Chapter 5 (Seg)

Rural Marketing, 3/Ed
Pradeep Kashyap
Chapter 5
Segmentation
Copyright © 2016 Pearson India Education Services Pvt. Ltd

Learning Objectives
• Describe the concepts of segmentation, target marketing

and market positioning, stressing the need to recognise
heterogeneity amongst rural consumers
• Understand the major bases for segmenting rural

consumers and segmentation strategy
• Understand how companies identify attractive market

segments and choose target marketing strategy
• Realise how companies position their products for

maximum competitive advantage in the rural marketplace
Rural Marketing, 3/Ed Pradeep Kashyap

Introduction
• Marketers need to progress

from traditional descriptive,
Segmentation geographic and traits to
behaviour,
psychographics in rural
Targeting • They also need to evolve

different targeting and
positioning strategies to
Positioning penetrate rural markets

Segmentation
• Sub-division of a market into homogenous subsets
of customers which can be reached with a distinct

marketing mix
• Profiles can be developed suitably
• Rural customers can be segmented as:

 Self-employed farmers
 Daily wage labour
 Salaried employees
 Traders
 Micro-entrepreneurs

Heterogeneity in Rural Markets
-not only viisble across diff regoins but also in each region, sometimes in a
village itself.
Socio-cultural differences

Population size and density variations
Infrastructure - developed vs underdeveloped
Media exposure levels
Variations in literacy levels
Differences in income levels
Family structure - joint, individualised joint, nuclear

Pre-requisites for Effective
Segmentation
Measurable - Data
should be distinct,
measureable.

limitations: lack of
comprehensive Accessible -
data. Size of the limitation due to poor
village, non roads, SCM hampers
uniform income
levels, multiple
sources of income
Differentiable - able
to distinguish bet Substantial -
urban & rural profitable. Seg is
features (bikes- profitable when the
sturdy, carrying market is homogenious
capaciety)

Degree / Approaches of Segmentation
Mass Segment Niche Micro
marketing marketing marketing marketing
 Considers all  Identifies  For a very  Focuses on

customers. Cos separate small groups of groups -
use it when not group of consumers with tailromade to
having much specific needs. specific needs
know of R/mkts customers

 HUL –  GoldPlus or taste.
 Companies use
this while Lifebuoy. jewellery of Tata  Pouches of
entering rural  low priced for rural gold con. Dabur’s
markets rural specific (gold-an imp Anmol hair oil
 This is a genaral way products invest in S.India) with mustard
of Seg. (here, 4  Jeevan Sadhan low priced
 This is used in variants of Nokia with targetted at
urban market due to
Lifebouy to providing various N.India cons.
its homogenecity agri tips (Rs. 10 for
(Eg colgate reach out the
differrent 50ml pouch)
marketed same TP in
urban & rural until it segments) (people were
realised the need for using loose
rural con). Hamam mustard oil)
by HUL.

Bases (Variables) for Segmenting Rural
Consumer Markets

What is the need for segmenting rural consumer markets ?
- Variables used in urban segmentation may not necessarily be

applied for rural.
- Rural consumers incomes cannot be known as IT returns filing

has been rare (with the exception in recent couple of years).
-Only income as variable is insufficient.

Bases (Variables) for Segmenting Rural
Consumer Markets
Demographic- seg on age,
Geographic- states family structure, land

divided into 4 regions - ownership, occupation
marketers to satisfy the patterns, income, socio-
need region wise - eco (edu & type of
population (more than dwelling)* classification &
2000), climate & culture relegion & caste.
(SCR).
Behavioural -
purchasing occassions,
loyalty, place of
Psychographic - lifestyle purchase, etc.
(AIO) & value system. Seg
approach diff from R1 TO Coca cola highest
R4. during festivals,
(activities,interests,opinio functions but low
ns) duirng travel.
Benefit sought-
Fullterton seg based on
5 classes to bring out a
new product for small
businessmen.
Geographic Segmentation
• By regions: North, south, west, east

• Village size: <1,000; 1,000–2,000; 2,000–5000; >5,000
(marketers focussed only on villages above 2k pop).
Density: Low, moderate, high
• Climate: Summer, rainy, winter
• Culture: 56 socio-cultural groups.
• Marketers need to seg the villag
on the basis of development
indicators relevant to the product
category.
Regional Differences Among Consumers



• By regions: North, south, west, east
Village size: <1,000; 1,000–2,000; 2,000–5000;

•
>5,000 (marketers focussed only on villages above
2k pop).
Density: Low, moderate, high
• Climate: Summer, rainy, winter
• Culture: 56 socio-cultural groups formed by

Rashiduddin Khan in 1970. Each SCR having its own
identity - language, culture, dress, etc. Cutlure is
related to human relationships with others and
ultimately the heirarchy of needs. Culture plays imp
role in con buying behavior and determining the
dynamics of decision-making.

Pradeep Kashyap

Demographic Segmentation
Age and Lifecycle  Children, teens, young adults, elders, seniors

Family structure  Joint family, invidualized joint family, nuclear family
Gender  Male, female
Income  Deprived, aspirers, seekers, strivers, global
Land ownership  Landless, marginal, small and large
Education  Illiterates, semi-literates, literates
House type:  Pucca, semi-pucca, kuccha
Occupation  Self-employed farmers, daily wage labourers, salaried, traders
Religion  Hindu, Muslim, Christian, Sikh, Parsi
Caste  Upper caste, lower caste

Demographic Segmentation
• Age & Lifecycle- change in age = product / brand
preferences. (Eg: in rural, youngsters need a smart phone
& elderly satisfy with a traditional phone).
• Family Structure: Family pack, mini pack, economy refill
pack, Family system changing from joint to individualised

joint to nuclear - require more products & services.
• Landownership: Seg include size of landholding, quality
of land, area under cultivation, irrigation method,
productivity, etc.
• Therefore, seg can be done on large, medium and
small farmers.
• Occupation: Marketers must seg on the basis of non-
farm people as they have disposable income
• Income: Urban income-based seg not entirely applicable
to rural as rural income is not known completely, seasonal
income, irregular income.
• SEC seg: level of edn & type of dwelling. (R1-R4).
This kind of seg widely accepted.
• Relegion & Caste wise village settlement.

Demographic Segments
Rural Demographic
in Rural India
SEC Rural Lifestyle
Characteristics
Landlord farmers, educated, Aspiring to match urban lifestyle,
exposed to urban environment, technology adopters, experiment with
children in schools, colleges in modern farming methods, eager for
R1 nearby towns, owns durables like additional sources of income socially
tractor, two wheeler, TV, music and politically well connected, high
system, steel cupboard, LPG, spenders on social occasions

refrigerator, mixer-grinders
Rich farmers with about 5 acres Want children to get educated, consult
of land, may not be educated, friends and relatives in urban areas for
R2 friends and relatives living in urban technology adoption, conscious of
areas, owns durables like tractor, status, aspire to be well known in
two wheeler, TV, LPG social and political circles
Average landholding 2 – 5 acres, Opt for time-tested technology, low
manages small savings, children risk-taker, desire more knowledge,
R3 sent to village school, owns followers, seekers
durables like TV, tractor (self and
rental)
Have little or no land, agricultural Laggards, averse to latest technology,
labour, living below poverty line, a risk averse, uninformed
R4 major purchaser from public
distribution system

Psychographic Segmentation
 Upper
Social

 Lower
Class  Middle
 Trendsetters
Lifestyle  Followers/adapters
 Traditionalists
 Authoritarian
Personality  Ambitious

Psychographic Segments in Rural India
Related to Lifestyle, Personality, Value system

Lifestyle Lifestyle = AIO.
The manner of a person lives,
spends money, etc.
People within the same demog
group can have diff lifestyles. This
enables to predict buying behavior.
Personality Sum total of a person's thoughts,

feelings, behavior & attitude.

Behavioural Segmentation
Occasions  Festivals, melas, jatras, weekly haats

 Quality, convenience, value for money,
Benefits sought service, etc.
 Non-user, ex-user, first time user, regular

User status user, potential user
Usage rate  Light user, medium user, heavy user
Loyalty status  Strong, weak, non-loyal
 Village shop, haats, nearby town, melas

Place of purchase and jatras

Behavioral Segments in Rural India
Occassions Durables purchased during & after harvest (Baisakhi,
Onam, Ugadi, Sankranti), Diwali, Dussera, Melas, haats,
etc.
Benefits sought Understanding the needs of customers / rural

consumers see the utility rather than outer look.
Marketers should do seg on the basis of benefits.
Eg: Fullterton segmented based on credit and invented
needs & identified 5 seg - salaried/large b men/small b
men, service providers & farmers.
1st User status Cons can be divided bet 1st time & 2nd time users as
most rural con are 1st time users. Ghari (pahele istamal
kare phir vishwas kare).
User rate Amount of consumption - light/medium/heavy users.
Diff pack sizes - sachets/economy packs/family packs,
etc.
Loyalty status Seg based on loyalty to specific brands. Brand stickness
Vs. Loyalty. First movers make loyalty / brand stickness
(Eg Nirma, Wheel, M&M. Escort)
Place of Diff products are purchased from diff markets.. Eg. Tata
Purchase shakti roofing sheets/Colgage/Marico already started
usinng haats as potential place of purchase.
Household Potential Index (HPI) - by Media
Research Users Council

-It assigns a premiumness to each household.
- premiumness = wanted by many but consumed by few.
- HPI high scores for less penetrated products & low scores for more
penetrated products
- Basket of 50 variables (durables, FMCG, services, etc) used for

calculation of HPI scores
- As we move up the pyramid, the potential becomes almost double (refer

next slide for figure)

Behavioural Segmentation - the
Household Potential Index

Multi-Attribute Segmentation

-Marketer cannot depend on a single variant
for segmentation.
-Seg is a complex factor since it depends on
many factors.
-Marketers should use diff variables to
identify clear segmented groups.

Targeting
Evaluation of  Overall attractiveness by size, growth rate, accessibility, etc.

 Company objectives and resource competitiveness
Segments  Go to rural markets rather than wait for customer
Selection of  Rating on a pre-determined scale

Segments
Coverage of  Undifferentiated marketing - Nirma

 Differentiated/targeted marketing - Lifebuoy
Segments  Concentrated marketing – Multiple brands of soaps of HUL
Choosing a  Depends on company resources, product variability, product

Coverage lifestyle stage, and market variability
Strategy

Evaluation of Segments - 2 broad factors need
to be considered.
Attractiveness of each segment &

Co's objectives.
Attractiveness of segment to be measured with:

size, growth rate of rural markets, accessibility,
profitability, scale economics, low risk.

Evaluation of Segments
Marketers should evaluate w.r.t. to their

objectives:
Company's objectives; Can be short term or long

term.
HUL & ITC had long term objectives.

Project Shakti & e-Choupal.
These are mega rural marketing models

Selection of Segments:
Based on evaluation factors, selection of segments

can be made - high, medium and low ratings.
Scores with highest ranking can be selected as
target segment to enter into rural markets.

Coverage of Segments:
3 ways of Coverage strategies:

Undifferentiated - no differentiation bet urban & rural like CoCa
Cola marketed for both the markets (thanda matlab coca cola) It
relies on mass distribution & mass advt.
Low priced.
Differentiated - It identifies the diff strategy for urban & rural
markets
-match the products to the identified segment of the rural market.
Here, the price is high but loyalty is developed.
Eg: Lifeboy - initally marketed on a mass scale, but later on
brought 4 diff variants, for rural poor.
Concentrated - concentrating only one segment / niche
marketing. (Eg: HUL with diff brands targetting a small section of
consumers)
Stretegy for target market Segments:
Companies should have a multi-segment

strategy rather than a single segment
strategy in order to received adequate ROI.

Positioning
• The act of designing the company’s offerings and
image to occupy a distinctive place in the target

segment.
• It is identifying the USP, spl offers & communicating
the USP to target audience
Begins with construction of a visual map (perceptual
positioning map) of the customer’s mind.
• Cost - expensive / economical
• Featuers - tradional / modern
• Quality - superior / inferior
• Eg: Himani's sona chandi chavanprash - exposed itself
as healthy body and a sharp mind.
Existing brands tend to cluster around particular spots
Marketers need to position brands in new attractive spots:

Pradeep Kashyap

Positioning can be done on the
basis of

Identifying the Selecting the
Developing the Communicating
positioning positioning
concept the concept
concept concept
 Product  Attractive  Concept  How many ideas

differentiation  Distinctive development /differences to
 Service  Pre-emptive  Select promote?
differentiation  Affordable appropriate  Which
 People  Communicable media positioning to
differentiation promote?
 Image
differentiation

Positioning
• Existing brands tend to cluster around particular spots - the

position of the brand is determined by the spot it occupies
on this mind-map.
• Each spot is a unique combination of the attritubes /
product features.
1) GHARI DETERGENT
• Marketers need to position brands in new attractive spots:
Ghari in low price, high quality has become rural specific
in less time because it identifed the vaccum in low-priced
high-quality quadrant and positioned itself accordingly.

Positioning - Tata Ace
•To create the positioning map.

• 2) TATA ACE became market leader in rural markets
due to:
• First Mini Truck; Small is Big.
• Stability and Trust of Big Truck
• Feel good aspect
• Transportation at the last mile.
• It used savings, performance service, comfort and

style as parameters

HOW TO POSITION THE PRODUCT - identifying the
positioning concept - The USP
• On the basis of:

• 1) Product differentiation
• Eg: Chota Coke by Coca Cola (in small pack)
• Dawn by Hero Honda (low priced)
• Herbal flavour (rural) in the toothpaste by Colgage.
• Meswak, Babool, Neem.
• 2) Service Differentiation:
• Delivery, Installation, Maintenance, Long warranty, Free
service-coupons, 24 hrs service, etc.
• Eg: Reliance LPG - a better refilling & distribution.

HOW TO POSITION THE PRODUCT - identifying the
positioning concept- The USP
• On the basis of:

• 3) People differentiation
• Eg: Amri Khan for Coca Cola
• Shahrukh Khan for Sona Chandi
•4) Inmage Differentiation: The image of a brand or a

cocmpany can be won by customers through
Ads, signs, symbols, colours, logos, etc.

STP
Effective use of STP

Case Study of Asian Paints
Launched Ustav for the rural consumers @ Rs. 22/- kg
A solution for rural consumer using chuna powder but

could not afford Dsitemper brand of Asian Paints
Utsav was positioned to the Festivals of the rural

consumers, which fetched Rs. 200 crore soon

Rural Marketing Case
Bru Instant Coffee Connect
1. What communication challenges did Bru face? Which
innovative media vehicle was chosen was chosen for

reaching the target group? Why? What else could have
been used to improve the campaign?
2. What kind of impact was generated by the campaign?

How much rural growth was achieved as a result of the
campaign?
3. Identify different consumer segments among health food

drinkers in rural. Suppose a new brand “Health Plus” is
entering this market. As the brand manager of the
company, explain how you enter this market and
address the communication challenge for different
segments.

Rural Marketing Case
Bru Instant Coffee Connect
3 diff segments of Coffee consumers:
- Conventional filter coffee drinkers

- Tea drinkers
- Instant Coffee drinkers.
All these 3 mixed would beocme a huge coffee market for

Bru.
- Challenge was to convert people from occassional instant
coffee-drinkers to regular instant coffee-drinkers.
-Communication challenge - both language & door to door
campaign.
Bru distrubuted free samples (2.3 m households) of
instant coffee, used innovative media vehicles by
adopting a communicating strategy.
Brand gained 70% share of new category entrants.

Chapter 5 (Seg)

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Chapter 5 (Seg)

Uploaded by

Copyright:

Available Formats

Rural Marketing, 3/Ed

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Copyright © 2016 Pearson India Education Services Pvt. Ltd

• Understand the major bases for segmenting rural

• Understand how companies identify attractive market

• Realise how companies position their products for

Rural Marketing, 3/Ed Pradeep Kashyap

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Targeting • They also need to evolve

Rural Marketing, 3/Ed Pradeep Kashyap

Copyright © 2016 Pearson India Education Services Pvt. Ltd

• Profiles can be developed suitably

• Rural customers can be segmented as:

Rural Marketing, 3/Ed Pradeep Kashyap

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Infrastructure - developed vs underdeveloped

Media exposure levels

Variations in literacy levels

Differences in income levels

Family structure - joint, individualised joint, nuclear

Rural Marketing, 3/Ed Pradeep Kashyap

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Rural Marketing, 3/Ed Pradeep Kashyap

 Considers all  Identifies  For a very  Focuses on

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Rural Marketing, 3/Ed Pradeep Kashyap

Copyright © 2016 Pearson India Education Services Pvt. Ltd

- Variables used in urban segmentation may not necessarily be

- Rural consumers incomes cannot be known as IT returns filing

-Only income as variable is insufficient.

Rural Marketing, 3/Ed Pradeep Kashyap

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Regional Differences Among Consumers

Rural Marketing, 3/Ed Pradeep Kashyap

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Rural Marketing, 3/Ed Pradeep Kashyap

Village size: <1,000; 1,000–2,000; 2,000–5000;

Copyright © 2016 Pearson India Education Services Pvt. Ltd

• Climate: Summer, rainy, winter

• Culture: 56 socio-cultural groups formed by

Rural Marketing, 3/Ed Pradeep Kashyap

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Gender  Male, female

Income  Deprived, aspirers, seekers, strivers, global

Land ownership  Landless, marginal, small and large

Education  Illiterates, semi-literates, literates

House type:  Pucca, semi-pucca, kuccha

Occupation  Self-employed farmers, daily wage labourers, salaried, traders

Religion  Hindu, Muslim, Christian, Sikh, Parsi

Caste  Upper caste, lower caste

Rural Marketing, 3/Ed Pradeep Kashyap

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Rural Marketing, 3/Ed Pradeep Kashyap

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Rural Marketing, 3/Ed Pradeep Kashyap

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Rural Marketing, 3/Ed Pradeep Kashyap

Related to Lifestyle, Personality, Value system

Copyright © 2016 Pearson India Education Services Pvt. Ltd

Personality Sum total of a person's thoughts,

Rural Marketing, 3/Ed Pradeep Kashyap

Copyright © 2016 Pearson India Education Services Pvt. Ltd