SAMPLE ANALYSIS TRENDS

Breakfast cereals are gaining popularity as an alternative breakfast option to traditional staples such as rice and bread. This trend is particularly strong in urban areas where consumers have higher spending power and the price of cereals is less of a problem for them. Due to increasingly hectic lifestyles, many urban consumers and double-income households are choosing breakfast cereals, as these consumers do not have time to prepare breakfast, and are opting for breakfast cereals for their ease of preparation. Consumers are also becoming more aware of Western food and lifestyle trends. Moreover, an increasing number of manufacturers have fortified breakfast cereals with vitamins, added health food ingredients and promoted their health benefits through educational and social programmes, thus creating a favourable perception of cereals among consumers.

COMPETITIVE LANDSCAPE

Kellogg led breakfast cereals with a 48% share of value sales in 2010. It was the leading player in several cereal categories, including flakes, RTE cereals and family breakfast cereals. The company advertised and promoted its products actively in the mass media. It also expanded its distribution network to penetrate deeper into existing markets (urban) and enter newer markets (tier-two and tierthree cities) in 2010. In October 2010, the company announced plans to introduce more affordable products targeted at the mass market segment to penetrate deeper into India.

PROSPECTS

India has one of the highest rates of coronary heart disease in the world and the incidence is increasing. Caring for the heart is set to become an important concern among consumers. Breakfast cereal producers, especially oats manufacturers, will benefit from this trend with more consumers will become aware of the benefits of oats. Cereals with other health or nutritional benefits, such as reduced sugar, high fibre or vitamin enriched cereals, will also grow faster than traditional corn flakes or rice flakes, because one of the key decision factors for consumers to purchase cereals is their health benefits. Such demand will drive innovation in breakfast cereals with more new launches and the introduction of international brands over the forecast period.

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

With about 60% of the Indian population living in rural areas and representing half of the country's buying potential even today, the Indian economy can be developed by improving the living conditions in rural areas. Rural illiteracy is the prime area of concern and various projects have been undertaken time and again to improve the rural conditions. A recent study by NCAER (National Council for Applied Economic Research) reveals that the number of middle/ high income households in rural India is expected to grow from 130 Million to 172 Million by the end of 2012 as compared to nearly 71 million of urban India.

Despite the fact that India is unarguably one of the largest consumer markets in the world, it is difficult to tap the market. Various marketing theories and concepts have been directly implemented in India, but have met minimal success. This is due to wide variations in size and potential of different segments owing to various parameters like income levels, diversity in language & religion, geographical diversity etc. Even a company like Kellogg's had to face the consequences of the unpredictability of the Indian market. The sales of cereals were abysmally low and forced the company to introduce new eating habits in the country. However, in the meantime, a major chunk of the already existing cereal market (which was small in size), was taken away by imitators who introduced local cereal flavors at much lower prices. As a result, Kellogg's had to realign their marketing strategies and introduce inexpensive biscuits meant for breakfast. It is therefore essential for the marketer to look beyond time tested concepts and reevaluate the entire approach. In order to tap the rural market adequately, the traditional marketing concepts should be modified. This is when the importance of Packaging, Retailer, Education and Empowerment comes into picture.

A rural consumer is always a budget seeking consumer. It is essential to first match a product's expectations and its pricing structures. It is to be noted that most of the rural population comprises of daily wage workers who tend to have minimal stock of money. Depending on her daily income, she fixes a budget for the purchase and makes a decision after taking other parameters like after sales service, warranty period etc into picture. Thus, the products in the rural market should be able to meet the basic needs of the consumer, as a rural consumer shall not be willing to pay additionally for extra benefits. This makes pack sizes and price points all the more important. For instance, a rural consumer would prefer buying a shampoo sachet to a large bottle which could be used for over a month. Packaging should also be done accordingly in smaller units and lesser priced packs, thereby making them affordable.

Physical distribution becomes arduous due to high costs involved and the non availability of retail outlets. Melas & Haats, and Rural Marketing Vehicles (RMVs) could prove to be better means of distribution as the rural consumers prefer 'touch and feel' experience.

In rural markets, a consumer's buying behavior is widely influenced by social customs and traditions. Higher levels of illiteracy and lack of exposure to traditional media practices further add to the problems. Hence, the advertising mix should be customized and contain other alternative forms like street plays, wall painting, posters etc.

A retailer's importance should be clearly understood because he plays a vital role in influencing the customer's decision making process. A rural consumer frequents the same shop in order to buy as per her daily requirements. As a result of the lack of brand awareness among the rural population, the amount of purchases is positively correlated with the extent to which a retailer pushes the product belonging to a particular brand. Effective incentive schemes and trade promotion activities should be developed to maintain a long lasting relation with the retailer.

The levels of unemployment are very high in the rural areas. Hence, any marketing strategy which involves the scope of income generation would be more preferable. The success of "Self Help Groups", which helps in generating income apart from operating like direct to home distributors, is a reflection of this viewpoint.

The concept of "e-choupals" introduced by ITC is noteworthy in the context of Indian Rural Marketing. The presence of these e-choupals is increasing at a rapid rate. It helps in raising the income levels of farmers by providing better prices for their produce in comparison with auctions. These also provide high quality seeds and online advice on various agricultural practices. These practices enable the farmers to increase the consumption levels of the products and services offered by ITC.

A clear understanding of the "Value for Money" concept in the rural areas shall be the major differentiating factor between a successful brand and its competitors. This has been proved by HLL (Hindustan Lever Ltd). HLL discovered that Indians in the rural areas used soaps for multiple purposes. This resulted in the design of all-in-one soaps which was a huge success.

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DISTRIBUTION STRATEGIES IN RURAL MARKETS Distribution strategy A one of the ways could be using company delivery vans which can serve twopurposes it can take the products to the customers in every corner of themarket and it also enables the firm to establish direct contact with them andthereby facilitates sales promotion. The mediocre companies with sizableresources may chip in for syndicated distribution. Haats and Melas could also be agreat platform to display merchandise. Also, every region consisting of severalvillages is generally served by one satellite town termed as Mandi where peopleprefer to go to buy their durable commodities. If marketing companies use thesefeeder towns they can have a vast coverage of rural arena. Delivery Vans Companies can use their own delivery vans to reach the rural consumers. There are certainadvantages of using delivery vans. They take the products to customers and retail outlets inevery corner of selected rural markets and enable the company to establish direct contactwith the consumers which helps in sales promotion.We can take the example of HLLs distribution strategy in rural market.In 1998, HLL landed "Operation Harvest" with an objective to increase penetration, increasebrand awareness, encouraging trials and identification of key distribution points and retailpoints. Around 30,000 villages having high growth potential, having a population of at least2000, and well connected by roads, were selected. The vans were retrofitted with a publicaddress system and their audio-visual equipment. These vans covered six villages a day for six days in a week. The cycle was repeated couple of times in the same villages. On reachingthe villages, they would play audio-cassette and video-films. These cassettes and films hadsongs and sequences from popular films with advertisement of HLL coming at some intervals.Company representatives distributed free samples. Small shops of villages were providedwith HLL products like Lifebuoy and Wheel. This helped company to understand the potentialof the market. Joint Distribution by Non-Competing Companies Companies having lesser distribution reach in rural areas can collaborate with companiesalready having wide network in rural market. This type of tie-up can prove to be beneficial asone can reach to large number of retail outlets by utilising the network and the other one canearn better revenue. Also, this type of joint collaboration can help both companies to reducedistribution costs and can convert operation which seems to be unviable into financially viableoperation.Some examples of effective distribution tie-ups in rural market: -

Samsung has tied-up with the Indian Farmers Fertilizer Cooperative (IFFCO). Thus,Samsung will use IFFCO's cooperative network for marketing the hand-sets to ruralconsumers over a wide area.

Nokia has entered into a partnership with HCL for distribution of its hand-sets.

Motorola and Nokia have partnered with ITC e-Choupal which gave them wider reach inrural market.

Procter & Gamble had tie-up with Godrej and Marico Industries, and now it is planning onewith Nirma as well for distribution of Camay Soaps.

Godrej has tie-up with Jyothi Labs to use its extensive distribution network for marketingGodrej Tea across the country.

Distribution up to Feeder Towns / Mandis Companies can cater to the needs of rural consumers by making their products available uptofeeder towns or mandis . Feeder markets or mandis provide excellent scope for distribution of products like consumer durables, clothes, kitchen equipment, agri-inputs and tools. The ruralconsumers visit these towns at regular intervals not only for selling their agricultural producebut also to purchase clothes, jewelry, hardware, radio, and other consumer durable products.

Haats Along with permanent retail outlets, haats can also be utilised to make the products availableto rural consumers. Haats are held on a particular day of every week. Typically, an average haat has 300 stalls. A haat usually serves around 5000 visitors. So if we consider averagepopulation of an Indian village to be 1000, then one haat caters to the needs of 5 villages.There are almost 47,000 haats in India. The sale per haat per day is Rs. 2.25 Lakh(approximately) and average sale per outlet is Rs. 900 (approximately).large number of retailers also buy products from haats for their village stores. About 90% of sales on haats are on cash basis. The participation fees at haats are a flat Re. 1 to Rs. 5 per stall which is very low.These figures show that targeting haats for distribution purpose can prove to bebeneficial for companies. Companies can tap the rural consumers for clothes,cosmetics, FMCGs, kitchen equipments and agricultural tools at these haats

. Leadingmanufacturers are introducing sachets of tea, blues and washing powders in these haats tocreate a demand and then meet the demand in affordable packages. Melas Over 25,000 melas are held every year all over the country. Out of these, 5000 arecommercial melas , 2,000 are cultural melas and 18,000 religious melas . The following factsregarding melas will help us to understand their importance to marketers: -

Number of visitors per mela is approximately 7.5 lakh.

On an average, 850 outlets are set-up in every mela .

Average sale per day in a mela is Rs. 25 Lakh.

Visitor turn-out in a mela is very high.

A large part of the visitors in these melas are women and children, which is significantbecause rural women are restricted to leave village often. Melas are generally used to sell durables, high-priced items and new products launched.Examples of effective use of melas by marketers are: -

Active participation of Maruti in rural melas like the kisan mela (Ludhiana), Sonepur mela

(Bihar), Kila Raipur sports mela (Punjab) and Pushkar mela (Rajasthan). The melas provideboth a platform for demonstration and improving product awareness, and also booking newsales.

In 2001, HLL ran a campaign at the Allahabad Kumbh Mela to demonstrate to the visitorsthe importance of usage of soap for better health and hygiene. Rural people in generalbelieve that washing hands with water alone is enough, so there is no need to use soaps.HLL representatives educated them about use of soap for better health and hygiene. Thisawareness campaign has helped HLL to increase the sales of Lifebuoy in rural market.

Hub & Spoke Method of Distribution The urban model of distribution in which the products are transported directly from the bottlingplant to retailers is not very effective in rural markets as taking stock directly to retail pointwould be costly due to the long distance to be covered. So Coca Cola has opted for a huband spoke method of distribution system. It worked this way: -Coke bottles were transported from the bottling plants to the hubs (large distributors) and fromhubs to spokes (smaller distributors) situated in small towns. These spokes then distribute thestocks to village retailers who cater to the demand in rural market. Rural Market IBEF: August 21, 2008 IT services Indian villages are finally getting to benefit from the IT revolution in India.E-Panchayats are slowly taking over rural India and an 'E-medicine' scheme for rural areas has beenlaunched by

the Gujarat government's health department in May 2008. A study by internet research firmJuxtConsult reveals that one out of every seven regular internet users is from the rural belt andsurprisingly, the rural net users are younger than their urban counterparts.Moreover, BPOs are slowly growing roots in rural areas. Comat Technologies (P) Ltd, a Bangalore-based global business solutions organisation has800 rural business centres in Karnataka and 290 centres in Haryana. It will soon open centresin Sikkim, Tripura, Uttarkhand and Uttar Pradesh. SerWizSol, a Tata enterprise, has a 250-seater BPO at Ethakota in rural Andhra Pradesh, andone in rural Gujarat in Mithapur which is a 100-seater. SREI Sahaj e-Village Ltd will set up 25,000 IT kiosks to be known as common service centers(CSC) across West Bengal, Bihar, Orissa, Assam, Uttar Pradesh and Tamil Nadu, by 2010. Automobiles The Indian automotive industry currently has a turnover of US$ 34 billion. However, the automobilemarket remains untapped in rural India which has a strong purchasing power. Nearly 50 per cent of theIndian rural market, which includes 220 million households, is potential car buyers. Two-wheeler penetration in rural belts is still very low with less than 10 per cent households owning a two-wheeler.Sensing a huge opportunity many automobile companies are trying to woo the rural consumer. Hyundai Motors India has introduced a new marketing initiative 'Ghar Ghar Ki Pehchaan'-totap the India rural car market. The company has rolled out special schemes for governmentemployees in rural areas and members of gram panchayats on the purchase of Santro. After establishing a strong foothold in urban and semi-urban markets, Maruti Suzuki haslaunched a pan-India campaign - 'Mera Sapna Meri Maruti' - to tap the rural market. Hero Honda has devised a major expansion strategy for the rural markets and is planning tostrengthen retail financing to support the initiative, which could lead to setting up of its ownfinance arm.

 M&M, Bajaj Auto and TVS Motor have also launched special marketing schemes for ruralmarkets. Consumer durables A survey carried out by the Federation of Indian Chambers of Commerce and Industry (FICCI), indicatedthat the consumer durable goods sector is all set to witness 12 per cent growth in 2008. The ruralmarket is growing faster than the urban markets, although the penetration level in rural area is muchlower. The rural Indian market, which accounts for nearly 70 per cent of the total number of households,witnessed a 25 per cent annual growth while the urban consumer durables market reflected an annual