I New Product Development

.
O h
. ~ce a c?mpany as carefully segmented the market, chosen it~
launch appropriate new products.
c·iven th e nsmg
· · interest
·
. t rget customer groups,
identified their needs and determined its desired market positioning, it is ready
to develo and

· new products
of companies in the rural market deve1oping ..
P

M suitable
h" d
£or th e rura1 mark et h as become an imperative. That is why companies
' · l"k
1 e LG ' Phillps' a. m ra
& ~ahindra and Electrolux are trying hard to develop products suitable to meeting the
reqmrements of rural conditions.
The new product development process involves four stages, namely, (1) idea generation (2)
concept testing (3) product development and finally (4) test marketing.
Some examples of new products introduced in rural markets are the 5-kg. cooking-gas cylinder
by HPCL; Jolly battery-operated colour television; Free Power Radio; /ugad, the rural public
transport in north India and the Kisan Credit Card
The product development process remains the same for rural and urban markets except in
the case of products specifically used in rural markets.
One aspect that is often ignored in designing products for rural markets is the product fit
with the rural lifestyle and environment. It is easier for marketers to relate the product to
themselves in the urban context since they belong to urban areas and are familiar with this
en vironment.
 There_fore, it is impo:t~nt to ~onceive of a product idea and build a product concept in the
rural environment by gammg a fust-hand understanding of consumer lifestyles and behaviour
patt~r~s thro~gh consumer surve~s. Ma~ Gas (see box) in a classic example that addressed rural-

-----
specific cooking problems, went mto mmute details related to rural cooking habits.
. .
· Rural Product Design: Max Cas LPC tyll~der
. ,. " ....

• Rural consumers are reluctant to switch to LPG for cooking because they worrv that the
cylinder could burst accidentally, that the gas ·could leak resulting in a fire and that there
Is no way to ch~ck the quality of the gas. Max Gas, a private player, developed a cylinder
;· ,: with the following features, which .addressed the above concerns~ ·- · · · .
• Auto cut-off regulator, which shuts off the gas supply Immediately in case of leakage
•.·, • • Double-sealed cylinder. that assures·. the
,.
~orrect weight. - . .,

• Special steel-braided hose pipe, which is rat resistant <unlike the rubber pipe> and
· does not crack on bending, so ~here is no possibility of gas leakage
. • Wider
.
base of. cylinder to ensure stability
.. even on uneven ·,.rural kitchen floors
'

• Top ring open from one side fo~' easy handling of the re?~lator

I.I""'-' P < P.H••·••=:- 4, . ... _•.· ¼fB' ~· "--;-~. \.,~~;,n)'A..IQIO >,-·" 4 -<: ,/; .;a:; «""i'!i

L, . Mahindra Maxx · ~- ,~ /
·1:_;. · · When Mahindra & Mahindra decided to enter the 'rural marketwith 'their four-wheeler, the
,,.. company first strategized to understand.the rie~ds of rural consumers. The study revealed
that the 'dream vehicle' of rural consumers was. one with mor~ space/with a rugged and
ll,:·._.· tough look, with a low cost, one that provided valuflor money and carrie With an aspirational
1urban1 image. This understandinrf'pn;,peUed t he .conceptualization and development ofthe
MaXX, which was big and spacious, r:an on an engine high on fuel economy and gave a better
I mileage than its competitors. The Max·x_ Stan_ dard 10-_ seater <for, the' value conscious>, the
MaXX TX !for the taxi operator> and the'
Ma)OCFestiva (for-.ttie'.lmage· seeker, ·who was.the
tourist taxi operator> were the options made-availableJo rural consumers. Preliminary
anajysis at the field level had r_
evealed t_hat'hJhf rn~Jor)tv ;of :rcas~s, .t~e ,pwners;hired .o~~
thei_r_four-_wheelers. . . ;jtj>"!s,::\;t:'} :t},r $·;fyi.i.r/l? ):;fi!f·{1:';;f)r:;;::;J; ~>:(; · f;:•:
Two primary target groups were identifie~:.the <;:ommercial operator and his hirer/It was
understood that the former makes a purchase decislonJiasec( onthe needs ofthe latter;'
The mass media strategy was to target th.e hirer and play .o.n his aspirations through essentially
urban imagery and appealing 'm,usic: Beloi.y-the-lln~ m~dla like tour operatorf meetings/.
>press conferences, mileage· me/as and Jfee' foy rides wer,e used to .appeal Jo the_ operator
·· ' · ,. segment.' Road shows, nukkad nataks; demonstratiqns and test drive~ -~OmJ?.lem~rited 9utd~c,r,
, . _; media like tioarttings and posters, which were put UP. in public pf~~es ,iJke bus stari.ds/ banks,:-
:. ,. '/ etc Direct-marketing ma lier campaigns targeting _existin'g 'cus(omers were alsc{ used .to·
;_ · ;-,' .• anhounce the launch of new MaXX variants and Invite :consumers to showrciomsfo(test'
'. . :}:r.;r~t~~ls::>" . ._. .-' ··.) · . .. .. , ,,.·. ,.... ·, _./~{ :'\·--3':::.;·:,i'·.. .•.i,~ \·.,: t.')
i\\'·>Jhe communication and promotional strategy encompassing _both the. hirer and the buyer
a
,/f_,\ ~reated _ marl< as MaXXwas· established as a bfand ln_t~_
e commercial segment and sales·.
'·;:s.~it ~p.:·r::;.' 1
,Z.i• -~z'.t: ,: ~ .\· :: ,,}·,:.
I
,·/,,; \,.. : . . . 1

, source: complied from the article in the praxis issue 1on 'Manag!ng Rural Mark_ets', JUiy 2003, contributed
by Mr Ra)esh Jejurlkar, Executive Vice President, Sales & Mar~ettng, Mahindra & Mahindra.
!. •·.:<' • ?: ·, ,
;
, ., ,. ,
 HPCL 5-kg. Cas Cylinder: The Rural Initiative
TIii recently, LPG marketing In lndla was focused
on meeting the demands of domestic and non-
domestic consumers in urban/semi-urban markets.
But as LPG penetration is a high 74 per cent In
urban and only 15 per cent In rural, HPCL decided
to tap the rural market.
A survey by HPCL found that the barriers to using
LPG In rural areas are high costs las a new
connection costs Rs. 1,600 and refilling costs Rs.
2701 and poor availability of cylinders In VIiiages.
HPCL conceived the Idea of manufacturing small
cylinders based on consumer feedback and
launched a 5-kg. LPG cylinder, which brought down ·
both Initial and recurring costs <Rs. 800 and Rs. 99
respectively). This new LPG cylinder 'tan be used
both for cooking and lighting <a boon in rural, as
the electricity availability is verv poorl. · ./.. ·\:,}\_:: · ·. :: ·.•.
· To address the usage barriers In rural, H~CL undertook a Pi)ot _in partnership Wit~ '.!1Aitr. Jt
introduced innovative credit schemes usmg the Klsan credit card and Self-Help oroupS. To
Improve availability, extension counters in biggervlllages were set up.•The HPCL retail Outlet
network located on highways/arterial roads was consider~~ f~~maklrig'. avallabie LP~ ~llnaers
to tractor owners visiting to fuel up. ·· · · · '.·/> •:•>'. i;.• ::;:' ·-,/

In rural homes, the detergent bar used for washing clothes is cut into two pieces before use
to ensure that it lasts longer due to less melting. But no marketer has addressed this need 80 far.
Similarly, areas with a problem of hard water do not have any detergent that can effectively
work in these conditions.
Concept testing in rural needs to be done in different regions as needs change from area to
area depending upon the characteristics of particular regions. A concept of a low-cost dry toilet
promoted by UNICEF (requiring little water) was appreciated in water-scarce regions of Rajasthan,
but was opposed in other regions where water availability is not a problem.
,;

a~ :(DCC).
Vardaan Bldl for Rural .·..
Oatmla .• con"sumer' devel~ped a tobaccifree
research study ~at showed that approximately 40 per cei'I
of migrants from rural and who hence have a rural min
these customers first before ·going rural.· . . .
Vardaan ens~r~da U~lf~~m fllHng In the btcit sci that It
Its length and quality. These attriDutes matie- vardaan
and lo.cal brands available. Vardaan's target'. g_u,stom .
consider. themselves dependable, tough ·minded, co
capacity to enJoy life.
. DCC ·also understood that It Is critical ·to off~ valU
avallablllty at the point of need. It tntroduced sm
bldls tor Re. 1, 10 for Rs. 2.
 occ aisockaging
found through test marketing th t
was developed With n·n a
Its
,1
· ·
target customer will be mostly literate and
tnus pa na a national brand. ' e maJor languages, which gave vardaan a regional
aura arou
. cc is deploying promotional tools llke street Plays, audio-visual presentations video clips
0 c1uster communication, Including children mentor programming outreach programmes
and
for women, etc., to c?nti~uously reach out to tobacco bldl users a~d Impress upon them
t11e importance of switching to a non-tobacco bldl for health reasons. .. .
occ nas created a huge distribution network to reach every ~art of the country. It Is
estimated to have more than 6.5 lakh outlets. . .

The test 11111rketing of any new pr~d_uct ~s the most important factor that decides the failure or
of the product. It becomes cnhcal m the rural context as the chances of failure are often
success
. Most companies · ignore
· th·ts f ac t, th a t is,
· t h at th e cost of market tests is insignificant in
high, ·son to the total project cost. Test marketing plays a crucial role in the success of products
compari
. markets. Also, t h e pro d uct nee d s to be tested m · different
· geographies as consumer
1n rura 1es could be d'ff ·
1 erent m d 'ff ·
1 erent regions due to the socio-economic and physical
respons
teristics of the place.
charac .
water purifier: Jalshodhak . .
Ntnetv-five per cent of diseases in rural India are water borne. The supply of clea·n drinking
water to the 6 lal<h + villages is a major challenge for the goverrtrne_ nt. Despite year:s of:
efforts involving massive budgets, less than so per cent Villages haye a piped drinking
supply. · •" ,./. ·· - ' ·
sensing a business opportunity, DCM Shrlram conso11Giated decided to :c1
water purifier specifically for rural areas. They introduc~d a twin pacJ< ~ons
ml. bottles <one contains chemicals to reduce the turbidity of floating soll
contains a disinfectant! sufficient for the needs of a family _of flveipeopl
MART was hired to test the concept. A total of 210 'wome~ trl~cr:iaisho
period. over so per, cent were satisfied with the performance, ao_d 9.0
to
price of Rs. 10 per pack to be acc~ptable. ··· J ;:~;, :'
'et
II, Encouraged bV the p~sitlve feedb~Ck frOIJI the concept-testing .~tudr the
to test market the product.In the Nalgonda district of Andhra Prad'j s
meetings were held With SHG women under various mandals and the wo
came forward were appointed _d~alers at the ,v.illage level. The produCs~
through haats. , .. · · .· '. 'Jf,.

However, the project had to be called off midway because the maJ
was the high fluoride content In the water, While Jalshodhak was
it failed to address the fluoride problem, which was the prime c9

Eicher Tractors aborted the idea of generating electricity through its tractor (with the use
of a generator powered by tractor engine) as the company had failed to address the consumers'
n(eed for power for agricultural purposes; customers found it suitable only for domestic purposes.
5ee box) .