NEW PRODUCT DEVELOPMENT

 To satisfy the change the change in consumer demand.

 To counter the moves of competitors who have launched a new product.

 To expand the product range or new products.

 To remain aligned with the changes in technological environment, which are enabling launch of
new products.

 To increase sale and profit of the organisation.

New product development

 Exploration stage

 Screening stage

 Nature of demand

 Compatibility

 Resources

 Competition

 Detailed value offering evaluation

 Business analysis

 Product development

 Development of marketing mix

 Product testing

 Product testing

 Concept testing

 Test marketing

 Commercialization or Launch

 Promotion strategy

 Pricing strategy

 Place strategy
Indian rural market profile

Assessment of rural market with different socio-economic parameters

Rural income distribution

 Rural India is generating more than half of the national income

 If India's rural income grows by 1% there will be corresponding increase of about 10,000 crore in
villager’s buying power

 There are almost twice as many lower middle income households in rural areas as in urban
areas

 Rural Indians are not as poor as they are wide perceived to be, if large number of poor people
live in village then equally good number of rich are also present there.

 The marketer has to segment this huge market across to his product profile & then select his
target market.

 The status of disposable income is roughly the same in both the markets with the rural
consumer's paying virtually nothing for health, education, housing& food.

Magnitude of poverty in rural India

 The rural population is normally perceived as a multitude of poor population with limited purchasing
power.

 Poverty is measured in terms of proportion of population living below the poverty line.

 A measure to segregate the poor from non-poor, the poverty line is developed by putting a price on
the minimum required consumption level for food, clothing, shelter, fuel & health care etc.

Poverty alleviation programmes & rural development schemes

 Gram sadak yojna

 Providing Urban Amenities in rural areas (PURA)

 National Rural Employment Guarantee act

 Integrated Rural Development Programme(IRDP)

 Jawahar Rozgar Yojana(JRY)

Rural consumption
  Expenditure on education by urban households was 4.5 times the corresponding expenditure by
rural households.

 Urban household spend twice on health as compared to their rural counterparts.

 Rental value of houses in urban areas was found to be five times more than that in rural areas.

 The actual disposable income for consumption in a rural household is nearly the same as that of
urban ones.

 3/4th increase in the consumption of packaged goods in rural areas.

Relationship between agriculture, rural income & consumption

 The rural economy is gradually getting less dependent on agriculture income,& there is
an increasing share of non-farm into the rural economy.

 The major factor responsible for this development is the migration of factories to areas
with less developed agriculture.

 Wage rates are lower in these areas , agriculturally well developed areas where labour
tends to be expensive & more demanding.

Literacy In rural India

 Over 55% of urban households heads reported atleast secondary education as against 15% rural
households heads.

26% urban households, the head was a graduate or a technical degree/diploma holder had 38.5% of
income, while 2.3% of such households have 4% of income in rural areas

Electricity availability in rural India

 The rural electrification figures & their variations across states need to be taken into account by
the marketers who are targeting the rural market with products which run on electricity.

 Apart from electricity connection, duration of power availability & regular power fluctuations in
rural areas while designing the products.

Marketing

Marketing is the process of planning & executing the conception,pricing,promotion and distribution of
goods and services to create exchanges that satisfy individual and organizational goals

Meaning of rural

 Rural – places far away from towns or cities

  Rural is defined as that which is not urban

 Urban is – All locations with a municipality /corporation, cantonment board or a notified town
area.

A minimum population of 5000

At least 75% of the male workforce engaged in non-

agri-activities

A population density of over 400 per sq.km

Rural areas for marketing purposes varies from company to company.

Rural marketing – definition

Rural marketing defined as “The process of developing,pricing,promoting,distributing rural –specific

goods & services lading to exchange between urban & rural markets, which satisfies consumer demand
& also achieves organizational objectives”.

Rural marketing scope

Flow of goods & services

 Phases of rural marketing
Nature & characteristics of the rural market

 Large & scattered market

 Heterogeneous market

 Income from agriculture

 Standard of living

 Infrastructure facilities

 Size of Rural Consumer Group

 * Rural population is about 73% of the total population of

India

 * According to 2001 census the total rural population amounts to 74 Crore

 Location Pattern

 A Scattered market the comparison below shows the same –

 * Urban Population is spread over 3,200 cities

 * Rural population is spread across 5,70,000 villages

RURAL MARKETING INCOME

 The main occupation for a vast majority of rural population is agriculture &allied activities

 About half of the rural population own or lease land and cultivate it for their livelihood.

 Another 27% are dependent on the cultivators for jobs as agricultural laborers

 Thus a total of 77% of rural population solely depend upon only land for their living& land is the
main source of living.

 The implication of the occupation pattern is that income generation in rural areas entirely
depends upon how land is used, what crops cultivated, how much is marketed, how much is
consumed .& what arrangements are made to market agricultural produce.

 If the weather is unfavorable, rural income suffers So, disposable income in the hands of rural
people is very much dependent on the status of agriculture& other allied activities
Income generation

 The major occupation being agriculture 75% of income generated in rural areas is from
agriculture and related areas’

 Prosperity of rural areas and development of rural market to a large extent depends upon the
progress of agriculture &related activities

Heterogeneous market

 Divisions are based on caste, community & other hierarchical factors, languages also varies
every 100km perceptions, traditions, values vary from state to state is some cases it vary from
region to region.

 Agriculture growth process has also not been uniformly spread across India. This has created
wide regional disparities & inequalities.

 Variations in economic development & socio-cultural background influence consumer

willingness to accept innovations & new products in different areas.

Standard of living

 Unreliability factor in case of rural income make rural consumers conscious in their purchase
behaviour as they are not confident about their future earnings.

 Besides low literacy, social backwardness, low savings, traditional attitude etc also have
contributed to a lower standard of living .

Infrastructure facilities

 Facilities like roads, warehouses, communication system & financial facilities are inadequate in
rural areas.

 Roads do not connect nearly 50% villages in the country.

 Over 50% rural households have acess to electricity as a main source of lighting but 46% still use
kerosene for lighting

 Promotion & physical distribution thus become very difficult in the rural areas.

Socio-Economic Position

 From a study conducted by IMRB (Indian Market Research Bureau) provides development index
points for each state on

 Health & Education

 Transportation
  Electricity

 TV Transmission

 Banks

 Post Offices

 Water Supply

 State to State variation in extent of development

 Average villages have 33 index points

Socio-Economic Position

 Literacy Level

 Rural India has a literacy rate of 28% compared to 55% of the whole country

 Lifestyle

 Conservative & tradition bound

 There has been a change in the same over the years though with

 Increase in Income

 Growth in Education

 Greater Media Penetration

 Marketers efforts to reach and capture the rural market’s

Socio-Economic Position

 Buying Behavior

Factors that Influence

 Literacy level

 Occupation

 Social & Cultural Factors

 Exposure to Media

 Marketer’s Efforts
  The buying behavior has undergone a major change. A huge population in rural areas has seen
an increase in their income as a result of which they have the potential to buy expensive/luxury
products

The Rural Demand

 Some well established products

 Pressure Cooker Artificial Jewellery

 Cooking Utensils Medicines

 Batteries Tobacco Products

 Scooters, Motorcycles Soaps,Detergents

 Bicycles Electrical Goods (fan,light)

 Radio T.V

 Pesticides, Fertilizers Wrist Watches

 Tea Mobile Phones

 Sewing Machines

Recent Trends

 Steady Growth from the past 2 decades

 Welcome change in the composition of Rural Demand

 Several products already well established in the rural market

 In many products the rural market share is greater than the urban market

 In many products rural market has overtaken the urban in growth rate

Rural Market becomes attractive to Corporate

 The Rural Market is being seen as a Growing Opportunity mainly because of the following –

 Rural Demand is growing rapidly

 Purchasing power has increased

 Cut Throat competition in the Urban Markets

 There would be opportunities for new entrants as compared to urban population being
loyal to specific brands
  The volume and the strength of the rural population

Economic Status

 The average household income of the urban population (Rs.36,000p.a) is thrice that of the rural
(Rs.12,000p.a).

 According to NCAER (National Council of Applied Economic Research) the lower income group
(<70,000) will shrink by 55% in 2006-2007 and upper income groups (>1,40,000) will double in
2006-2007

 The aspirants, lower middle and middle class are the largest segment and are the largest base
for durables and FMCG goods

Government Initiatives

 Integrated Rural Development Programme (IRDP); TRYSEM (Training Rural Youth for Self-
Employment); REP (Rural Electrification Programme)

 REP gave impetus to consumer durables industry, it also aims at having electricity in almost all
villages by 2010

 PSU and Co-op banks lend farmers (with ‘Kisan’ credit card by Canara & Andhra bank, a person
can borrow up to 50,000 with these credit cards.)
Factors differentiating rural marketing from urban marketing

 Infrastructure facility

 Income stream

 Life style

 Socio cultural background

 Accessibility

 Media reach & habits

 Nature of competition

 Consumer behaviour