1. PRODUCT STRATEGYPRODUCT STRATEGY

2. 4Ps4Ps  44AsAs
 Rural marketers need
to deliver value to
consumers by
developing suitable
products at a price
they are willing to pay
and at a place where
they can conveniently
purchase the
products.
4Ps are
still the
tools
4As are the
challenges
Product Acceptability
Price Affordability
Place Availability
Promotion Awareness

3. AvailabilityAvailability
 India’s 638,000 villages are spread over
3.3 million sq. kms. Thus finding them is
not easy.
 Given the poor state of Indian roads, it is
a great challenge to send products to far
away villages on a regular basis.
 Companies would do best by first
reaching out to villages of population
above 5,000 (20,000 villages) and next
stage move onto villages with
population of 2000-5000 (87,000
villages).

4. o HUL has built a strong distribution
system with stockists using auto-
rickshaws, bullock carts and even
boats.
o Coke has company depots which
supply twice a week to large
distributors who in turn supply to small
distributors in other areas.
o LG has set up 45 area offices and 59
remote area offices.

5. AffordabilityAffordability
 With lower incomes, the products should
be affordable to the rural consumers,
many of whom are daily wage earners.
o Godrej recently introduced 3 brands
(Cinthol, Fair Glow and Godrej) in 50gm
packs priced at Rs.5 meant specially for
Bihar, MP and UP.
o Coke came out with its Rs.5 Chotta
bottle which was an instant success as
today 80% of new drinkers are from rural
India.
o Videocon introduced a washing machine
named the “Washer” priced at Rs. 3000
and without a dryer, it has seen 100%
growth. The rural people were more than
willing to purchase a branded product
over locally manufactured ones.

6. AcceptabilityAcceptability
 In order for a product to be
accepted it needs to suit thesuit the
mindsetmindset and requirements of
that market. It needs to
understand the daily lives
and way of life of the rural
people.
 LG’s “Sampoorna” was one
product that really worked
wonders selling 100,000 TVs
in the first year itself.
 HDFC topped private
insurers by selling rural
policies worth Rs. 3.5 crores
(premium collected)

7. AwarenessAwareness
 With only 41% of rural households having access
to television, building awareness is a huge
challenge.
 Doordarshan is still the primary medium of
communication for marketers as rural TV viewing
is confined to this.
 Outings are confined to visiting local fairs and
festivals.
o Godrej which tries to push its soaps into rural
areas uses radio in local languages.
o Coke uses a combination of TV, cinema and radio
to reach 53% of HHs. It doubled its spending on
DD. Its ads stressed the magical pricing of Rs 5.
o LG uses vans and road shows to each rural
customers.
o Philips uses wall writings and radio ads.

8. What companies doWhat companies do
Company Products What they do
Bajaj
Electricals
Home appliance Pricing closer to small-scale
sector
Electrolux Refrigerator,
washing m/c
Test marketing urban models
in rural Punjab
Eveready Batteries Van coverage
Hero Bicycles Modifying pdts to suit
different needs
LG Color TV Selling high-priced TVs with
local language display
Marico Hair oil Selling low-priced sachets
Titan Watches Pilot project with low-cost
pdts
Videocon Durables Pushing walkmans

10. PRODUCT CONCEPTSPRODUCT CONCEPTS
The rural customer judges the offering onThe rural customer judges the offering on
 Product features and quality
 Services mix
 Appropriateness of the pricing.
 The rural marketer needs to understand that productsThe rural marketer needs to understand that products
made for the urban market cannot be dumped in ruralmade for the urban market cannot be dumped in rural
areas by changing the price or another feature. LG,areas by changing the price or another feature. LG,
Philips and HLL succeeded through innovation ofPhilips and HLL succeeded through innovation of
products.products.
 Eg. Cadbury launched ChocoBix, a chocolate
flavored biscuit, based on consumer insight that
rural mothers opt for biscuits as they are less
expensive than chocolates.

12.  Eveready found that their plastic
torches which had a strong sales in
urban markets was not doing well in
rural areas. It was later that they
realized that farmers preferred heavy
brass torches because of the scrap
value that the metal/alloy fetches.

13.  Philips found that rural people are willing to pay
more for larger models as they perceived bigger
products to be costlier. Thus radios became larger.
 Usha fans introduced table fans designed to meet
the aesthetic tastes of rural people.
 LG brought washing machines with double the
capacity as they found that rural HHs had more
members and thus more washing to do.
Thus products intended for rural use should beThus products intended for rural use should be
 Simple
 Easy to use (convenient)
 Visually identifiable
 Affordable

14.  Philips radio Usha fan

15. 5 Levels of Products5 Levels of Products
1. Core Benefit (eg. Entertainment, mobility)
2. Basic Product (eg. TV, Bike)
3. Expected Product
(TV-good pic quality, easy to operate for rural,
digital sound, flat screen for urban)
(Bike- good shock absorbers, mileage for rural,
power & style for urban)
4. Augmented Product- meet desires beyond
expectations. Can be done only by studying the
physical environment of consumer (TV- battery
operated, display local language, better picture
in weak signal)
5. Potential Product- finding new ways to satisfy
consumers tomorrow.

16. Philips- Free Power RadioPhilips- Free Power Radio
 Philips came with an innovative radio that
neither consumed power through battery
nor electricity. It used a one-minute
winding spring (like mechanical watches)
which would give enough power for 30
minutes listening time.
 Since the average radio costs Rs.1000
worth of batteries per year, Philips radio
would bring savings too.

17. Classification of ProductsClassification of Products
 While rural product
categories do not
differ much from
those urban, there
are 2 separate ones:
 Agri goodsAgri goods (agri
inputs like fertilizers,
pesticides etc.)
 Agri implementsAgri implements
(tractors, threshers,
harvesters, pump
sets etc.)
Rural Products
FMCGs
Durables
Agri Goods
Services

18. Fast Moving Consumer GoodsFast Moving Consumer Goods
 Consists of all non-
durable goods like
toiletries, cosmetics,
foods, beverages,
footwear etc. These
are consumed quickly
and purchased
frequently.
 Major players in this
category include HUL,
Dabur, Marico, Colgate-
Palmolive, Nirma,
CavinKare, Godrej
Product BasketProduct Basket
Toilet soap Biscuits
Washing cake Tea
Tooth powder Beverage
Talcum
powder
Cooking
oil
Hair oil Vanaspati
Shampoo Bulb
Face cream Tube
Lipstick Footwear
Nail polish Cigarette

19. FMCG Consumption PatternFMCG Consumption Pattern
Income Group’s Share in Total Market-1999 (%)
Class Urban Rural
Low 9 32
Low-middle 26 37
Middle 25 16
Upper Middle 18 8
High 22 7
100 100

20.  Though it was found that
high income households
spent 3.6 times that of
lower-income groups, it
was the two lowest
income groups that
accounted for 69% of
consumption in the
rural market. Thus there
was a clear signal that
marketers need to
address the bottom of
the pyramid with cost-
effective value-for-money
products.
Most PopularMost Popular
ConsumablesConsumables
RuralRural UrbanUrban
Toilet soap Toilet soap
Washing
powder
Biscuits
Packaged
tea
Washing
powder
Biscuits Packaged
tea
Detergent
cakes
Detergent
cakes

21. Consumer DurablesConsumer Durables
 This group includes home
appliances, watches,
automobiles, furniture
etc. Rural consumers
purchase from nearby
towns while urban
consumers purchase from
city dealers.
 The major players are
Usha, Bajaj, Philips, Titan,
Godrej, Videocon, Onida,
Salora, Hero Cycles, Hero
Honda, Mahindra, Tata.
 Can be divided into 3
price ranges- low,
medium, high-priced
products.
Group1Group1
(<Rs.(<Rs.
1000)1000)
Group2Group2
(Rs. 1K-(Rs. 1K-
6K)6K)
Group3Group3
(<Rs.(<Rs.
6000)6000)
Pressure
Cooker
TV
(black
&white)
Color TV
Pressure
pan
Geyser VCR/
VCD
Bicycle Sewing
m/c
Scooter
Watch Mixer/
grinder
Motor
cycle
Electric
iron
Stereo Fridge

22. Rural Share of Consumer DurablesRural Share of Consumer Durables
Share in % 1998-99
Over 75 Bicycle, transistor, wrist watch,
B&W TVs
50-75 VCR, pressure cooker, table fan,
ceiling fan, sewing m/c, motorcycle
30-50 Moped, scooter, Color TV, Electric
iron
20-30 Refrigerator
10-20 Washing machines
5-10 -
<5% VCR/ VCD

23. Agricultural GoodsAgricultural Goods
 These are goods used for farm activities.
These include inputs like seeds,
fertilizers, pesticides, insecticides and
implements like tractors, tillers,
threshers.
 This market accounts for Rs.450 billion
annually.
 Major players include Rallis India,
Monsanto, DCM Shriram, Chambal
Fertilizers, IFFCO, Mahindra, Eicher,
Escorts.

24. ServicesServices
 This includes
telecommunication,
transport, healthcare,
banking, insurance and
education.
 Emerging services include
ITES, Internet, Mobile phone
services.
 The major players include LIC,
SBI, SBNL. There are also
new entrants which include
Reliance Infocomm, ITC e-
Choupal, ICICI Prudential Life
Insurance, IFFCO-TOKIO
General Insurance etc.

25. New Product DevelopmentNew Product Development
The process involves:
 Idea generation
 Concept testing
 Product development
 Test marketing
Some new products introduced
in rural markets are 5-kg
cooking gas cylinder by
HPCL; Jolly batter-operated
color TV, Philips Free Power
Radio, Kisan Credit Card etc.

26. Rural Product designRural Product design
 Rural consumers
are reluctant to
switch to LPG for
cooking – burst
accidentally, gas
leakage, no way to
check quality of
gas
 Max gas cylinder –
private player -
came up with auto
cut-off regulator,
double sealed
cylinder that
assures the correct
weight, special steel
branded noise pipe,
wider base of
cylinder, top ring
open from one side
for easy handling

27. HPCL IntiativesHPCL Intiatives
 LPG penetration is
as high as 74% in
urban but only
15% in rural areas
 HPCL 5-kg gas
cylinder which can
be used for
cooking and
lighting. The initial
and recurring cost
has been brought
down from Rs.
1600 and Rs 270
to Rs 800 and Rs.
99

28. ““Jaishodhak”Jaishodhak”
 95% of disease in
rural India are
water borne.
 Less than 50%
villages have a
piped drinking
water.
 DCM Shriram came
out with a low cost
water purifier. They
introduced twin pack
consisting of two 30
ml bottles( one
contains chemicals to
reduce the turbidity of
floating solids and the
other contains a
disinfectant) sufficient
for needs of a family
of five people for one
month.

29.  Philips launched a
CTV exclusively
for rural market
and named it
Vardhan. It is
priced at Rs. 6,500

30.  Idea generation:Idea generation: in rural homes, the detergent
bar used for washing clothes is cut into two
pieces before use to ensure that it lasts longer
due to less melting. But no marketer has
addressed this need so far. Similarly areas with
a problem of hard water would appreciate
detergents able to cope with this factor.
 Concept testing:Concept testing: this needs to be done in
different regions as needs change from area to
area. Eg. A concept of low-cost dry toilet
promoted by UNICEF (requiring less water) was
appreciated in water-scarce regions of
Rajasthan, but was opposed in other regions
where water availability is not a problem.

31.  Dalmia consumer care developed a tobacco
free bidi, Vardaan. It also found that target
customer will be mostly literate and thus
packaging was developed into 9 languages.
It developed promotional tools like street
plays, audio visual presentations, video clips,
outreach programme for women etc to
continously reach out to tobacco bidi users
and impress upon them the importance of
switching to a non tobacco bidi for health
reasons

32.  Test Marketing:Test Marketing: this is the most important factor in
deciding the success or failure of the product. It
becomes critical in the rural context where failure rates
are high. Thus companies need to realize that the cost of
test marketing is very low compared to the risks
involved.
 Eg. Eicher Tractors aborted its idea of generating
electricity through its tractors with the use of a
generator powered by tractor engine. This was
because the company found that it could not take
care of the farmer’s agricultural power purposes and
could only be used for domestic purposes.
 It found that farmers use 5-KW water pumps for
irrigation which ran on 3-phase power supply. Hence
the company’s single-phase, 3KW generator was not
suitable. Because of limited space on tractors a
bigger one could not be fit either. So safest bet was
to abort!

33. Eicher tractorsEicher tractors

34. Product Life CycleProduct Life Cycle
 PLC stages in rural India are
usually much longer than
urban markets.
 Companies struggle to push
growth of their products
through consumer education
and adopting alternate
channels to reach deeper to
grow the market.
 HUL, ITC and Eveready
having tasted success by
introducing products at
the maturity stage have
now entered new
segments and gone for
brand extension.

35. Rural PackagingRural Packaging
 Packaging plays an important role in product offering in
rural markets as it is associated with affordability,
ability to recognize (visibility, readability),
convenience of usage, product appeal, protection of
product and aesthetics.
Packaging for rural markets needs special focus because of
 Poor transport system (poor road conditions)
 Difficulties of safe storage (rats, moisture, heat, rain
water)
 Poor facilities (erratic power supply leading to poor
cold-storage facilities for food products)
Thus packaging has to haveThus packaging has to have
 Longer shelf life than urban products
 Able to withstand harsh weather conditions
 Able to withstand sudden and jerky movements
during transportation.

36.  Packaging Material:Packaging Material: Plastics and tetra-packs are the new
packaging mediums. Plastic advantages include that it is
waterproof, provides effective barriers to vapors, is sunlight
resistant and is lightweight.
 Pack size and convenience:Pack size and convenience: Velvet shampoo and Chik kick
started the sachet revolution.
 Packaging Aesthetics:Packaging Aesthetics: Lower literacy levels in rural markets
increase the need of highlighted packaging. Lifebuoy is
identified as the red soap, tiger biscuits identified by the
animal on the cover. Thus perception is influenced by use of
local languages, images and symbols.
 Eg. The picture of lightning used on
Rin detergent pack is distinct and
communicates the brand benefits of
whiteness easily to the illiterate consumer.

37. Brand Building in Rural IndiaBrand Building in Rural India
 Brand name:Brand name: should facilitate easy brand recall
through color, visual or numeric association. Thus
names like Nirma, Sampoorna, Utsav were chosen
by those firms.
 Creating & building brand identity:Creating & building brand identity: all promotions
should match the identity you wish to create. Thus
Tata Steel branded its sheets as Tata Shaktee to
create an identity of strength, durability, toughness.
Britannia Tiger biscuits associates an identity with
smart, active and sharp children.
 Mahindra maintained its image through the
Bhumiputra seriesBhumiputra series of tractors and SarpanchSarpanch
seriesseries both of which matched the tough,
hardworking image the company wanted
associations with.

39. Brand VarietyBrand Variety
Category/Category/
dealerdealer
Average Number of BrandsAverage Number of Brands
RuralRural UrbanUrban
Toothpaste 3 7
Toothbrush 3 6
Biscuits 3 9
Hair oil 3 7

40. Largest Rural Brands ( AC NeilesenLargest Rural Brands ( AC Neilesen
July 2004)July 2004)
Brand Category Growth %
Parle-G Biscuits 8.2
Lifebuoy Active Toilet soap 6.4
Lux Toilet soap 5.6
Nirma Washing
powder
13.1
Ghari Washing
powder
21.5

41. Fake BrandsFake Brands
 Fakes are common in rural India.
A visit to the haats where the rural
people regularly visit will show an
almost complete absence of
genuine brands. A survey found
that for every 100 strips of
genuine Vicks Action 500, more
than 50 were counterfiet. Thus weThus we
have Bond’s, Fair & Lonely,have Bond’s, Fair & Lonely,
Likeboy etc.Likeboy etc.
 Lookalikes, Spell-alikes,
Duplicates all have the advantage
of being able to reach the inner-
most villages, manufactured by
small time companies.

43. Strategies to counter fakeStrategies to counter fake
 Dabur – replaced its plastic blow-moulded
container with a premium four-colour shrink-
sleeve packaging, which was a grainy texture
and water bubbles. The packaging is difficult
to replicate. This resulted in a sales growth of
12% of the original product.
 P&G initiated action against the
manufacturers of lookalike Vicks vaporub
and Lozenges. It was marketed under the
brand name Vikas.
 Coca cola has put into place 48 consumer
response.

44. After sales serviceAfter sales service
 Tractor servicing – Most tractor companies
regularly organize service camps in big
villages/small towns. They invite tyre, battery, fuel
injection and other component suppliers to
participate.
 Videocon company mechanics go around to
villages twice a week to provide after sales
services.
 The tractor and heavy commercial vehicle
requires 3 mn batteries per year. Exide company
officials travelled to remote areas to convert local
manufacturers (Ustad) into exide dealers. R&D
team designed low cost battery.