The 4 Ps and 4 As of Rural Marketing

The 4Ps and 4 As of Rural Marketing

 

Most of the companies treat rural market as a dumping ground for the lower end products designed for an urban audience. But, this scenario is slowly changing and importance is given to the need of the rural consumer. Hence it is important to understand the 4Ps along with 4 As of rural marketing with respect to a rural consumer.

 

4Ps

1. Product

A product is the heart of rural marketing. It is a need satisfying entity to a rural consumer. NCAER has classified consumer goods into 3 categories. These categories cover most of the products from Rs. 100 to Rs. 20000 and above.

Category I – These products are of immediate use to the family

·         Pressure Cookers, Mono Cassette Recorders

·         Pressure Pans

·         Wrist watches (mechanical)

·         Wrist watches (quartz)

·         Radio/Transistors

·         Electric irons

·         Ceiling Fans

Category II- These products reduce the strain of the households and also act as a source of entertainment.

·         2-in-1 (mono)

·         2-in-1 (stereo)

·         B and W TV (S)

·         B and W TV (R)

·         Instant Geyser

·         Sewing Machines

·         Storage Geysers

·         Vacuum Cleaners

·         Table Fans

·         Bicycles

 Category III- These are combination of means to supplement income.

·         C TVs (S)

·         C TVs (R)

·         VCRs/ VCPs

·         Scooters

·         Mopeds

·         Motor Cycles

·         Refrigerators

·         Washing Machines

·         Mixer/grinders

The hierarchy depends on the needs of the rural consumers. Rural branding aims at creating and disseminating the brand name so that it is easily understood and recognized by the rural consumers.

 

The following have to be kept in mind while the marketer makes a decision on the product.

1.      The product for the rural markets has to be simple, easy to use and provide after sales service or maintenance.

2.      The product has to be packed for low price and convenient usage.

3.      The pack has to be easily understood by the rural consumer. The information on the pack is preferred in local language communicating the functional benefit of the product not technical advantages.

 

2. Pricing

A rural customer is price sensitive and shops for value mainly because of his lower income levels than his urban counterparts. Hence the marketer has to find ways of making the product affordable to the rural consumer.

For example banks offer loans for tractors, pump sets, television sets and so on to make the product affordable to a rural consumer.

Smaller unit packs are preferred in the case of FMCG products to offer at lower prices.

 

3. Placement or Distribution

Distribution of products is one of the biggest challenges of rural marketing.

A three tier rural warehousing setup exists:

·         CWC/SWCs      (Central/ State Warehousing Corporation)

·         Co-operatives

·         Rural Godowns

CWC and SWCs reach up to the district levels. The co-operatives are at the mandi level. The Rural Godowns are at the village level wherein they are owned by panchayat heads. All these tiers provide warehousing facilities only to their own members. Hence it is a big problem for a company to store its goods in rural areas.

There are some problems of rural distribution:

Ø  Transportation has not been fully developed.

Ø  Lack of proper channels of communication like telephone, postal services, and so on pose a lot of problem to marketer to service the retailer as it is difficult to the retailers to place order for goods.

o   This problem is on the way to have a solution by the advent of mobile phones which are now available at cheaper rates due to tough competition among the players.

Ø  Storage of goods in rural areas is also a problem for the marketers.

Ø  Multiple tiers push up the costs and channel management is a major problem for marketers due to lot of middlemen in the process.

Ø  Availability of suitable dealers.

Ø  Poor viability of rural outlets.

Ø  Rural outlets need banking support for remittances to principals, get fast replenishment of stocks, receive supplies through bank and facilitate credit. This gets handicapped due to inadequate bank facilities.

 

Retailers in rural markets

There are different kinds of retailers.

·         Shops within the village.

·         Shops located on the main road and not exactly within the village

·         Kasba market or the tahsil market.

Margins are very important to a rural retailer. The pushing by the retailers depends on margins and the pushing by the wholesalers depends on retailers.

The gap is very wide because the local manufacturers do not undertake investments either in terms of advertising or anything. Hence they are very fast imitators.

For rural retailers, it’s the question of simple economics – Am I getting more money if I invest on these brands? More the margin better choice to stock and sell.

The rural retailer stocks few brands in each category. This may have important implications for a company and its managers because whoever reaches the market first gets the share of the market.

 

4. Promotion

Communication to rural consumer is through organized media. More number of rural consumer (~70%) listen to radio and many go to cinema.

Rural communication can be through Conventional media or through a nonconventional media.

• Conventional media: Print, Cinema, Television and Print.
• Non-conventional media: Theatre, Posters, Haats, street plays, Melas and through influential person in the area.

The conventional media have excellent reach, less expensive and create a better impact. But at the same time, it is not customized to each village and also offers unnecessary coverage at times.

Problems in rural communication:

Ø  Language

Ø  Low literacy rates

Ø  Cultural & traditional differences

Ø  Rural reach

Ø  Attitudes and behavior

An effective promotion should plan for a proper mix of media which must take care of all the problems of communication to rural consumers.

The Indian rural market today accounts for only about Rs 8 billion (53 per cent - FMCG sector, 59 per cent durables sale, 100 per cent agricultural products) of the total pie of Rs 120 billion, thus claiming 6.6 per cent of the total share. So clearly there seems to be a long way ahead.

ü  Hindustan Lever is the first company that comes to mind while thinking of rural marketing due to its initiative of project ‘Shakti’.

ü  Amul is another case in point of aggressive rural marketing.

ü  Other corporate that are slowly making headway in this area are Coca Cola India, Colgate, Eveready Batteries, LG Electronics, Philips, BSNL, Life Insurance Corporation, Cavin Kare, Britannia and Hero Honda to name a few.

The greatest challenge for advertisers and marketers is to find the right mix that will have a pan-Indian rural appeal. Coca Cola, with their Aamir Khan Ad campaign succeeded in providing just that.

Corporates are still apprehensive to "Go Rural." Since, the rural consumers are scattered and it is difficult to predict the demand in the rural market.

A few agencies are trying to create awareness about the rural market and its importance are Anugrah Madison, Sampark marketing and Advertising Solutions Pvt Ltd, MART, Rural Relations, O&M Outreach, Linterland and RC&M, to name a few. Also, the first four agencies mentioned above have come together to form The Rural Network. The paramount objective of the Network is to get clients who are looking for a national strategy in rural marketing and help them in executing it across different regions.

 

The 4As of Rural Marketing

For rural market 4Ps alone are not sufficient. The 4As also has to be considered and keep in mind while formulating the plan to enter the rural market because these are also critically important.

1. Availability

The first challenge in rural marketing is to ensure availability of the product or service. India’s

7, 00,000 villages are spread over 3.2 million sq km; 700 million Indians may live in rural areas, finding them is not easy. They are highly dispersed.

Given the poor infrastructure, it is a greater challenge to regularly reach products to the far-flung villages. Marketer should plan accordingly and strive to reach these markets on a regular basis. Marketers must trade off the distribution cost with incremental market penetration.

ü  India's largest MNC, Hindustan Lever has built a strong distribution system which helps its brands reach the interiors of the rural market.

ü  Coca-Cola, which considers rural India as a future growth driver, has evolved a hub and spoke distribution model to reach the villages. To ensure full loads, the company depot supplies, twice a week, large distributors which act as hubs. These distributors appoint and supply, once a week, smaller distributors in adjoining areas.

ü  LG Electronics has set up 45 area offices and 59 rural/remote area offices to cater to these potential markets.

 

2. Affordability

The second major challenge is to ensure affordability of the product or service. With low disposable incomes, products need to be affordable to the rural consumer, most of who are on daily wages. A part of it has been mentioned in product (first P).

A solution to this has been introduction of unit packs by some companies. Most of the shampoos are available in smaller packs.

ü  Fair and lovely was launched in a smaller pack.

ü  Godrej recently introduced three brands of Cinthol, Fair Glow and Godrej in 50- gm packs.

ü  Hindustan Lever has launched a variant of its largest selling soap brand, Lifebuoy.

ü  Coca-Cola has addressed the affordability issue by introducing the smaller bottle priced at Rs 5. The initiative has paid off: Eighty per cent of new drinkers now come from the rural markets.

Some product also can be made affordable by making available the loan facility by having alliance with banks.

 

3. Acceptability

The next challenge is to gain acceptability for the product or service. Therefore, there is a need to offer products that suit the rural market.

ü  LG Electronics have developed a customized TV for the rural market named Sampoorna. It was a runway hit selling 100,000 sets in the very first year.

ü  Coca-Cola provided low-cost ice boxes in the rural areas due to the lack of electricity and refrigerators. It also provided a tin box for new outlets and thermocol box for seasonal outlets.

ü  HDFC Standard LIFE topped private insurers by selling policies in rural sector. The company tied up with non-governmental organizations and offered reasonably-priced policies in the nature of group insurance covers.

 

4. Awareness

Building awareness is another challenge in rural marketing. A large part of rural India is inaccessible to conventional advertising media. The media penetration in rural areas is only about 57%.It has been seen that, two out of five Indians are unreached by any media - TV, Press, Radio and Cinema put together. Haats, mandis and melas are opportunities. Family is the key unit of identity for both the urban and rural consumer. However, the rural consumer expressions differ from his urban counterpart. For a rural consumer, outing is confined to local fairs and festivals and TV viewing is confined to the state-owned Doordarshan. Consumption of branded products is treated as a special treat or indulgence. Haats, mandis and melas are the place of opportunities to promote awareness about the product.

 

ü  Hindustan Lever has its own company-organized media. These are promotional events organized by stockiest.

ü  Godrej Consumer Products, which is trying to push its soap brands into the interior areas, uses radio to reach the local people in their language.

ü  Coca-Cola uses a combination of TV, cinema and radio to reach the rural households. It has also used banners, posters and tapped all the local forms of entertainment. Since price is a key issue in the rural areas, Coca-Cola advertising stressed its `magical' price point of Rs 5 per bottle in all media.

ü  LG Electronics uses vans and road shows to reach rural customers. The company uses local language advertising.

ü  Philips India uses wall writing and radio advertising to drive its growth in rural areas.