. or a radio.

TOOTHPOWDER MARKET SHARE

HLL

Dabur

Colgate

Colgate

Dabur

HLL

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Samparkwanted something that had far and wide reach that is why Sampark

decided to their advertising by door to door selling. Samparkhired people from

a certain locality who knew the local language, jargons and idioms. This not

only helped Colgate communicate easily with the consumer but was also

effective in sending the right message across to the rural consumer, the other

plus point of this message was that the communication gap was reduced to a

large extend. These people would move about in the villages telling the people

about the pros of using advanced oral care products and the cons involved in

tradition oral care system, this was quite difficult as rural people always felt

that natural was the best. Colgate trained these salesmen to convince the

rural population and make them try the free sample that Colgate was

distributing free.

The next best option that Sampark choose after door to door selling was

publicity vans also called as A/V vans. Seventy promotion vans do the rounds

of the country and educate rural folks on oral hygiene products such as

toothpaste, toothpowder and toothbrushes. These vans used to travel from

village to village and depending upon the market day in that specific village.

These vans also did a number of other activities at a time such as spot selling,sampling, retailing etc. The vans used to be parked in strategic locations, they

were highly decorated so as to get more curious eyes and in the process

educate the rural folk. The roving Colgate vans, after screening a 22 minute

film on oral hygiene that explains how to use the product, offer sampling at

stalls setup near the van. 60 percent of the towns were covered by Colgate

with their own distribution strategy and the remaining 40 percent was covered

by other distributors. There are puppet shows done in the villages educating

the villagers about the plus points of using modern hygiene products.

Educational films were also shown in between movies in theatres, these are

usually 10-40 seconders which were educational and used to feature either

actors, local lenders, for a farmer just like the ones viewing the documentary,

later on after the movie would end free samples were distributed to the

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audience, these tactics are also used in Haats and Melas thought the length

and breadth of India. The thrust towards promotion through schools has done

wonders in changing the awareness levels as well as a shift towards the new

decision-makers in the rural families.

S.S.T. COLLEGE OF ARTS AND COMMERCE

ULHASNAGAR-4

SUBMITTED TO: PROF SHRIVANI.

PROJECT ON

TECHNIQUES USED IN RURAL MARKETS

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SUBMITTED BY:

CONCLUSION

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 astrategy where rural industries have an important role to play.

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

producers in the globalization mechanism, with better livelihoods and global access tomarkets. The real challenge of building a sustainable market linkage starts here.

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Index

Documents

Project on Rural Market