Strategic marketing decision (What to do?)
1. Strategies regarding product positioning: Product
positioning plays a very crucial role. Marketer has to position their
products after understanding the unique characteristics of the rural
market environment in India. These are broadly as follows:
• Low per capita income
• Lack of formal retail and distribution network
• Relative cheapness of labour
• Positioning involves three tasks-
— Identifying the differences of the offer vis-à-vis
competitors offers.
— Selecting the differences that have greater competitive
advantage.
— Communicating such advantages effectively to the
target audience.
Companies can reposition their existing products in rural markets.
For example, refrigerator manufacturing companies can launch a
refrigerator of bigger size because most of the families in rural areas are
undivided big families and require big refrigerators having bigger storage
capacity.
Secondly in India most of the villages are facing acute shortage of
water; here companies can reposition a washing machine, which require
less water than any ordinary washing machine.
Here are few examples endorsing the above view point-• Escort, which repositioned the old Rajdoot motorcycle as the
“rugged durable” bike good for village road with actor
Dharmendra endorsing the products in TV spots.• Godrej’s new toilet soap ‘lime light’ was launched with an ad
campaign design to appeal to “dessi” tastes complete with
Hindi pop singer Alisha Chinai doing a gypsy act.• Maharaja Appliances launched ‘Bonus’, a range of appliances
especially for the rural market in 1998.• Colgate’s 10 gm sachets of toothpaste were designed keeping
the rural consumer in mind.
• IDE designed a low cost manual pump, branded KB (Krishna
Bantu) priced at just about Rs. 400 to Rs. 500 as against a
minimum of Rs. 3000 for a diesel/electric pump. It is for up
to an acre of irrigation need of marginal or even small farmer.
2. PRODUCT SEGMENTATION AND TARGETING
Right segmentation and targeting policies are key to success in
rural market. Segmentation can be done with one or more variables viz.,
demographic, geographic, psychographic and behavioural.
a) Geographic: As the rural market is spread over a large area
companies can divided the market area into small sectors
having some geographic similarity to consolidate their
distribution network.
b) Demographic: Market can be divided on the basis of income,
education, lifestyle, gender, marital status, family size,
occupation and religion. Due to unequal distribution of
income, the Indian market for detergents is structurally
shown like a pyramid (from base to top-laundry soap, low
price detergent mid priced detergent and premium powders)
HLL has wheel as a laundry soap, blue wheel power and
international wheel active power at the base, Rin Shakti
powder and bar, Sunlight powder and Super 501 bar at midprice level and international surf excel at the top end.
c) Psychographic: Market is divided into different segments like
social class, life style and personality. E.g. in some parts of
Gujarat it is reported that farmers are going in for big, 50 hp
(horse power) tractors, when there need was for much
smaller, typically 25 hp to 30 hp ones. The reason, on
further investigation was the compulsion to “keep up with
the neighbours”.
d) Behavioural: Following factors play important role to
segment the market; occasions, benefit sought, user status,
usage rate, loyalty status, place and product possession
category.
INNOVATIVE MARKETING STRATEGIC DECISION
(HOW TO DO?)
1. Product
Product plays an important role in strategic marketing decisions.
Product innovation is in fact key to success in rural market, developing
indigenous products that cater to the needs of rural consumers who
demand quality products at an affordable cost. This requires substantial
R & D and marketing research to better understand consumer behaviour
and preference.
Case of marketing of shampoo in rural areas. Hair products were
introduced to rural India in an attempt to capitalize on a culture where
women take hair grooming extremely seriously. While rural women may
wear faded saris and little jewelry, few step out without ensuring that
their hair is in place. Consumer goods companies introduced a
transplanted product from developed markets, the 2-in-1
shampoo/conditioner. Companies thought that women would be
attracted to this product because it was cost-effective; however, initial
sales were dismal. What companies failed to recognize is that most rural
consumers had previously never used shampoo and did not value or
understand the full benefits of conditioner.
Several years back, Hindustan Lever focused on product
development strategies for rural consumers who still did not use
shampoo in India. Their research indicated that a prevailing consumer
habit in rural India was to use soap for hair and body care. Rather than
try to change instilled consumer behaviour, product developer focused on
creating an opportunity consumers wanted; a product that was
convenient and low-cost. The result was a new 2-in-1 soap, a product
that cleans the hair and body, and is targeted towards consumers in
rural areas.
Offering a variety of pack sizes at different prices has been one
solution. However, unlike developed markets, consumer goods companies
have to be particularly careful in developing their pricing strategy in
developing countries such as India. While daily sachets of products are
affordable to the rural consumer, if quantity discounts (common in
developed markets) are large enough, street entrepreneurs will purchase
the ‘family pack’ and retail it in loose form. The result is a lack of control
over the quality of the product, brand presentation, and pricing.
Most of global products that multinationals companies
manufacture are primarily for the tier one consumers of
the global markets. Those global products are then also sold to the tier 4
consumers, with least thought given whether those products are suitable
for the tire 4 consumers. Inevitably, most of such global products fail to
fulfill the needs of tier 4 consumers. “Other than medication, most
branded items marketed on a global basis can best be described
luxuries. They ease or provide additional comforts and conveniences, or
establish a person as belonging to a specific milieu”. To be successful,
companies need to nurture local markets and provide local solutions
depending on the culture and consumer habits of a particular market.
For example, FMCG companies to sell more in the rural India, they
have to be innovative in the delivery format. In India, the tier 4
consumers, because of higher price, earlier did not often purchase the
shampoos sold by MNCs. Buying in small quantities is also practiced by
the laborers in the urban areas of India who are being paid on a weekly
or daily basis. Many of them stay in single rooms or huts with little
space. Lack of cash and space makes these people to shop every day in
small quantities and hence single served sachets have become popular.
Once the multinational companies started selling shampoos in singleserved sachets priced at 50 paise/Re. 1, the sales of shampoos have
increased to the extent that 30% of the personal care products are now
sold in single-served packages. Sachets are no longer restricted to
shampoos only; they have penetrated to other products such as edible
oil, tea, jam etc. also. The sachets give these buyers an option of choosing
different brands without locking too much cash.Products that cater to local needs: Philips, which has operated
in India since 1933, did well selling colour TV sets years ago, when
competition was slim. Sales in rupee terms grew 22% a year on average
between 1995 and 2001. Since then, that pace has slowed by more than
half. With more competitors jumping in— 18 brands available in India
today, compared with just three in 1991- Philips’s market share was
withering, even in the countryside.
So in early 2001, Philips decided to devise new products just for
the rural markets, like the wind-up radio. They used one speaker,
instead of two, in the TV sets sold outside cities to make them more
affordable. The size of the TV cabinets, meanwhile, was bumped up by
about 10% over units sold in the cities to make the sets look bigger.
Rural consumers might be able to afford only a 14-inch or 20-inch screen
TV set, but “they want something that looks substantial” to show off to
their neighbours, says Suresh Sukumaran, marketing director for
television sets at Philips.
The result is that rural sales have become the new driver of growth
for Philips in India. Last year, rural TV set sales grew 45%, while audio
sales grew 14% at a time when the overall audio market declined by
7.8%.
2. Price
Income variability: India’s wide income distribution implies that
there exist multiple segments with very different levels of purchasing
power. The challenges for consumer goods companies are to develop
products that capture the entire spectrum of potential consumers.
1. Strategies regarding product positioning: Product
positioning plays a very crucial role. Marketer has to position their
products after understanding the unique characteristics of the rural
market environment in India. These are broadly as follows:
• Low per capita income
• Lack of formal retail and distribution network
• Relative cheapness of labour
• Positioning involves three tasks-
— Identifying the differences of the offer vis-à-vis
competitors offers.
— Selecting the differences that have greater competitive
advantage.
— Communicating such advantages effectively to the
target audience.
Companies can reposition their existing products in rural markets.
For example, refrigerator manufacturing companies can launch a
refrigerator of bigger size because most of the families in rural areas are
undivided big families and require big refrigerators having bigger storage
capacity.
Secondly in India most of the villages are facing acute shortage of
water; here companies can reposition a washing machine, which require
less water than any ordinary washing machine.
Here are few examples endorsing the above view point-• Escort, which repositioned the old Rajdoot motorcycle as the
“rugged durable” bike good for village road with actor
Dharmendra endorsing the products in TV spots.• Godrej’s new toilet soap ‘lime light’ was launched with an ad
campaign design to appeal to “dessi” tastes complete with
Hindi pop singer Alisha Chinai doing a gypsy act.• Maharaja Appliances launched ‘Bonus’, a range of appliances
especially for the rural market in 1998.• Colgate’s 10 gm sachets of toothpaste were designed keeping
the rural consumer in mind.
• IDE designed a low cost manual pump, branded KB (Krishna
Bantu) priced at just about Rs. 400 to Rs. 500 as against a
minimum of Rs. 3000 for a diesel/electric pump. It is for up
to an acre of irrigation need of marginal or even small farmer.
2. PRODUCT SEGMENTATION AND TARGETING
Right segmentation and targeting policies are key to success in
rural market. Segmentation can be done with one or more variables viz.,
demographic, geographic, psychographic and behavioural.
a) Geographic: As the rural market is spread over a large area
companies can divided the market area into small sectors
having some geographic similarity to consolidate their
distribution network.
b) Demographic: Market can be divided on the basis of income,
education, lifestyle, gender, marital status, family size,
occupation and religion. Due to unequal distribution of
income, the Indian market for detergents is structurally
shown like a pyramid (from base to top-laundry soap, low
price detergent mid priced detergent and premium powders)
HLL has wheel as a laundry soap, blue wheel power and
international wheel active power at the base, Rin Shakti
powder and bar, Sunlight powder and Super 501 bar at midprice level and international surf excel at the top end.
c) Psychographic: Market is divided into different segments like
social class, life style and personality. E.g. in some parts of
Gujarat it is reported that farmers are going in for big, 50 hp
(horse power) tractors, when there need was for much
smaller, typically 25 hp to 30 hp ones. The reason, on
further investigation was the compulsion to “keep up with
the neighbours”.
d) Behavioural: Following factors play important role to
segment the market; occasions, benefit sought, user status,
usage rate, loyalty status, place and product possession
category.
INNOVATIVE MARKETING STRATEGIC DECISION
(HOW TO DO?)
1. Product
Product plays an important role in strategic marketing decisions.
Product innovation is in fact key to success in rural market, developing
indigenous products that cater to the needs of rural consumers who
demand quality products at an affordable cost. This requires substantial
R & D and marketing research to better understand consumer behaviour
and preference.
Case of marketing of shampoo in rural areas. Hair products were
introduced to rural India in an attempt to capitalize on a culture where
women take hair grooming extremely seriously. While rural women may
wear faded saris and little jewelry, few step out without ensuring that
their hair is in place. Consumer goods companies introduced a
transplanted product from developed markets, the 2-in-1
shampoo/conditioner. Companies thought that women would be
attracted to this product because it was cost-effective; however, initial
sales were dismal. What companies failed to recognize is that most rural
consumers had previously never used shampoo and did not value or
understand the full benefits of conditioner.
Several years back, Hindustan Lever focused on product
development strategies for rural consumers who still did not use
shampoo in India. Their research indicated that a prevailing consumer
habit in rural India was to use soap for hair and body care. Rather than
try to change instilled consumer behaviour, product developer focused on
creating an opportunity consumers wanted; a product that was
convenient and low-cost. The result was a new 2-in-1 soap, a product
that cleans the hair and body, and is targeted towards consumers in
rural areas.
Offering a variety of pack sizes at different prices has been one
solution. However, unlike developed markets, consumer goods companies
have to be particularly careful in developing their pricing strategy in
developing countries such as India. While daily sachets of products are
affordable to the rural consumer, if quantity discounts (common in
developed markets) are large enough, street entrepreneurs will purchase
the ‘family pack’ and retail it in loose form. The result is a lack of control
over the quality of the product, brand presentation, and pricing.
Most of global products that multinationals companies
manufacture are primarily for the tier one consumers of
the global markets. Those global products are then also sold to the tier 4
consumers, with least thought given whether those products are suitable
for the tire 4 consumers. Inevitably, most of such global products fail to
fulfill the needs of tier 4 consumers. “Other than medication, most
branded items marketed on a global basis can best be described
luxuries. They ease or provide additional comforts and conveniences, or
establish a person as belonging to a specific milieu”. To be successful,
companies need to nurture local markets and provide local solutions
depending on the culture and consumer habits of a particular market.
For example, FMCG companies to sell more in the rural India, they
have to be innovative in the delivery format. In India, the tier 4
consumers, because of higher price, earlier did not often purchase the
shampoos sold by MNCs. Buying in small quantities is also practiced by
the laborers in the urban areas of India who are being paid on a weekly
or daily basis. Many of them stay in single rooms or huts with little
space. Lack of cash and space makes these people to shop every day in
small quantities and hence single served sachets have become popular.
Once the multinational companies started selling shampoos in singleserved sachets priced at 50 paise/Re. 1, the sales of shampoos have
increased to the extent that 30% of the personal care products are now
sold in single-served packages. Sachets are no longer restricted to
shampoos only; they have penetrated to other products such as edible
oil, tea, jam etc. also. The sachets give these buyers an option of choosing
different brands without locking too much cash.Products that cater to local needs: Philips, which has operated
in India since 1933, did well selling colour TV sets years ago, when
competition was slim. Sales in rupee terms grew 22% a year on average
between 1995 and 2001. Since then, that pace has slowed by more than
half. With more competitors jumping in— 18 brands available in India
today, compared with just three in 1991- Philips’s market share was
withering, even in the countryside.
So in early 2001, Philips decided to devise new products just for
the rural markets, like the wind-up radio. They used one speaker,
instead of two, in the TV sets sold outside cities to make them more
affordable. The size of the TV cabinets, meanwhile, was bumped up by
about 10% over units sold in the cities to make the sets look bigger.
Rural consumers might be able to afford only a 14-inch or 20-inch screen
TV set, but “they want something that looks substantial” to show off to
their neighbours, says Suresh Sukumaran, marketing director for
television sets at Philips.
The result is that rural sales have become the new driver of growth
for Philips in India. Last year, rural TV set sales grew 45%, while audio
sales grew 14% at a time when the overall audio market declined by
7.8%.
2. Price
Income variability: India’s wide income distribution implies that
there exist multiple segments with very different levels of purchasing
power. The challenges for consumer goods companies are to develop
products that capture the entire spectrum of potential consumers.
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