Tag: Production & Total Quality Management BMS Notes

Sales Promotion

It is a short term tool adopted by the marketer to increase the sales of the particular product / service in a particular area for a particular period of time.

According to marketers, sales promotion includes those sales activities that supplement both personal selling and advertising, and coordinating. It also involves making the advertisements effective, such as displays, shows and exhibitions and demonstrations.

Types of Sales Promotion

The following are the different types of sales promotion:

Push-up Sales Promotion

It is the technique where marketers persuade third parties i.e. intermediaries like dealers, retailers etc. to stock the products of the respective company and push them towards the ultimate customers.

Marketers started providing various incentives, pop material etc. to the intermediaries which encourage them to sell the products to the customers. To increase product sales ratio push-up sales promotion is the important part of promotion efforts taken up by the companies.

In case of rural marketing the companies also follow push-up sales promotion strategies. The commonly followed push-up sales promotion strategies include:

• Free display materials: Free display materials like banners, sign boards, neon lights etc. are distributed among dealers to attract and inform the customers about the products.
• Storage materials: Storage materials like racks, shelves, refrigerators etc. are distributed among shopkeepers who help in visual merchandising and also aid in storing the product.
• Demonstrations: Important technique of push-up sales promotion, free demos at dealers’ shops inform the consumers about the handling of the product.
• Incentives to dealers: Under the push-up sales promotion special incentives are provided to dealers on the number of units sold to the ultimate consumers.
• Lucky draw contest: It is to motivate dealers to stock the company’s products and promote sales, and lucky draw contest are organized among dealers.
• Free gifts: It is a common strategy adopted by the companies and free gifts are often distributed among dealers during festive seasons to increase the consumer base.
• Pull-up sales promotion: As the name suggests, pull-up sales promotion is the tool where marketer pulls the customers towards their product through various promotional strategies and advertising.

Personal Selling

It is a process of face-to-face interaction between the salesperson and the prospective customer. Through a proper training and guide, a salesman can be a valuable medium between the marketer and the prospective customer.

A good salesperson is the one who has thorough knowledge about the product he is about to sell and tries to strike a common point of link between the product and the customer needs.

Personal Selling in Rural Region

Most of the marketers think personal selling is not feasible in rural areas because of various reasons ranging from scattered population to a large number of villages to be covered.

Though still not a prevalent practice adopted by the national level marketers, personal selling is widely done by the local manufacturers of utensils, garments, edible good etc.

For the marketer to adopt personal selling as a tool of promotion in rural area, following are few of the basic requirements that need to be present in their salesperson:

• Familiarity with the Rural Area: It is difficult for the salesperson to be familiar with rural area. As the population of rural region is scattered, it becomes a lot more important for the salesperson to have sufficient knowledge about rural area which he is supposed to cover.
• Proficiency in Local Language: Fluency in the local language is another key skill that must be present in the salesperson. It acts as a major communication point in converting prospective customer into an actual one.
• Acquaintance with the Rural Folks: It is a common tendency among rural people that they only pay attention to those people whom they can consider as a part of their social group. Thus, if the salesperson belongs to the particular rural district, in that case his job not only becomes easy but also chances of success in achieving his sales target increase strongly.
• Be Persuasive but not Pushy: A good salesperson is one who is persuasive but not pushy in nature. Rural people are always skeptical in nature about the new product and strongly hesitate to purchase it due to lack of faith.
• Here a salesperson needs to remove the doubts of the prospective customer and make him believe to purchase the product. But being too pushy in his approach can ruin the chances of sale of the product.
• Public Relations: Public relations in case of marketing promotions in case of rural areas are highly important so as to create the formal relationship with the newly acquired customers. Also, dissemination of information concerning the rural folk is possible only through effective public relations.

Educating rural people about the importance of administering polio drops to children, vaccination to mother and child, sanitation, hygiene etc. has become possible only through the publicity health campaigns.

Free Distribution of Samples

Distributing free samples among rural people not only popularize the product but also gain huge acceptance among them. When the company decides to enter into new market and launch the new product, in such cases free distribution of samples is an effective pull-up sales promotional activity.

As compared to urban consumers, the tendency to try the new product is low in case of rural consumers because they have lack of faith about the new products. Free samples encourage trial purchase among consumers.

With-pack Premiums

Here, a free product is given either inside the pack or outside the pack. This attracts the rural customers to purchase the product. This is successful only when the free product is either complementary or useful to the consumers. For example, a free toothbrush that comes complementary with toothpaste.

Price-off Premiums

This refers to the cut-price technique for a product. This is useful not only in case of FMCGs but also in case of consumer durables if the discount is appropriate.

Money Refund Premiums

It refers to the price of the product, which is partially refunded to the consumers on the repurchase of same product by showing of proof of previous purchase like cash memo, empty wrapper, poly packs etc.

Exchange Premiums

It is quite similar to the above strategy, under which instead of refund of money a new product is given to consumers on showing of proof of previous purchase.

Interactive Games

Innovative fun-filled games generate interest among the rural crowd. The winner of the game can be rewarded with the product of the company which sponsored such games. Sometimes such games ensure high customer involvement and also increase the interaction between the marketer and target customers.

Fairs and Exhibitions

Fairs are a part of rural people’s life. For the rural people, they are the source of entertainment and a good opportunity to launch their products for the marketers in the rural market. It has mass appeal as several villagers come to fairs.

Customers may be attracted by using the mass media like organizing folk songs competition, folk dances, magic shows, puppetry shows, street theatre, acrobatic skills, juggler, etc.

Village Haats

Haats are the weekly markets from where rural people buy the items of daily necessities, garments, farm inputs etc. They are the source for rural people and a place of social gettogether. The existence of haats can be traced back to ancient times the times of Chandragupta Maurya.

Haats provide to the marketers an opportunity to display their products. Consumers are ready to try the product by overcoming all inhibitions and can get the touch and feel of the product and this will further generate sales as most of the people come to the haats with an intention to buy.

Melas

Melas are again the essential element of India’s culture and pull masses. In a trade mela, one can find variety of products. Melas are held usually in festive seasons like Dussehra, Diwali, Holi, Eid etc.

During melas, marketers get to interact with a large number of consumers and encourage for trial purchase. These melas help the marketers target large audience.

Mandis

Mandis are the place for agricultural produce and inputs. Mandis can be a good platform for manufacturers of agri-inputs both durables and non-durables. Durable are tractors, pump sets, threshers etc. Non-durable includes seeds, fertilizers etc.

FMCG

Rural markets offer FMCG companies a good growth opportunity. A slogan suits FMCG companies’’ More rural, more profit’’ However few things which can make jobs of FMCG companies easy are:

1) Rural-urban hubs: Creating some rural urban hubs where every village is within an hour of reach and could ensure a large percentage of population has easy access to urban areas and become the big markets of tomorrow.

2) Formal banking: Access to formal banking in rural areas would make the informal banking services like money lenders at stake which would be beneficial for the rural consumers, as it will also bring capital investments I to rural. This would improve agricultural productivity and also help to build small scale enterprises and other commercial venture.

3) Skill building: With the help of ITI’s industrial skills can be built up and young people can be prepared for their role in retail due to which skill building is needed for generating income opportunities in rural India. BPO, hospitality and other services would also build similar skills in them.

4) Market Penetration: Companies need to apply rigour to governance and control to make sure their strategies translate into required action and they have to develop novel strategies to serves rural consumers. It is required to understand consumers culture and thereby sustain in rural markets.

5) Get regional: FMCG companies can adopt strategies which the rural consumers would feel closeness towards them according to rural consumers tradition and use of folks for the region would even help to gain customer loyalty.

6) Continuous Research: Continuous research should be undertaken by FMCG companies to understand the changing needs of the rural consumers and thereby the companies would also change and manufacture products accordingly.

Consumer Durables

Consumer durables involves any type of products purchased by consumers that manufactured for long term use. As opposed to many goods that are intended for consumption in the short term. The consumer durables industry can categorize into two segments:

• Consumer electronics (brown goods): Television, laptops, cameras, computers.
• Consumer appliances. (white goods): Washing machines, kitchen appliances, ovens, air conditioners and fan.

Rural consumers are very much cautious about their money and their spending level. It might be due to the fact that they have little scope of earning additional money outside their usual sources. In other words, for them marginal utility of money is very high so they are very cautious. Indian rural consumer durable market is very vast size and having lot of opportunities. Guidelines to consumer durable industry are as follows:

• Modify the product to market for the needs of rural awareness about the products.
• Arrange customer care units in all areas for clarifying and giving the information about their products.
• By considering the population the organization have to establish or open new sale outlets.
• To encourage social activities for development of rural areas for brand loyalty.

The key growth drivers for consumer durable industry are as follows:

• Rise in disposable income: The demand for consumer electronics has been rising with the increase in disposable income coupled with more and more consumers falling under the double income families.
• Availability of newer variants of a product: Consumers are split for choice when it comes to choosing products, Newer variants of a product will help a company in getting the attention if consumers who look for innovation in products.
• Product pricing: The consumer durable industry is highly price sensitive making the price the determining factor in increasing the volumes at least for lower range consumers. For middle and upper range consumers, it is the brand name, technology and product features that are important.
• Availability of financing schemes: Availability of credit and the structure of the loan determine the affordability of a product. Sale of a product is determined by the cost of credit as much as flexibility of the scheme.
• Rise in the share of organised retail: Rise in organized retail will set the growth pace of the Indian consumer durable industry. The share will go bigger players entering the market.
• Innovative advertising and brand promotion: Sales promotion measure such as discounts, free gifts and exchange offer, coupon codes helps company in distinguishing itself from others.
• Festive season sale: Demand for TVs come during the festive season as at that point of time the company releases new tvs with different and unique features which thereby attracts the customers.

Agriculture goods and Services

Agriculture produces and marketing continues to be on a higher side amongst the Indian population. Most of the agricultural produce comes from the rural market due to the large access of the land to be produced for as compared to the urban areas. Agricultural produce has its own features of their own they are as follows:

• Uncertainty: There is a high degree of uncertainty because the country wholly depends on the rainfalls. It is very difficult to forecast the volume and the output. The cultivator can only plan the production of a certain crop but he final output depends upon the weather, disease, pests, fertilizers etc which does not posses any control. Hence things are uncertain during agricultural produce.
• Heterogeneity of produce: The quality of agricultural produce cannot be controlled as it can be done to other products. This lack of standardization of quality makes the task of gradation and assortment very difficult for the marketers.
• Perishability: Agricultural goods are more perishable than industrial goods. Although some crop such as rice, wheat, gram etc. retain their quality for a long time but most of the farm products are perishable and cannot remain long on the way to the final consumer without losing loss and deterioration in quality.Hence the marketer needs to preserve in an appropriate manner and make it available to the consumer at its earliest way or manner.
• Seasonality: Seasonal agriculture is a problem itself and one cannot stop it as production cannot be adjusted according to the demand. Hence maintaining smooth supply of agricultural produce according to the season helps to call for good and large storage space.
• Processing: Some of the agricultural products like sugarcane, cotton, jute, tobacco etc have to be processed before they are consumed. This requires adequate processing facility.
• Bulkiness: Agricultural products tend to be bulky and their weight and volume are high when compared with their value. This makes their storage and transportation difficult and copy.

Fake brands are identified under two broad categories, namely:

Counterfeit products: These are fake products that bear identical name of product/ packaging/graphics/colour scheme and even same name and address as the genuine manufacturer. They look exactly like real products other than the legal owner of the real products & trademarks.

Pass-Off products: Such products have a similar sounding name or have a similar spelling with similar looking packaging and design. These products are meant to mislead the consumers who are illiterate or in a hurry to purchase goods.

When brand loyalty is difficult to achieve and brand identification is a big challenge in the presence of fakes and counterfeits, innovation in packaging becomes extremely critical. Since only select people can read the name of the brand in the rural market. These innovations in the form of pack sizes and colours act as differentiator and can create demand-pull because of the excitement they create in the mind of consumers.

Rural markets suffer from the problems of low penetration and poor availability of branded products. Hence, although there exists a huge demand for branded products, there are no distribution channels to make the product reach the customer. This has led to the growth of fake brands.

• Ponds has been replaced by Bond’s talc
• Fair & Lovely by Fair & Lonely
• Lifebuoy by Likebuoy/Lifeboy

Fake brands exist in rural as well as urban locations. But the problem is more acute in rural areas especially the deep pockets which are less accessible and people have very little knowledge about the original brands. “Most people in rural India can recognize alphabets but not complete words, so during a research, we found a whole lot of samples of fake Clinic Plus shampoo sachets where the visual was similar to the original brand but the name was changed to ‘Clinton’ as Bill Clinton was to arrive soon in the country. During another such raid, we collected about 99 variants of Fair&Lovely cream including Fair&Lonely, Far & Lovely etc.”, said Mr. Pradeep Kashyap, president, Rural Marketing Association of India (RMAI) and CEO, MART while sharing an interesting incident in past.

The Indian rural landscape being scattered in smaller villages, gaining access in all of them is a tedious task for brands. Also, most of the FMCG brands have not been able to set up an efficient distribution network in such areas. The local entrepreneurs are well aware of these challenges. Hence, take advantage by manufacturing cheap substitutes of original brands, misleading the rural consumers. These manufacturers have an advantage of being local and thus reach the shops before the original brands do.

Such counterfeits piggy back on huge marketing budgets of FMCG companies. The rural consumers are aware of the brand owing to ads broadcasted on radio & television channels. But on time of purchase, the consumers tend to pick their fake counterparts due to unavailability of original product or get fooled by the retailers who on purpose sell cheap products for higher margins.

Over the time the share of fake products in the FMCG market has grown to 10- 15% causing a deep hole in the pockets of the FMCG companies.  A study conducted by AC Nielson, a research agency reveals that FMCG industry loses around 2500 crores annually to counterfeits and pass-off products. In another recent survey conducted by AC Nielson reveals that top brands in India are estimated to lose up to 30 percent of their business to fake products. Besides the loss of revenue, the leading companies also bear the damage to brand image and brand loyalty of consumers.

On a whole, the brands not only suffer in terms of revenue but also have to compromise on the brand image which in no case can be tolerable. Therefore, various brands have come up with unique strategies to overcome their shortcomings in the rural markets and curb the growth of fake brands in rural areas.

Companies like Coca-Cola have set up an elaborate system to curb the menace of duplicate manufacturers, offering incentives to informers.  It has 48 consumer response coordinators across the countries who work with their teams and redress consumer complaints directly, including overcharging and spurious bottling. Besides, it has a large network of route salesmen who have a one-to-one relationship with the retailers on their beat and keep their ears to the ground. When they spot suspicious activity, they inform company officials. So though it is impossible to stop counterfeiters totally, it is possible to minimize the damage they cause.

Upgrading the product packaging periodically or launch product variants so that the manufacturers of counterfeits find it difficult to copy their products. Hindustan Lever has initiated special tamper-proof packs for its deodorant spray ‘AXE’, whose nozzle can’t be detached from the body while Procter and Gamble uses special labels for its Vicks Vapo Rub which does not peel off even if soaked overnight in water. This makes it difficult for spurious goods makers to imitate.

Stopping the counterfeits market is a long process but it’s more important for companies to create awareness among the consumers about the ill effects about such fake products and the hazards they pose.

Companies should not only price their products competitively, but also offer their rural prospects the maximum value for money spent. Indian companies can do this by putting in place an aggressive cost structure. Re-designing of products for the rural market should be done in a manner to maintain a low cost for the products. Refill packs are a good example in this case.

Law of demand says ‘Higher the price of the products, lower will be the demand of the product and lower the price of the product, higher will be demand for that product’. This law is totally applicable in the rural markets. Because of the relatively lower income, the rural consumer is more sensitive towards price. Marketers have to plan their activities in order to bring down the cost of production. They have to bring down the price in order to attract the customers e.g. Nirma Washing Powder.

The price decision must be influenced not just by the income received but also on when it is received and how it is allocated as rural consumers either get daily wages or the farmers get major income during the harvest season.

Companies must follow the strategy of penetration pricing with the backup of a good quality product to be successful in the rural market. As ‘two for one’ deal and coupons are not very effective marketing tools, it is far better to price the product as low as possible in the first place.

FMCG companies can cut cost to maintain the price points through reducing the net weight of the products or doing away with freebies and promotions. In developing markets, the profit margin on individual units will always be low. What really counts is capital efficiency getting the highest possible Returns on Capital Employed (ROCE).

The key is to make constant efforts to reduce capital investments by extensively outsourcing. Manufacturing, streamlining supply chains, actively managing receivables, and paying close attention to distributor’s performance. Very low capital needs, focused distribution and technology investments and very large volumes at low margins lead to very high ROCE business; creating great economic value for shareholders. The overall impact on the volumes and margins will be based not only on the industry dynamics but also on how intelligently the package is designed.

Price Point:

Low unit packs were there since long; only denomination is different now. The pioneers in this category were tea and coffee marketers. Brooke Bond pack was available earlier in 5 paise, later in 10 paise, 25 paise and 50 paise and then with inflation it became Rs. 1 pack. Now it is the time of Rs. 5 pack.

The current craze for Rs. 5 positioning could be because of Coke’s success in promoting the pouch strategy. Colas helped to highlight the price point to the consumer and their medium weight really threw open the gates for other manufacturers to come and ride piggyback on the Rs. 5 price point. And what is different from the past is that large numbers of product categories are now available in small packs and it has taken the shape of mega trends.

The small packs increase user base, usage occasion and can thus explode the market. The consumer base of soft drink increased from 16 crores in 2002 to 24 crores in 2004. A two-year period for which the Rs. 5-price point remained in force.

The Colas started it but host of other branded products are now realising the importance of being present at Rs. 5 price point. Ready availability of five rupees coin has been an advantage and many consumers are not worried as much about grammage as price. They are used to ask for Rs. 2 or Rs. 5 worth of commodity.

Some of the brands that HUL sells for Rs. 5 are Pond’s Talc, Pond’s Cold Cream, Rin, Taaza, Fair & Lovely and Lux. The price point also helps branded FMCGs, which are battling fakes from unorganized sector. Rs. 5 price point leads to growth in user base of brands and increased category penetration for those who have introduced such packs.

Key to successful rural marketing lies in selling goods and services that can be afforded by villagers. Most of the rural population depends upon agriculture for livelihood and as such their income is irregular. Also the per capita income of the rural areas is lower.

It is estimated that more than two-thirds of Indian villagers belong to low income group, and thus they are very much price-sensitive. A villager will purchase a particular product only if he feels that he is getting enough value for it.

Rural population normally does not indulge in conspicuous spending. In order to sell to the village markets, many organizations developed low priced options specifically suited to the rural customer’s pockets. Britannia’s tiger biscuit is a low priced snack which is popular among village kids.

In the year 1998, Lg electronics introduced its sampoorna television range targeted at rural buyers. Procter and gamble brought out tide naturals, a comparatively cheaper detergent powder. Most brands of shampoo are available in sachets priced at Rs. 2-3.

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.

With rapid urbanisation and technological advancement, there is a shift in the pattern of consumption of the people in the rural areas. The transition has been studied in light of the objectives which were set at the beginning of the survey. These underlying objectives were to study the- changes in the pattern of consumption concerning the food items like cereals, pulses and beverages, non-food items like clothing, mobile, television and services like beauty clinics, barbers, and private tuitions, medical. Besides, this the gaps in rural markets regarding the availability of various ranges of products, services and understanding the opportunities to intervene.

As the time is changing the earning, consumption and saving pattern of the Indian consumers are also changing. The research made by Centre for Macro Consumer Research (CMCR) of the National Council of Applied Economic Research (NCAER) reports that there will be rapid shift of 42% in the income level of the rural households by 2015. This would become possible due to the development in agriculture, and other activities like construction, retail, trading, etc.

There is a huge dramatic change in the rural sector with a change with the shift in the income earnings and the consumption patterns of the rural consumers. But there is a huge disparity between the income generation and consumption pattern among the various states of rural India. Bridging this gap is a big challenge for the marketers and government.

There has been an overall change in the pattern of consumption expenditures made by the households. The consumption pattern has shown its changes concerning different periods of time, as in Financial Year 17-18, five years back and further to this again a ten year back data. Even the type of crops which were cultivated by the households across periods has shown changes. Traditional rain-fed paddy has been replaced by the scientific cultivation of paddy through System of Rice Intensification methods. Besides, changes are also prominent in consumption expenditures made by the households. If consumption expenditure is tracked for respondents, it becomes apparent that the portion of expenditure on food items made during the period FY 17-18 is less as compared to the figures five years back and furthermore for ten years back. Further, to this, the expenditure on items which are like packaged foods, beverages, gutka & Pan Masala shows displays a different trend.

The consumption of liquid beverages was more five years back while it is relatively less now. This can be attributed to the spread of print and social media campaigns which has made the respondents aware of health benefits and ill effects. However, the expenditures have constantly increased over the non-food heads like private tuitions, medical treatment and toiletry, cosmetics as compared to the data of 5-10 years back.

When the attitude of the respondents is captured over their behaviour in the market, it is interesting that the share of expenditure of the respondents on items like furniture, mobile batteries, mobile repair has increased over time.

The number of earning members from a family has also come up recently, the households previously were mostly dependent on one person for income, but now, some earning members are 3-4. The business establishments mostly have found that their returns are high if they run food stalls in Thela and temporary makeshifts selling tea and evening snacks. Respondents, especially the women folk have potential to earn a higher income by taking up vocations around the promotion of traditional skills like weaving.

The occupation pattern reveals the income generation pattern also. From the Table 3.7, we can find out more than 40% of rural people are engaged in agricultural and allied activities. Next followed by the wage earners, salary earners, and small shop keepers and so on. If we compare with urban sector, rural sector hits very little percentage of professionals and businessman.

In contrast, nearly 40% of urban people are earning regular salaries and just 3.45% of people alone engaged in agriculture and related activities. Wage earners and small shop keepers comes in the second and third place respectively which is similar in the rural sector and followed by the artisan, businessman etc.

Marketing can refine entire living style and system. Better quality products at reasonable price, improved income level, availability of facilities, etc., have direct positive impacts on quality of life. Quality of life improves and level crime reduces.

Naturally, marketing acts as catalyst agent for economic growth. There exists more attractive business opportunities in rural than urban. Rural market is more potential for consumer durables and services. Rural population largely depends on agriculture and it can contribute nearly 50% to total national income. Agriculture enjoys significant portion in export business, too. Rural marketing improves agricultural sector and improved agricultural sector can boost whole economy of the country.

The total cultivation area, approximately 74% is occupied by food crops and only 26% is occupied by non-food crops. This situation clearly exhibits the excessive dependence on food crops rather than non-food commercial crops. It is because of the farmer’s attitude towards food security i.e., they used to retain sufficient quantities of production for their own consumption and the rest alone goes – to the market.

Take the food crops such as rice, wheat, vegetables etc., as example whose retention quantity is estimated nearly 50%. In contrast, the entire production of non-food crops goes to the market without noticeable proportion of retention like food crops. For example, almost the entire production of cotton, sugarcane, groundnut, etc., are marketed. This has an implication in generation of disposable income.

In general, large farmers are able to generate adequate disposable incomes because they can grow food as well as non-food, commercial crops with the help of sufficient land holding pattern. But the small farmers are in a position to grow only food crops that too in a little quantity and are able to generate small disposable income.

So, the marketers surely show interest to target the large rural farmers. Anyway this situation is slowly changing due to the introduction of latest technologies in the agricultural sector for the result of high yield such as, high yield seeds, cross-cultured seeds, pesticides, etc.

Land Distribution & Use

One of the main obstacles for marketers to exploit the rural market potential has been the largeness of rural markets in terms of the areas it covered. It is much easier to divide it according to the needs of the urban population because of concentration, but it is very difficult in the case of rural market because of their widespread nature.

Distribution of villages in India:

This clearly shows that rural population is distributed in almost about 638365 villages. It is also noted that villages are not uniform in size. About 42 percent of the villages in India has population of less than 500 people in it.

Irrigation:

Irrigation plays a vital role while increasing the potentiality of rural market. Actually, in agricultural sector, many new technologies were implemented in irrigation only such as energized pump sets and so on to improve the overall yield and economy. To improve the irrigated area, many kinds of investment schemes like minor, medium and major are continuously framed and implemented by the Government.

For example, states like Gujarat, Madhya Pradesh and Maharashtra are expected to irrigate about 19 lakh hectares of land from the project Sardar Sarofar Project across river Narmada. We can imagine the prosperity of farmers in these beneficiary states.

The major source of irrigation is wells followed by canals. Nearly about 40% of gross cropped area is from approximately 80 million hectares of gross irrigated area. The important point to be noted here is, still nearly 60% of rural India is dependent on rainfall for their agricultural activities.

Anyway, many steps have been taken and major and medium level irrigation projects also initiated to improve the rural irrigation potential. One more important scheme launched by the Government in the year of 2005 was ‘National Project for Repair, Renovation and Restoration of Water Bodies’.

It mainly focuses on the restoration and augmentation of water bodies storage capacities and recovering and extending their lost potential. ‘Drip Irrigation’ programme was launched to cover more areas under irrigation. Currently, about three lakh hectares are under drip irrigation in various states of India and a great scope to extend this method under the context of shrinking ground water supply.

So, it is very clear that the availability of irrigation facilities leads to the higher technology development and finally results in the increased productivity, income and improved rural purchasing power.

The literacy level of rural people has a considerable impact on the marketing strategies to be adopted by the marketing team especially in communication with the rural people. Higher the level of literacy, the easier it becomes for companies to penetrate into rural areas.

As per the 2001 census, about 50 per cent of the rural population is literate. This has contributed to the increase in rural demand. This has changed the buying behaviour of rural consumers and lifestyles. An increase in literacy levels has resulted in an increase in demand for consumer goods.

From the table, we can make out that there has been a rise in the literacy rate during the last two decades, changes in the literacy rate from 1991 was only marginal. It can be further noticed that only 45 percent of rural people are literate in our country even today.

Although the Central and State Governments have implemented many schemes, severe punishments etc., to stop childhood marriage, keep away from education to girls, killing female child at the stage of birth itself, etc., unfortunately, these customs are still existing in many states of India such as; Bihar, Haryana, Rajasthan, Tamil Nadu, Uttar Pradesh and so on. These are all just because of higher illiteracy level among rural people and particularly lack of literacy level among rural women.

But the rural youth education and literacy level shows a good progress and prosperous rural India. Here, the contribution given by both State and Central Governments to improve rural youth literacy rate is noticeable one. This growth in youth literacy level increases the demand for modern, fashionable, current trend products among the younger generation.

Also, it increases the brand awareness of rural consumers for various products (national and international level). Marketers can make serious efforts to capture these adults’ group (falls in the age group of 20-35), for their products such as perfumes, two- wheelers, western outfits, etc., which accounts nearly 25% of India’s consumption.

Occupational pattern of rural people also has an impact on the nature of income generation, which will in turn affect the expenditure pattern. Purchase behavior of the rural consumers depends upon the nature of occupation and the consistency in the generation of income.

A major section of the rural population relies on agriculture and allied activities for occupation. So, the income in the hands of rural people is very much conditioned by the status of agriculture and other allied activities.

Agricultural and allied activities are the main occupation for the rural people. An allied activity includes Horticulture, Forestry, Fishery, Animal Husbandry (dairy, poultry, and goat), Floriculture etc., the everyday needs of the villagers are also met by many other types of occupations. In rural sector, agri-based occupation can be different types.

The occupations which can be generally seen in the villages are:

1. Farm laborer
2. Milkman
3. Washer man
4. Pot maker
5. Blacksmith
6. Barber
7. Carpenter
8. Cobbler
9. Priest
10. Weaver.

Other rural occupation which are non-agricultural and support agricultural requirements and the rural people in their daily life are:

1. Village doctor
2. Policemen
3. Traditional village nurse
4. Anganwadi workers
5. Teacher
6. Peon
7. Grocer
8. Mechanic
9. Cyber cafe owner
10. Venders
11. Agricultural experts
12. Electricians etc.

Census of 2001 reports that, this agri-based occupational trend is slowly changing and a gradual shift towards non-agri based work has been taken place. As per the NSSO Rounds Survey, for the year of 1999-2000, rural India’s Primary sector workforce accounts for 76.1%, Secondary sector 11.3%, Tertiary sector 12.5% and finally non-farm sector hits 23.8%, which is next to the Primary sector.