Nature of competition in Rural Markets

27/03/2021 0 By indiafreenotes

The nature of competition in rural market is very different from that of the urban one. The number of brand options available to the rural consumer is very different from the one available to urban consumers. The brands rarely compete with one another on the retailers’ shelf space but they have to be just there and then through the influence of the retailer they can find way into customer’s home.

Thus, the competitive strategy with regard to rural market varies on almost all the five forces, which clearly suggests that the strategic approach required for the rural market is very different from the one adopted in the urban market.

The focus remains on the people who are living in the remote areas, and the marketing activities should be planned accordingly. Seeing this, now-a-days many companies are turning towards the rural market to expand their scope, and to overcome competition or to restart or give new shape to competition. A lot of focus is required to be given on the rural markets because rural markets are the “tomorrow’s markets”.

Now-a-days people say that there is lot of competition in the market. Actually it is not only lot of competition but cut throat competition, especially in the urban areas. Companies are playing on the basis of price. Every big company is trying to swallow the small and new companies. Prices are going down steeply just because of the tough competition.

Apart from the price factor, companies have started increasing product features and added value to their products to compete in the market, without increasing the prices. The concept is increase the utility and value and decreases the prices. Irrespective of the above facts, there are certain products which have already achieved the maturity level or have reached the saturation level. Demand is not increasing in these sectors so the best strategy is to explore new markets for the products.

So rural marketing is turning out to be a market for the packaged products with a minimum or no competition. Firms can generate demand and increase profits.

The changing competition in the market research industry has also influenced the foray into quasi- consultancy. Though the number of research agencies in the country has not increased considerably from the 30-odd agencies that were around 10 years back, mergers and tie ups over the past three years or so have changed the structure of the business. In the 1980’s, the two agencies, IMRB and ORG-MARG dominated the Indian market research scene, followed by Mode.

In the mid-nineties, Bangalore based Research and Consultancy Group (RCG) tied up with MBL and was eventually taken over by the inter public group’s $450-million market research company, NGO World group. Around the same time, AC Nielsen entered and bought a stake in MRAS while TNS bought a stake in Mode. Dutch giant VNU bought a stake in ORG-MARG in 1996.

Several new outfits have also stepped in by this time. For example, Blackstone, a small outfit from the US, set up shop and teamed up with a large American agency, Market Facts, in India. Market Probe, a boutique U.S. company, set base in 1999. Then MBA, a small Mumbai-based outfit, tied up with Gallup. Barring the WPP Group’s Research International, which has been here since 1992, most global players came to India in the last three years.

If the newer players ushered in change through branded techniques, then the pre-reform players like ORG-MARG and IMRB had vast databases, could over two decades or more that could be used to better effect. The nature of the market is changing too with the advent of Internet and Information technology era. The Telecom and Financial Market reforms also opened up the market and newer avenues like consultancy research opened up.

Till the 1980s, market research was restricted to the data delivery function alone. As competition grew, predicting consumer behaviour came to the forefront of client demand. So, research agencies started adding value by defining what kind of information should be collected rather, than merely sticking to the client’s brief.

For example, a soft drink player today would also look at competition from a category like bottled water. Similarly, a moisturizer would also compete not only with other moisturizers but also with skin lotions and homemade products like malai and so on.

Marketers also agree that the needs are evolving. For example, the new area that HLL has added to its research requirements is the concept of consumer windows. HLL has two consumer windows-one is the traditional view of consumers through market research and the second is direct customer contact. For the latter, a website was set up, where HLL managers across the country can log in and request for an interface with any type of consumer across India.

The request is then processed by the research agency, which organises meetings between the managers and the consumers. HLL claims that after this window was set-up, every day, roughly nine managers contact consumers in 20 locations and interface with five consumer groups.

For instance, when sales of Lifebuoy, one of HLL’s designated ‘power’ brands, were tapering, the consumer window sessions, especially in rural areas, helped the company change the product composition from carbolic to non-carbolic and reposition the soap from a male market to a family product.

Marketing Research techniques and tools always have to be adapted to the target group. Rural marketing research is undergoing a major transition as the scope of the research is expanding with the rising size and potential of the rural market. The mostly quantitative approach followed so far is giving way to behavioural and qualitative studies. In view of the illiteracy and lower exposure of rural consumers, however, tools are required to be specifically adapted or designed.

Branding Strategy:

To build a brand in rural market, products have to be geared to rural in terms of price, packaging and communication and delivered to target audience in the language they understand using the idiom specific communication.

In packaged goods industries (FMCG), reduction of the number of brands and creating master brand to serve many segments by product variety or brand extensions is a strategic option adopted by many players. The high cost of building many brands is significantly lowered if only few master brands have to be developed and promoted for different but related products.

Logos and Symbols:

Use of symbols like muscle man for MRF, lightening for Rin, helps the rural consumers to identify brands at the time of the purchase. If, the logos or symbols are not registered very clearly in the mind of illiterate rural consumer, then it is easier for the retailer to sell a fake or counterfeit version of the brand.

As most of the rural consumers do not know English and products of most of the national level companies are using only English language, the highlighting of logos and symbols can help the rural consumers to identify the brand during the final selection.

The sun symbolises life, moon depicts love and stars represent destiny, with such perception and interpretations symbols become very vital consideration for effective rural communication. Certain successful brands in rural market have numbers, symbols and animals as brands e.g., 555 soap, Monkey brand toothpowder, Gemini tea (with elephant), etc.

Logo and the colour are not the only factors that influence purchase. There are other factors to be considered like size of logo, shade of color and also the significance of combined effect. Rural markets respond in different ways to different symbols than the urban consumers.