Importance of Rural Marketing in India Essay Example

sulphonate, fatty acid soaps, bleaching agents, optical brighteners, and phosphates are incorporated into synthetic detergents to enhance their cleaning ability. Detergents are classified based on the charge of their organic component (anionic, cationic or non-ionic) or their biodegradability. Anionics are commonly used for washing and cleaning purposes while cationics act as germicides and non-ionics have low foaming properties that make them suitable for industrial use. Traditional laundry powder typically includes approximately 15% active surfactant (acid slurry), usually with Sodium tripoly phosphate (STPP) serving as the builder at 20 to 25%.

To soften the water, a phosphate builder is included. The fabric wash market is structured such that around 36 lakh tonnes of synthetic detergents, comprising of both powders and bars, were produced in 1999 with a 60:40 ratio between the two. The detergent powder segment serves three market categories- lower, middle and higher end. The average per capita consumption of synthetic detergents in India stands at 2.

The Detergent market weighs between 5 to 3 kg. Most users prefer detergent powders over bars due to their convenience. The usage of detergent powders would increase if more people switch to bucket wash. According to studies, the usage of synthetic detergents like Surf, Ariel, and Henko has increased compared to conventional detergent bars made from vegetable oils. To address challenges in the industry, major players have launched initiatives to promote growth. Hindustan Lever initiated a rural campaign to increase the penetration of their products in response to slow volume growth.

Procter and Gamble Home Products chose a unique tactic to streamline their distribution network and decrease the quantity of stockists to cut costs. HLL implemented de-bottlenecking and cost-cutting measures

at Vashisti Detergents where they have a stake. Nirma started several backward integration projects in order to save money. If these projects are completed, Nirma will be able to produce virtually all necessary components. Henkel SPIC, a new player in the market, waited two years and invested Rs.

The company has acquired control over Calcutta Chemicals and Detergents India Ltd. for 60 crores as a strategic move to compete with industry leaders, funded through a rights offer. This acquisition is aimed to provide the company with critical mass by obtaining key brands. With a worth of Rs. 4,000 crore, the detergents market in India is among the largest globally in terms of value and ranks second only to edible oils and biscuits in the FMCG category.

The growth of volume can be influenced by multiple factors. These include a drop in demand within urban markets or a decline in rural purchases as disposable income reduces. Moreover, consumers may oppose high price hikes imposed by many manufacturers during the late 1990s. An illustration of this is Hindustan Lever who recouped volume growth because of an increase in demand from rural regions during H1 1999. According to CMIE data, there was a boost in agricultural output by 6.8% in 1998-99 after decreasing by 5%.

According to Mr. Arun Adhikari, Vice-President of Marketing (Soaps and Detergents) at Hindustan Lever, there was a contraction in the rural economy over the past two years. However, in 1999, there was a recovery attributed to the increase in rural disposable incomes. This resulted in growth seen in certain brands, pack sizes, and markets.

In 1999, sales growth was driven by previously depressed Northern

and Eastern markets with low consumption. This contributed to the major players' ability to present a reasonable performance. However, the significant improvement in financial performance came from the sharp rise in profit margins. Major detergent brands increased their selling prices by 9% to 25%, particularly in the mid-priced to medium segments, due to a surge in production costs.

Price increases were observed in various detergent brands in India. Nirma Popular and Wheel Green saw an increase of approximately 8% in their selling prices, whereas Ariel Supersoaker, a mid-priced product, witnessed a hike of 20 to 25%. Premium products like Surf Excel and Henko Stain Champion increased their prices by 10 to 12%. Indian Soaps and Toilet Manufacturer Association (ISTMA) has predicted that the demand for detergent bars and powders in India is approximately 3.5 million tonnes annually, with per capita consumption averaging around 2 on a nationwide basis.

The weight range for a certain product is between 5 to 3 Kg, and may differ among regions due to the economic and social circumstances. The expected annual increase in demand is around 7 to 8%, and there is a new strategy to tap into rural markets. Despite being a vital component of any economy, rural markets present challenges such as distribution costs and lack of retail outlets. As the concept of rural markets in India is still developing, there are various difficulties that marketers must overcome.

Trying to extend marketing plans from urban areas to the rural market in India can be as unpredictable as rain for brands. Even those brands that should have been successful often fail miserably due to unique consumption patterns, tastes, and needs of

rural consumers. To avoid this, analyzing the needs of rural people should be done at the product planning stage. Marketers need to understand the social dynamics and attitude variations within each village, despite the consistency of patterns nationally.

The primary challenges in rural marketing are the comprehension of rural consumers, inadequate infrastructure, physical distribution, channel management, as well as promotion and marketing communication. Rural markets operate differently from other types of markets, making strategies for rural marketing significantly distinct from those for urban or industrial consumers. To succeed in rural marketing, marketers should understand the psychology of rural consumers and design marketing strategies that appropriately cater to their needs. Companies must engage in more intensive personal selling efforts to run a successful rural marketing campaign. It is not advisable to produce goods designed for urban markets and subsequently thrust them into rural areas.

To successfully target the rural market, a brand must align itself with rural culture and traditions. This can be achieved by utilizing various rural media channels to communicate with them in their own language, and in large numbers. By doing so, the brand can be associated with local festivals, celebrations, rituals, "melas" and various other activities where they come together. An effective distribution strategy would be to use company delivery vans that can serve two purposes: firstly, delivering products to customers in every corner of the market, and secondly, establishing direct contact with customers to facilitate sales promotion. However, this channel may only be feasible for large corporations.

One effective way for companies with limited resources to distribute their products is through syndicated distribution. This involves collaborating with non-competitive marketers to facilitate distribution. Another

option is to participate in annual "melas" or fairs, which are popular and provide a good platform for distribution, as people visit them to make purchases. According to the Indian Market Research Bureau, there are around 8000 such melas held in rural India each year. In addition, rural markets often designate specific days as Market Days (known as "Haats"), when goods and services are exchanged. Marketers can take advantage of these potential low-cost distribution channels.

When it comes to buying durable goods, the rural population prefers to visit satellite towns known as "Mandis" or Agri-markets. These towns serve multiple villages within a region, making them an ideal location for marketing managers to target a large portion of the rural population. However, it's important for firms to carefully choose their communication vehicles since only 16% of the rural population has access to vernacular newspapers. Promotional strategies should leverage traditional media like folk dances and puppet shows that rural consumers are familiar with and comfortable watching to deliver impactful product campaigns.

The company Escorts provides a great example of a focused marketing approach based on geographical and market conditions, such as fares and festivals. Rather than relying on traditional advertising channels like television and press, Escots concentrated on deeper penetration by positioning their bike as a tough vehicle on the 'kuchha' roads of villages. Their successful campaigns featured Dharmendra riding their bike with the tagline "Jandar Sawari, Shandar Sawari".

HLL achieved a remarkable sales of 95000 vehicles per year. To target the rural markets, they launched "Operation Bharat" which provided low-priced sample packets of toothpaste, fairness cream, Clinic plus shampoo, and Ponds cream to twenty million households. ITC is establishing

e-Choupals to provide farmers with necessary information, products, and services to increase farm productivity, enhance farm-gate price realization, and reduce transaction costs. Through this Hindi web portal, farmers can access up-to-date local and global information on weather, scientific farming practices, and market prices in their village. The platform also facilitates the supply of high-quality farm inputs and the purchase of their commodities at their doorstep.

BPCL has incorporated a Rural Marketing Vehicle (RMV) as a method of rural marketing. The RMV travels from village to village and provides on-the-spot cylinder filling services to rural customers. Considering the low-income of rural populations, BPCL introduced a smaller-sized cylinder to reduce the initial deposit and refill costs. During the launching process, it's important to remember that the rural market is a heterogeneous population, with various tiers present depending on income levels, such as big landlords, traders, small farmers, marginal farmers, labors, and artisans.

In terms of rural demographics, there are disparities among states regarding literacy rates and the percentage of population living below the poverty line. Kerala boasts a literacy rate of 90%, while Bihar has a much lower rate of only 44%. Similarly, Orissa has 48% of its population living below the poverty line compared to Punjab's mere 6%. Interestingly, there are more middle-class households with an annual income ranging from Rs 45,000-2,15,000 in the rural sector - specifically, 27.4 million - compared to urban areas where this figure stands at 29 million. It is worth noting that rural incomes have experienced a compound annual growth rate of 10%.

The percentage of rural individuals in decision making for purchases increased from 10.74% to 95% between 1970-71 and 1993-94 compared to

urban areas. In reality, the purchasing process involves multiple parties including the influencer, decider, buyer, and payer. Therefore, marketers need to target their brand message on various levels.

Households (HH) benefit from the brand knowledge of rural youth who are experienced in using cultivators. A cultivator is a farm implement that stirs and pulverizes soil for various purposes such as removing weeds, aerating, and loosening soil during crop growth. Typically, cultivators penetrate deeper into the soil compared to harrows. They are commonly used in farming and crop work and smaller versions are utilized for gardening.

Utilizing garden cultivators is ideal for blending soils with manures and fertilizers, preparing them for planting purposes. These tools perform tilling processes that transform clumped soil into tilth. Depending on the specific attachment utilized, the cultivators can either rotovate or plow the soil. When it comes to agriculture, harrows are implements designed to cultivate the soil's surface. The distinct effect of a harrow sets it apart from a plow, which focuses on deeper cultivation. Initially, harrows were pulled by horses.

Tractor-mounted implements are now the norm, with the chisel plow being a popular tool for deep tillage and minimal soil disturbance. This plow loosens and aerates soil while leaving crop residue on the surface. The reaper-binder, invented by Charles Withington in 1872, is an improvement on the traditional reaper as it can also tie small-grain crop stems into sheaves.

After being gathered into sheaves, the grain was dried in conical stooks, resembling tipis, before being threshed. The threshing machine, invented by Scottish engineer Andrew Meikle in 1796, revolutionized agriculture by separating grain from stalks and husks. Before this invention, grain was separated by hand

using flails, a method that was extremely labor-intensive and time-consuming.

The introduction of machinery into farming has eliminated the tediousness of manual labor. The strategy for increasing adoption of new tools involves cultivating farmer awareness and understanding of their benefits. Advancements in technology, such as the seven modern tools, are communicated to rural individuals, focusing on farmers as the primary target audience but also extending to other agricultural workers and agro-industries. Promotional efforts rely heavily on word-of-mouth publicity, along with awareness campaigns through various media outlets such as radio. Special events that educate farmers about the benefits of using modern tools are also arranged to increase their adoption rates.