Abstract for National Conference On Excellence in Management Practices (ICEMP)

April 2011.

Sub themes: Marketing management

Name of the authors 1)Shwetha MK

Name of the institution St. Aloysius college. (Autonomous) St. Aloysius college. (Autonomous) St. Aloysius college. (Autonomous)

E-mail ID mkshwetha11@g mail.com 9449236555 jenniferprakash@ rediffmail.com 9448448617 zeenamendonca@ gmail.com 9448910892

2)Jennifer Quadras

Title of the paper Excellence Practices in Rural Marketing: Key observations.

Category of sub themes Marketing management.

3)Zeena Flavia Dsouza

Excellent practices in rural marketing: key observations.

Shwetha mk Jennifer Maria Quadras Zeena Flavia DSouza.

The future lies with those companies who see the poor as their customers
- C.K. Prahalad addressing Indian CEOs Jan 2000

The Indian marketing structure is dichotomous having both rural and urban markets. In the present context an analysis of the urban market indicates that they sure getting saturated for several categories of consumer goods which are making it difficult for most of the corporates to tap them with high profit margins. Moreover, the awareness level of urban consumers is increasing which make the product innovation a major requirement for successful operations. The competition in urban markets is also becoming very tough due to which the firm have to incur heavy promotional expenditure. All these factors indicate that the reach to urban markets is becoming very challenging and tough which requirement huge investment and sometimes may even bring a negative impact on profitability. Rural markets on the other hand are becoming more attractive as especially in India and china as the overall growth of the economy has resulted into substantial increase in the purchasing power of the rural communities. The rural areas are now consuming large quantities of industrial and urban manufacturing products with the rising of rural incomes, the marketing executives have discovers the strengths of large rural markets and are trying to expand and enlarge their markets from urban areas to rural areas as well. In the context a special marketing strategies namely rural marketing has emerged. Rural marketing is often confused with agricultural marketing but they do not mean the same. Agricultural marketing denotes marketing of the products of the rural areas to the urban and rural marketing includes delivering manufactured processed inputs or services to rural producers or consumers. The concept of rural marketing has always played an influential role in the lives of people. The rural market in India is not a separate entity in itself and it is highly influenced by the

sociological and behavioural factors operating in the country. As the rural region compromise of the maximum consumers, it brings in bigger revenues in the country. So the marketers are looking for extending their product categories to an unexplored market i.e., the rural markets.

Attractiveness of Rural Marketing in India

Rural markets are attractive in India because of the following attributes substainted by the facts given below: 742 million people

Estimated annual size of the rural market:FMCG Durables Agri inputs (including tractors) 2/4 wheelers Rs 65000 crore Rs. 5000 crore Rs. 45000 crore Rs 8000 crore

In 2001-02 LIC sold 55% of its policies in rural India Of 2 million BSNL mobile connections, 50% are in small towns/villages Of the 6.0 lakh villages, 5.22 lakh have a village public telephone(VPT) 41 million kissan credit cards have been issued (against 22 million credit- plus- debit cards in urban) with cumulative credit of Rs 9.77 billion resulting in tremendous liquidity.

Of the 20 million rediffmail sigh ups, 60% are

from small towns , 50% off

transactions from these towns are on rediff online shopping sight 42million rural household (HHS) are available banking service in comparison to 27 million urban HHs. Investment in formal savings instruments is 6.6 million HHs in rural & 6.7 million HHs in urban

Opportunities for rural marketing in India:

Infrastructure is improving rapidly. In 50 years only 40% villagers are connected by road, and it is projected that in another 10 years 30% villages will follow. More than 90% villages are electrified. Rural telephone density has gone up by 300% in the last 10 years, every 1000 plus population is connected by STD. Social indicators have improved a lot between 1981 & 2001 Number of pucca houses doubled from 22% to 41% & kaccha houses halved from 41% to 23% Percentage of BPL families declined from 46% to 27% Rural literacy level improved from 36% to 59%

Low penetration rates in rural areas provide many marketing opportunities. Durables Urban Rural Total (% of rural HH) CTV Refrigerator 30.4 335 4.8 3.5 12.1 12.0

FMCGs

Urban

Rural

Total (% of rural HH)

Shampoo Toothpaste

66.3 82.2

35.2 44.9

44.2 55.6

Markets can make effective use of the large available infrastructure Post offices Haats (periodic Markets) Melas (Exhibitions) Mandis (agri markets) 138000 42000 25000 7000

Public distribution shops Bank branches

380000 32000

Proliferation of large format rural retail stores which have been successful also. DSCL Haryalic stores M&M Shubh Labh stores TATA/ Rallis Kisan Kendras Escorts rural stores Warnabazzar, Maharashtra (annual sale Rs 40 crore)

Paradigm shift in the behaviour of rural consumers in India:

1. Awareness among rural people about the qualities of the product: The increase in the literacy level and the income level has created awareness among the rural people about the quality of the product. This awareness has increased the demand for durable goods like motor cycles, television, refrigerator etc and non-durable goods like soaps, biscuits etc in rural areas. 2. Awareness among rural consumers to differentiate between branded and unbranded products: In the rural families studies indicate a slow but determined shift in the use of categories. For instance, households are upgrading from indigenous teeth cleaning ingredients to tooth powder & tooth paste, from traditional mosquito repellent to coil and mats. There is also visible shift from local and unbranded products to national brands, from low priced brand to premium brands. The villages are more loyal to branded products and they purchase same brand each time, study reveals that 50 to 60% of consumers were found to be buying the same brand each time. 3. Rural people are now fashion conscious: Because of the exposure got through television rural; people are more concerned about how he or she looks and dressed. This has increased the sale of textiles, cosmetics and toiletries in rural markets. 4. Social status: There is substantial change in the lifestyle of rural people because of higher levels of income, expenditure, consumption and consciousness about their social status. In the modern rural world consumer durables are considered as status symbol as the rural people now aspire for comfort, quality and convenience.

5. Change in the attitude and mind set of the rural consumer: The rural consumers have changed the attitudes and inhibitions related to the use or consumption of certain products. For eg: getting flush toilets constructed in the home is more considered as unclean.

Excellent practices in rural marketing:

Rural markets operate in an environment that is associated with some related problems which needs to be tackled by evolving certain strategies specifically rural marketing. 1. Appropriate communication and changing quality perception: Companies coming up with new technology are properly communicating to the rural customer and this has resulted in a trade-off between the quality a customer perceives and a company wants to communicate. Thus, the position of technology becomes very crucial in rural marketing. 2. Promoting products by communicating n local languages: Most of the companies have started promoting their products and selling the concept of quality with proper communication. 3. Targeting the changed perception of rural customers: Villagers are looking for new branded products as rural Indian customers now want value for money with the changed perception. In spite of using local manufactured low price p[products, rural consumers are more attracted towards new branded products without being price sensitive. They are ready to pay higher premium for acquiring higher utility from the products. This changed perception needs to be targeted by the organisations to capture rural markets. 4. Understanding cultural and social values: Rural people are also emotional and sensitive. Thus many companies are promoting their brands by exhibiting their social and cultural values. 5. Promoting products through advertisement with Indian models and actors: As Indians are attracted and also associated them self to Indian models and Indian actors, companies need to focus on advertisement which depict the models and actors with a view to promote their products and thereby attract rural consumers. 6. Associating with India and highlighting the spirit of an Indian: Companies are associating with India by talking about India and by explicitly saying that they are Indians with the view to attract rural consumers. Nokia has designed a new

cultural phone 5110, with the India tri-colour and a ringing tone of Sare Jahan Se Achcha 7. Promoting Indian sports Team: Companies are influencing Indian mindset by promoting Indian sports teams so that they can associate themselves with India. With this, they influence Indian mindset. LG has launched a campaign LG Ki Dua, All The Best, Hero Honda is promoting Indian cricket team and during this world cup they have launched a campaign Dhak Dhak Go, India Go. 8. Talking about normal Indian: Companies are talking about a normal Indian when promoting their products so that the rural consumer tries to associate himself or herself with the product and become loyal to it. 9. Developing Rural specific products: Keeping into consideration the

requirements of rural people, companies are developing rural specific products. Electrolux is working on a made for India fridge designed to serve basic purpose: chill drinking water, keep cooked food fresh, and to withstand long power cuts. 10. Giving Indian words for Brands: Companies are using Indian words for brands. LG has used India brand name Sampoorna for its newly launched Television. The word is a part of the Bengali, Hindi, Marathi and Tamil tongue. By the end of 1999, roughly 12 thats Rs.114crore worth of TV sets sold in the villages in a year.

Case study: ITC e-choupal:

ITC is one of Indias foremost private sector companies with a market capitalisation of over US $14 billion and a turnover of US $3billion. ITC has a diversified presence in cigarettes, paperboards and specialty papers, packing, Agri-business, greeting cards and other FMCG products.

ITC e-choupal and the Strategy:

ITC followed a different media/communication strategy which is more elaborate and extensive in rural marketing so far, which benefits both the farmers and the organisation. The strategy is to use the information technology and bridge the information and service gap in rural India which gives an edge to market its

products like seeds, fertilizers and pesticides and other products like consumer goods. The company has initiated an e-choupal effort that places computers with internet access in rural farming villages: the e-choupal serve as both a social gathering place for exchange of information and an e-commerce hub. The computer, typically housed in the farmers house is linked to the internet via phone lines or by VSAT connection, serves an average of 600 farmers in 10 surrounding villages within about a five kilometre radius. The farmers can use the computer to access daily closing prices on local mandi, as well as to track global price trends or find information about new farming techniques directly or via the sanchalak who is the village farmer who runs the echoupal and acts as ITCs representative in the village. In addition they can also know about weather forecast (local). They also use the e-choupal to order seed. Fertilizer and other products such as consumer goods from ITC at price lower than those available from village traders. At harvest time, ITC offers to buy the crop directly from any farmers at the previous days closing price; the farmer then transports his crop to an ITC processing centre, where the crop is weighed electronically and assessed for quality. The farmer is then paid for the crop and a transport fee. Launched in June 2000, e-choupal has already become the largest initiative among all internet-based interventions in rural India. E-choupal services today reach out to more than 3.5 million farmers growing a range of crops- soyabean, coffee, wheat, rice, and pulses in over 31000 villages through 5200 kiosks across six states. (Madhya Pradesh, Karnataka, Andra Pradesh, Uttar Pradesh, Maharashtra and Rajasthan).

Conclusion:
Rural markets are for marketers and entrepreneurs with perseverance and creativity. As marketing to the rural folk has to be innovative, innovation here indicates a complete approach to meet the needs of rural consumers. Success in rural markets depends upon understanding the unique characteristics of rural market environment in India. This requires considerable investments in terms of efforts in evolving appropriate strategies and excellent practices to tackle these

problems. Thus rural India has a plethora of opportunities all waiting to be harnessed.

References:
1. Advertising and sales promotion strategies in Rural Marketing from file:///H:/rural%20mkt/Sales%20Promotional%20Strategies%20In%20Rur al%20Market.htm 2. Devi Bhuvana N, Emerging Trends in Rural Marketing; Innovations and organisational changes: Theory and concepts, pg.313-317 3. Pinto Santhosh, M Nagaraj and Shanbhag Santhosh; Rural Marketing in India Relevant issues; Tatva The essence of excellence; ISSN 09730974 Vol 3, No-2, sep 2006, pg.1-17. 4. Rural Marketing from file:///H:/rural%20mkt/Rural-Marketing.htm. 5. Rural Marketing in Indian Economy from

file:///H:/rural%20mkt/Rural%20Marketing%20in%20India%20Economy. htm 6. Rural Marketing: Challenges, opportunities and strategies from

file:///H:/rural%20mkt/19653207.htm 7. Rural Marketing: Challenges, opportunities and strategies from

file:///H:/rural%20mkt/rural%20mkt.htm 8. What is the role of Rural Marketing in India from

file:///H:/rural%20mkt/what-role-rural-marketing-in-india.htm