In this article we will discuss about the rural marketing strategies adopted in India. Learn about:- 1. Product 2. Pricing 3. Place (Distribution) 4. Promotion.
Rural Marketing Strategies in India: Product, Pricing, Place and Promotion
Rural Marketing Strategy # 1. Product:
In simple terms, a product is anything that satisfies human want (customers) and includes product quality, features, benefits, design, style, colour, brand, services, and warranties. Product is something like the heart in the human body. Product is the most important element of marketing-mix.
The product strategies used by companies in rural markets are as follows:
Product Strategy # (a) Sturdy Products:
Most of the rural consumers believe that heavier the item, higher the power and durability. Examples- (1) Bullet motor cycle continues to be popular in villages due its ruggedness. Royal Infield sells about 65 per cent of two wheelers in semi-urban and rural areas. (2) Ambassador car continues to be popular in rural areas due to sturdiness, roomier rear seat and luggage space.
Product Strategy # (b) Designing Products:
The companies can come out with new products or promote existing products to suit field conditions in rural areas. Examples- (1) LG Electronics came out with a unique product for rural market. It launched ‘Sampoorna’, India’s first TV with a Devanagari script on screen display. The word Sampoorna meaning ‘Wholesome’ cuts across all linguistic barrier in our country. It is affordable and aimed at semi-urban and rural areas. It can withstand power fluctuations and has sold over one lakh 20″ TV in towns with a population of over 10,000. (2) Godrej has introduced a refrigerator Chotukool for rural areas. (3) Chota coke in 200 ml packing priced at Rs.5/- has increased the sale of coca cola in rural market.
Product Strategy # (c) Small unit packing have been used for many consumer products. Examples- (1) Tiger brand of biscuit is available at rupee one for a packet of four biscuits. (2) Ponds has gained market share over the past few years by focusing on rural market and it has introduced 20 gm talcum power. (3) Cavin Kare studied rural buyer behaviour and introduced Chik shampoo in small sachet of 4 ml at low price of 50 paise and (4) Rasna is now available in Sachet pack priced at Rs.1 each and one sachet will make two glasses of soft drink. The product is available in a variety of flavours such as mango, lemon, etc.
Product Strategy # (d) Utility Products:
The rural people are concerned with the utility of the items rather than appearance/show. Examples- (a) Philips has introduced Free Power Radio priced at Rs.995/- for the first time in India. The radio requires no external batteries or electricity for operation. A one-minute winding of the lever runs the radio for about 30 minutes, (b) HMT watches are popular for utility value.
Product Strategy # (e) Branding:
Brand is a name, word, symbol, design or a picture or a combination of them used to identify the product and distinguish it from that of the competitions. A brand name not only represents the product but also conveys the quality of the product.
(1) Tata Steel has branded its galvanised corrugated sheets as Tata Shakthi, a sign of power. Similarly the galvanised corrugated sheet produced by Ispat Industries has been named as Ispat Kavach .The brand name conveys strength, durability and toughness.
(2) Some of the brands that have created a lasting impact on rural consumers are Billy wali cell (Eveready batteries- battery with cat as symbol), Lal saboon (Lifebuoy). Ladkawala paint (Cattu-Asiant paints Mascot), Nirma girl (Nirma detergent) Rishi (Dabur Chawanaprash), Parle baby (Parle biscuits) and Coconut tree (Parachute), Amul (From Sanskrit word ‘Amoolya’ Meaning Priceless). Peedhari Balm (Zandu Balm), Desh Ka Namak (Tata Salt).
Rural Marketing Strategy # 2. Pricing:
Price refers to exchange value of the product and includes- (a) Maximum retail price, (b) Discounts, (c) Credit, (d) Terms of delivery and (e) Maintenance charges. Rural retailers generally require credit and, therefore, product pricing has to be adjusted to meet their requirements.
Pricing Strategy # (a) Low Price:
A rural customer is price-sensitive mainly because of his relatively low level of income and unit price of a product will have an impact on sales. Pricing the product at a lower price really attracts rural population for trying the products. Though rural incomes have grown in the past decade, the money earned by the average rural consumer is still much lower than that of his urban counterpart.
A large part of the income is spent on the basic necessities, leaving a smaller portion for other consumer goods. Examples- (1) Bharath Petroleum has introduced five kg gas cylinders to reduce initial deposit and refill cost for rural consumers. The deposit for 5 kg cylinder is Rs.350/- against Rs.700/- for 14 kg cylinder and refill cost is Rs.90/- against Rs.250/- for 14 kg cylinders. (2) Small unit packs of shampoo, hair oil, toothpaste, biscuits and bathing soap.
Pricing Strategy # (b) No-Frills Product:
The production cost can be lowered by using less sophistication and rather concentrating on sturdiness and utility of the product. Examples- 1. Maharaja Appliances Ltd., sells a sturdy Bonus washing machine, without a drier for rural market at Rs.2,990/-. 2. The rural markets operate on a price-value proposition. LC Electronics has knocked off some of the frills in the products.
The idea is to give features that are absolutely indispensable. The rural consumer does not require Colden Eye feature and therefore base models do not have this feature. Again not all consumers need 200 channels and therefore they have provided 100 channels in the base model. Everybody may not require a sound output of 350 watts and therefore they have given an output of 200 watts in base sets. The rural consumer is value conscious. He will buy the product that gives value for money.
Pricing Strategy # (c) Refill/Reusable Packaging:
By giving refill packaging marketers can add value to the pricing of the product. Examples- Bourn vita available in refill pack and detergents made available in reusable packaging.
Pricing Strategy # (d) Credit Facilities:
Success or failure of crop depends upon climatic conditions. Favourable conditions give bumper yields and unfavourable conditions result in very low yields, and, therefore, rural income is seasonal in nature. The farmer requires credit for meeting cultivation expenses as well as running the family between marketing of produce and the harvest of next crop.
He avails credit facilities from the village merchant for buying household necessities. The rural retailer in turn requires credit facilities from the distributors of consumer goods. Many companies extend credit to the village retailers to persuade them to stock the company’s products and push it in the market.
The decision to extend credit is based on the volume of business and credit worthiness of the retailers. The credit period varies between 15-30 days in the case of fast-moving consumer goods.
Pricing Strategy # (e) Discounts:
Discounts are offered to motivate the retailers to sell more of the companies’ products. A discount of about 10 per cent is given on the maximum retail price in the case of fast-moving consumer goods. Many Companies offer attractive additional discounts to motivate the retailer to stock the products during off-season.
Pricing Strategy # (f) Promotional Schemes:
Normally farmers purchase consumer durable items after the harvest of crops. Similarly, Diwali, Pongal, Onam, Dassera, Id and Christmas are the festivals for buying household articles. Special promotion schemes such as new product introduction scheme, festival offer by way of special discounts, exchange offer i.e., taking back used consumer durables are aggressively promoted during harvesting and festival seasons in rural areas for increasing sales of the products.
Pricing Strategy # (g) Value Engineering:
This is an internationally used technique, which helps organisations not only lower costs but enhance value to customer. The concept has been implemented by a few firms in tapping the rural markets. Example- Nirma detergent powder, over a period of ten years has become the largest selling brand in rural India. The success of Nirma is due to affordable price, medium quality, availability at village shops and use of rural specific mass media.
Rural Marketing Strategy # 3. Place (Distribution):
Place refers to distribution of the product and includes distribution channel, area coverage, channel remuneration, warehousing, inventories, banking and transportation.
Major obstacles to reach the rural customers are as follows:
(a) The distribution chain requires a large number of intermediaries and this increases the cost of distribution
(b) Non-availability of dealers
(c) Poor viability of retail outlets due to low business volume
(d) Inadequate banking facilities.
(e) Interior villages get flooded during monsoon and only about 70 per cent of the markets are connected by road and
(f) Transport and communication facilities are poor in villages.
Many companies are making use of innovative as well as traditional channels to reach interior markets and a few examples are given below:
Channel # (a) Satellite Distribution:
In this system, the company appoints stockists in important towns. These stockists are responsible for placing orders with the company, receiving the stocks, sorting of stocks and supply the goods in small lots to the retailers and merchants situated in rural areas and in and around the towns.
The stockist is given 15-30 days’ credit by the company. Over a period of time, along with increase in business, some of the good retailers will be elevated as stockists. Therefore, many retailers hover around a particular stockist. The advantage of this system is it enables the organisation to penetrate interior markets. Example- Companies like Nestle, Marico, Eveready batteries have appointed stockists to service the village merchants and the merchants are met at fortnightly/monthly intervals through van operations.
Channel # (b) The Hub and Spokes Method:
In the rural areas, Coca-cola has developed Hub and Spokes method of distribution. In this method, the manufacturer in the area appoints main distributors (Hub) in important markets. These distributors, in turn, appoint sub-distributors (spokes) to handle smaller markets within the territory. The sub-distributor supplies to the retailers and these retailers finally deliver it to consumers.
Channel # (c) Syndicate Distribution:
Companies selling non-competitive goods can join together and distribute the products through a common distribution channel. Example- P&G has made use of the distribution channel of Marico for selling their product.
Channel # (d) Project Shakti:
HLL has come out with a new distribution model with main objective to develop income-creating capabilities of underprivileged rural women by providing a sustainable enterprise opportunity and to improve rural living standards through health and hygiene awareness.
Typically, a woman from the Self Help Group is selected as a Shakti entrepreneur and receives stocks Lifebuoy, Wheel, Pepsodent, Annapurna salt, Clinic Plus, Ponds, LUX, Nihar, 3 Roses tea, etc. at her doorstep from the HLL rural distributor. She sells directly to consumers as well as to small merchants in the village.
Each Shakti entrepreneur services 6-10 villages in the population range of 1000-2000 people. With training and hand-holding by the company for the first three months, she begins her journey selling the products door-to-door. Normally the entrepreneur has a turnover of Rs.10,000 to Rs.25,000 per month and earns a profit of Rs.800 to Rs.2,000 a month.
Channel # (e) Melas:
Our country is a land of melas and we have religious (Kumbh Mela), cattle and commodity fairs which are held for a day or even a week. Many companies have come out with creative ideas for participating in such melas. The company can put up a stall and decorate the same with posters, cut-outs and banners. A trained salesperson answers queries about products and services.
Lucky draws, surprise gifts and scratch cards can be organised to attract the people to the stall and sell the products. Examples- (a) Kisan Mela in Ludhiana is an annual feature and companies like Maruti have been able to book orders for cars by participating in this Mela, (b) Display and sale of consumer goods.
Channel # (f) The Haats:
By participating in haats and melas, the company can not only promote and sell the products but also understand the shared values, beliefs and perceptions of rural customers that influence his buying behaviour. Weekly markets i.e., Haats are held regularly in all rural areas. The sellers arrive in the morning in the haat and remain till late in the evening. Next day, they move to another haat.
The reason being that in villages the wages are paid on weekly basis and haat is conducted on the day when the villagers get their wages. For the marketer, the haat can be an ideal platform for advertising and selling of goods. Example- Tata salt, Parachute oil are promoted through Haats. The wholesalers buy from urban markets and sells to retailers who sell it in Haats.
Channel # (g) Mobile Traders:
Known as Pheriwaalas, they are able to service interior markets, which conventional distribution channels do not touch. They are also able to reach rural households especially women who do not leave their homes. They move from house to house on bicycle or on foot, selling a variety of goods like bangles, artificial jewellery, perfumes, toothpowder, face cream, vessels, clothes etc. These traders have been calling on the same home for years and their association with rural customers is a good example for relationship marketing.
Considering the constraints in physical distribution of stocks in rural areas, many companies have come out with innovative solutions.
(a) Physical Distribution of Stocks through Delivery Vans:
The delivery van takes the product to the retail shops in villages. The sales person travels in the van and delivers the stocks to the retailer and collects the money, too.
(1) Bharat Petroleum has introduced Rural Marketing vehicle (RMV) way back in 7 999 in Punjab. The vehicle moves from village to village and fills LPC Cylinders on the spot to rural customers.
(2) Sygenta Distributors use hired vehicles for delivery of pesticides as well for collection of outstandings in rural areas.
(3) Eveready batteries has appointed van operator in each district, who supplies the product to retail stockists. These stockists supply the product to all retailers and merchants.
(b) Syndicate Van Distribution:
There are cases wherein companies do not have resources for running exclusive vans for delivery of goods to the rural market. In this case, the firms/ distributors selling non-competitive consumer goods come together and operate delivery van to service the rural retailers.
(c) Bullock Carts or Camels:
Bullock carts or camels are used for covering remote villages with no motorable road. Boats are also used to cover villages that are not connected by road. Example- Villages in certain parts of Kerala, A.P., and West Bengal.
A few corporates have entered the field of organised retailing in rural markets and examples are given below:
(1) Choupal Sagar promoted by ITC is the first organised retail outlet in the rural market. The rural mall serves as a shopping and information centre. Spread over an area of six acres at Sehore in MP, the mall sells everything – sarees, footwear, groceries, cosmetics, television, agricultural inputs, motorcycles, scooters and even tractors.
Banking, ATM, restaurant, Post Office, fuel pump, health care centre are the other facilities offered by Choupal Sagar. The farmers can log on to Internet and find out modern methods of cultivation of crops and prices of agricultural commodities. The company has 20 Chaupal Sagars and has plans to increase the same in coming years.
(2) Haryali Kisan Bazaar:
Each complex spread over two acres caters to farmers’ requirements such as agricultural inputs, sprayers, animal feed, farm implements, irrigation equipments. Further an experienced agricultural graduate provides free advice to farmers on modern cultivation practices through personal interaction or through mobile.
(3) Godrej Agrovet:
Godrej Agrovet has launched rural retail outlets known as Godrej Aadhaar in Maharashtra. The stores offer agricultural inputs, consumer goods, banking, postal and pharmacy services.
Development of Retailers in Rural Markets:
One of the important challenges faced by the marketer is the development of a chain of retailers in rural markets. The problems are non-availability of retailers and poor viability of retail outlets due to low business volumes. The marketer could consider some of the existing retail outlets in rural areas.
1. Co-Operative Societies:
There are about four lakh cooperative societies operating in rural areas. Many of these societies distribute consumer goods and low-value consumer durables.
2. Public Distribution System:
Essential commodities such as sugar, kerosene, edible oils are made available to the consumers at reasonable prices through fair-price shops. Such shops are run by State Civil Supplies Department, co-operatives or by private parties. There are about 3.80 lakh public distribution shops and marketers could explore the possibility of selling goods.
3. Agricultural Input Dealers:
There are about two lakh dealers selling fertilisers. Since the demand for fertilisers, seeds and pesticides is highly seasonal, many of these dealers deal in consumer goods also. The marketers could approach these dealers and find out the possibility of selling consumer products in rural areas.
4. Feeder Markets/Mandis:
The rural consumers visit nearby towns for selling agricultural produce and buying consumer durables. 90 per cent of the durables purchased by rural people are from class 11 & 111 towns as shown in Table 24.7 and stockists could be appointed in such feeder towns to service the villagers.
5. Post Offices and Bank Branches:
There are 1,40,000 post offices and 38,000 bank branches and marketers could consider using their services for promoting insurance policies and other financial services.
Rural Marketing Strategy # 4. Promotion:
Though the rural markets offer big attractions to the marketers, one of the most important questions frequently asked is how do we reach the large rural population through different media and methods?
Considering the dynamics of rural market, uniqueness of rural customer and the distribution of infrastructure, the marketer has to formulate an appropriate promotional strategy to reach the rural population. The promotion media and methods could be broadly classified into Formal media and Informal/Rural Specific media.
Promotion Media # (A) Formal Media:
Reach of formal media is low in rural households (Print- 14 per cent, TV- 36 per cent, Cinema- 16 per cent, and Radio- 18 per cent) and, therefore, the marketer has to consider the following-
(1) Local Language Newspapers and Magazines:
Local language newspapers and magazines are becoming popular among educated families in rural areas. Examples- Newspapers- Eenadu (A.P.), Dina Thanthi (Tamil Nadu), Dainik Bhaskar (North), Anand Bazaar Patrica (West Bengal) and Loksatta (Maharashtra) are very popular in rural areas.
Television has made a great impact and large audience has been exposed to this medium. Regional TV channels like Alpha Punjabi, Alpha Marathi, Surya, Eenadu and Sun have become very populat in rural areas. Example- Dabur promotes Vatika brand of shampoo through local TV channels such as Alpha Marathi, Surya TV
Radio reaches large population in rural areas at a relatively low cost. The farmers have a habit of listening to Regional news/Agricultural news in the morning and late evening. The advertisement has to be released during this time to get maximum coverage in rural areas.
Viewing habit is high in certain states like Tamil Nadu, Karnataka and Andhra Pradesh. Village theatres do roaring business during festivals by having four shows per day. Examples- (a) Advertisement films on Lifebuoy soap and Colgate toothpaste are regularly shown in rural cinema theatres, (b) A telegu film “Nee Premakai” has been shown in rural theatres to ensure top of the mind salience of Bata in the minds of people
(5) Direct-Mail Advertising:
Direct-mail Advertising is a way of passing on information relating to goods or services for sale, directly to potential customers through the medium of post. It is a medium employed by the advertiser to bring in a personal touch. In cities, lot of junk mail is received by all of us and very often such mails are thrown into the dustbin whereas a villager gets very few letters and he is receptive to such mails.
The mailing list has to be updated on a yearly basis. The message should be in local language and should contain pictures and local phases. Example- Mails in Regional Languages for promoting Insurance, Seeds and Pesticides.
(6) Wall Painting:
Wall painting is an effective and economical medium for communication in rural areas, since it stays there for a long time depending upon the weather conditions. The company need not have to pay any rent for the same in rural areas. The matter should be in the form of pictures, slogans for catching the attention of people.
The local distributor could be involved in the selection of places for wall painting. Example- Companies marketing TV, fans, branded coffee/tea, toothpaste, pesticides, fertilisers, etc. use wall painting as a promotional medium in rural areas.
Promotion Media # (B) Informal/Rural Specific Media:
These media with effective reach and personalised communication will help in realising the promotional objectives.
Rural people prefer face-to-face communication and farm visits facilitate two-way communication. The salesperson meets the villager and highlights product benefits and persuades him to use the product. Very often, the local dealer makes follow-up visits for securing orders. Examples- (a) Many LIC agents and Bank managers have tried this approach with success in rich rural areas, (b) Farm-to-Farm has been found to be effective for promoting seeds, pesticides, and fertilizers.
(2) Group Meeting of Rural Customers:
Group meeting of rural customers as well as prospects is an important part of interpersonal media. The company is able to pass on the message regarding benefits of the products to a large number of consumers through such meetings.
Early morning and late evening hours are ideal for conducting meetings. Opinion leaders could be requested to share their experiences with the participants. Question-and- answer session will make the programme very interactive.
Examples- (a) Banks, agricultural input and machinery companies conduct group meetings of key customers, (b) MRF Tyres conduct Tractor Owners’ Meet in villages to discuss repairs and maintenance of tractors, (c) Croup meetings could be organised in prosperous villages for promoting consumer durables, two wheelers and LPG cylinders.
(3) Opinion Leader:
Opinion leader is a person who is considered to be knowledgeable and is consulted by others and his advice is normally followed. Examples- (a) Paint companies such as Asian Paints, Goodlass Nerolac conduct painters’ meet. They invite the painters from 2-3 villages to a common place, detail their products and give small demonstrations. They distribute free samples and give small gifts such as T-shirts, wallets and key chains, (b) Mahindra Tractors use bankers as opinion leaders.
(4) Rural entertainment programmes:
Rural entertainment programmes Fold dances, dramas, puppetry shows, magic shows, Tamasha and Keertana are some of the well-appreciated forms of entertainment available to the rural people. Many companies are promoting their products through such programmes.
(a) Brook Bond/Lipton India Limited have started an All-India campaign to promote its Kadak Chhap tea through magic shows and skits. A local magician delivers the message under the garb of a skit. One of the boys plays the role of Nathoo who kills the evil guys after he had a strong cup of Kadak Chhap. At the end of the show everybody is given a sample pack,
(b) Marico have used folk theatre groups to promote Parachute in rural areas in West Bengal,
(c) Lavnis, the folk dance form of Maharastra is as old as 700 years. This is an important form of entertainment in rural areas. This powerful medium has been chosen by Coca-Cola to penetrate rural markets
(5) Audio Visual Publicity Vans (AVP Vans):
Audio Visual Publicity Vans (AVP Vans) is one of the effective tools for rural communication. The van is a mobile promotion station having facilities for screening films and mike publicity. Portable exhibition kit can be carried in the van and an exhibition of the products could be put up as and when required. During day time, the van is used for mike publicity and poster pasting.
Film shows are organised in the villages after sunset. Examples- (a) Colgate van screens a 20-minute film on oral hygiene that explains how to use the products and offers samples to the villagers during such programmes, (b) Cavin Care organises Audio visual unit programmes in rural markets by showing popular films interspersed with Chik commercials to develop awareness among villagers, (c) Mahindra hires trucks and these trucks contain tents, chairs, loud speakers, mike sets, etc.
They also display their tractors. The trucks go from village to village showing films. The dealers help in collecting the audience. Leaflets are distributed to villagers. The truck covers on an average 2-3 villages in a day.
(6) Product Demonstration:
Product demonstration is based on the extension principle “seeing is believing” and is one of the most effective methods to show the superiority of the company’s products to the customers. Examples- (a) Sales promotion of detergents, vacuum cleaners, pressure cookers, and Shampoos, through demonstrations, (b) Demonstrating the use of tractor/ implements for different agricultural operations, (c) Application of Urea fertilizer in Paddy fields to show the luxurious growth of the crop.
(7) Jeep Campaign:
Jeep Campaign is normally organised for promoting the use of fertilisers, pesticides and seeds. The programme starts in the morning and about 4-6 trained agricultural field assistant’s travel in a Jeep. As soon as the Jeep reaches the village, all the field assistants get down and move in different directions in the village.
They meet the farmers, talk to them about the products, hand over the leaflets and move to another village. Depending upon the size of the village, crops grown, number of villagers to be contacted and the distance between villages, the group covers about 4-6 villages per day. By organising Jeep campaign, the company is able to pass on the messages about products/services to a large number of farmers during a short period.
(8) Life-Style Marketing:
Life-style reflects as to how a person lives and spends time and money. Life-style can be determined by the product a person consumes, his activities (shopping, hobbies), interests (food, recreation, fashion) and opinion (about business, society and the Government. Each rural market segment has certain special features i.e., they share common life-style traits.
They include village sports, religious events, prominent personalities and role models. Example- over 100 rural sports festivals are held in Punjab every year. Bullock cart races, camel races, races of horses are some of the attractions of the rural sports festivals in Punjab. Products like Parle and Glucon ‘D’ are promoted during sport festivals.