Effective Strategies for Rural Marketing and Promotion
Evolving effective strategies for rural marketing involves segmentation of the heterogeneous rural market, identification of different segment needs, and formulating marketing mix strategies related to product, price, place, and promotion. Product strategies include small unit packaging and new designs, while pricing strategies focus on low-cost products and value engineering. Distribution strategies for rural areas include cooperative societies and agricultural input dealers. Promotion strategies utilize mass media and tailor-made messages to reach diverse rural populations effectively.
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RURAL MARKETING IMBA 8THSEM
RURAL MARKETING STRATEGY FORMULATION Considering the environment in which the rural market operates and other related problems, it is possible to evolve effective strategies for rural marketing. An appropriate segmentation of the highly heterogeneous rural market and identification of the needs and works of different segments will form the very basis for rural market strategies. For rural market, it will be ideal to think of strategies from the marketing mix point of view, main strategies are related to product, price, place and promotion.
PRODUCT STRATEGIES Small unit and low priced packing New product designs Sturdy products Brand name
PRICING STRATEGIES Low cost/cheap products Avoid sophisticated packing Refill packs/reusable packaging Application of value engineering
DISTRIBUTION STRATEGIES While it is -essential to formulate specific strategies for distribution in rural areas, the characteristics of the product, its shelf life and other factors have to be kept in mind. The distribution strategies that are specifically designed for rural areas are: through co- operative societies, public distribution system, multi-purpose distribution centres, distribution up to feeder markets/mandi towns shanties/hat/jathras/melas, agricultural input dealers etc.
PROMOTION STRATEGIES Mass media is a powerful medium of communication. It could be television, cinema, print media, radio and so on. The other means of mass media available are hoardings/wall paintings, shanties/hats/melas, non-price competition, special campaigns etc. Besides these, other mass media like hand bills and booklets, posters, stickers, banners of the schemes etc. The contents of the advertisement should be moulded according to regional requirements instead of national releases. Tailor-made message s can counter linguistic, social and cultural differences For disseminating the information, related to agricultural and other rural industries products, the government should circulate pamphlets either to panchayati raj office or to schools where it can be documented for the reference. While making efforts to improve the marketing system within rural areas and the marketing of rural produce to other areas, we should foresee the forces of globalization affecting the market forces. Publicity vans fitted with audio-visual gadgets should be used to reach ruralities, especially people living in remote tribal and hilly areas. Even animals like elephants can be used for spreading messages by putting banners on them and parading them in villages
SOME EXAMPLES Hariyali Safar is a project of Henkel SPIC India to penetrate the rural market. Under the project, the company has divided the country into 100 blocks with one super stockist for each block. Each super stockist is reached through vans. The super stockist is expected to service 15 to 20 dealers in semi-urban areas. By end 2001, Henkel expects to have 100 super stockists reaching 1,500 to 2,000 dealers. It is also introducing economy packs and sachet: Henko compact sachet, 50 gm Margo soap, 20 gm Fa talc and 250 gm Mr. White detergent pack. It expects its current media campaign to generate acceptance of its brand in the rural market. Pioma Industries is increasing its efforts in the rural markets in order to push sales of its main product, Rasna soft drink concentrate. Says Pioma Industries President Raj Pinjani, Earlier, we relied totally on our wholesalers to push the product in the rural areas. Now we are going there ourselves, in order to get a feel of the market and promote the product directly. In order to promote trials in the semi-urban and rural markets, Rasna launched its soft drink concentrate in sachet during the early 90s. The sachet was promoted using characters from Mahabharat television serial. This year, Rasna has replaced these advertisements with comedian Johnny Lever. The company is focusing on nine districts in the states of Maharashtra, Gujarat, Rajasthan, Uttar Pradesh and Tamil Nadu. Sales force regularly calls on retailers in these districts. Says Pinjani Its remarkable the amount of goodwill a visit to the rural distribution network can generate. It builds enormous brand loyalty among the retailers, who in turn, push sales to the consumer.
ADVANCED PRACTICES IN RURAL MARKETING Significant changes in product design or packaging, product placement, product promotion or pricing. E-Rural Marketing and ICT initiatives. Organized Rural Retailing. Innovative Rural Distribution. Rural Market Mapping. E-Governance. Innovative Banking and Finance. Innovations in Supply Chain.
SOCIAL MARKETING Social marketing is the application of commercial marketing principles for social good rather than for profit. Social marketing is becoming increasingly relevant to the developing world. One dimension of it related to social responsibilities of marketers mainly in response to consumer advocacy movement and also the pressures of government regulations. In this case the focus is on economic benefits to business and social benefits to society that emerge from the adoption of socially responsible business policies by business organizations. The second dimension of social marketing is the applicability of marketing philosophy and principles to the introduction and dissemination of ideas and issues of social significance like road safety by observing traffic rules; controlling child/infant mortality by immunization; better living by family planning, primary education and health care, hygiene and sanitation, etc.
Social marketing, as a compared to commercial marketing is a process where an idea is sold with an aim to bring about a change in behaviour of the customer (in other words, the target audience). Hence, the results of social marketing are not cognizable. Difference between the two are summarized below: Commercial Marketing Felt need and cognizable rewards Pertains mainly to products Social Marketing Needs not perceived, rewards not seen Pertains to ideas, behaviours and practices Persuasion to make audience buy Persuasion to make audience learn, adapt and change Adapt products to large social needs Welfare Objective Talks to needier sections Major impact on society Must work with government Adapt products to audience needs Profit motive Talks to people who have money Success/failure rate hardly affects society Rarely needs to involve government
COMMON CHALLENGES IN RURAL COMMUNITIES Limited access to remote areas and lack of transportation. Limited financial resources. Limited technology. A wide range of cultures and beliefs across large geographic areas. Scarcity of media outlets. Scarcity of primary care providers, child and adolescent psychiatrists, therapists, and social workers (especially bilingual providers). Siloed services and limited collaboration between systems. Lack of privacy due to of close social networks.
COMMON OPPORTUNITIES IN RURAL COMMUNITIES Tight-knit community that understands the importance of helping neighbors. The commonality of word of mouth communications. Existing collaborations and informal communications networks. Agencies and organizations that are willing to partner, such as the Cooperative Extension System. Natural community leaders who are easily identifiable (because of the smaller community) and willing to partner. Audiences that may be more likely to read traditional print publications (such as local newspapers, local magazines etc). Media coverage may be more accessible because of lower competition (compared to urban areas).
NETWORK MARKETING Network marketing is a form of direct selling. Also known as multi-level marketing, is a business model which involves a pyramid structured network of people who sell a company s products. The participants in this network are usually remunerated on a commission basis. It can take place at two levels. Single level distributor appoints sales persons. He earns profits on sales, made by him. Multi-level-distributor introduces another distributor (a friend or relative, in general), who in turns introduces another distributor. Like that the network is created. The network markets products. Each distributor gets profits on his sales and also a percentage on sales made by his network . Thus one earns by retailing and recruiting .
EXAMPLES Amway been in business for around 57 years now, this company is one of the biggest examples of a successful MLM/network marketing company. Other companies that use network marketing model include Avon, Tupperware, Nu skin, Juice Plus, etc.
NETWORK MARKETING (CONT.) The introduction of network marketing in rural side will be beneficial not only to the companies but also to the villagers. Already innovative companies like HLL have their schemes in the pipeline. Companies are continuously trying to find new and innovative ways of tapping into the rural markets. Network marketing is the right way however, it still remains untapped in the rural markets (though it has been a successful business model for some companies in urban areas). This marketing method is also in sync with the rural consumer psyche Credibility and trust: Compared to current sales models where the rural consumers buy from an unknown person, here it will be a fellow consumer who will sell to another consumer whom he knows, hence the credibility and the trust issue will be addressed. Understanding and ease of usage: A rural consumer will be in a better position to understand the features & the technicalities of a product if another consumer who is one of his own kind explains it to him. He can also better demonstrate the benefits that he himself has experienced and hence ease of usage for customer increases. Word of mouth: The word of mouth of this initiative can be tremendous. Not only is it innovative but also holds incentive for each buyer. This can very easily establish top of mind recall for the rural consumers even if they opt against joining the chains. Scalable and replicable model: The model is a very simple one where we believe, it can easily be replicated in all the geographies as everywhere the human capital of rural consumers will be used.
GREEN MARKETING Green Marketing refers to holistic marketing thought wherein the production, marketing utilization and disposal of products and services occur in a manner that is less harmful to the environment with increasing awareness about the implications of global warming, non-biodegradable solid waste, harmful contact of pollutants etc. The firms using green marketing must make sure that their activities are not confusing to consumers or industry, and do not violate any of the regulations or laws dealing with environmental marketing. In rural India, the concept of Green Marketing has been utilizing right from the use of biogas in the Villages to using environment-friendly products like bamboo furniture, CFL, etc. Pottery made from earthenware and the use of traditional Surahi and Matka for drinking cool water Rather than the refrigerator is another motivating example. Utilize of steel utensils which is reusable, rather than disposable plates can also be viewed as a green initiative. The use of Coolers rather than air conditioners goes a long way in reducing the carbon footprint. The rural marketers give their customers an opportunity to participate this means personalizing the benefits of your environmentally friendly performance, usually through leasing the customers take part in positive environmental action
CHALLENGES OF GREEN MARKETING IN RURAL INDIA There are number of challenges of green marketing in rural India such as listed below: Green marketing encourages green goods/services, green technologies, green power/energy; a lot of money has to be used on R&D programmes. Thus green marketing to begin with costly issue. The rural customers may not believe in the firm s strategy of Green marketing, the firm therefore should ensure that they convince the customer about their green product. Many customers may not be willing to pay a higher price for green products which may affect the sales of the company. The firm may give up on Green marketing impression or be forced to practice inequitable means to cut cost to maintain in the competition and thus the whole idea of going green will be embarrassment.
EXAMPLES LG Electronics, coca-cola, HUL, Philips, Colgate s, ITC, and LIC are among these companies which have a very significant presence in the Indian rural market. Companies like Idea Cellular, IBM, Wipro InfoTech (Green It), Nokia, Samsung, Tamil Nadu Newsprint and Papers Limited (TNPL) etc. are also providing green marketing solutions to rural India.
CO-OPERATIVE MARKETING Co-operative marketing is the marketing for the producers and by the producers that aims at eliminating the chain of middlemen operating between producers and the ultimate consumer and thus securing the maximum price for their produce. In other words, co-operative marketing societies are established for the purpose of collectively marketing the products of the member producers. It emphasizes the concept of commercialization. Its, economic motives and character distinguish it from other associations.
NEED FOR COOPERATIVE MARKETING To Eliminate Malpractices To Establish Appropriate Reward for the Efforts Concomitant of Integrated Programme To Stabilise the Agricultural Price
PROBLEMS Low and inadequate distribution margins to lower level societies. Unable to compete with private trade. High rate in interest on fertilizer credit. High cost of operation due to locational disadvantages. Lack of single window approach. Poor management and lack of professionalism.
EXAMPLE In milk production and distribution, NDDB (National Dairy Development Board) operates at national level. At state level KMF (Karnataka Milk Federation), at districts level they have BAMUL (Bangalore Milk Union Ltd.), and at village level they have a number of village level co-operative societies. Maha-grape - co-operative federation marketing grapes in Maharashtra. Co-operatives marketing banana in Jalgaon district. Vegetables co-operatives in Thane District. Milk co-operatives in Maharashtra and Gujarat.
MICRO CREDIT MARKETING Micro-finance refers to small scale financial services provided by financial institutions to the financially backward classes. These services include savings, credit, insurance, etc. The conditions for a financial service to be termed as micro-finance is that the transaction should be small and the customers should be financially weak. Jeffrey Sachs, the renowned economist once claimed that The key to ending extreme poverty is to enable the poorest of the poor to get their foot on the ladder of development. Providing sustainable financial services for rural areas and agriculture in developing countries has proven immensely challenging. Billions have been spent to subsidize programs and policies designed to develop financial institutions to serve this neglected market segment.
CONT. The concept of micro-finance was introduced in India during the 1990s. The country is home to about a third of the world s poor, most of who do not have access to commercial banking services. The key problem areas in rural financial markets included a lack of credit in rural areas, absence of modern technology in agriculture, low savings capacity in rural areas and prevalence of usurious moneylenders. In such circumstances, micro-finance provides financial inclusion to the under-privileged sections of the society. In absence of micro-finance, the poor in rural India would fall prey to the money-lenders who charge a very high rate of interest on credit and thereby rob the poor of their savings.
CONT. Micro-finance targets mostly the women of rural India, with more than 90% of its customers being women belonging to self-help groups. Micro-credit is mostly used for direct investments by self-help groups and facilitates access to credit by clients who need small amounts of credits but are less credit-worthy for larger loans.
SOURCES OF CREDIT Informal Sources : Non Govt. sources such as family, friends, moneylenders, traders etc. Formal Sources : Govt. owned institutions such as commercial banks, regional rural banks etc.
REFORMS National Bank for Agriculture and Rural Development. Regional Rural Banks. Commercial Banks. Cooperative Banks. Micro Finance Institutions. Self Help Groups. Green Revolution. Introduction of Subsidy.
PUBLIC PRIVATE PARTNERSHIP MODEL IN RURAL MARKETING A PPP represents a collaboration, defined by contract, between a public and a private actor. The partners contributions complement each other in a way that enables both to achieve their goals more efficiently within the given PPP than on their own. Each partner formulates clear goals and communicates them to the other partner. In rural areas, PPPs can take two particular directions: Improvement of frame conditions with the aim of attracting investment, Improvement of production (cultivation systems, market access, and others). In both cases, sustainable use of natural resources should be a main objective.
WHY PPP MODEL? The PPP model serves as a mechanism for the government to carry out the essential activities of development, especially rural development through infrastructure construction, while at the same time minimizing the risks and heavy drain on government budgets. The private sector can invest heavily as it has the resources to do so, and since these projects are for social good, the government plays a role in providing incentives for the private sector to invest, while at the same time ensuring that it is in a position to supervise and regulate the project. As part of the incentives, the government has also resorted to viability gap funding for private entities who take up development projects, especially in rural areas. This means that the government funds a part of the project so as to incentivize it for the private entity to find it attractive enough to take up. Hence it seems amply clear that the government would like to harness private sector resources and channel it into ensuring economic growth.
EXAMPLE Under the Bharat Nirman plan, the Government of India is focusing on rural development and building of infrastructure in irrigation, rural housing and water supply, rural electrification and telecommunication connectivity. The government is laying emphasis on building a road network across the country that ensures connectivity throughout the nation and matches up to global standards. Also on the government agenda is building bridges, telecom networks and towers, electricity grids and other developmental infrastructure in rural areas. NABARD had set up a Rural Infrastructure Development Fund (RIDF) in 1995-96 created out of the shortfall of commercial banks in lending to agricultural/priority sectors, with the primary aim of providing low cost funds to governments to undertake infrastructure development projects in rural areas. Since the setting up of this fund, NABARD has allowed the initiation of the PPP model to access these funds for infrastructure development projects in irrigation, housing, water supply, rural electrification and construction of roads and bridges.
BENEFITS OF PPP MODEL IN RURAL INFRASTRUCTURE Employment of private sector resources to fund rural development projects would ensure that the quality of these projects are at par with global standards, while guaranteeing the best technology, expertise and skills are available. Public sector institutions rarely have access to such resources and expertise to fulfill these targets. By giving incentives such as viability gap funding, government will ensure that private sector has enough incentive to undertake these projects. This means the focus will shift inward and development of rural and remote areas will take place. All this will ensure India progresses. The private sector is known for being efficient. Hence it is certain that problems like delayed decision-making, functioning of day-to-day operations, etc. will not arise. Private sector companies treat these as their usual corporate plans and projects that they undertake, and execute them in a smooth, efficient manner. It bridges the gap between public and private, rural and urban. Not just do these projects help bring the best of both worlds public and private together, but are also ensuring that the level of economic development in the urban and rural areas occur simultaneously.
E-RURAL MARKETING e-Marketing can be defined in broader terms as not only trade in goods and services across internet but also new ways of conducting business and communicating with customers, suppliers and colleagues. Companies are making effective use of the Internet for marketing their products and services in the rural areas, and are also in the process of enhancing the quality of life and standard of living, and rendering economic benefits to the rural populace. This has been demonstrated through initiatives like e-Choupal (ITC), TARAhaat (Development Alternatives Group), India agriline (EID Parry), etc. It has various advantages including the better investment, reducing the marketing campaign costs and also helps to target the customers and use of the technological aspects of the content of the video, article and the email. It also includes various aspects of the marketing mix.
WHY E-MARKETING? Internet is fast becoming the way of life. With the mantra of anywhere/anytime and convergence of mobility and intelligence e-commerce happens to be the thing which can provide all this. E-commerce is the technology of the present. It can provide services which is beneficial to both rural community and corporate world. It is used to make farmers improve the quality of their yield, with better technique and give them more power. It can help in removing the intermediaries and traders in the supply chain of global giants. This, along with higher responsiveness and speed at which business takes place has helped in reducing transaction cost, and increase profit margins. This is especially true in case of agricultural commodities. E-Marketing can cause a profound change in rural India in key service areas such as government services, banking, education and health. It promises to provide faster, better, cheaper and more flexible service delivery and this is irrespective of where the customer resides.
CHALLENGES IN RURAL INDIA Poor literacy rate low use of textual information. Remote village locations physical distances compounding problems of lack of proper price information and habitual dependence on middlemen. Absence of info in vernacular languages and multiplicity of languages. Cash crunch of farmers, immediate cash transaction system and reluctance of banks to provide soft loans to farmers.
EXAMPLE ITC e-Choupal is the greatest example of information technology in rural marketing. Launched in June 2000, 'e-Choupal', has already become the largest initiative in all internet- based interventions in rural India. ITC followed a different media/communication strategy which is more elaborate and extensive in rural marketing so far, which benefits both the farmers and the organization. The strategy use the Information Technology and bridge the information and service gap in rural India which gives an edge to market its products like seeds, fertilizers and pesticides and other products like consumer goods etc. They use the e- Choupal to order seed, fertilizer, and other products such as consumer good from ITC or its partners, at prices lower than those available from village traders. In this Paper we discuss about the role of IT in rural market, e-Choupal, different strategy, vision and planning behind the e-Choupal.
CRM IN RURAL MARKETING Customer relationship management is a model for managing a company s interactions with current and future customers. It involves using technology to organize, automate, and synchronize sales, market ng, customer service, and technical support. CRM is concerned with the creation, development and enhancement of individualised customer relationships with carefully targeted customers and customer groups resulting in maximizing their total customer life-time value. Consumer preferences through market research may enhance CRM adoption among the rural customers of developing countries.
CONT. CRM is worth mentioning for rural marketing as sentiments of customers are more important than economical utility of the products. CRM serves as the guiding principle for seller of rural market. Customer relationship management can increase through following factors:- Packaging Local language and local celebrity Distribution customisation Packaging customisation
FACTORS INCREASING CRM IN RURAL AREA Packaging: Packaging is important communication tool for rural market. Companies must use prominent logo symbols and logo colors to ensure that illiterate consumer able to recognize the product. By creating a bond with customer through package, companies are able to establish a relationship that encourages repeat purchases. Local language and local celebrity: The models should wear proper clothes and use local language to increase the relationship between product and rural customer. This actually shows that products are affordable and can be easily available for them. Distribution customization: A variety of innovation have taken place in customizing the distribution for rural market. For transportation of goods, the regular store keeper hires auto rickshaws, bullock carts and even boats in south India Packaging customization: One of the most important element of package designed for rural India includes size and visual communication through packaging. That s why sachet market was introduced in rural area which made the product affordable to Indian rural customer.
E-CRM Electronic Customer Relationship Management (e-CRM) is an effective tool that helps to leverage customer retention, loyalty and attract new customers. In other words, Electronic customer relationship management (E-CRM) is the application of internet-based technologies such as emails, websites, chat rooms, forums and other channels to achieve CRM objectives. It is a well-structured and coordinated process of CRM that automates the processes in marketing, sales and customer service. An effective E-CRM increases the efficiency of the processes as well as improves the interactions with customers and enables businesses to customize products and services that meet the customers individual needs.
THE BENEFITS OF E-CRM INCLUDE THE FOLLOWING: Improved customer relations, service and support Matching the customers' behavior with suitable offers Increased customer satisfaction and loyalty Greater efficiency and cost reduction Increased business revenue
CSR AND MARKETING ETHICS IN RURAL MARKETING Corporate Social Responsibility is emerging as a significant feature of business philosophy, reflecting the impact of business on society in the context of sustainable development. The emerging perspective on corporate social responsibility focuses on responsibility towards all stakeholders: shareholders, employees, creditors, suppliers, government, and community rather than only on maximization of profit for shareholders. CSR not only includes corporate regulatory compliance, but also refers to the act of making business successful through balanced, voluntary approaches to environmental and social issues in a way that is helpful to the society. Nearly all leading corporate in India are involved in corporate social responsibility (CSR) programmes in areas like education, health, livelihood creation, skill development, and empowerment of weaker sections of the society. Notable efforts have come from the Tata Group, Infosys, Bharti Enterprises, ITC Welcome group, Indian Oil Corporation among others. Therefore, CSR actions have positive impacts not only on development of rural community but also in their business
CONT. Recent CSR practices of corporate houses are trying develop the rural areas through providing basic infrastructural services and also to remove regional imbalance caused due to operational loopholes or inability of authorized agencies. It has also been found that the many banks are directly engaged in CSR activities mostly in the area of Rural Development, Education, Community Welfare, Women and Children. All the public sector banks are having highest number of rural branches in India. So, all the banks take steps for development of rural people. Canara Bank, Indal, Gujarat Ambuja and Wipro are involved in community development work of building roads, running schools and hospitals. ACC has been rendering social service for over Five decades. They are setting up schools, health centers, agro-based industries and improving the quality of rural life. BHEL is actively involved in the Welfare of the surrounding communities is helping the organization to earn good will of the local people BHEL is also providing drinking water facilities, construction of roads and culverts, provision of health facilities, educational facilities, and so on companies like ONGCs are encouraging sports by placing good players on their pay rolls. A.P.J. Kalam's idea of PURA (Provision of Urban Amenities in Rural Areas). NTPC has established a trust to work for the cause of the physically challenged people. Similarly in the private sectors like Infosys, Wipro and Reliance are believed to be most socially responsible corporations.
CONT. Ethics occupies a special place in rural marketing, and has been at the heart of all the transactions whether cash or kind. In order to make a lasting impact on the rural clients, the firms need to built a trustful relationship and that is possible by no other means but only by ethical conduct. Ethics in Business form an important plank for rural markets and rural marketing. Due to poor knowledge about their rights and also to lack of skills to take a rational decision based on information about the product or services, the rural consumer in India is exploited in many ways. The rural consumer has been made to endure sub standard products and services, adulterated foods, short weights and measures, spurious and hazardous drugs, exorbitant process, endemic shortages leading to black marketing and profiteering, unfulfilled manufacturing guarantees and host of other ills. The rural consumers who generally depend on weekly markets to purchase essential things are often cheated due to lack of choice. The rural consumers in India are generally ignorant and they are also unorganized. Thus, they are exploited by the manufacturers, traders and the service providers in different ways.
CONT. In the emerging scenario it is necessary to protect the rural consumers by educating them about their rights and empowering them to make decisions based on information about the goods and services. That s where ethics come into play. Companies need to build strong consumer information and advisory system. Take adequate measures to plug loopholes in the Consumer Protection Act with a view to reduce delays and enhance its reach to new areas of consumer issues. While ethics and social responsibility are sometimes used interchangeably, there is a difference between the two terms. Ethics tends to focus on the individual or marketing group decision, while social responsibility takes into consideration the total effect of marketing practices on society.
