Module 2
Why Rural Marketing?
Segmentation, Targeting and Positioning
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Segmentation, Targeting, Differentiation and Positioning
5
Market Segmentation
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Market Targeting
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Positioning
Figure: Positioning Map: Large Luxury SUVs
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Segmentation in Rural Marketing
Definition: Dividing rural markets into smaller, homogenous groups to tailor
strategies effectively.
Why Segment?:
• Address diversity in consumer needs.
• Design focused marketing strategies.
Key Bases:
• Demographic: Age, income, gender.
• Geographic: Regions, village size.
Key Insights on Rural Market Segmentation
• Demographic Factors:
• Behavioral Patterns:
o High youth population driving
o Seasonal demand driven by agricultural
aspirations and consumption.
cycles.
o Rising literacy levels influencing o Loyalty to traditional and locally trusted
buying behaviors. brands.
• Geographic Diversity: • Strategic Importance:
o Villages range from isolated hamlets to o Effective segmentation aids in targeted
semi-urban setups. product development.
o Helps in optimizing distribution and
o Infrastructure influences accessibility
promotional efforts.
and marketing strategies.
Targeting in Rural Marketing
• Definition: Selecting specific segments within the rural market to focus marketing
efforts effectively.
• Key Criteria for Targeting:
o Market Size: Number of potential buyers in a segment.
o Growth Potential: Future opportunities based on rural trends.
o Accessibility: Ease of reaching the segment with products or services.
• Strategies:
o Focus on underserved or high-demand areas.
o Use local influencers to build trust and credibility.
Challenges:
• Limited infrastructure in remote villages.
• Cultural diversity requiring localized approaches.
Examples:
• Project Shakti (HUL): Leveraging rural women as micro-entrepreneurs to penetrate
deeply.
• ITC e-Choupal: Direct engagement with farmers for effective targeting.
Outcome:
• Targeted efforts maximize resource efficiency and consumer satisfaction.
Positioning in Rural Marketing
Definition: Establishing a unique and relevant image of a product or brand in the minds of
rural consumers.
Key Elements:
• Differentiation: Highlighting unique features or benefits of the product.
• Relevance: Addressing specific needs or aspirations of rural consumers.
• Trust: Building credibility through quality, affordability, and local relevance.
Approach:
• Use relatable communication styles (local languages, storytelling).
• Focus on functional benefits (durability, value for money).
Challenges:
• Low literacy levels demand visual and experiential messaging.
• Strong reliance on word-of-mouth and local influencers.
Examples:
• Colgate's Bicycle Entrepreneurs: Positioned as accessible and affordable oral
hygiene.
• Tata Salt: "Desh ka namak" (Nation's salt), emphasizing trust and purity.
Impact:
• Effective positioning creates lasting consumer loyalty and drives brand preference
in rural markets.
Understanding Rural Product Needs
• Unique Requirements: Products need to be aligned with rural consumers' lifestyle,
environment, and purchasing power.
• Key Considerations:
o Affordability: Price-sensitive rural consumers seek value for money.
o Functionality: Products should withstand harsh environmental conditions.
o Ease of Use: Products must be simple to operate, with minimal technical complexity.
• Examples:
o Nokia 1100 phone: Durable, energy-efficient, and cost-effective.
o Godrej ChotuKool: Compact, low-cost refrigerator designed for rural households.
Product Development Strategies
• Tailoring Features:
o Focus on quality, durability, and relevance to rural life (e.g., larger washing
machine capacities for joint families).
o Product features should translate emotional cues into physical benefits (e.g.,
sound of tractor engines for quality perception).
• Frugal Innovation:
o Emphasizes cost efficiency without compromising value.
o Example: Tata Nano – built using frugal engineering to meet rural
affordability.
Product Lifecycle Strategies
• Longer Lifecycles: Products in rural markets have prolonged lifecycle stages
(introduction, growth, maturity, decline) due to:
o Heterogeneity: Different regions adopt products at varying speeds.
o Distribution Challenges: Slower reach in underdeveloped areas.
• Customized Strategies:
o Tailor approaches based on product adoption stage:
▪ Introduction: Awareness-building and free trials.
▪ Growth: Improved accessibility via distribution.
▪ Maturity: Enhancing value through product augmentation.
Successful Rural Product Innovations
• Examples of Success:
o HUL Pureit: Affordable water purifier addressing clean water needs.
o Philips Free Power Radio: No batteries or electricity required.
• Key Innovations:
o Reverse Innovation: Build products from scratch to suit rural needs (e.g.,
low-cost, dry toilets by UNICEF in Rajasthan).
o Sachet Revolution: Small packaging ensures affordability for FMCGs.
Overview of Pricing Strategies
• Focus on affordability due to lower income levels.
• Offer value without compromising quality.
• Example: Sachet packaging for FMCG products.
• Importance of flexible payment options.
Techniques for Affordability-Based Pricing
• 'Sachet Pricing': Small packs for low-cost access.
• Tiered Pricing: Products for different income groups.
• Microfinancing and credit options for high-cost items.
• Partnership with local organizations for distribution.
Importance of Affordability in Rural Markets
• Rural incomes are significantly lower compared to urban areas.
• Affordable pricing ensures accessibility to essential goods.
• Enhances brand loyalty by addressing rural consumer needs.
• Drives product adoption and market penetration.
Case Studies in Affordable Pricing
• Sachet Revolution**: FMCG products in small affordable packs.
• Colgate Bicycle Model**: Innovative low-cost distribution.
• Max Vijay Insurance**: Affordable micro-insurance policies.
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Challenges in Affordability-Based Pricing
• Balancing cost and quality without compromising product value.
• Ensuring sustainable profit margins for businesses.
• Managing disatribution in remote and low-density areas.
• Educating rural consumers about product value.
Distribution Channels in
Rural Areas
Traditional and Emerging Strategies
Distribution Challenges
• Geographical spread and low population density.
• Poor infrastructure: roads, electricity, and logistics.
• High distribution costs for low-margin products.
• Dependence on intermediaries for last-mile reach.
Traditional Distribution Channels
• Haats and Shandies: Weekly village markets.
• Cooperative societies for agricultural and FMCG goods.
• Rural mobile traders: Traveling vendors.
• Public distribution systems for essential commodities.
Emerging Distribution Models
• HUL's Project Shakti**: Empowering women entrepreneurs.
• ITC e-Choupal: Digital hubs for rural market connectivity.
• Micro-warehousing for decentralized storage.
• Partnerships with NGOs for sustainable reach.
Role of Technology in Rural Distribution
• Assisted e-commerce for online rural retail.
• Mobile apps for inventory and supply chain management.
• Digital payments to enhance transaction transparency.
• GPS-enabled logistics for improved delivery tracking.
Case Studies and Success Stories
• ITC e-Choupal: Bridging digital and physical markets.
• Coca-Cola: Hub-and-spoke distribution in rural India.
• Tata Tea's Gaon Chalo: Reaching remote villages.
• Colgate Bicycle Entrepreneurs: Low-cost last-mile delivery.
• Elasticrun Rural Retail Strategy
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The Role of Technology in
Rural Distribution
Revolutionizing Reach in Rural Markets
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Importance of Technology in Rural
Distribution
• Addresses challenges of geographical remoteness.
• Reduces distribution costs and improves efficiency.
• Enhances product availability and accessibility.
• Promotes transparency and real-time monitoring.
Digital Hubs and Connectivity
• ITC e-Choupal**: Connecting farmers to markets via digital
platforms.
• Rural kiosks for access to product catalogs and order placement.
• Integration of digital hubs with local supply chains.
• Bridging the digital divide in rural areas.
Mobile and Smart Technologies
• Mobile apps for inventory management and order tracking.
• Use of smartphones for price comparisons and product discovery.
• GPS-enabled logistics for optimized delivery routes.
• Digital payment systems improving transaction reliability.
Assisted E-Commerce Models
• Enabling online ordering with local agent support.
• Reducing barriers to entry for rural consumers.
• Collaboration with last-mile delivery networks.
• Case Study: Amazon and Flipkart's rural penetration strategies.
Challenges and Opportunities
Challenges:
• Limited internet penetration and digital literacy.
• High initial investment for technology deployment
Opportunities:
• Expanding digital infrastructure in rural areas.
• Growing acceptance of technology among rural consumers.
Key Elements of Building Brand Trust
• Simple, Memorable Brand Names
o Use culturally resonant names (e.g., Sampoorna, Ajanta).
• Relatable Brand Identity
o Reflect rural lifestyles and values (e.g., Tata Shaktee for strength and
durability).
• Emotional Connection
o Align with community pride (e.g., Mahindra Bhoomiputra tractors).
Building Credibility and Overcoming Brand
Stickiness
• Early Mover Advantage
o First brands often dominate (e.g., Surf for detergent).
• Influence of Local Leaders
o Engage farmers, teachers, and sarpanches for endorsements.
• Consistency and Reliability
o Rural consumers prefer trusted, familiar brands.
Leveraging Community and Social Initiatives
• CSR for Community Engagement
o Initiatives like LIC’s Jeevan Bima Gram build trust.
• Localized Communication
o Tailor messaging to local dialects and customs.
• Word-of-Mouth Power
o Highlight local success stories and testimonials.
One Nation One Election
• Impacts?
• Pro’s
• Con’s
• How it is going to Impact Rural Markets
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