CHAPTER -1 OBJECTIVE OF RESEARCH

OBJECTIVE
The over all objective of the Dissertation is to know the whole scenario of rural marketing in India.

To know the scope of rural marketing in India

Future growth potential in Indian Rural marketing Different strategies for competing in rural India Opportunities in Indian Rural marketing

Scope:
is booming. It will help in understanding the whole marketing strategy It will also help in understanding, why Indian rural market about Indian rural market.

CHAPTER - 2 INTRODUCTION

INTRODUCTION
"The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product."

While we all accept that the heart of India lives in its villages and the Indian rural market with its vast size and demand base offers great opportunities to marketers, we tend to conclude that the purse does not stay with them. Nothing can be far from truth. Rural marketing involves addressing around 700 million potential consumers, over 40 per cent of the Indian middle-class, and about half the country's disposable income. According to a NCAER study the consuming class households in rural equals the number in urban. and awareness The recent NCAER publication "The Great Indian Middle Class" further reveals that the Indian middle class consisted on 10.7 million households or 57 million individuals of which 36 per cent lived in rural areas. No wonder, the Rural markets have been a vital source of growth for most companies. For a number of FMCG companies in the country, more than half their annual sales come from the rural market. Although with the substantial improvement in purchasing power, increasing brand consciousness, changing consumption pattern and rapid spread of communication network rural India offers a plethora of opportunities all waiting to be harnessed, the marketers lack the in-depth knowledge of the village psyche, strong distribution channels and awareness that are indeed the prerequisites for making a dent into the rural market.

Moreover, vast cultural diversity and vastly varying rural demographics, poor infrastructure - be it inadequate roads and highways or the availability of telephones and electricity, low income levels, low levels of literacy often tend to lower the presence of the corporates in the rural markets. Thus, although the rural markets must be alluring, tapping the vast potential calls for a systematic psychographic analyses and an appropriate marketing mix to meet the consequent challenges of availability, affordability, acceptability. To achieve success, in rural India, companies will need to establish rural market development programme. There is a need to innovate and adapt products that suit rural operating conditions. The rural consumers need to be educated of new concepts, relevant to the environment and usage habits that will improve their quality of life. In addition to focusing on targeted promotions and advertising there is an urgent need to work on economical packaging, dual pricing and special sizes of FMCG and household products. IT can be considered as an important marketing tool. Moreover, the corporates need to place emphasis on retailers directly rather than depending on the wholesalers for distribution in the rural market as this has not proved to be very effective and a proactive marketing medium. There is a need to generate superior data on rural marketing system, the haats, melas, mandis and on village and small town income levels and consumption patterns. They need to learn how to use existing market places - haats, melas, and mandis - to arrange live demonstrations of products. The ingredients for successful penetration into the hearts and wallets of village consumers include long-term commitment, cost reengineering and sustained innovation and specialized strategies.

I would like to mention that despite the hurdles that Rural economy presents, corporate-rural partnership can overcome these and bring about positive results for both the entities. Partnership needs to extend beyond agribusiness. It is not only the FMCGs but also the financial and insurance sector that needs to come forward. We are glad that today we have senior representatives from the Banking and Insurance sector to discuss their success stories and tailor-made financial products that have been introduced by them to address the specific needs of the rural markets.

Characteristics of Rural markets There are certain characteristics of rural India, which every prospective marketer needs to be aware of before unleashing his product: Low income influenced by seasonal fluctuations Low literacy Diverse customs, languages and social structures Resistant to change Price sensitive High brand loyalty Influenced by traditions Moderate aspirational levels Quality Conscious Low to moderate risk taking ability These typical characteristics of the rural market make it evident that there are huge challenges, which a marketer will face. These challenges need to be tackled using appropriate strategies and proper planning. The major obstacles can be classified as follows:

. The major obstacles can be classified as follows: Poor infrastructure facilities, which hamper the effective distribution of products and make the task of reaching the target consumer difficult. Traditional media is ineffective due to illiteracy and non availability. There is insufficient past research to provide some insight about consumer behavior. Disposable income is highly dependent on good monsoons and a rich harvest. Varying linguistic and socio-cultural norms compel the marketer to vary his marketing message for different parts of the same country. Role of women in buying process is still not independent of family constraints. Inadequate credit availability hampers the ability of rural retailers to carry stocks. Understanding the psyche of the rural consumer and gauging the complexity of the rural market has to be given utmost priority by marketer. Creative marketing solutions need to be devised to combat these barriers. Methods followed traditionally Traditional methods of rural marketing make an interesting study and they ought to be analyzed carefully to draw relevant conclusions. Conventionally marketers have used the following tools to make rural inroads:

 Use of few select rural distributors and retailers to stock their goods but no direct interaction with prospective consumer. Use of print media or radio but no alternate form of advertising for promoting their brands More focus on price of product but less attention devoted to quality or durability Same product features for urban and rural setting with no customization for rural areas despite differences in the market environment. Low frequency of marketing campaigns. Little uses of village congregations like haats and melas to sell the products. More focus on men as decision makers and buyers.

Marketing in focus groups To explain how the dynamics of branding works in different settings, let us take example of four villages from various parts of the country. For our purpose we will refer to these villages as our focus groups. We have taken a village each from Punjab, Bihar, Kerala and West Bengal. As we have stressed earlier, for any product to be successful in the rural parts of the country, a customized approach is necessary. So we will start our analysis by describing the features of each village, define a product that we wish to market in that village and then describe the marketing strategy for that product.

Difference between Rural customer & Urban customer:

Not only today - but there has been a vast difference between the two markets for a long time now. The difference is not only between urban and rural but also within the rural areas -- between regions, states and districts. There is a difference in the media reach, the education levels, in the culture and the type of products that the two markets are exposed to and this leads to a difference in the two markets. The difference is in things like -- how do you celebrate New Year, how do you celebrate birthdays? Small things like these are celebrated in a completely different manner when the rural and the urban customers are concerned. There is a vast difference in the lifestyles of the people in the two regions. The kind of choices of brands that a urban customer enjoys is different from the choices available to the rural counterparts. The rural customer usually has 2 or 3 brands to choose from whereas the urban one has multiple choices. The difference is also in the way of thinking. The rural customer has a fairly simple thinking as compared to the its urban counterpart. The biggest thing is that there is lack of any research into the consumer behavior of the rural areas. There is considerable amount of data on the urban consumer regarding things like -- who is the influencer, who is the buyer, how do they go and buy, how much money do they spend on their purchases, etc. but on the rural front - the effort has started to happen now. So we need to understand the buyer. Also, whatever little understanding we have is not for the entire industry. There is no collective effort. Some people have spent time in the rural markets, carried out studies and have understood the rural behaviour, but their works have not been passed or known to the rest of the industry. So, an in depth understanding of the consumer is one key area that the industry needs to work on. Second is -- what appeals to him, what are the

right kind of products for him. For example - can I sell the same Lux or the same Tata Tea that I sell to the urban customer to the rural as well? What needs to be the difference in the marketing mix when we try to sell the same commodity to the 2 different sections. There are vast differences in the rural areas as well. There are some 5,60,000 villages and some 525 districts and each one is different from the other. The geographical spread is not as homogeneous as it is with the urban areas owing to vast cultural differences.

Why go Rural?
There are various reasons why every industry is taking a very serious look at rural markets About 285 million live in urban India whereas 742 million reside in rural areas, constituting 72% of Indias population resides in its 6, 00,000 villages. The number of middle income and high income households in rural India is expected to grow from 80 million to 111 million by 2007 while urban India is expected to grow from 46 million to 59 million. Size of rural market is estimated to be 42 million households and rural market has been growing at five times the pace of the urban market More government rural development initiatives. Increasing agricultural productivity leading to growth of rural disposable income. Lowering of difference between taste of urban and rural customers. Many companies like Colgate-Palmolive, HLL, Godrej etc have already made forays into rural households but still capturing the markets is a distant dream. Most

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marketers still lack in depth knowledge to analyze the complex rural market.

CHAPTER -3 RESEARCH METHODOLOGY

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METHODOLOGY USED
In order to carry out any research investigation there is a need of a Systematic method and to adopt a well defined procedure for each and every research there is also a need of methodology. Methodology of any research constitutes application of the appropriate research tools and the techniques. The research involves the following steps:1. Define the problem and the Research objective:If the problem is clearly defined, it is half solved .The problem Objective here to assess the scope of rural marketing. 2. Collect the Information :The information is collected from secondary sources - Internet, books, magazines , newspapers , and journals 3. Analyse the Information :The next step in the marketing research process is to exact findings from the collected data . 4. Present the findings and Conclusions :As the last step ,the findings and conclusion of whole research are Presented. . .

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CHAPTER -4 RURAL MARKETING ENVIRONMENT

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The rural market environment need a separate examination as it varies significantly from that of the urban market. We shall deal with the subject under the three headings :1. The rural consumer. 2. The rural demand. 3. Other aspects of the rural market environment. A. THE RURAL CONSUMER: A Detailed Profile:Size of Rural Consumer Group In numerical terms, Indias rural market is indeed a large one ; it consists of more than 740 million consumers. 73% of Indias total population is rural. The rural market consists of more than 12 crorer households, forming over 70%of the total households in the country. Characteristics of Rural Consumer Group Location Pattern :Rural Market of India is a geographically scattered market. The rural population is scattered across 5,70,000 villages . And, of them, only 6300 villages , have a population of more than 5,000 each . More than 3 lakh villages, are in the category of 500 people or less.

Socio - Economic Position :-

Rural Consumers continue to be marked by low per capita income/ low purchasing power. Similarly, they continue to be a traditional -bound community, with religion, culture and tradition strongly influencing their consumption habits. Nearly 60% of rural income comes from agriculture. Rural Prosperity and discretionary income with rural consumers are thus linked to a sizeable extent with agricultural prosperity.

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Literacy level :Rural India has a literacy rate of 28% compared with 55% for the whole country. The adult literacy programmes launched in the rural areas are bound to enhance the rural literacy rates in the years to come. The rate is certainly on the low side. Lifestyle :The rural consumers are marked by a conservative and traditionbound lifestyles. But this lifestyle of a sizeable segment of rural consumers has already changed significantly in recent years .The changes can be attributed to several factors such as: Growth in income and change in income distribution. Growth in education. Enlarged media reach ( particularly television). Growing interaction with urban communities. Marketers effort to reach out the rural market. Buying behavior :Buying behavior of rural consumers have been effected by the following factors:INFLUENCE OF CULTURE:Rural consumers perception of products are strongly influence by Cultural factors .For example-the preference in respect of color, size and shape is the result of cultural factors.

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GEOGRAPHIC LOCATION:Rural consumer behavior is also influenced by the geographical location of the consumers. For example , nearness to feeder towns and industrial projects influenced the buying behavior of the consumers in respective cluster of villages.

DIFFERENT WAY OF USING THE PRODUCT

The situation in which the consumers utilize their the product also their buying behavior. For example Lack of electricity automatically increase the purchase of batteries by rural consumers: since the rural consumers cannot use washing powders /detergents powders that much, as they wash their clothes in streams.

Amazing innovator
With a queer psychology of purchase and usage, Indian rural market is still a puzzle to marketers. In many a case, it stretches its imagination to find surprisingly different uses of some of the products. And the red-faced marketers admit that they actually sell their products in areas they would otherwise find difficult, simply because there are other uses for them. For instance, in parts of Northern India, condoms are used by weavers as gloves on their fingers to weave fine threads. Lubrication on condoms allows them fine control on threads and protects their sensitive fingers. Buffaloes displayed at the haats for sale are dyed an immaculate black with Godrej hair dye. Horlicks is used as a health beverage to fatten up cattle in Bihar. In villages of Punjab, washing machines are being used to make frothy lassi in bulk. Paints meant for colouring up the rich-smooth walls are used to paint the horns of cattle to make identification easier and to achieve a long-term protection from theft. Iodex is rubbed into the skins

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of animals after a hard days work to relieve muscular pain. The organizations in question might not be pleased with such usage. However, their moneybags keep on jingling.

Quality consciousness
It will be unjustified to think that rural consumers are less bothered about product quality. Even the village buyers desire to buy a quality product and upgrade their quality of life. Marico, an Indian edible oil company, has found the rural consumers in the interior of India willingly pay a reasonable price premium for branded cooking oil, over community oil, because they are certain of its consistent quality. Unbranded products are often considered by some of them to be adulterated.

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Chapter -5 Some Players in Rural Marketing

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SOME PLAYERS ARE IN RURAL MARKET

Here the rain gods still play havoc with ones dreams. The dusty village path winds past a cluster of slumbering cottages and leads one to a weekly rural bazaar or haat, brimming over with din, bustle and transaction. This is where the real India resides. Telephone is a luxury here. Electricity, if at all, comes here only in fits and starts. And a delivery by road may take any stretch of time.

However, things are changing fast now. Thanks to the increasing literacy level and media explosion, people are becoming conscious about their lifestyles and about their rights to live a better life. Brand consciousness is on the rise. This, clubbed with increasing disposable income of rural households, has made the rural consumer more demanding and choosier in his purchase behavior than ever before. And the dusky village damsel has now learned to pine for a satin rose .

The rural India offers a tremendous market potential. A mere one percent increase in Indias rural income translates to a mind-boggling Rs 10,000 crore of buying power. Nearly two-thirds of all middle-income households in the country are in rural India. And close to half of Indias buying potential lies in its villages. Thus for the countrys marketers, small and big, rural reach is on the rise and is fast becoming their most important route to growth. Realizing this Corporate India is now investing a sizeable chunk of its marketing budget to target the rural consumers.

Increasing brand awareness

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In the rural families, studies indicate a slow but determined shift in the use of categories. There is a radical I ncreasing brand awareness In the rural families, studies indicate a slow but determined shift in the use of categories. There is a remarkable improvement in the form of products used. For instance, households are upgrading from indigenous teethcleaning ingredients to tooth powder and tooth-pastes, from traditional mosquito repellant to coils and mats. There is also a visible shift from local and unbranded products to national brands. From low-priced brands to premium brands.

FMCG Consumption Organizations like Hindustan Lever Ltd., Nirma Chemical Works, Colgate Palmolive, Parle foods and Malhotra Marketing have carved inroads into the heart of rural markets. Various categories of products have been able to spread their tentacles deep into the rural market and achieved significant recognition in the country households. And, in the process, the regional brands, local brands and the other unbranded offerings got displaced by the leading brands.

Company HLL Nirma Chemical Works Colgate Palmolive Parle Foods Malhotra marketing

Household penetration 88% 56% 33% 31% 27% % volume of local

Category

brands/unbranded

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Washing cakes/bars Tea Salt

88 56 33

Of the expenditure on consumer goods in rural household, approximately, 44% is on food articles such as biscuits, tea, coffee and salt, 20% on toiletries, 13% on washing material, 10% on cosmetics, 4% on OTC products and 9% on other consumables. A number of category products have established themselves firmly in the rural households. It is evident that in the villages low-priced brands are well accepted and one might feel that a larger proportion of the purchases made in rural market can be attributed to local/ unbranded players. Surprisingly, however, the unbranded/local component contributes to a substantial portion of the volume of only a few of the highly penetrated categories. Focus on urban categories Category Category Brand with penetration Lifebuoy Wheel Double iron Mustard Lipton Taaza Nirma

Penetration highest Toilet Soap Washing cakes/Bars Edible oil Tea Washing powder 91% 88% 84% 77% 70% 64%

Though the commodity products have greater penetration, traditionally urban categories such as skin creams and talcum powder have also made a mark. While the urban talcum powder market suffered a de-growth, the rural talcum powder market darted ahead. Similarly, growth of rural skin

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cream market was at par with that of urban skin cream market. This clearly indicated that after being considered urban for a long time, some categories are now wearing a rural face. And, in many a case, it is the rural market that is actually driving the growth of category.

Premium brands
Ponds is the leader in the talcum powder category with a penetration of 65% and volume contribution of 56%. Its rivals viz. Nycil and Liril are trailing far behind. Moreover, 60% of the Ponds users have purchased no other brand i.e. they are 100% brand loyal. This reflects the strength of the brand in rural bazaar. Category Skin creams Talcum Powders Household Penetration 18% 15%

In the skin care category, Fair & Lovely fairness cream, with a penetration of 75%, accounts for 60% of the skin care market in rural India. It also enjoys the undistinguished patronage of 58% of its user households. Both Ponds and Fair & Lovely are enjoying a monopoly in the rural markets in their respective categories. Rural India is not averse to trying out the premium brands at high prices. A study indicated that a majority of the premium brand users are using the brand for the first time. Similarly 0.9% of the talcum powder-using families have started using Denim talc and 0.7% of the shampoo using households started using Pantene. Surveys also reveal that trials are not restricted to the more affluent echelon of the villages. The experimenting households are more-or-less evenly spread across the various socioeconomic clusters of the rural market. This should further encourage the marketers to focus their attention on rural buyers. Brand Penetration of

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category users Surf Ariel Pantene Denim 6.2% 4.5% 1.8% 1.8%

The rural youths are more open to fresh concepts as against their elderly family members. Their difference in choice of products/brands with the seniors of the households often leads to a dual-usage of product categories. As an instance, 20% of the households using tooth powder also use tooth paste. Similarly, many of the households using premium brands also use mass market brands. For example, while 15% of Surf and 12% of Ariel using families also use Nirma detergent, 3% of Denim users use Ponds Dream flower talc and 18% of Pantene using households use Clinic shampoo as well.

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CHAPTER 6 Marketing Mix for Rural Marketing

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MARKETING MIX FOR RURAL MARKETING

Product
The strategy revolves around what attracts the rural customer to a product. For example - Packaging. Now the rural customers are usually daily wage earners and they dont have monthly incomes like the ones in the urban areas have. So the packaging is in smaller units and lesser-priced packs that they can afford given their kind of income streams. Then a thing like the colour that attracts him is also important. Another important factor is Convenience. An example is what Colgate did to its tooth powder packaging. Firstly - it made sachets as was required by their income streams. Secondly - since many households dont have proper bathrooms and only have a window or things like that to keep such things -- it was wise to cap this sachet for convenience of storage while use. So this is what they did. There is also a difference in the kind of media mix that is used to convey the messages to the rural customers. We need to use different models and means to reach them as what appeals to the urban customer may not appeal to him due to varying lifestyles. The communication and the design of it are also different as what attracts one need not attract the other as well. So again, even if the media reaches him, there might not be an impact as it may fail to attract him as fails to connect to it due to the lifestyles being different. Then there is the case of product availability that again has different strategies. The concept of supermarkets coming up in urban areas is not the same as in rural areas. There the concept of Haats is more prevalent. FOR all the management jargon associated with it, CRM has had grassroots beginnings. Here's a classic example which illustrates this perfectly: CavinKare's Chik shampoo in 50-paise sachets - a huge success

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which redefined shampoo usage and forced giants such as HLL and P&G to follow suit - saw the idea germinate from the grassroots. Literally. Several years ago, CavinKare found that many rural consumers were using bathing soap for washing their hair. The company field force found the reasons - the rural consumer had not heard of soaps damaging hair, and in any case, hair was being washed by soaps for generations by their predecessors. Interestingly, the rural consumers were aware that a shampoo cleansed hair better, but was expensive at Rs 2 per sachet. That's when CavinKare began working on a shampoo for the rural consumer. The 50-paise Chik shampoo was conceptualized then, and has since been a runaway success in rural markets

Keep Products Simple and Functional Driving consumption of goods in rural areas is not just about lowering prices and increasing volume sales. It is also about product innovation: developing indigenous products that cater to the needs of rural consumers who demand quality products at an affordable cost. This requires substantial R&D to better understand consumer behavior and preferences. A case in point is the rural market for shampoo. Hair products were introduced to rural India in an attempt to capitalize on a culture where hair grooming is taken extremely seriously by women. While rural women may wear faded saris and little jewelry, few step out without ensuring that their hair is in place. Consumer goods companies introduced a transplanted product from developed markets, the 2-in-1 shampoo/conditioner. Companies thought that women would be attracted to this product because it was cost-effective; however, initial sales were dismal. What companies failed to recognize is that most rural consumers had previously never used shampoo and did not value or understand the full benefits of conditioner. Several years back, Hindustan Lever focused on product development strategies for rural consumers who still did not

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use shampoo in India. Their research indicated that a prevailing consumer habit in rural India was to use soap for hair and body care. Rather than try to change instilled consumer behavior, product developers focused on creating an opportunity. Consumers wanted a product that was convenient and low-cost. The result was a new 2-in-1 soap, a product that cleans the hair and body, and is targeted towards consumers in rural areas. Model Variant:Models developed specifically for the rural market have found more takers in the market. For instance, Motorcycles that are designed to take on the rig ours of rural roads have succeeded more in the rural market. Colour Variant:The rural consumer differ from their urban cousins in colour preference . in case of some products , colour may matter vary much . firms can exploit this fact to their advantage. For example , ASIAN PAINTS understood the substantial difference between the rural buyer in the colour preference .

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Different products/models, Different brands, packing, pricing and different positioning

By and large, the rural market can be tapped better through different products / models , different brands, different packaging and different positioning.

PACKAGE DESIGN AND PACK SIZE In some case, the product can be the same, but the package and pack size may have to be different for the rural target group. Package design and colour help identification of brands by rural buyers. Many rural consumers are not quite conversant with various brands .All the same, they manage to pick the brand that they want . They recognize the brands by its packaging. This reason why a number of local brands in rural areas imitate the packaging of big national brands. As regard pack size, as a general, it can be stated that smaller packs are more suited to the rural areas. Low purchasing power and limited availability of cash for shopping force the rural consumer to go in for smaller packs with low unit price. In some cases, they also prefer small packs so that they can make a beginning on small scale and after trial and satisfaction go in for regular purchases. In recent years , sale of shampoo brands were priced at Re 1 or below per sachet helped the trail and adoption. The 5-gram Vicks Vapourb tin and the small size Lifebuoy soap are other such examples. HLL, has deepened coverage of many of its products in the rural market through such combination. It has come up with a series of small pack sizes/saches that specially cater to low end consumers.

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Logo, Symbols and Mnemonics:Image is far more potent the rural market , which in many cases is an uninitiated market. Symbols, therefore , add value to brand recall and brand personality in the rural market. Asian Paints Gattu: Asian Paints Gattu though equally well known in urban and rural market has greater effectiveness as an identity tool in the rural market .Actually in many rural parts of India , Asian Paints is referred to as the bahahawala or chokrawala company. The Nirma Girl: The Nirma Girl in Frock on the packs of Nirma washing powder has become the mnemonic for effective and good value in washing powders. The Dettol Sword and the Mortein Genie: For the same reason , Reckitt& Colman has been focusing on the Dettol Sword and the Mortein genie in its rural communication.

Brand Decisions
Branding too needs skillful handling in the rural market. The rural consumers have already graduated from generic products to branded products. Today, the brand name is the surest means of conveying quality to rural consumers. In other words, brand is the key to confidence building among the rural consumers. Besides quality, it conveys that the manufacturer is going to show sustained interest in those products ands markets. Whether the same brand is used in either urban and rural market, or appropriate variants of the brand must be adopted for the rural market, is a matter for conscious decisions by the individual firms depending on the context. In quite a few cases, the same brand is providing right and cost effective. In some cases, however, the brand name that is suited to the

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urban market may not be quite suitable to the rural market. Low priced variants seem to work better in majority of cases in the rural market. It will, however, be incorrect to assume that rural consumers prefer local brands to national brands. Sell Value Brands, Not Cheap Brands;While brands specifically developed for the rural market and low priced variants may work better in many cases , the strategy should be one of selling value brands . HLLs Lifebuoy, for example, is a low priced carbolic soap that is often the first choice of bath soap by a rural consumer .HLL, however , does not sell it as a cheap soap. Instead, sell it as a hygiene brand. It communicates the value of the brand to the target market. It also tries to enhances the value of the offer by giving suitable add-ons .for example, while targeting rural students for the soap , it distributed height charts along with the soap and conveyed its concern for their health and well being . Rural marketers would do well to add some value to their products in this fashion if they are keen to secure the loyalty of the consumers.

Wider competition for a product Many of the rural buyers tend to have little stock of money, only a flow. Consequently, they tend to make purchases only to meet their daily needs and have little capacity to build inventory. The marketing implications of this are far-reaching. Not only are pack sizes and price points affected, but in turns out that consumers have to make a selection from a much wider array of product categories. Thus the nature of competition for any given product is much broader. For instance, in a village haat, Coca Cola competes not just with Pepsi, but with a broad set of purchases that the rural consumers consider as treats. Preference for Low Unit Packs (LUP)

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Trial is often encouraged by Low Unit Packs (LUP) or sachets. The sachet packaging strategy caught the popular FMCG imagination in the early 1990s and it was considered as a breakthrough in the psyche of the rural consumers. Today, the sachets are increasingly dominant on shelves. Shampoo, for instance, has invaded the rural households with sachets at low affordable prices. Sachets of tea, blues and washing powder are being launched in a big way in the village haats by leading manufacturers. Companies like HLL and Marico are making concrete efforts to create and then meet the demand of rural consumers by launching products in small affordable packs.

Price:
According to Euro monitor data, the 2002 per capita income of India was a mere $360. Marketing strategies in rural India must rely on large volumes over fat margins to drive profitability in such a price sensitive market. However, how can consumer goods companies drive volume growth when a regular bottle of shampoo costs more than the average daily rural wage? Hindustan Lever, a subsidiary of Unilever coined the term nano-marketing in the early 90s when it introduced its products in small sachets. In tiny pillow-like plastic packets that contain about 20 milliliters of product, Unilever sells shaving gel, dishwashing liquid and toothpaste, to name just a few items. The sachets answer the needs of rural consumers who cannot, or are not used to, buying larger sizes and enables them to buy on a more frequent basis. This strategy provides a viable entry-level price for many rural consumers who want to try new products, and allows companies to drive volume sales. Today, Hindustan Lever estimates its shampoo sachets are sold in around 400,000 of India's 600,000 villages. Other multinational companies, such as Coca-Cola, have learned the hard way. After being thrown out by Indias earlier socialist government, Coca-Cola re-entered the Indian market in 1993 and

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struggled to grow its business. Coca-Cola overestimated the size of the market, misread consumer preferences and underestimated Pepsis market penetration in India which had been established through its long-standing presence in the country. In 2000, the company wrote down its Indian bottling assets by $405 million after incurring years of financial losses. Since Coca-Cola recruited a local Hindustan Lever veteran, Sanjeev Gupta, its Indian operations have started to turn around. With a pulse on rural consumer needs and preferences, companies introduced a new, smaller sized bottle in 2001. The 200ml Coca-Cola bottle sells at 10c and is aimed at rural areas and lower-income urban markets (the Climbers and the Consumers).Furthermore, this year Gupta dropped the price of a 300ml bottle of Coca-Cola to 17c from 24c.These price cuts have boosted volume sales and the smaller sized bottle has been extremely successful and is expected to represent about half of Coca-Colas sales by volume in 2003, turning Coca-Colas operations to profitability.

Distribution:
Retailer Power While independent retailers are a fragmented group, they have a substantial amount of power in driving consumer purchases, particularly in rural areas. Most rural stores are cramped providing little opportunity for consumers to browse. The consumer interacts directly with the retail salesperson (usually the owner) and services often include informal lines of credit and home delivery in addition to personal opinions on goods. In rural areas, retailers tend to carry only a single brand in a product category. In such a retailing environment, being first on the shelf and developing a privileged relationship with the retailer is extremely important and a competitive advantage to consumer goods companies.One of the grey areas that needs to be probed more into is the Trade -- that is the retailer. When an urban consumer goes to shop -- he has many options

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in front of him(around 10 to 15 in some cases) as are displayed in the store. But for the rural customer these choices are limited. So the retailer plays a very big role here. The rural customer goes to the same shop always to buy his things. And there is a very strong bonding in terms of trust between the two. The buying behaviour is also such that the customer doesn't ask for the things by brand but like -- "paanch rupey waali chaye dena". Now it is on the retailer to push whatever brand he wants to push as they can influence the buyer very easily and very strongly on the preferences. Unfortunately, we have not spent enough money and time on understanding the rural markets in a collective way. As we need to understand the consumer, we need to do the same thing for the retailer as he is a chief influencer in the buying decision.

Promotion
There is an example in innovative media. It was used to push products in personal wash like Lux and Lifebuoy and fabric wash items like Rin and Wheel. For both, washing and for taking bath - one requires water. Now for rural markets there are three sources of water - wells, handpumps and ponds. For the first in the history of advertising - these were branded. Special stickers were put on the handpumps, the walls of the wells were lined with advertising tiles and tinplates were put on all the trees surrounding the ponds. The idea was to advertise not only at the point of purchase but also at the time of consumption. So the customer could also see the advertising when he was bathing or washing. Now, the customers who bought these brands got a sense of satisfaction by seeing their choice being advertised in these places while a question was put in the minds of the customers who had bought other brands. So this was an innovative strategy that worked quite well.

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Therefore to understand the way the rural markets work -- we need to go to these markets and spend time there in understanding them. We live in surroundings where the things are completely different from what the rural customer experiences. And we can't understand him unless we go and spend time there. Things like what time does he get up, etc need to be studied and customer needs to be understood. Also these studies need to be passed on so others can also benefit from the ground works done and enhance them further. We need in depth studies of the market, the medium, the message and the rural customer in center of all these to understand the rural markets completely.

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CHAPTER -7 RURAL MEDIA

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RURAL MEDIA
Urban consumers shop daily and have 365 opportunities a year to switch brands while the rural purchasers who buy their goods in weekly haats have only 54. Attempts to reach rural consumers, even once during the purchase cycle to ensure repeat purchase, make point of purchase advertising and trade push indispensable. This requires a significant reorientation in the allocation of funds across media. For example, outdoor advertising accounts for over 7% of all media expenditures in India, while it only accounts for 0.8% in USA. Rural buyers living in small isolated groups distributed across vast distances have limited access to the broadcast media. The existence of a multiplicity of languages and varying level of illiteracy complicates the task of communication further. To overcome some of these challenges, Unilever pioneered the concept of video vans that travel from village to village screening films in the local language, interspersed with advertisements for Unilevers products. The company also provides product usage demonstrations to the captive audience because written instructions on the pack may be illegible to the consumers who are either illiterate or do not understand the dialect. Where mass media is used, variability can, at times, back fire. On re-entering India in the 1990s, Coca Cola decided to reinvest massively on a TV advertising campaign. It opted for slick commercials, rich in colour, with high production values, but the effect was somewhere lost on a market where 60% of all TVs are still black and white. However, in the recent past, the improved technology has allowed the cable and satellite networks to increase their reach across the countryside thus exposing a rural consumer to a lifestyle that was beyond his dreams. And this increasing awareness has led to a significant change in his buying behaviour and consumption patterns. While the urban market is

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getting increasingly competitive and saturated, the rural market is blooming with increase in the disposable incomes of the households, thus promising a far better scope for growth for marketers. Hence, with the shifting dynamics of the present-day market situation, now it is the turn of the rural consumers to dictate the terms. And this reinforces the need for marketers to formulate a well-designed strategy to feel the pulse and to tackle the mystic rural marketing. Selecting The Media Mix Television:With he increase in coverage and increase in TV ownership in rural areas TV is gradually becoming the prime media for rural communication . Cinema:The cinema is a useful medium in rural context . most large and medium villages have one or more cinema house. Also, more than one-third of all rural people do see cinema as a matter of regular lifestyle. Advertisement films , short feature films, with disguised advertisement message, and documentaries that combine knowledge and advertisements, can be employed for rural communication. It has been estimated that 33 per cent of the total cinema earnings in the country come from rural India. Radio:The radio is well -established medium in rural areas. A big expansion in broadcasting facilities has taken place in the country over the years. The availability of radio sets has also expanded. While radio as a medium cannot match TV in potency and effectiveness, in the existing context ,it can certainly play a significant role in rural communication.

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Print media too has some scope :The role of print media is certainly limited in the rural context. Even the remotest rural parts have a small group, which is literate. Moreover, while the group may be numerically small , its member usually happen to be the opinion leaders , influencing the purchasing behaviour of the large segment of the rural consumers. so, it would be unwise to assume that the print media has no scope at all in the rural areas . Moreover, the younger generation in the rural areas is comparatively more literate. With the new trend of increasing rural literacy , the scope for using print media in rural communication will increase further. Outdoor:The outdoors , which include hoardings, wall paintings, illumination and other displays, also lend well for rural communication . In fact , many companies are using the outdoors in the rural communication mix. POPs (point of purchase) :The POPs Point of purchase promotional tools- are also quite useful in the rural markets. The POPs meant for the rural market should be specially designed to suit the rural requirements. Symbols, Pictures, and colors must be liberally in POPs meant for the rural market. Colour is of particular significance. As a general rule, the rural people love bright colors. The effective Communicator utilizes such cues.

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CHAPTER 8 Rural Small Scale Industries

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RURAL SMALL SCALE INDUSTRIES

In India, the Small Scale Industries Sector has been growing faster than the whole of the manufacturing sector, at rates of 7% to 10% during the past decade. Hence, the targeted growth rate of 12% envisaged in the 10th Five-year Plan appears imminently attainable. SME sectors contribution to GDP has been increasing and is about 40% now. Today, 11.4 million SSI units provide employment to over 27.1 million people contribute 40% of the countrys industrial production and 34% of the exports from the country and also produce more than 8000 products. Setting up of National Commission on enterprises, Revamping of Khadi and Village Industries, Small Industries Development Bill, Golden Jubilee of SIDO and Third All India Census of Industries are some of the highlights during the year. To address the concerns of the unorganized / informal sector enterprises, a four member National Commission on enterprises in the unorganized /informal sector under the Chairmanship of Dr. Arjun Sengupta in the rank of Cabinet Minister has been set up on 21.9. 2004. The mandate of the Commission is to examine the problems being faced by the enterprises in the unorganized / informal sector and to provide appropriate recommendations for technical, marketing and credit support to these enterprises. The Commission will function both as an advisory body and a watchdog for the informal sector. Revamping of Khadi and Village Industries For revamping the Khadi and Village Industries (KVI), the Government dissolved KVIC on 14.10.2004. The Chairman and all members of the Commission ceased to hold their offices since that day. The Ministry set up a ten member Expert Committee (a) to review the existing structure, functioning and performance of the KVI since its inception (b) to review the KVIC Act, 1956, KVIC Rules, 1957 and the Regulation made

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thereunder and (c) to recommend other measure(s) considered necessary by the Committee to revamp the KVI and to launch new appropriate programmes/schemes. Small Enterprises Development Bill The Small Enterprises Development (SED) Bill has been drafted. Enactment of this Bill will remove the barriers to SSI growth by inculcating a hassle-free, user friendly environment enabling SMEs to diversify from the conventional product range. It will, thus, encourage exports and global integration and propel SSI towards the projected 12% growth target. This can help India achieve its ambition of transforming into a global manufacturing hub, a centre of excellence for small enterprise activities. In addition to SED Bill, a major promotion package for development and promotion of SSI sector is under formulation. Credit Rating Scheme A Credit Rating Scheme has been introduced to encourage the SSI Units to get their credit rating done by the reputed credit rating agencies, with a view to facilitating credit flow to them and enhancing the comfort-level of the lending banks. 75% of the cost of the credit rating exercise, with a maximum limit of Rs.40, 000 per SSI unit, is now reimbursed to the SSI units availing of this one-time facility. The scheme is being implemented by the NSIC. SME Fund Looking to the credit needs of the SMEs in 1990, the Small Industries Development Bank of India, (SIDBI) was launched to aid and finance for small enterprises with a corpus of Rs. 2500 crores. To further improve

41

credit availability, a SME Fund of Rs. 10,000 crores has been operationalised under SIDBI from April 2004. Credit to SSI. In order to facilitate smooth flow of credit to SSIs, the composite loan limit for SSI entrepreneurs has been increased from Rs. 50 lakhs to Rs. 1 crore. Credit Cards Laghu Udyami Credit Card (LUCC) Scheme has been liberalized by enhancing the credit limit from Rs. 2 lakh to Rs. 10 lakh, for borrowers who have a satisfactory track record. SSI Clusters 16 new industrial clusters were identified and taken up under Small

Industries Development Programme during this year. These are: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. Food Processing, Muzaffarpur, Bihar Steel Re-rolling Mills, Raipur, Chhatisgarh Agricultural Implements, Karnal, Haryana General & Light Engineering, Parwanoo, Himachal Pradesh Readymade Garments, Bangalore, Karnataka Gold Ornaments, Thrissur, Kerala Readymade garments, Indore, Madhya Pradesh Brass & Bell metal, Khurda, Orissa Agricultural Implements, Moga, Punjab Ball Bearings, Jaipur, Rajasthan Leather Footwear, Agra, Uttar Rpadesh Leather goods, Shaniniketan, Uttar Pradesh Installation of Common Facility Centre in Brass/Bronze, Utensils, Manufacturing Cluster at Pareb, Bihar Development of Whiteware Cluster at Khurja, U.P. Development of Auto Parts Clusters at Phagwara, Jallandhar and Ludhiana Development of Cane & Bamboo Cluster at Dimapur, Nagaland.

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The development of these clusters is at various stages of implementation. A National presentation on Rural Business Hubs was organised by the Ministry in collaboration with the Confederation of Indian Industries at Vigyan Bhavan on 5 November, 2004. The Prime Minister Dr. Manmohan Singh delivered the valedictory address. The presentation focussed on the number of issues including the participation of the private sector in such programmes. Conference of States/Uts Ministers A conference of Ministers (SSI, KVIC & COIR) was organised on 25 June 2004 at Vigyan Bhavan, New Delhi under the chairmanship of Shri Mahabir Prasad , Minister of SSI & ARI. Progress of implementation of various programmes of SSI/KVIC and coir industry was reviewed in the context of implementation of NCMP. The Minister stressed upon the need for a comprehensive promotional package for the SSI sector. Golden Jubilee Year of SIDO This year was celebrated as Golden Jubilee year of the Small Industrial Development Organisation (SIDO) along with the SSI convention on 30 August at Vigyan Bhavan , New Delhi . SIDO was set up in 1954 as an apex body for formulating and overseeing the implementation of policies for the promotion and development of smallscale industries in the country On this occasion, the Prime Minister gave away National awards for outstanding achievements in the fields of enterpreneurship, research and development, and quality product in the SSI sector. The inaugural session of function was followed by an openhouse by way of an interactive session on SSI lending in which the representatives of major banks participated along with the representatives of industry and other officials. Global Summit on SMEs The Ministry in association with the Confederation of Indian Industry ( CII) organised `India Global Summit on SMEs Emerging Challenges and Opportunities on 23-24 November, 2004 in New Delhi. Dr R. Chidambaram, Principal Scientific Advisor to the Government of India made a special presentation. The global summit facilitated networking and sharing of best

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international practices, in the SMEs sector, to provide a sustainable focus on the future development and the growth of the SMEs. During the summit discussions, deliberations took place on the themes of enabling policies, role of finance/ innovative finance and measures for risk sharing. Value addition through information and communication technology, global outsourcing opportunities and global small enterprises. 137 foreign delegates from 27 countries across the globe attended the summit. Conference on `Small Business Competitiveness Development National Small Industries Corporation (NSIC) in collaboration with the Commonwealth Secretariat London organised a pan-commonwealth programme on `Small Business Competitiveness Development in New Delhi. On 15-19 November, 2004. Dr. V.Krishnamurthy, chairman, National Manufactruing Competitiveness Council delivered the key note address Techmart India 2004 National Small Industries Corporation (NSIC) organised `Techmart India 2004 , the 12th Internatioinal Technology Fair, during the Indian International Trade Fair 2004 at Pragati Maidan, New Delhi. More than 236 SSI units participated in it. NSIC was awarded a silver medal for `Excellence in special Display by the India Trade Promotion Organisation.

WTO and SMEs Under the World Trade Organisatioin (WTO ) regime, new opportunities are being created for linkages between SMEs across the globe. The dismantling of the textile quotas is being anticipated in India with great enthusiasm. Garment export is a dominant characteristic of Indian SMEs. Other sectors, such as Biotech, IT and IT enabled services, footwear to name a few, have shown promising potential. Closer connectivity of Indias large agricultural resources affords growing opportunities for new ventures. Indias vast pool of talented and educated persons, and low-cost

44

labour can translate into possibilities for foreign collaborations. SMEs grew by 19% last year, faster than the overall growth of the IT sector, and has expected SMEs to deliver better results in the coming years. SMEs are also engaged in cutting edge research and development activities, logistics services, back-office operations and other services. Reservation Policy On the recommendations of the Advisory Committee, the Government has deserved on 20.10.04, 85 items from the list of items reserved for manufacture by the small scale industries. This was done to enable the SSI sector to grow and adapt to the fast changing economic scenario. The Ministry brought out the final results of the third All India Census of small scale industries 2001-2002. The census was launched in November 2002 . The main objectives of the census were: (I) to update the frame (list) of registered SSI units.(ii) to identify sick and incipiently sick units with the reasons thereof, and (iii) to collect other useful information for policy formulation. The State Directorate of Industries have been requested to de-register 8,87,427 SSI units found closed during the survey of the Third All India Census. Tool Room & Training Centre at Guwahati was inaugurated by Minister of SSI & ARI on June 26, 2004. Action Plan for Employment in Agro & Rural Industries To generate more employment in the agro and rural industries sector, the Government has fixed a target of creation of 25 lakh additional job opportunities in rural areas during the 10th Plan under the Rural Employment Generation Programme (REGP) being implemented through the Khadi and Village Industries Commission (KVIC). In the first two years of the 10th Plan 8.32 lakh job opportunities have already been

45

created under the REGP and a target of creation of 5.25 lakh jobs have been fixed for the current financial year 2004-05. Further, a target of creation of 16.5 lakh employment has been fixed under the Pradhan Mantri Rozgar Yojana (PMRY) for the 10th Plan period. In the first two years of the 10th Plan 5.44 lakh job opportunities have already been created. A target of creation of 3.75 lakh employment opportunities has been fixed for 2004-05 Coir Industry The 10th Plan outlay is Rs. 11500 lakhs envisaging 12% growth in production and export. The 10th programme of coir industry is aimed at overall sustainable development of coir industry trough research and development, modernisation, quality improvement, human resource development, better marketing of products and welfare of all those who are engaged in this industry.

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CHAPTER -9 The E-Marketing in Rural India

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THE E-MARKETING IN RURAL INDIA

Modern information and communications technologies (ICTs) and web based marketing of agricultural produce hold great promise for the socioeconomic development of rural hinterlands in India. However, if they are to serve the `unserved and spawn innovation at grass root level their implementation must be carefully localised. This paper explores several models of ICT deployment and information design issues which have been tried in various parts of the developing world in the context of agricultural marketing over the web and uses that learning with field experience from a live project. The flexible systems framework is found appropriate and useful to design the next action agenda. The anytime-anywhere advantage of e marketing leads to efficient price discovery and offers economy of transaction for agricultural trading. This attracts many rural developmental agencies to deploy websites for marketing agricultural produce. But in spite of a core value proposition and significant investment by the Indian government/NGOs and commercial agencies in developing such portals, many have failed. Internet traffic on these websites is either very limited or none at all. Yet there is a lack of empirical studies on the modes of their failures. This study using the sap-lap methodology examines the experiences of a number of internet portals from India and other countries engaged in rural marketing or disseminating rural development information, with usability measures derived from farmers and traders and those suggested by researchers. The findings are used in developing a conceptual framework for e-marketing info design for agricultural market in rural northern India for the portal (DM).

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Situation Common wisdom has it that the advent of modern information and communication technologies (ICTs) such as telephony or the internet hold unprecedented opportunities for rural development. Researchers, policymakers and entrepreneurs alike frequently claim that ICTs represent one of the most powerful tools in the struggle against poverty. The significance of the Web in disseminating information and communicating this effectively to the targeted user has been sufficiently debated. Most experts agree to it that the Web will have a great impact on the way rural marketing would be conducted in the future, yet there has been little research towards exploring the effectiveness of the provision of agriculture-related and rural marketing information in the electronic form. This study set out to assess the current performance of agricultural websites in some key areas of information provision through such websites maintained by government departments and agencies, private profit-motivated as well as non-governmental organizations (NGOs), and to identify the barriers to communication. The results offer significant implications for researchers and practitioners interested in development of portal information structure for Web development, multi-dimensional communication, electronic commerce networks and e-commerce trading platforms for rural marketing. There are a number of ways some obvious and some not-so-obvious ones in which ICTs may serve the development process. For instance rural entrepreneurs can benefit because ICTs help to improve access to markets or supply chains and provide a broader base for decision-making, thus making risk more calculable. Moreover, many local communities have experienced that ICTs have increased bottom-up participation in the governance processes and may expand the reach and accessibility of government services and public infrastructure. In Andhra Pradesh, Internet-based Integrated Citizen Service Centres allow for electronic bill

49

payment, issuing of certificates, permits and licenses; or access to public information. The electronic village project of M.S.Swaminathan Research Foundation (MSSRF) in Pondicherry received the Stockholm award for its promise. However, there is as yet little systematic empirical evidence of the supposed enormous developmental impacts of ICTs. Moreover, in many especially rural areas, the private sector is yet to invest significantly in ICT experiments (except for a few like ITC or Tata Chemicals) because of lack of experience with rural markets or low purchasing power of the local population. This means that, if ICT access is to be expanded, public money will have to be spent which in turn means that there are important trade-offs to be considered. In many areas, there are serious questions about how much money policymakers should spare for the build-up of ICTs instead of investing further in potable water supply, roads, electricity or other physical infrastructure projects. Given such trade-offs, there is a need to identify which kinds of ICT access deliver the best value for money, and how the limited resources that can be spent on it can be made to best suit the particular needs of rural India. A number of `models have so far been tried. One of the most famous projects of successful ICT application for development is the Grameen Village Phone system, undertaken by Grameen Telecom (a member of the Grameen Group). The project aims at ultimately spreading phone access to the over 100 million inhabitants of Bangladesh who are so far unwired, made possible by combining the Grameen Banks expertise in village-based micro-enterprise and microcredit with the latest digital wireless technology. The aim is to have selected member borrowers of Grameen Bank purchase the phones under a lease programme and make the phones available to all users in the village on a fee-paying basis.

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Another model of ICT provision in rural areas of developing countries, and one which attempts to combine phone access with access to the Internet is that of the so-called Telecentres or Information Kiosks or the recently introduced Infothela of MLAKLH. An Infothela is a common point of access for multiple users (often an entire community), providing a range of ICT services including Internet, fax, phone, e-mail, word processing, and even specialised information retrieval or applications (e.g. distance education or matrimonial matchmaking). Telecentres have been established widely in the developing world, and vary in their service provision and means of funding. In Peru, the establishment of numerous `Cabaas Pblicas created one of the highest concentrations of public internet access and a significant reduction in prices. Nevertheless, the experience with telecentres has so far been a mixed one. In numerous cases, usage, particularly of PCs, has been lower than expected or commercial viability was not attained. Of the over 70 Community Telecentres established since 1997 by the South African Universal Services Agency, only 40 per cent remain open today, with only 3 per cent making enough money to cover costs. Buried at the end of the World Bank policy paper on the Networking revolution: opportunities and challenges for developing countries ( June, 2000) is an account of multipurpose community telecentres (MCTs) in It turns out that of twenty-three MCTs built in rural rural Mexico. percent. The policy paper comments, Problems encountered included insufficient maintenance funding, inadequate political interest and will, and cultural constraints which hamper community interest in the projects. The paper gives no hint why political interest and will might have been inadequate and why community interest might have been constrained by that holdall excuse for failure, culture.

Mexico, only five were working two years later. This is a failure rate of 80

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The paper concludes that the Mexican case underscores the importance of participatory design and attention to sustainability issues in the development of such programs.

Actor Internet and Information Kiosks exist in various kinds, each with their respective merits. First, one might distinguish between the small private sector cyber cafes on the one hand and bigger, donor-funded telecentres like e-Seva in Andhra Pradesh or e-Village in Pondicherry on the other hand. Smaller, privately run cyber cafes are often financially selfsustaining but are thus usually restricted to areas where they expect to be viable (usually urban centers) and are usually neither within physical nor financial reach of the poor. They are also unlikely to be able to provide local content. By contrast, larger, often externally funded telecentres are rarely financially sustainable but can focus more on specific development aspects, including access specifically targeted at rural communities and the poorest in general, as well as a focus on training. A second distinction is according to the institutional context they are embedded in. This often has a significant influence on the developmental impact of telecentres. commercial telecentres and commercial franchises (like e-choupals of ITC) are usually closest to commercial viability but, as mentioned, are unlikely to have an impact on the poor outside the economic circle of the e-Choupals. Telecentres run by or with the involvement of developmental NGOs are more likely to target poor and marginalized communities and focus on much-needed additional services like training, content creation, provision of public goods without which ICT access would be of limited developmental use. Telecentres in village schools for example as another alternative have the significant advantage that for their establishment an existing physical infrastructure only has to

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be extended and some of the ICT-relevant training can be cost-effectively integrated into the mainstream curriculum of the educational institution. This partnership has successfully worked in the DM project. One further idea for the Digital Mandi that evolved was Virtual Telephones or village voice mail systems, as have been set up in Brazil. These can provide individuals with their own telephone number and access to a voice mailbox. In other words, the individual need not possess a telephone but can receive calls to a voice mailbox using his/her personal PIN. Extending this idea to text e-mail access, a South African company assigns e-mail addresses to every Post Office box address in the country, thereby providing electronic mail indirectly to around eight million South African households through public internet terminals located in post offices which users can access with a personal identification number. The Postal Department in India has now taken up a similar programme. . Thus there are a number of alternatives and apparently mutually exclusive business models for ICT implementation in Rural India. On one hand it appears that kiosks run by local entrepreneurs with localized and targeted applications (like e choupals in Northern India or voicemail service in Brazil or matrimonial matchmaking service in Tamil Nadu) will succeed on the other hand following the success model of the world wide web itself one may suggest that if an infrastructure is created and user friendly appropriate interfaces are continuously accessible then local rural folks will develop their own applications and Information Kiosks or Infothela will survive. The Digital Mandi Project conceived as an electronic trading platform for agro-commodities of Northern India and meant to run as a core application on the mobile Infothela faced additional problems. Barriers to information access may be physical, economic, intellectual or technological, that impede a users participation in the activities on a website. The barriers may be actively imposed by the architects and

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website designers or they may be allowed to continue simply through their lack of action or lack of understanding of the critical user conditions. Such critical user conditions may arise due to particular demographic, geographic, cultural, social, psychological, economic or other factors. Issues related to usability such as ease of use, usefulness (Davis, 1989), decision effectiveness (Mason et al, 1973), user response, user satisfaction (Doll et al, 1988) and many other aspect of usability have been studied in great detail by researchers. But interactions with focus groups at various agricultural market places around Lucknow-Kanpur showed the need of a more detailed study on Information communication barriers on a more localised set of priorities. Learning It is therefore, assumed that a website with relatively high-level of accurate, up-to-date and pertinent content, deployed in a user-friendly way, customized to particular user groups, and tailored to specific geographical needs should be universally successful and hence, accepted in India too. However many such efforts have apparently failed to achieve their targets. The challenges to agricultural website usability for rural marketing in India arise mainly because of the highly specific local needs and the great diversity in local conditions. The major challenges are Poor literacy rate low use of textual information Remote village locations - physical distances compounding problems of lack of proper price information and habitual dependence on middlemen. Absence of alternate media for dissemination of info. Absence of info in vernacular languages and multiplicity of languages.

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Cash crunch of farmers, immediate cash transaction system and reluctance of banks to provide soft loans to farmers. Economic, low-cost solutions - any technology solution aimed at benefiting the masses in rural India must be affordable and low-cost so that the perceived economic benefits of such an endeavor are much more than the cost of switching over to a different technological solution.

In the absence of timely and correct information about prices, arrivals and market trends, compounded with the problems of low cash-at-hand and proper advice, farmers are forced to sell their produce at lower-thanexpected rates. The result is that the benefits of the green revolution have not really percolated down to the farmers.

Action The Digital Mandi project demonstrates that there are a number of features pertaining to the ICT access projects that are particularly successful from a developmental viewpoint This means, for instance, to somehow convey the relevant (local) content provided through internet access to the largely illiterate rural populations of developing countries in local language may have far- reaching spinoffs. It has a leased line connection to the Internet, and in the so-called process of radio browsing programme presenters browse the Web in the studio on behalf of listeners (who provide requests/input through phone or post). Relevant experts from the community then interpret the information for listeners. Another good example of the creation of relevant local content are the Infoshops in Pondicherry, India. After information requirements are identified during a trial period, volunteers from the village create a local database comprising government programs for low income rural

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families; cost and availability of farming inputs such as seeds and fertilisers, grain prices in different local markets; a directory of insurance plans for crops and families; pest managements plans for rice and sugar cane; a directory of local hospitals, medical practitioners and their specialties; a regional timetable for buses and trains; a directory of local veterinarians, cattle and animal husbandry programs. All these preceding experiments contributed to the Digital Mandi design. Web site success depends on a number of factors the most important of which is the website design, which encompasses both the content creation and information design. All website design issues aim at providing certain requisite features in the website. Jonathan Palmer (see references) has contented that website success depends on such factors as website download addressed as (a) content-related issues (b) information design issues and (c) communication design issues. Traditionally, the basic work of a good website design has been considered as addressing the content-creation and context-appropriateness issues only. While website designing objectives for other purposes may be fulfilled by creating a good fusion of relatively high-level content with fine design features taking care of the issues mentioned above, they would certainly fall behind their objectives when considering agricultural websites for rural marketing. The reasons as has been listed earlier, can be found in the inherent characteristics of rural markets in India. These websites are therefore bound to fail unless delivery services for agricultural information can be effectively integrated with good delays, navigation, content, interactivity and responsiveness. The inclusion of these features into a good website can be

56

information design models and grass root innovators/ social activists agenda.

Performance The basic findings from our initial research at Digital Mandi has shown that the presence of a number of desired features in a website leads to higher user satisfaction. Such features are broadly aimed at satisfying one or the other of the following immediate user objectives: a) Ease of access. b) Up-to-date content. c) Layout, design, consistent themes. d) Easy navigation. e) Higher interactivity. f) Access through multiple media. g) Higher use of non-textual information. h) Multiple languages. i) Lower cost of transaction. It was assumed that each of these factors contributed to higher user satisfaction. The Digital Mandi project now wants to integrate an ethnographic approach with flexible systems methodology to focus on the communication design issues for web-portals specifically devoted to rural marketing in India. The specific research questions are: 1. What are the major information design features for rural marketing in India? Hypotheses (a), (b), (c), (d) and (e) are tested to find answer to this question.

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2. What are the major communication media tools to be used for agricultural websites in India? Hypothesis (f) is tested against this question. 3. What are the modes employed to transcend communication and cost barriers for specific user groups? What local language solutions are to be provided What non-textual solutions can be provided for the What makes ICT relevant for the unserved rural

through which media? under-educated, untrained user? communities?

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CHAPTER 10 IMPACT OF POWER BRAND IN RURAL MARKET

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IMPACT OF POWER BRANDS

"With the implementation of the power brands strategy almost complete, we have shown both topline and bottomline growth in this quarter." D Sundaram, finance director, Hindustan Lever Limited, after announcing Q3 2005 results. "We benefited by dropping brands with low profit margins or moving out of categories that were not growing." Harsh Mariwala, chairman and managing director, Marico Industries. Three men, one voice. Indian fast moving consumer goods companies like HLL, Godrej Consumer Products Limited and Marico Industries are completely sold on the concept of "power brands". But in their rush to put their best brands forward, are these big companies in danger of overlooking the potential offered by some of the also-ran brands? It's been almost five years since these three FMCG giants opted to manage their brand portfolios on the basis of the power brand strategy. How have they fared? And what does the future hold? Why power brands? In 2001, HLL decided to put its marketing resources behind 30 power brands out of a bouquet of 110. Of these select brands, the top five brands of the company contributed more than Rs 3,000 crore (Rs 30 billion) to the company's turnover (close to 30 per cent of sales). So what did it take to be a power brand? In a nutshell - size, brand strength, uniqueness and growth potential. The thinking in HLL? Helping brands grow under the prevailing market conditions required scale. Even in 2001, the Indian FMCG market was crowded. More than 3,000 advertisements were beamed on television every month, while stockkeeping units at retail outlets had increased by over 40 per cent, in just three years. Unfortunately, for the most part, shop sizes remained the same. Which meant in-store displays - critical for impulse purchases -

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suffered. Even the plethora of television commercials wasn't helping the FMCG cause: it was difficult for brands to stand out amidst the clutter. For others like Marico, GCPL or Dabur, too, "getting more from fewer brands" became the magic mantra. In 2002, GCPL decided to focus on five brands in a bid to sustain growth; since these five contributed more than 90 per cent of the company's total sales, that strategy made eminent sense. Around the same time, Marico decided to exit from slow-growth, low margin sectors such as Sweekar edible oil and Sil jams. Instead, it chose to stick with brands like Parachute, Saffola and Hair & Care. Was the approach correct? Arindam Banerjee, professor and chairman, marketing area, Indian Institute of Management, Ahmedabad, agrees cautiously. "Power branding counters brand dilution by allocating organisation resources on lesser but more secured marketing investments," he explains. Adi Godrej is more emphatic. "[Power branding] is not to prevent dilution of brand, but to prevent dilution of the company's focus. If a company has 10 brands and tries to support all of them, focus on the important brands would be diluted." Top to bottom Has it worked out quite the way these companies anticipated? Global marketing experts aren't too bullish about a power brands strategy's impact on the balance sheet. "Power brands will have an impact on the bottomline of companies, but not necessarily on the topline growth," says Nirmalya Kumar, director, centre for marketing, and co-director, Aditya V Birla India Centre, at London Business School. Jagdish Sheth, Charles H Kellstadt Professor of Marketing, Goizueta Business School, has a slightly different viewpoint. "You may have problems in the short run, but these can be ironed out in the long run. Introducing brand variants will help." Consider some numbers. Between 2001-02 and 2004-05, profits at GCPL increased 19.66 per cent, from Rs 41.98 crore (Rs 419.8 million) to Rs 86.07 crore (Rs 860.7 million). Over the same period, turnover went up less than 4 per cent, from Rs 520.47 crore (Rs 5.2 billion) to Rs 603.46

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crore (Rs 6.03 billion). "This is clearly unsustainable," says an analyst. In sharp contrast, Marico has shown significant hikes in both turnover and profit from 2002 to 2005. While sales climbed from Rs 671.08 crore (Rs 6.71 billion) to Rs 953 crore (Rs 9.53 billion), profits increased from Rs 49.32 crore (Rs 493.2 million) to Rs 73.79 crore (Rs 737.9 million). For its part, HLL has been plagued by flat or declining growth for some time now. Between 2001 and 2004, profits plunged more than 22 per cent {Rs 341 crore (Rs 3.41 billion)}, while turnover dropped by Rs 892 crore (Rs 8.92 billion). The troubles magnify when specific categories are considered. Toilet soaps, for instance, contributed 24 per cent of HLL's sales in 2004, with sales value increasing marginally from Rs 2,089 crore (Rs 20.89 billion) to Rs 2,380 crore (Rs 23.8 billion). But sales volumes had actually declined, from 384,000 tonnes in 2001 to 368,000 tonnes, indicating that the growth was mainly on the back of price hikes. The story was repeated in reverse in the detergents sector, where HLL had three power brands (Surf, Rin and Wheel). Sales volumes increased from 892,000 tonnes to 930,000 tonnes, but sales value crashed from Rs 1,975 crore (Rs 19.75 billion) to Rs 1,872 crore (Rs 18.72 billion), thanks to the price wars with Procter & Gamble. The lesson? Power brands may be "powerful" to the company or the retailer, not necessarily to the consumer. Not everyone agrees. Counters a senior HLL executive, "The impact was because of the migration phase to power brands - sales of non-power brands declined." He adds that the company's power brands strategy will boost both topline and bottomline growth in the future. It doesn't help that India isn't just one, big market: it's several hundred. Brooke Bond tea may be a power brand for HLL, but it doesn't face the same enemy in every market in the country: if Wagh Bakri rules in Gujarat, Girnar and Sapat vie for the top honours in Maharashtra.

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Making matters worse is the fact that rural India is an entirely different nation when it comes to preferences. That's a problem GCPL, too, faces; at present, rural sales account for just 30 per cent of the Rs 603.46 crore (Rs 6.03 billion) company's sales, but the company expects that figure to go up substantially in the coming years. Marico's Mariwala agrees that penetration is difficult to achieve with a power brands strategy. Consequently, segmentation takes a hit, because you don't have 20 brands for 20 different people. "As a brand grows larger, it simply cannot mean everything to everybody," agrees London Business School's Kumar. There is a way out, though. Kumar points out that a power brand strategy allows a company the luxury of targeting fewer segments, but the more profitable segments. HLL found another way. In addition to its 30 national superpowers, it also has 10 regional jewels. HLL executives point out that with fewer brands on which to focus, the company will be able to manage its marketing spends better. Godrej is attempting to beat regional diversity at its own game. For instance, when toilet soap Godrej No.1 entered the sub-popular category in 1998-99, it had only one offering: rose. It soon also introduced its first variant, sandal, which has proved popular in the southern markets. The rose variant finds takers in northern states such as Uttar Pradesh, Bihar, Punjab, Madhya Pradesh and Rajasthan. One, two, three, you go free If the rural-urban divide cuts into the aspirations of power brands, the changes in the urban shopping landscape renew hopes. Most analysts expect shoppers to throng to malls and hypermarkets, for everything from electronics and clothing to groceries. As the shopping landscape changes in India and malls look down upon hole-in-the-wall outlets, power brands could be an answer. According to HLL, at present just 3 per cent of Indian customers shop through organised retail outlets. The average in Asia -- 30 to 35 per cent. How will

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organised retail help power brands? In developed markets, all brands, leaving aside the top three sellers, have to buy space on retailer shelves. Since private labels get a free ticket to the shelves as the third brand, it is important to be a No. 1 or No. 2 in a category. Marketing experts claim that large-format retailers have changed the destiny of companies in foreign countries. Sheth refers to P&G's experience in Canada. In that market, rival Unilever was a market leader with loyal customers, while P&G wasn't doing all that well. When WalMart entered Canada, it changed the complexion of the market. Wal-Mart provided P&G a much-needed distribution channel. In five years, P&G gained significant market shares in Canada. "When a Wal-Mart happens to India, the power branding companies will reap better benefits," says Sheth. That's because organised retail formats will provide more display space to power brands, their extensions and variants: and marketers believe that whatever gets seen, gets sold. That's not happening at present. Remember, more than 90 per cent of grocer shops in India are cubby-hole outlets. So, what's the final take-away? Will a power brands strategy work in the future in India? The answer: it depends on the category, the market and the consumer. Now, where have we heard that before? Power brands in perspective Power brands as a concept came into existence by seeing the retailer as an economic partner. When a P&G executive paid a visit to Japan, he saw the respect and importance given to retailers -- something that was not happening in the US where there were several layers in the distribution channel. Later, when Wal-Mart emphasised that it was the largest customer for P&G and the company could work closely with the retail chain and reduce costs in its supply chain, P&G started power brand projects with WalMart, K Mart and others.

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The principle was simple. Brands were rationalised to support the super retailer. In 1999, P&G's arch-rival Unilever decided to focus on 400 out of its 1,600 strong brand portfolio. Two years later, Unilever's Indian arm, too, adopted the same strategy. Hindustan Lever decided to spend on only 30 brands and 10 regional brands from its original basket of 110 brands. Other Indian companies, too, decided to follow the power brands strategy, including Godrej, Britannia, Dabur and Marico. Recently, Vijay Mallya's United Spirits also joined this group by naming Director's Special, Antiquity, Bagpiper, McDowell No 1, Signature and 10 other brands as power brands.

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CHAPTER-11 Cracking the Rural Market

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Cracking the Rural Market in India

To a marketer, India's rural market presents a challenge like no other. While marketers salivate at the prospect of making their marketing millions in rural India, none has yet been able to understand what makes rural India tick. Harish Bijoor says that so far marketers have sought to thrust cornflakes and dog biscuits alike at rural Indians. He makes a plea to preserve the sanctity of Rural India and discover commerce and sense in it all - by creating brands that keep in mind rural imperatives. The rural market for brands is a powder keg of an opportunity waiting to be explored - not exploited! I used every mode of travel to enter into the gut and gore of the slice of market I had the privilege to look after. The bullock-cart, the camel-driven cart and the boat were all means to penetrate a terrain no MBA in his right mind wanted to. Dirty rat-infested lodges, police-raids that had me ashamed of my neighbors in the rooms around and food that had me running to the nearby field even in broad daylight are tales my early life in the rough and tumble of Indian marketing is made of. These four years taught me one thing clearly! There are two India, Real India and Virtual India! Real India was this piece of terrain I sold tea, coffee, spices and condoms to. It was a big chunk of the land mass. It occupies bulk of the landmass and houses 742 million people as of now! It is populous, multicultural and multi-faceted. India started here. This is the residence of the arts, the culture, the food, the ethnic fashion, the agricultural practice, the nuance of language and diction and everything else that we in Urban India have morphed to our needs as of today. Remember, in the very beginning there was no urban at all! It was all rural! All real! Virtual India was where I came from. Virtual India was where I was shaped into a being capable of commercial, social and cultural existence. The size of pie of land I came from was an urban island of sorts. An aberration even! The populace that lives here comprised fourth of the size of the population of

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India on the whole.

There sure was a Matrix at play! While politics of the nation was governed largely by what Real India had to say, government policy did not necessarily tread the very same path. There was this huge gap in understanding what was right for the masses and what was politically expedient. In the bargain, policy was hijacked by the politician. While politics was the domain of the politician and the bureaucrat that ran the nation in many ways, commerce was largely played in the very same way. Till the wave of liberalization set in. And when this happened, Indian businesses actually steered Virtual India. Whats more, Virtual India took charge of the way Real India was to be run as well.

And in Virtual India, the businesses that dictate the soap that needs to be placed in your toilet and the detergent in your bathroom and the cooking gas in your kitchen, actually ran Real India. Real India is today run by Virtual India. The largest part of land-mass and the larger part of the population base is controlled in many-many ways by the way the urban man in urban India wants it run. A true blue hegemony of the Urban Indian! Remember again that all marketing men and their kin in advertising, market research and branding are mostly urban souls. Many in disguise as well! Real India (read as: rural India henceforth) is fast morphing to the needs, wants, desires and aspirations discovered by the urban man. Television as a medium has created awareness, a raging interest in brands, a latent desire to consume and possess what is shown on the not-such-anidiot-after all-box! Television has spurred on consumptive action and has acted as a brand consumption catalyst in many ways. And television has continually shown us images that make everything Urban desirable and everything Rural as something that is basic.too basic!

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Look keenly at the statistics that tell us the growth of urbanization. In 1951 we had 2,843 Urban Agglomerations (UA) and towns. Today, the number is close to 4000! The Urban population in 1951 stood at 17.3 per cent of total. Today, the number is a proud and one-dimensional 27.8 per cent! In the last fifty years, we have had what I would call creeping urbanization. In the next fifty, it is time to expect a galloping rate! Thanks to televisionand thanks fundamentally to the Brand movement, which is poised to make a big movement in the heart and hearth of the rural dweller? The two Indias mean two sets of peoples. The rural man, woman, child, dog and cat for a start! Remember, dog-food and cat-food companies will definitely want to invade the vast rural hinterland sometime in the future for sure!

How then does one go about creating brands for the rural person in the rural dwelling? There are two ways really. The first is the insensitive way most marketers have adopted to date. The second is a more sensitive rendering of what marketers and brand-evangelists in the future could adopt. The first is really the easy way. Pioneer marketers in rural areas used it to good advantage. Take the urban brand, 1) 2) 3) Tweak the product a wee bit (read: make it rustic, rugged and even Lower the price (read: offer inferior grade teas to the rural market Extend the brand to Low Unit Packs (read: lower unit packs will be lower-quality if necessary), and superior grades to the urban one in the same brand), cheaper in price and inferior in quality as well. Higher unit packs will take

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in superior quality. Urban markets use High unit packs and rural markets use LUPs) 4) 5) Modify the packaging marginally (read: add the brand name in Hindi Advertise (read: Take the English rendering of the standard urban and four other prominent vernaculars) storyboard and make a film in Hindi. Take this film and dub it in the vernacular. Never mind the lip sync even.in the early days!) 6) Promote (Read: Use Cinema widely. Use wall-site paintings. Sponsor the local boat race and the temple festival alike! Use rural publicity vans to percolate the brand message through television sets that would carry a VCR and a large-format screen as well) 7) Market Research (Read as: find out more about the rural dweller. Use the intrusive and alien questionnaire format to find out more. Use probes of every kind. Use the focus group at times if you are feeling particularly qualitative in your yearnings for data.)

The easy way is the insensitive way to create and build brands in the rural markets that still remain on the landscape. My clarion call: Forget the easy way you have used all hese years. Take the tough route of branding in the rural market. Preserve rural India and what it represents. Bring back pride to rural India in terms of what it has to offer in its multivariable format. But why? Is this a return to socialism? A form of retro-appeal? Of retrofashion? No, the logic is strong enough for us to pursue the new rules of branding for rural India..

For one, take the case of the fertilizer and pesticide situation. In the very beginning, all of India was organic. We grew everything we did to cater to a population size that was manageable without the use of pesticides and fertilizers. Natural organic manure and very innovative natural practices that used plant and animal waste distinguished the agricultural practices of

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India. And then came the revolution everyone wanted. The men in the Gandhi caps (except Gandhi of course) wanted a bigger yield from the land and the cow and the factory alike. Practices morphed and India became yet another dumping ground for the pesticide and fertilizer that came from far and near. The countryside morphed. Yields doubled. The year is 2003! The world is discovering health and the joy of consuming the organic produce. Its back to naturethe pure way! And India has lost it! Imagine a situation where India could emerge as a 100 per cent producer of the organic product! And remember still that the organic produce today commands a premium in the key consumption markets of the world! We lost it! The rural terrain we still boast of can be preserved. I seek sensitivity among the marketing man. A sensitivity that promises not to harm commercial intent, which is the salient driving force of all business intent. Sensitivity that could well carve out for the marketing man a commercial space one can be truly proud of. I present in this piece therefore, is a case that seeks to preserve the sanctity of Rural India and discover commerce and sense in it all! A plea to really stop this one-sided movement that seeks to make the rural man a consumptive animal of cornflake and dog biscuit alike! Create brands keeping in mind rural imperatives then. Here goes the ideal

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CHAPTER-12 OPPORTUNITIES IN RURAL MARKETING

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Urban consumers shop daily and have 365 opportunities a year to switch brands while the rural purchasers who buy their goods in weekly haats have only 54. Attempts to reach rural consumers, even once during the purchase cycle to ensure repeat purchase, make point of purchase advertising and trade push indispensable. This requires a significant reorientation in the allocation of funds across media. For example, outdoor advertising accounts for over 7% of all media expenditures in India, while it only accounts for 0.8% in USA. Rural buyers living in small isolated groups distributed across vast distances have limited access to the broadcast media. The existence of a multiplicity of languages and varying level of illiteracy complicates the task of communication further. To overcome some of these challenges, Unilever pioneered the concept of video vans that travel from village to village screening films in the local language, interspersed with advertisements for Unilevers products. The company also provides product usage demonstrations to the captive audience because written instructions on the pack may be illegible to the consumers who are either illiterate or do not understand the dialect. Where mass media is used, variability can, at times, back fire. On reentering India in the 1990s, Coca Cola decided to reinvest massively on a TV advertising campaign. It opted for slick commercials, rich in colour, with high production values, but the effect was somewhere lost on a market where 60% of all TVs are still black and white. However, in the recent past, the improved technology has allowed the cable and satellite networks to increase their reach across the countryside thus exposing a rural consumer to a lifestyle that was beyond his dreams. And this increasing awareness has led to a significant change in his buying behavior and consumption patterns.

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While the urban market is getting increasingly competitive and saturated, the rural market is blooming with increase in the disposable incomes of the households, thus promising a far better scope for growth for marketers. Hence, with the shifting dynamics of the present-day market situation, now it is the turn of the rural consumers to dictate the terms. And this reinforces the need for marketers to formulate a well-designed strategy to feel the pulse and to tackle the mystic rural market. The above article has been condensed/abstracted from the following articles with all their rights are reserved. 1. Rethinking marketing programs for emerging markets, 2. Growing brand awareness,

Concept:
In recent years, rural markets have acquired significance, as the overall growth of the economy has resulted i.e. companies who see the poor as their customers. substantial increase in the purchasing power of the rural 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. But often, rural marketing is confused with agricultural marketing the latter denotes marketing of produce of the rural areas to the urban consumers or industrial consumers, whereas rural marketing involves delivering manufactured or processed inputs or services to rural producers or consumers.

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What makes Rural Markets Attractive? Rural market has following arrived and the following facts substantiate this.742 million people Estimated annual size of the rural market FMCG Rs 65,000 Crore Durables Rs 5,000 Crore Agri-inputs (incl. tractors) Rs 45,000 Crore 2 / 4 wheelers Rs 8,000 Crore

Some Myths:
1. Myth-1: Rural Market Is a Homogeneous Mass Reality: Its a heterogeneous population. Various Tiers are present depending on the incomes like Big Landlords; Traders, small farmers; Marginal farmers: Labors, artisans. State wise variations in rural demographics are present viz. Literacy (Kerala 90%, Bihar 44%) and Population below poverty line (Orissa 48%, Punjab 6%)

2. Myth-2: Disposable Income Is Low Reality: Number of middle class HHs (annual income Rs 45,000- 2, 15,000) for rural sector is 27.4 million as compared to the figure of 29.5 million for urban sector. Rural incomes CAGR was 10.95% compared to 10.74% in urban between 1970-71 and 1993-94. 3. Myth-3: Individuals Decide About Purchases Reality: Decision making process is collective. Purchase processinfluencer, decider, buyer, one who pays can all be different. So marketers must address brand message at several levels.Rural youth brings brand knowledge to Households (HH).

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Why Different Strategies? Rural markets, as part of any economy, have untapped potential. There are several difficulties confronting the effort to fully explore rural markets. The concept of rural markets in India is still in evolving shape, and the sector poses a variety of challenges. Distribution costs and non availability of retail outlets are major problems faced by the marketers. The success of a brand in the Indian rural market is as unpredictable as rain. Many brands, which should have been successful, have failed miserably. This is because, most firms try to extend marketing plans that they use in urban areas to the rural markets. The unique consumption patterns, tastes, and needs of the rural consumers should be analyzed at the product planning stage so that they match the needs of the rural people. Therefore, marketers need to understand the social dynamics and attitude variations within each village though nationally it follows a consistent pattern. The main problems in rural marketing are: Understanding the rural consumer Poor infrastructure Physical Distribution Channel Management Promotion and Marketing Communication 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 industrial consumer. Strategies to be followed: Marketing Strategy: Marketers need to understand the psyche of the rural consumers and then act accordingly. Rural marketing involves more intensive personal selling efforts compared to urban marketing. Firms should refrain from designing goods for the urban markets and subsequently pushing them in the rural areas. To effectively tap the rural market a brand must associate it with the same things the rural folks do.

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This can be done by utilizing the various rural folk media to reach them in their own language and in large numbers so that the brand can be associated with the myriad rituals, celebrations, festivals, melas and other activities where they assemble. Distribution Strategy: One of the ways could be using company delivery vans which can serve two purposes- it can take the products to the customers in every nook and corner of the market and it also enables the firm to establish direct contact with them and thereby facilitate sales promotion. However, only the bigwigs can adopt this channel. The companies with relatively fewer resources can go in for syndicated distribution where a tie-up between non-competitive marketers can be established to facilitate distribution. Annual melas organized are quite popular and provide a very good platform for distribution because people visit them to make several purchases. According to the India n Market Research Bureau, around 8000 such melas are held in rural India every year. Rural markets have the practice of fixing specific days in a week as Market Days (often called Haats) when exchange of goods and services are carried out. This is another potential low cost distribution channel available to the marketers. Also, every region consisting of several villages is generally served by one satellite town (termed as Mandis or Agri-markets) where people prefer to go to buy their durable commodities. If marketing managers use these feeder towns they will easily be able to cover a large section of the rural population. Promotional Strategy: Firms must be very careful in choosing the vehicle to be used for communication. Only 16% of the rural population has access to a vernacular newspaper. So, the audio visuals must be planned to convey a right message to the rural folk. The rich, traditional media forms like folk dances, puppet shows, etc with which the rural

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consumers are familiar and comfortable, can be used for high impact product campaigns. Some Live Examples: One very fine example can be quoted of Escorts where they focused on deeper penetration. They did not rely on T.V or press advertisements rather concentrated on focused approach depending on geographical and market parameters like fares, melas etc. Looking at the kuchha roads of village they positioned their bike as tough vehicle. Their advertisements showed Dharmendra riding Escort with the punch line Jandar Sawari, Shandar Sawari. Thus, they achieved whopping sales of 95000 vehicles annually. HLL started Operation Bharat to tap the rural markets. Under this operation it passed out lowpriced sample packets of its toothpaste, fairness cream, Clinic plus shampoo, and Ponds cream to twenty million households. ITC is setting up e-Choupals which offers the farmers all the information, products and services they need to enhance farm productivity, improve farm-gate price realization and cut transaction costs. Farmers can access latest local and global information on weather, scientific farming practices as well as market prices at the village itself through this web portal - all in Hindi. It also facilitates supply of high quality farm inputs as well as purchase of commodities at their doorstep. BPCL Introduced Rural Marketing Vehicle (RMV) as their strategy for rural marketing. It moves from village to village and fills cylinders on the spot for the rural customers. BPCL considered low-income of rural population and therefore introduced a smaller size cylinder to reduce both the initial deposit cost as well as the recurring refill cost.

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Conclusion: Thus looking at the challenges and the opportunities which rural markets offer to the marketers it can be said that the future is very promising for those who can understand the dynamics of rural markets and exploit them to their best advantage. A radical change in attitudes of marketers towards the vibrant and burgeoning rural markets is called for, so they can successfully impress on the 230 million rural consumers spread over approximately six hundred thousand villages in rural India.

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CHAPTER -13 PROBLEM IN RURAL MARKETING

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PROBLEMS IN RURAL MARKETING

Where the rural market does offer a vast untapped potential, it should also be recognized that it is not that easy to operate in the rural market because of several attendant problems. rural marketing is thus time consuming affair and requires considerable investment in terms of evolving appropriate strategies with a view to tackle the problems The major problems faced by manufacturing and marketing men in rural areas are described below Underdeveloped people and underdeveloped market; The agriculture technology has tried to develop the people and market in rural areas . unfortunately ,the impact of the tectology is not felt uniformly through out the country .while there are pockets- some districts in punjab .haryana or western utter Pradesh where a rural consumer is some what comparable to his urban counterpart , there are lage areas and groups of people who have remained beyond the technogial break throgh . Even today about 75 districts in country are drought prone and no new technology worth the name has percolated to in crease in the standard of living of these people in addition, the small agricultural land holdings have enable to take advantage of new technological breakthrough . the number of people below poverty line has not decreased in any appreciable manner. Thus the rural markets, by large number, by and large are characterized by underdeveloped market.. a vast of the rural people image old customs tradition habits , taboos and practices

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Lack of proper physical communication facilities; Nearly 50% of the villages is the country does not have villages in the country do not have all weather roads. Physical communication to these villages is highly expensive. even today ,most villages is in eastern part today inaccessible during monsoon season. hence, distribution put in by manufacturer prove expensive and some times of no consequences .to be effective the products have to be physically moved to places of consumption or places to purchase.

Media for rural communication; Among the mass media, at some point of time, say in late 50s or early 60s ,radio was considered to be a potential ,medium for communication to the rural families . Now the advent and expansion of telecast network appears for easy communication with rural masses. The question is how many peole access viewing television? There is a need to examine the ownership pattern of television sets in rural areas to judge the potential reach of this medium. Another mass medias cinema. it has been observed that cinema viewing is fairly satisfactory ,where available . Mobile theaters are also good medium but very expansive companies like HLL using these vans found 10 to12 times higher in rural areas than urban areas due to bad roads in areas

Hierarchy of markets. Rural consumer has identified market places for different items of their requirements. So there can not be uniform distribution pattern for all products. It has been seen that 90% of farmers visited the nearest town , where an agricultural produces assembling market is situated at least once a quatter for either selling the produce or for purchase of there requirements . so town/ mandi centers with large hinterland villages become the focal point thus depending upon the purchase habit of rural

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people. The distribution network for different commodities has to be different. Low level of literacy: The literacy rate is low in rural areas as compare to urban areas. This again leads to the problem of communication for promotion purposes. Print medium becomes in effective and to an extent irrelevant in rural areas since ita reach is poor and so is the level of literacy. The dependent should be more on electronic media cinema, radio and television. While the excess to cinema and radio appears to be fairly easy and common. in not so in case of television. Television advertising is very expensive. Probably it will be prudent to take advantage of such professional rural advertising agencies. The promotion of product along with distribution is also being resorted to by many . Seasonal demand: The distribution of any product in rural areas either agricultural inputs , consumables or durable should necessarily follow a seasonal pattern. Since 75% of the rural income is generated through agricultural operation which is seasonal so the demand pattern is also seasonal. A typical example is that of fertilisers.the demand of fertilizers is always high during the start of kharif and rabi system the fertilizers manufacturers have evolved a distribution pattern so that the seasonal demand can be met. Like wise the demand for consumables and durable will be high during the pek crop harvesting and marketing season. . this is the time at which the rural people have substantial cash inflows. Hence the distribution should be fairly intensive. During harvesting season this arrangement would result in adequate sales realisation vise versa in summer months the demand will be very low festivals seasons like sankranti, poangal, vaisakhi or depawali are also demand seasons. So the

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distribution of rural areas should be more and frequent during the harvest and festival seasons as opposed to a fairly uniform demand pattern in urban areas.

Many languages and dialects: Even assuming that media are available for communication or the company commotions its own media vans the large number of languages and dialects very wildly from state to state and reason to reason. The messages have to be delivered in local; languages and dialects. Even though the number of recognized languages is only 16, the number of dialects is estimated to be around 850.

Low per capita income: Even though about 33 to 35 percent of gross domestic product is generated by rural areas. It is shared 75% of population hence the per capita income is low compared to urban areas. This apart the distribution of income is highly is qued. Since the land holding patterned itself is esqued thus the rural population present a highly heterogeneous seen. given the low percapita incomes and population spared in the villages, what wiill be the off take of any product by rural consumer, say from avillage shop? What should be the inventory levels to be maintained by the rural shopkeeper and how long will it take for the rural areas shopkeeper to liquidate his stock? if the n company

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CHAPTER -14 CONCLUSION

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Conclusion
Thus looking at the challenges and the opportunities which rural markets offer to the marketers it can be said that the future is very promising for those who can understand the dynamics of rural markets and exploit them to their best advantage. A radical change in attitudes of marketers towards the vibrant and burgeoning rural markets is called for, so they can successfully impress on the 230 million rural consumers spread over approximately six hundred thousand villages in rural India. My research has attempted to explore the key opportunities and challenges of marketing in rural India. To be successful, multinational consumer goods companies need to be innovative, dogged and culturally sensitive in developing rural marketing strategies. A direct transportation of traditional marketing strategies that have worked in core first world markets will likely need to be localized to cater to the substantially lower per capita incomes, a lack of formal retail and distribution networks and the relatively low cost of labor. It is a testament to both multinational and local consumer goods companies that they have been able to innovate and address the challenges offered by Indias rural market to bring goods, to and improve the lives so many people. These successful marketing techniques may even be introduced to other large emerging markets.

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CHAPTER -15 SUGGESTION

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SUGGESTION
Products must be specifically designed/modified for rural customers through industrial engineering exercises for transportation, storage, performance, operation, packaging and servicing requirements. Thrusting urban technology down rural markets is not desirable. Relate technology to market development indexes. Check primary, secondary, and transport packaging for rural orientation. Sales forecasting, positioning, inventory management, inter territory transfers, pricing and credit management are functions of how the agriculture in the area is faring. Managers must learn to correlate and respond to drought, floods, irrigation, good and bad monsoons, harvesting and sowing seasons and impact of these on disposable incomes of rural households. Location, shop profile, dealer network, financial position, cash to credit outlook, reputation, track record, allied lines, accounting, ability to implement company policy, competitive products position, attitude and partnership status are some useful criteria. Demand generation programs should be carried out through teams with daily review by team leaders. dgp must result in brand awareness and movement from dealer shelves. Brands must have visual identity, be regularly available, and promoted with few price changes.

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 Make an it enabled system for reporting, information, data collection, and periodicity area wise, mandiwise. Make market research an ongoing activity

territory wise rural development plus rural marketing should be done companies should introduce good supply chain practices - deliver 24 hrs

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BIBLIOGRAPHY
Rural Marketing -S.L.Gupta www.google.com www.ciionline.org www.msnsearch.com

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