PRODUCT STRATEGY

Avin Bittu Renju Riba Riny

RURAL INDIA

Product
Rural context - product, features, quality - 4As Product concept in rural market - appropriate for rural environment - simple to operate - visually identifiable - affordable

 Eg : LG PHILIPS Micromax

Levels of a product

Rural product classification

Rural product

FMCG

Durables

Services

Agri:products

FMCG consumer goods

FMCG products are quickly consumed and purchased frequently Rural market accounts 50%of total consumption Rural market has grown significantly in last 5 years. 75% penetration for edible oil, tea biscuits etc. 50% for commodities such as shampoo, oral care products.

Contd..
Penetration is low for products like milk powder, instant noodles ,ketch up, jam etc. It is estimated that the consumption of FMCG in rural market will have an increased growth in future.

Consumer durables
Products like home appliances, automobiles, watches, sand furniture. Accounts 50% of total durable consumption. Penetration is of consumer durable has increased in the rural market. Increasing disposable income has an impact on market.

Services
Healthcare , telecom ,ICT , banking, insurance and education. Fastest growing telecom market second largest in the world 864million subscribers. Huge contribution is from by rural market. Low penetration of banking in rural area Moneylenders are the major financial services providers.

Contd..
245 million adults does not have bank accounts 7% of Indian villages have banks 80% does not have banks within 2km 32000 bank branches (40% of total) Insurance penetration is low in the early stages of our country. After post liberalization India has faced tremendous growth.

Contd.
Health care sector is emerged as the most progressive and largest service sectors in India. Increased awarenss in rural area has led to demand in health care. The major challenges in rural health care:-inadequate physical infrastructure - skilled man power

Contd
Government initiatives in rural India NRHM ICDS JSY

Contd.
New players in insurance sector improved the penetration in rural market. Rural penetration increased up to 25% 2012 it will increase up 35-42 % 73% of households are aware of life insurance. 19% are policy owners

Agricultural goods
Products are tangible goods used for farm activities - seeds - fertilizers - pesticides - implements (tractors,pumpsets) It contributes around 900billion annually.

Product decisions and strategies

While developing products for rural markets, it is important for a marketer to take decisions on product attributes like quality,features,design and style.

Individual Product Decisions

1. Quality
2. Features

3. Design &Style

Product Line and Mix Decisions

A product line is a group of closely related

products priced with in a certain range, targeted

at the same customer group and distributed

through the same channel.

A product mix is the set of all product lines and items offered by a company.

Company can take various product-mix decisions based

on their strategies, like

a. b. c. d.

Width extension(adding new product lines) Length extension (adding new product items) Line pruning(reducing the number of product items) Depth extension(adding new product variants)

Product Branding in Rural Markets

The concept of branding has been a late entrant in rural
markets. In a rural set-up, the retailer plays a significant role in brand promotion. The first-mover brands in rural markets become generic

Brands.(Surf,Dalda,clinic plus, Lifebuoy,)

Building Brands in Rural Markets

Developing a BRAND NAME Creating a BRAND IDENTITY Building a BRAND IMAGE

Fake Brands
Fakes are rampant in rural India.

Major brands and products are facing huge problems with spurious products. For example; Bonds (for ponds talc), Fair&lonely (for fair&lovely) Likeboy (for lifebuoy) Clamic (for clinic shampoo) Fighter(for Tiger Biscuits)

The FAKES MARKET

Fake Products in Rural Markets can be of Three Types; Look-alikes{Shagun for Lifebuoy(150 g) Lalita Amla for Dabur Amla} Spell-alikes{fare&lovely for fair&lovely Pomes for Ponds} Duplicates

Strategies to Counter Fakes

Companies have used several strategies to counter fakes. {eg:Dabur-Chyawanprash,Coca-Cola} Only Sustainable Strategy in the long run is to ensure deeper penetration, and continuous and regular availability of Products through coverage of the markets and by forging strong relationship with local retailers. Rural marketers should also create awareness through local promotion and should highlight the harm that spurious products can cause the users.

Packaging for rural markets

 Packaging plays a significant role in product offering Associated with

Affordability The ability to recognize convenience to users Appeal of the product

 Packaging at the primary level involves protecting the product At the secondary level it adds to the aesthetics and sales appeal of the product Packaging in rural areas should have special focus because of
Poor transport system Difficulties of safe storage Poor facilities

Product for rural market

Should have a longer shelf life than products for urban markets Be able to withstand extreme weather conditions Be able to withstand sudden and jerky movements on dusty roads Should have alternate storage arrangements Marketers should consider three important factors for packaging
Packaging material Pack size and convenience Packaging aesthetics

Packaging material
Tetra pack has become ubiquitous Plastics has took its place and its advantages are
Waterproof Provides effective barriers to vaporous substances Sunlight resistant Lightweight

Godfrey Philips introduction of Sona Bidis in plastic which protects it from being spoilt and damaged by moisture

Pack size and convenience

Introduction of small unit packs or sachets The sachet revolution was pioneered by velvet shampoo in 1970s
HUL introduced a 50 gram pack , priced at INR 2 of its largest selling brand ,Lifebuoy. Godrej introduced small packs of Cinthol, fair glow and Godrej for rural

The success of the sachet is attribute to the economical consumption of the product in addition to affordability

The sachet phase was followed by the coinage pack See-through pack Companies introduced soaps, cosmetics, cold drinks and tooth pastes in smaller packs.( fair and lovely, parachute oil)

Packaging aesthetics
Rural consumers appreciate bright colours Distinct lettering Local languages on the pack Images or symbols that conveys the products benefits
Lifebuoy identified as red soap Tiger biscuits has attractive red pack

Significance of colours differ from region to region ( ITC gold flake packing differences in south yellow and north- gold) Consumers recognise and remember brands by colour , visuals or numbers

Product warranty and after-sale service

Rural consumers attach great value to the warranty offered on the product The consumers expect
smooth, hassle free maintenance repairs at low charges quick availability of spares and accessories at reasonable rates

Tractor companies regularly organize service camps in big villages /small towns .

New product development in rural markets

The new product development process involves four stages :
Idea generation Concept testing Product development Market testing

Important aspect of designing products is that the product fit with the rural lifestyle and environment

Idea generation It is important to conceive a product idea and build a product concept in the rural environment by understanding the consumer lifestyle and behaviour patterns through consumer survey Concept testing Based on the idea once the concept is developed , it must be tested in the market It must be done in different regions,as needs change from area to area

Product development The next step is developing an apt product for the market and follows a term known as frugal engineering Cellphone(1100) Refrigerator size of a small cooler(Godrej chotukool) Car for rs.1 lakh (tata nano) all these are result of frugal engineering Frugal engineering helps in maximising value to the customers while minimizing non-essential costs

Market testing It decides the failure or success of the product The product need to be tested in different geographies as consumer responses could be different in different regions due to socio economic and physical characteristics of the place

PRICING STRATEGY

 Price is the amount of money charged for a product or service. Pricing is a determinant of the market demand for the product. The right price influences the quantities of products/ services that consumers will buy, which in turn determines the total revenue and hence profit of the business.

Pricing in rural India

Conservative rural people 1983 Sachet revolution Companies resorted to low unit price strategy Main focus Value for money products Growth of rural market Today, past price is not the only consideration for the purchase of the product.

How do companies price

In rural markets, consumer looks at the value for money Companies have to price their products to meet consumer expectations and generate profits In present days companies also opt for target pricing in rural segment Target pricing involves : setting a target price for the product prior to its production. EG: TATA NANO, GILLETTE

Consumer psychology & pricing

Some of the factors that rural marketer should keep in mind are as follows : 1. Rural consumers are very conscious of value for money 2. Rural consumers generally compare a products price to a reference price consider reasonable for a certain type of product. 3. Rural consumers still do not perceive the premium value of brands

Setting the price for rural products and service

Internal Factors Cost Pricing objective of the company. External Factors Price sensitivity of consumers Channel costs Competition Environment

Cost
Fixed cost & Variable cost Promotional cost Distribution cost

Pricing objectives
Profit maximization in the long run Minimum return on the sales turn over Deeper penetration of the market Keeping up with the competition Increasing sales volume and market share

Pricing strategy
The different pricing strategies adopted by marketers at various stages of product lifecycle includes : Skimming pricing Penetration pricing

Product Mix pricing strategy

The pricing strategy adopted by a product when it becomes a part of the product mix includes : Optional Product pricing Captive product pricing Product- Bundle pricing

THANK YOU