This document summarizes strategies for rural marketing and distribution. It discusses adapting products for rural consumers by considering economic realities and designing products specifically for rural needs. It also discusses adapting brand strategies like using variants of national brands. Physical distribution in rural areas requires multiple tiers and overcoming challenges like limited dealers and banking. The village shop is identified as the key to rural distribution due to its large network and low costs despite challenges faced by shopkeepers. The document also provides examples of companies adapting their rural marketing strategies, including Titan Watches and HLL's rural operations.
This document summarizes strategies for rural marketing and distribution. It discusses adapting products for rural consumers by considering economic realities and designing products specifically for rural needs. It also discusses adapting brand strategies like using variants of national brands. Physical distribution in rural areas requires multiple tiers and overcoming challenges like limited dealers and banking. The village shop is identified as the key to rural distribution due to its large network and low costs despite challenges faced by shopkeepers. The document also provides examples of companies adapting their rural marketing strategies, including Titan Watches and HLL's rural operations.
This document summarizes strategies for rural marketing and distribution. It discusses adapting products for rural consumers by considering economic realities and designing products specifically for rural needs. It also discusses adapting brand strategies like using variants of national brands. Physical distribution in rural areas requires multiple tiers and overcoming challenges like limited dealers and banking. The village shop is identified as the key to rural distribution due to its large network and low costs despite challenges faced by shopkeepers. The document also provides examples of companies adapting their rural marketing strategies, including Titan Watches and HLL's rural operations.
This document summarizes strategies for rural marketing and distribution. It discusses adapting products for rural consumers by considering economic realities and designing products specifically for rural needs. It also discusses adapting brand strategies like using variants of national brands. Physical distribution in rural areas requires multiple tiers and overcoming challenges like limited dealers and banking. The village shop is identified as the key to rural distribution due to its large network and low costs despite challenges faced by shopkeepers. The document also provides examples of companies adapting their rural marketing strategies, including Titan Watches and HLL's rural operations.
The 1st decision to be made in product strategy in the rural context is whether the product that is sold in the urban market can be supplied to the rural market as it is, or whether it must be adapted. The firm should find out what kind of product is actually required by the rural consumer. Economic & income realities of the market should be considered while developing the product strategy. In addition, socio-cultural realities should also be considered. When products are designed reflecting both these influences, the chance of success is greater.
Specially Designed Products
The Tractor/Trailer: It is a product specifically designed for the rural market. It is designed as a replacement for the plough as a vehicle for transporting both men & material in the rural areas. Evereadys Jeevan Sathi Torch: The villagers rejected the original part-brass torch, as the product was not fully made of brass & contained little plastic. The firm, after a thorough research, came out with an all-brass product (slightly at a higher price) & the communication depicted side-by-side, the 2 Jeevan Sathis (the farmers wife who is his life-long companion) & the brass torch (another life-long companion). Model Variants: Models developed specifically for the rural market have found more takers in the market. For ex, m/cs that are designed to take on rigors of rural roads have succeeded more in the rural market. Color Variants: The rural have their color preferences. In the case of some products, color may matter very much. Firms can exploit this fact to their advantage. For ex, Asian Paints introduced paints with bright colors for the rural markets. Asian Paints also communicated the feature well through its communication campaigns. 1
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39.2 BRAND DECISIONS Branding too needs skilful handling in the rural markets. The rural consumers have already graduated from generic to branded products. Today, the brand name is the surest means of conveying quality to rural consumers. To them, buying an established brand is the sure way of reducing risk. Whether the same brand should be used in both urban & rural markets or appropriate variants of the brand must be adopted for the rural market, is a matter for conscious decision by individual firms depending on the context. Low-priced variants seem to work better in a majority of cases in the rural market. It will, however, be incorrect to assume that rural consumers prefer local brands to national brands. Analysis actually shows that contrary to the commonly held view, many rural consumers have a strong preference to nationally advertised & promoted brands.
Sell Value Brands, Not Cheap Brands
HLLs Lifebuoy, for ex, is a low-priced carbolic soap that is often the 1st choice for a rural consumer. HLL sells it as hygiene & not as a cheap soap. It communicates the value of the brand to the target market. Rural marketers would do well to add some value to their products if they are keen to secure the loyalty of the consumers.
Examples of distinct brand offer for the rural market
There are several cases where the firms concerned have launched distinct brands for the rural buyer & tapped the market better. Arvind Mills entered rural market with its specially made Ruff and Tuff brand. Britannia has ventured into the rural market with Tiger brand biscuits & is steadily gaining market share with this brand.
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39.3 PHYSICAL DISTRIBUTION TITAN WATCHES GOING RURAL Initially Titan was mostly confining its marketing to urban & semiurban areas & by the end of 90s, it modified its strategy & started tapping the rural market in a systematic manner. Titan carried out a detailed study of the rural market & based on the findings, developed watches that matched the needs of the market & also chose other elements of the marketing mix like distribution & promotion in line with the requirements of the market. It found out how the rural consumers perceived their watch, what were their expectations, the price level & service that they preferred. Titan set up appropriate retail outlets for its watches in the rural market. It did not replicate its urban market strategy. For ex, it did not open any glitzy showrooms or outlets of the World of Titan & Titan Time Zone type. It set up outlets that helped it go close to the rural buyers. It increased its presence & promotion in villages & mundi towns, which were the feeder centers to the villages. Titan also carried out an appropriate shift in its positioning strategy. When the target market was the elite urban buyer, the watch had been positioned as a premium product, as jewellery or an ornament one would like to wear & as a product of fashion & not as a time telling device. Titan brought in its new brand Sonata with mainly the rural market in mind. It was a case of appropriate line stretching to meet the specific target segment in the rural market. Sonata was considerably low-priced & was targeted specifically at the lower end of the market. Many rural folks from the retail outlets in nearby towns were buying Sonata quartz watches. This gave the idea to Titan to position the watch appropriately for the rural market & formulate distribution & promotion strategies that matched the market.
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39.4 PHYSICAL DISTRIBUTION Multiple tiers add to the costs: Unlike urban distribution, rural distribution involves more tiers in distribution. At the minimum, the distribution chain in the rural context needs 3 tiers, viz., the village shopkeeper, the mundi-level distributor & the WS/Stockist/C&F. Producers who can reach the customers through the shortest distribution chain can do better in this market. Non-availability of dealers: Firms find that availability of dealers is limited & the scope for appointing fresh/exclusive dealers of the company is equally limited in view of the low demand & nonavailability of suitable parties. Poor visibility of the outlets: A familiar paradox in rural distribution is that on the one hand the manufacturer incurs additional expenses on distribution & on the other, the retail outlets find that the business is un-remunerative to them! The additional funds the firm pumps into the system are used by the scattered nature of the market & the multiplicity of tiers in the distribution chain. Inadequate banking & credit facilities: It is estimated that there is only one bank branch for every 50 villages. Rural outlets need banking support for 3 important purposes: 1. For remittances to principals & to get fast replenishment of stocks 2. For supplies through bank AND 3. For securing credit Firms have been in search of a low-cost system of distribution with the W/S serving all the retailers, including the ones at the tail end, & the latter servicing the consumer. This is the strategy followed by Nirma to compete with HLL. Nirma relies on the W/S network. HLL is trying to get around this problem by giving credit to the distributors. Analysis shows that many firms hesitate to venture into rural markets largely because of the problems on the distribution front. They find it uneconomic to operate outlets in rural areas as in their perception, cost of selling/transportation/sub-distribution/servicing the outlets, are all very high. 4
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39.5 VILLAGE SHOP KEY TO RURAL DISTRIBUTION The network of village shops of India is considered as the largest & cheapest distribution channel in the world. There are 3.6 m such shops in rural India. The village shopkeeper actually operates against several odds. He is often forced to deal in a large # of products in order to make his operation viable. It means larger inventory & higher inventory costs. The longer lead-time for replenishments from the urban-based producer enlarges his inventory holding further. Also, as his sales are not uniform throughout the year, he has to carry the inventory over a longer period of time. The scope for making up the higher cost through higher mark-up is limited. The average daily turnover of a rural shop is Rs >300/-. Even the level of turnover is generated only when he extends credit to his customers. It is quite interesting that in spite of all these handicaps, the village shopkeeper conducts his rural retail operation at a profit. He achieves this feat largely through his inborn ability for astute management of money & other inputs. He also puts in hard work. He keeps his shop open for 14 hours a day compared to the 8-hour service provided by the urban shops. And he keeps his shop open on all 365 days in the year, with the support of his wife & children & ensures that he does not miss a single possible sale. In fact, it is mainly this human labor, the cost of which neither gets accounted, nor paid for fully, that makes the village shops of India one of the cheapest distribution channels in the world. It is quite natural, therefore, that firms seeking an effective presence in the rural market, willingly embrace the private village shops as the major component of their distribution outfit. The shops also function as their effective bridge with the scattered rural consumers.
The name of the game is to motivate the retailer in rural
markets to stock a product or a brand. 5
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39.6 HLLS RURAL THRUST AN EXAMPLE In recent years, HLL has carried out 3 special operations in the rural markets of India:
OPERATION HARVEST
To efficiently service the channels in an intensive effort to build
volumes. Operation Harvest used in a fleet of vans, which regularly visited remote villages, with a population of >5000, to restock small shops with its primary products --- LIFEBUOY & WHEEL.
OPEARATION STREAMLINE
HLLs soaps & detergents division launched this operation. Doubling
of rural market penetration to 10K villages from roughly 50K villages was the objective. The exercise meant that HLL would be moving directly into villages, with populations of > 1000 people & located away from motorable roads & communications links.
OPERATION BHARAT
HLL also launched a major promotion/sampling exercise in the rural
markets. Code-named OPERATION BHARAT, it covered nearly 22 million rural households across 12 states over a 2-year period. The objective was to popularize HLLs personal products in small towns & villages. As part of this campaign, HLL handed out lowpriced sample packets of toothpaste, fairness cream, shampoo (Clinic plus) & talcum powder (Ponds) to 22 million households.
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39.7 RURAL SALES FORCE MANAGEMENT Rural marketing calls for some special traits on the part of salesmen Willingness to be located in rural areas Cultural similarity Attitude factors Knowledge of local language Ability to handle several lines Creativity
Managing rural sales force
In selecting the salesmen, in giving them the orientation, in motivating them 7 in developing them, the sales manager in charge of a rural sales force has to make several adaptations. For example, the sales manager may have to devote a much longer time in providing orientation to the newly recruited rural salesmen. Also, mere classroom briefing will not meet the requirements. The salesmen need comprehensive on-the-job coaching in select village markets. They need to be educated about the rural marketing environments in addition to training salesmanship/selling techniques. Sales force management in the rural context thus becomes an exacting job, especially when the firm has big stakes in rural marketing & when it operates on a nation-wide basis. HLL is an excellent example. It has the largest network of rural salesmen in the country. Administering such a large & scattered sales force, supervising them, supporting them in sales calls, coaching them on the job, attending to their official & personal problems & above all motivating them for better results, is by no means an easy task. 7