Problems Of Indian Primary Market

Abstract:

There are several problems of the Indian primary market. But these problems can be overcome too by mere application of simple rules( end of the article). These remedies have been suggested by experts.

Withdrawal of IPOs:

Another problem lies in the fact that these days, IPOs are increasingly being withdrawn. An expert has rightly said that there is no point expressing disappointment in the withdrawal of the IPOs because it may be taken not as an indication of failure of the company and hence the primary market but it may be considered as a disagreement of price between the seller and the buyer. The primary markets are undulating the world over. The incidents occurring in the primary markets are reflections of what is actually happening in the secondary markets. It was fathomed that the IPOs, which were lately taken back had very "aggressive" price bands. The price bands could have been aligned as per existing conditions of the market. The lead managers responsible for the IPOs may also be blamed for the catastrophe. Few are of the opinion that lack of judgment may have led to the withdrawal. "Investors fatigue" is being accounted for in the withdrawals. "Cornering" of shares:

Recently, there was an instance when investors "cornered" shares, which were to be alloted to the public. The investor was actually a big investor who camouflaged as a small investor cornered many shares. Grey markets and manipulation:

Other problems of Indian primary markets include over subscription of shares. There are instances when the grey markets usually have high premia, which collapse as soon as the issues are listed. These indicate that for vested interests manipulation in the markets are rampant. Causes: Owing to the subprime mortgage crisis in the United States of America, economies around the globe became sluggish and there were fears of recurring recession in the US. The other primary markets of the world were already affected long ago. In fact the Indian primary market has been impacted rather late. Few economists feel that this delay may be attributed to the "decoupling theory" followed in India. Solutions to the problems:

The following measures have been suggested by economists for overcoming the problems of Indian primary markets.

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The practice of part payment of shares may be removed. The process of application money pertaining to the shares could become uniform among different investor categories. Restricting a company's entry into the primary market if that company had withdrawn shares from the market at least for a span of 12 months. Making the process of book building more effective as well as making the book builders more efficient.

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Challenges faced in Indian Rural Marketing

Posted by siddharth on May 07, 2011 | Leave a Comment

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The concept of Rural Marketing has been evolving continuously over the years and can be classified into three major phases pre 1960s when it was synonymous with agricultural marketing; 1960s-1990s which saw the growth in the marketing of non-farm rural products; and post 1990s, where the prime focus of the companies is to market FMCG and consumer durable goods in rural areas as a result of rise in income levels as well as the number of middle class families.

With about 60% of the Indian population living in rural areas and representing half of the countrys buying potential even today, the Indian economy can be developed by improving the living conditions in rural areas. Rural illiteracy is the prime area of concern and various projects have been undertaken time and again to improve the rural conditions. A recent study by NCAER (National Council for Applied Economic Research) reveals that the number of middle/ high income households in rural India is expected to grow from 130 Million to 172 Million by the end of 2012 as compared to nearly 71 million of urban India. Despite the fact that India is unarguably one of the largest consumer markets in the world, it is difficult to tap the market. Various marketing theories and concepts have been directly implemented in India, but have met minimal success. This is due to wide variations in size and potential of different segments owing to various parameters like income levels, diversity in language & religion, geographical diversity etc. Even, a company like Kelloggs had to face the consequences of the unpredictability of the Indian market. The sales of cereals were abysmally low and forced the company to introduce new eating habits in the country. However, in the meantime, a major chunk of the already existing cereal market (which was small in size), was taken away by imitators who introduced local cereal flavors at much lower prices. As a result, Kelloggs had to realign their marketing strategies and introduce inexpensive biscuits meant for breakfast. It is therefore essential for the marketer to look beyond time tested concepts and reevaluate the entire approach. In order to tap the rural market adequately, the traditional marketing concepts should be modified. This is when the importance of Packaging, Retailer, Education and Empowerment comes into picture. A rural consumer is always a budget seeking consumer. It is essential to first match a products expectations and its pricing structures. It is to be noted that most of the rural population comprises of daily wage workers who tend to have minimal stock of money. Depending on her daily income, she fixes a budget for the purchase and makes a decision after taking other parameters like after sales service, warranty period etc into picture. Thus, the products in the rural market should be able to meet the basic needs of the consumer, as a rural consumer shall not be willing to pay additionally for extra benefits. This makes pack sizes and price points all the more important. For instance, a rural consumer would prefer buying a shampoo sachet to a large bottle which could be used for over a month. Packaging should also be done accordingly in smaller units and lesser priced packs, thereby making them affordable. Physical distribution becomes arduous due to high costs involved and the non availability of retail outlets. Melas & Haats, and Rural Marketing Vehicles (RMVs) could prove to be better means of distribution as the rural consumers prefer touch and feel experience. In rural markets, a consumers buying behavior is widely influenced by social customs and traditions. Higher levels of illiteracy and lack of exposure to traditional media practices further add to the problems. Hence, the advertising mix should be customized and contain other alternative forms like street plays, wall painting, posters etc. A retailers importance should be clearly understood because he plays a vital role in influencing the customers decision making process. A rural consumer frequents the same shop in order to buy as per her daily requirements. As a result of the lack of brand awareness among the rural population, the amount of purchases is positively correlated with the extent to which a retailer pushes the product belonging to a particular brand. Effective incentive schemes and trade promotion activities should be developed to maintain a long lasting relation with the retailer.

The levels of unemployment are very high in the rural areas. Hence, any marketing strategy which involves the scope of income generation would be more preferable. The success of Self Help Groups, which helps in generating income apart from operating like direct to home distributors, is a reflection of this viewpoint. The concept of e-choupals introduced by ITC is noteworthy in the context of Indian Rural Marketing. The presence of these e-choupals is increasing at a rapid rate. It helps in raising the income levels of farmers by providing better prices for their produce in comparison with auctions. These also provide high quality seeds and online advice on various agricultural practices. These practices enable the farmers to increase the consumption levels of the products and services offered by ITC. A clear understanding of the Value for Money concept in the rural areas shall be the major differentiating factor between a successful brand and its competitors. This has been proved by HLL (Hindustan Lever Ltd). HLL discovered that Indians in the rural areas used soaps for multiple purposes. This resulted in the design of all-in-one soaps which was a huge success. The writer, Siddharth Chhottray, is currently pursuing PGDM at T A Pai Management Institute / TAPMI (2010-2012) and is an alumnus of BITS, Pilani (Goa- Class of 2009) Email : siddharth.12@tapmi.edu.in

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