Index

Sr.No Topic Page No

1 Executive summary 2

2 Introduction 3

3 Strategies for going Rural 10

4 Rural Market and Rural Marketing 15

5 FMCG Category and Product 18

6 Opportunities Of Rural Market 29

7 Problem Of Rural Market 32

8 Recommendation 33

9 Rural demographic analysis 34

10 Conclusion 35

11 Bibliography 37

Executive summary

The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion. It has a strong MNC presence and is characterised by a well established distribution network, intense competition between the organised and unorganised segments and low operational cost.

Availability of key raw materials, cheaper labour costs and presence across the entire value chain gives India a competitive advantage. The FMCG market is set to treble from US$ 11.6 billion in 2003

to US$ 33.4 billion in 2015. Penetration level as well as per capital consumption in most product categories like jams, toothpaste, skincare, hair wash etc in India is low indicating the untapped market potential. Burgeoning Indian population, particularly the middle classand the rural segments, presents an opportunity to makers of branded products to convert consumers to branded products. Growth is also likely to come from consumer 'upgrading' in the matured product categories. With 200 million people expected to shift to processed and packaged food by 2010, India needs around US$ 28 billion of investment in the food-processing industry.

Thrust on rural development since 1950 eventually made India into an attractive rural market. Increased awareness along with rise in income levels influenced the rural marketing environment in the country (Velayudhan, 2002). Other factors that contributed to the growth of rural markets are penetration of media, rising aspiration of rural people and packaging revolution (Bijapurkar, Rama, 2000; Kotler et al., 2009). Fast moving consumer goods (henceforth referred to as FMCG) market has emerged as one of the most attractive rural markets in India (Kashyap, Pradeep & Raut, Siddharth, 2007). An effective FMCG marketing strategy in a rural setup essentially includes product variants, product categories, price points, sizes and widespread distribution network (Kumar & Madhavi, 2006). The general impression that the rural markets are potential only for agri-inputs is partly correct as there are opportunities to market modern goods and services in rural areas in India (Khosla, Ashok, 2000). The rural FMCG market in India has grown 15% in 2011 (Nielsen Report, 2012). The Indian rural consumer market grew25% in 2008 and would reach US$ 425 billion in 2010-11 with 720-790 million customers (Quarterly Report, CII-Technopak, 2009). According to FICCI Technopak Report 2009, FMCG industry is projected to grow by 12% and reach a size of US $ 43 billion by 2013 and US $ 74 billion by 2018.

Introduction

Rural market is the key to survival in India. Most consumer markets are getting cluttered, thereby slowing down the growth rates of consumer products. While overall volumes continue to grow reasonably well, there are too many players eating into each other's market share. Reducing prices and investing heavily in sales promotion becomes inevitable in the urban markets. Consequently, operating margins come under pressure and new growth markets need to be explored. It is here that the rural markets provide an opportunity, a ray of hope for a marketer.

Some Interesting Facts about the Rural Markets

Rural market comprises 74% of the country’s population, 41% of its middle class, 58% of its disposable income and a large consuming class. Around 700 million people, or 70% of India's population, live in 6, 27,000 villages in rural areas. 90% of the rural population is concentrated in villages with a population of less than 2000.For manufacturers of consumer goods, these markets are certainly hot cakes.

More than 50 per cent of policies are sold in rural India, more than 50 per cent BSNL and STD connections are sold in the rural areas. Also, Kissan credit cards was a huge success as Rs 977 billion has been loaned against this card. Moreover, 60 per cent signups on Rediff.com are from the small towns

The Indian rural market today accounts for only about Rs 8 billion (53 per cent - FMCG sector, 59 per cent durables sale, 100 per cent agricultural products) of the total ad pie of Rs 120 billion, thus claiming 6.6 per cent of the total share. So clearly there seems to be a long Indian economy is peculiar to the extent that it has a lot more rural orientation than most economies of the world.

Majority of the countries in the world are dependent on their industrial centers and rapidly growing cities for maintaining their growth rate. In India, though industries and the services sectors are centered around the industrial and urban areas, yet over 60 per cent of the work force is directly or indirectly dependent on the primary sector.

This sector contributes about one fourth of the total GDP and offers tremendous potential for growth in the near future. Being a low

income segment, this also does not get influenced easily by extraordinary economic situations.

As per the views of the Rural Marketing Association of India, there has been no impact of economic slowdown on the rural economy of India. A nation-wide study carried out in the rural markets of the country found out that the rural markets in the country actually offer an opportunity to the marketers to come out of current economic crisis.

Main reasons for such immunity are stated to be higher percentage of total expenditure on food items and the fact that majority of the population is involved in self-employment occupations, having no fear of loss of jobs. The telecom sector has witnessed a rapid growth in the villages and small towns. The total telecom subscriber base for India grew from 70.83 million in the first quarter of 2008 to 90.98 million in the second quarter. Out of this growth 71 per cent rise in this sector came from the rural India, while the urban areas accounted for the remaining 29 per cent growth. The study also brings out that more than 72 million Kisan Credit Cards are in use in the rural areas of the country, which number almost matches the number of Credit Cards under use in the urban areas. During 2008, larger part of growth of Fast Moving Consumer Goods (FMCG) came from rural and sub-urban markets. Majority of the people in the rural areas do not invest in stock markets and park their savings in low risk portfolios like post office/bank savings or fixed deposits. The government of India was quick to realize this and immediately after the recession began to show its impact began to direct its economic policies towards the rural sector. Fortunately for the country, at the critical juncture when the great recession knocked at the doors of Indian economy, several government sponsored programmes involving huge public expenditure in the rural areas were already being implemented.

The Interim Budget for the year 2009-10, presented by Mr. Pranab Mukherjee on February 16, 2009, also had its focus on the rural economy. Under the NREGS during the year 2008-09, about 3.51 crore rural households were benefited, generating 138.76 crore man days. For the year 2009-10, a massive allocation of Rs 30,100 crore has been made for the said scheme. In other words, this huge sum would be distributed as wages to the rural households during the said year.

Another gigantic rural development programme is Bharat Nirman, which aims at huge public expenditure in the rural infrastructure. It has six components, including rural roads, rural telecommunication, irrigation, drinking water supply, rural housing and rural electrification. As per the Finance Minister, the allocation to this programme was increased by 261 per cent during the period between 2005-09. A provision of Rs 40,900 crore has been kept in the interim budget, 2009 for this programme.

In addition to stiff doses of funds proposed through the above two flagship programmes, the Finance Minister also made significant allocations to various other programmes and schemes having rural focus. A sum of Rs 13,100 crore has been allocated for Sarv Siksha Abhiyan, most of which is to be spent in the rural areas. Mid-day meal programme, which is also termed as the largest school feeding programme of the world, has been allocated a sum of Rs 8,000 crore. To further supplement the efforts of nutrition to the rural students, another provision of Rs 6,705 crore has been made under the Integrated Child Development Scheme (ICDS), under which the pre-school children and the lactating mothers are provided nutrition and healthcare under Anganwaris.

Another important scheme with rural focus is Rajiv Gandhi Rural Drinking Water Mission, which aims at providing drinking water supply to the villages not covered by tap water supply. A sum of Rs 7,400 crore has been provided for this scheme for the financial year 2009-10. Rural sanitation is also an ongoing programme for which Rs 1,200 crore provisions have been kept. NRHM, which is a healthcare programme for the rural areas, has been provided with a hefty provision of Rs 12,070 crore.

It is apparent from the above that the direction of the Interim Budget 2009-10 has been towards the rural areas. Whether it is the growth of FMCG or consumer durables, or the telecommunication growth, rural areas of the country hold the key for future development. Enormous amounts of funds being pumped into the rural economy by the government would greatly supplement the natural growth of these areas. The trickle down effect, though delayed, has begun to actually show. If the trend continues, the so-called ‘digital divide’ may start experiencing imminent and rapid bridging.

Rural markets in the country have arrived in a big way. The hereto ignored rural areas have now revealed their true potential. The policy makers have realized that as soon as the cities and the industrial centres start becoming saturated

with growth potential, it is the rural market of the country which holds the key for future. Even at the pre-sent times of crisis, it is the rural economy and its hidden capabilities that may ultimately bail the economy out. It is for sure that the rural emphasis in the India’s economic policy is going to stay for quite some time in future.

The rural areas had remained, by and large, neglected after independence. But now, with improved focus on rural wage employment, rural infrastructure, rural healthcare, telecommunications, irrigation, rural housing, drinking water supply, nutrition and rural electrification in a big way by the government, the purchasing power of the people in these areas is on the rise and, if the current trends continue, the day is not far when the history of rapid growth of the economy for the next two decades would be scripted by the smart growth of rural economy in the country.

Rural Trends in India

A number of factors have been recognised as responsibl for the rural market boom to come into existence :

1. Increase in population and hence increase in demand.2. A marked increase in the rural income due to agrarian prosperity.3. Standard of living is also increasing in rural areas.4. Large inflow of investment for rural development programmes from government and other sources. 5. Increased contact of rural people with their urban counterparts due to development of transport and wide communication network.6. Increase in literacy and educational level and resultant inclination to sophisticated lives by the rural folks.7. Inflow of foreign remittances and foreign made goods into rural areas.8. Change in the land tenure systems causing a structural change in the ownership patterns and consequent changes in the buying behaviour.  9. Rural markets are laggards in picking up new products. This will help the companies to phase their marketing efforts. This will also help to sell inventories of products out dated in urban markets.

Tends indicates that the rural the rural markets are coming up in a way and growing twice as fast as the urban, witnessing a rise in sales of hitherto typical urban kitchen gadgets such as refrigerators, mixer-grinders and pressure cookers. According to a National Council for Applied Economics Research (NCAER), study, there are as many 'middle income and above' households in the rural areas as there are in the urban areas. There are almost twice as many 'low middle income' households in rural areas as in the urban areas. At the highest income level there are 2.3 million urban households as against 1.6 million households in rural areas. According to Mr.D.Shiva Kumar, Business Head (Hair), personal products division, Hindustan Lever Limited, the money available to spend on FMCG (Fast Moving Consumer Goods) products by urban India is Rs.49,500 crores as against is Rs.63,500 crores in rural India.

As per projections, the number of middle and high-income households in rural India is expected to grow from 80 million to 111 million by 2007. In Urban India, the same is expected to grow from 46 million to 59 million. Thus, the absolute size of rural India is expected to be double that of urban India. Rural income levels are largely determined by the vagaries of monsoon and, hence, the demand there is not an easy horse to ride on.

Apart from increasing the geographical width of their product distribution, the f ocus of corporate should be on the introduction of brands and develop strategies specific to rural consumers. Britannia industries launched Tiger Biscuits especially for the rural market. An important tool to reach out to the rural audience is through effective communication. A rural consumer is brand loyal and understands symbols better. This also makes it easy to sell look -alike. The rural audience has matured enough to understand the communication developed for the urban markets, especially with reference to FMCG products. Television has been a major effective communication system for rural mass and, as a result, companies should identify themselves with their advertisements. Advertisements touching the emotions of the rural folks, it is argued, could drive a quantum jump in sales.

Some Myths about the Rural Customer

Several myths abound the rural customer such as Rural people are not interested in branded goods

Rural market is a homogenous mass. Individuals decide about purchases The fact remains that Rural people account for 80 per cent of sales for FMCGs; They seek value for money Rural market is fascinatingly heterogeneous and Decision-making is a collective process comprising the influencer, decider, buyer consumer. So a communication needs to address several levels in order to make a difference.

Rural Kid – An Important Influencer

In rural India, it is the age group between 8 and 15 that influence most purchases more than any other group. They have a better retention of messages and often play back these messages to others too, despite the fact that the product is not targeted towards them .

Also, another typical rural phenomenon is that kids are sent by their mothers to purchase something without specifying a brand. So kids tend to ask for products they have seen or heard on radio or TV. So to a large extent, kids are driving this change as much as youth.

Growth in rural market bodes well for the FMCG sector

The rural market is currently worth approximately USD 9 billion in consumer spending in the FMCG space annually. Rural India accounts for 700 million consumers or 70% of the country’s population, accounting for one -third of the total FMCG market.

According to a report by Nielsen, the Indian rural market is tipped to grow more than ten-fold to USD 100 billion by 2025, presenting a huge opportunity for leading FMCG brands. One of the key drivers of the rural FMCG market has been the unprecedented growth of smaller packaging options. Lower priced packs have improved accessibility and increased the pace of penetration of FMCG products in rural areas. According to Nielsen, FMCG growth in the rural sector for the quarter ended March 2012, stood at 17.2 %, surpassing the urban segment at 16.5%. The purchasing power in rural areas has outpaced that of urban areas as non -farm incomes improve, bolstering consumer spending on FMCG products. Rural consumption growth has outpaced urban consumption with the percentage increase in monthly per capita expenditure in rural markets surpassing its urban counterparts during the period 2009 -2012.

Significant progress in literacy levels, higher government spending on welfare programs, growing support to agricultural sector, which is the major occupation of rural India and better infrastructure and DTH and mobile connections have also acted as a catalyst in bolstering rural demand for FMCG products. Several measures taken by the government to support the rural population including higher minimum support prices (MSPs), loan waivers, and disbursements through the National Rural Employment Guarantee Act (NREGA) programme have bolstered the purchasing power of this segment.

Strategies for Going Rural

A successful penetration into the hearts and wallets of the rural customer depends on the

following 4 as

Availability (of the offering) Affordability (of the offering) Acceptability (of the proposition) Awareness (of the brand) Availability

Figure 1: Rural Marketing – 4 A's Structure - Source: Kotler et al. (2009). Marketing Management A

South Asian Perspective, 13e, Pearson Education, New Delhi, pg. 12

Rural Marketing

Acceptability

Affordability

Awareness

Availiability

Developing a relationship with the retailer

The greatest challenge for the rural marketer was reaching out to the remotest rural destinations and increasing rural incomes. Data on rural consumer buying behavior indicates that the rural retailer influences 35% of purchase occasions. Therefore, sheer product availability can determine brand choice, volumes and market share.

Being first on the shelf and developing a privileged relationship with the retailer is a source of competitive advantage to consumer by good companies. In order to efficiently and cost effectively target the rural markets, the companies will have to cover many independent retailers since in these areas, the retailer influences purchase decisions and stock a single brand in a product category. Going to the retailers directly rather than depending on the wholesalers for distribution in the rural market as that had not proved to be very effective and proactive marketing medium.

Affordability

Re-engineering costs and creating new price points

Rural customer is a combination of rural sensitivities and urban aspirations. It wants to try out products, which were earlier considered to be the prerogative of the urban populace. But, price proved to be a major constraint. This necessitated creating new price points in order to reach out to rural consumers since a significant portion of the rural population are daily wageworker.

Many companies have achieved this by tinkering with the pack sizes. Sachets and miniature packs, as in the case of shampoo sachets priced at Re 1 and Rs 2 or toothpaste at Rs 10, have become the order of the day in hinterland India and help improve market penetration. Coca Cola brought down the average price of its products from Rs 10 to Rs 5, thereby bridging the gap between soft drinks and other local options like tea, butter milk or lemon water.

Product innovation

Driving rural consumption is much more than lowering prices and increasing volumes. It entails product innovation and developing indigenous products to cater to rural demands. For example, soap makers use advanced technology to coat one side of the soap bar with plastic to prevent it from

wearing out quickly. BPCL introduced a smaller sized cylinder to reduce the initial deposit cost and consequent refilling cost.

Awareness

Innovative methods of advertising

Mass media reaches only 57% of the rural population. Market penetration has lot to do with effective communication at local levels. Generating awareness, then, means utilising targeted, unconventional media including ambient media. Fairs and festivals, haats, offer occasions for brand communication. Cinema vans, shop-fronts, walls and wells are other media vehicles that have been utilised to heighten brand and pack visibility.

A few years ago, many companies congregated at the Ganges river for the Kumbh Mela festival, where about 30 million people, mostly from rural areas, were expected to come over the span of a month.

The companies provided 'touch and feel' demonstrations and distributed free samples. This proved to be extremely effective in advertising to the rural market.

Finding the right mix that will have pan-Indian rural appeal

The motivators for purchase in a rural consumer are different from those in the urban consumer. This implies that a mere translation of the urban ad copy to rural customers is not enough. Rather, it is the same as pushing urban communication to the rural market would surely fail miserably in terms of touching the hearts and minds of the rural customer. Knowledge of the nuances of language, dialects, customs, rituals, festivals, celebrations and traditions of the regions is a must

Yaara da Tashan..." McCann Erickson's ads with Aamir Khan created universal appeal for Coca ColaCoca-Cola

India tapped the rural market in a big way when it introduced bottles priced at Rs 5 and backed it with the Aamir Khan ads.

Overcoming Attitudes and Habits -Seeing Is Believing

It is of utmost importance to overcome attitudes and habits in order to increase consumption and penetration. Only three out of 10 people in rural areas use toothpaste or talcum powder, or shampoo and skin care products. Even in categories with high penetration, such as soaps, consumption is once per five bathing occasions.

Nothing works better than a demonstration of the functional benefits. A glass of water was stored from a bucket of water mixed with wheel. Then dirty clothes from the community were soaked in the bucket for 20-30 minutes and then another glass of water was taken from the bucket to compare it with the previous one. The significant difference could surely make them believe in the power of Wheel Washing Powder for cleaning clothes. A gathering of the village folks in the courtyard where a successful demonstration of the efficiency and efficacy of the products can be organized, would go a long way in changing existing habits and lifestyles and escalating to the ones needed by rural marketers.

Community Participation Based Marketing

It has been time proven that community participation for any rural communication produces fabulous results. It is here that the opinion leaders or influencers like the sarpanch, mukhiya, teacher, doctors could be roped in as brand ambassadors.Asian Paints painted the house of the sarpanch and others followed the league. The teacher, doctor spread a word on health and hygiene issues, a blessing in disguise for the marketer of Personal Care Products.

Hindustan Lever Limited (HLL)- Well Entrenched In The Rural Market

The Company is a marketing giant dealing with Packaged Mass Consumer goods (PMCGs). The company has traditionally focused on the rural market. Some of its major business categories like Fabric Wash, Personal Wash and Beverages, already get over 50% of their sales from rural areas.

The lynchpin of HLL's strategy has been to focus on penetrating the market down the line activating the brand in the rural market through different projects like Project Streamline, Project Shakti and Project Bharat.

Project Shakti

Project Shakti is a strategy adopted by HUL to tap the rural households directly. Project Shakti covered 62,000 villages across twelve states, through the village women entrepreneurs, called Shakti Amma (empowered mother), who have understanding of village needs and the products that are in demand. Project Shaktiis the combination of micro credit, training in enterprise management and self-help groups. The women guided by the company’s representative called the rural sales promoters (RSPs) were responsible for selling the products door to door at MRP to consumers as well as to the retailers at a discount typically given out by a distributor. They would pocket different margin for each different sale. The shopkeepers did not feel threatened because these women were not undercutting the MRP; also the stocks would come to their doorstep. (Gupta and Rajshekhar, 2005)

Project Streamline

Project Steamline was conceptualized to exercise and enhance control on the rural supply chain through a network of rural sub-stockiest, who are based in these very villages. The pivot of Streamline is the Rural Distributor (RD), who has15-20 rural sub-stockiest attached to him. Each of these sub-stockiest is located in a rural market. The sub-stockiest then performs the role of driving distribution in neighbouring villages using unconventional means of transport such as tractor, bullock cart, et al. As part of the project, higher quality servicing, in terms of frequency, credit and full-line availability, are provided to rural trade. Distribution acquires a further edge with Project Shakti, HLL’s partnership with Self Help Group of rural women.

The SHGs have chosen to adopt distribution of HLL's products as a business venture, armed with training from HLL and support from government agencies concerned and NGOs. A typical Shakti entrepreneur conducts business of around Rs.15000 per month, which gives her an income in excess of Rs.1000 per month on a sustainable basis. As most of these women are from below the poverty line, and live in extremely small villages (less than 2000 population), this earning is very significant, and is almost double of their past household income. This model creates a symbiotic partnership between HLL and its consumers, some of whom will also draw on the company for their livelihood, and helps build a self-sustaining virtuous cycle of growth.

Project Bharat

Project Bharat is the first and largest rural home-to-home operation to have ever been mounted by any company. The exercise was initiated by the Personal Products Division in 1998. It successfully addressed issues of awareness, attitudes and habits. In the course of the operation, company vans visited villages across the country and distributed sample packs comprising a low-unit-price pack each of shampoo, talcum powder, toothpaste and skin cream priced at Rs. 15.

The distribution was supported by explanation of product usage and a video show, which was interspersed with product communication. Thus we generated awareness of its product categories and the availability of affordable packs. The project saw a 100% increase in penetration, usage and top-of-mind awareness in the districts targeted. Other Corporates Making Headway In The Hinterland Amul, Coca Cola India, Eveready Batteries, Philips, Life Insurance.

Rural Market and Rural Marketing

Different experts and organizations have divergent views on what constitutes the term, ‘rural’. Collins Cobuild Dictionary (2001) describes the word ‘rural’ as ‘place far away from towns and cities’. A rural market broadly comprises of consumer markets, institutional markets and services (Dogra & Ghuman, 2008). According to Velayudhan (2002), rural marketing includes all those activities of assessing, stimulating and converting the rural purchasing power into an effective demand for specific products and with the aim of raising the standard of living. It is a two way marketing process of flow of goods and services from rural to urban areas and vice-versa (George & Mueller, 1955). Rural marketing is any marketing activity in which one dominant participant is from rural area (Kotler, et al., 2009).

Rural Buyer-Seller (Producer) Matrix

Rural Seller (RS) Urban Seller (US)Rural Buyer (RB)

I: RS-RB Intra-Rural (All products)

II: US-RB Consumer goods, services, agro inputs, farm implements & machinery

Urban Buyer (UB)

III: RS-UB Farm & Non-farm products

IV: US-UB Intra-Urban (All products)

Experts like, Harish Bijoor, Rama Bijapurkar and C.K.Prahalad and many researchers have been emphasizing on this fact. Hence, it is recommended not

to compromise on the quality of FMCG. Low prices have to be charged while maintaining the quality.

Urban Rural

Population 2001-02 (mn household)

53 135

Population 2009-10 (mn household)

69 153

% Distribution (2001-02)

28 72

Market (Towns/Villages)

3768 627000

Universe of Outlets (mn)

1 3.3

Source: Statistical Outline of India (2001-02)

Around 70 per cent of the total households in India (188 million) resides in the rural areas. The total number of rural households are expected to rise from 135 million in 2001-02 to 153 million in2009-10. This presents the largest potential market in the world. The annual size of the rural FMCG market was estimated at around US$ 10.5 billion in 2001-02. With growing incomes at both the rural and the urban level, the market potential is expected to expand further.

FMCG Category and products

Category ProductsHousehold Care Fabric wash (laundry soaps and

syntheticdetergents); household cleaners (dish/utensilcleaners, floor cleaners, toilet cleaners, airfresheners, insecticides and mosquito repellents,metal polish and furniture polish).

Food and Beverages Health beverages; soft drinks; staples/cereals; bakery products (biscuits, bread, cakes); snackfood; chocolates; ice cream; tea; coffee; softdrinks; processed fruits, vegetables; dairyproducts; bottled water; branded flour; brandedrice; branded sugar; juices etc

Personal Care Oral care, hair care, skin care, personal wash(soaps); cosmetics and toiletries; deodorants;perfumes; feminine hygiene; paper products

Rural markets: small is beautiful

By the early nineties FMCG marketers had figured out two things

• Rural markets are vital for survival since the urban markets were getting saturated

• Rural markets are extremely price-sensitive

Thus, a number of companies followed the strategy of launching a wide range of package sizes and prices to suit the purchasing preferences of India's varied consumer segments. Hindustan Lever, a subsidiary of Unilever, coined the term nano-marketing in the early nineties, when it introduced its products in small sachets. Small sachets were introduced in almost all the FMCG segments from oil, shampoo, and detergents to beverages.

Cola major, Coke, brought down the average price of its products from around twenty cents to ten cents, thereby bridging the gap between soft drinks and other local options like tea, butter milk or lemon juice. It also doubled the number of outlets in rural areas from 80,000 during 2001 to 160,000 the next year, thereby almost doubling its market penetration from 13 per cent to 25 per cent. This along with greater marketing, led to the rural market accounting for 80 percent of new Coke drinkers and 30 per cent of its total volumes. The rural market for colas grew at 37 per cent in 2002, against a24 per cent growth in urban areas. The per capita consumption in rural areas also doubled during 2000-02.

The strategies followed by various FMCG players are discussed below in terms of Promotion strategy, Pricing strategy, Operational Efficiency, Disinvestment, Corporate restructuring, Packaging, Product Line Pruning, Line Modernisation, Brand Management, Operation Streamline, etc. The various FMCG players, who have been successful in tapping the rural markets, are discussed below:

Divestment

In the 1990’s, HUL took to inorganic growth with a goal of building a Rs.10,000 crore company. HUL decided to disengage from all non-FMCG or commodity businesses. It divested and discontinued fifteen low margin and unrelated businesses including even the big ones as animal feed, specialty chemicals and oil and fats, with sales of Rs.1750 crores in 1999. It also divested nickel catalyst, adhesives, thermometers, seeds and mushroom businesses. This released cash for investments in core operations. Low margin exports were also weeded out for greater attention to export of manufactured FMCG products. The divestment by HUL resulted in increasing a

large proportion of sales from FMCG businesses and the rest came from several non FMCG businesses which were neither very profitable nor did they offer prospects for long-term leadership. The company then invested the amount realized from these divestments into building the FMCG businesses. Today, HUL is a focused FMCG company consisting of 35 power brands across twenty categories and the branded business accounting for 90 per cent of the sales. (Vijayraghavan, 2005)

Capital Investments

in Tax Havens HUL also invested about Rs.250 crores in two separate facilities in the states providing excise rebates and tax holidays - Personal care facility at Uttaranchal and for soaps and detergents in Himachal Pradesh. These investments provided efficiency gains and huge savings on account of excise and tax benefits provided by these states. These benefits have made HUL more competitive and in the position to cut the prices of its product whenever it is required to match the competitive offers by local and regional brands. The edge of local brands, which were manufactured by small-scale organization, who were exempted from certain form of taxation are also neutralized by this move.

Corporate Restructuring

HUL’s all major businesses except for new ventures were merged under two divisions HPC (Home and Personal Care) and the Foods (Foods, ice creams, confectionery and beverages). The organization was restructured into eight profit centers and two divisions. This was done with an objective to have a simple and leaner organization with less hierarchy, fewer levels and greater empowerment. This move was aimed to eliminate complexity and to increase the speed of strategic planning and decision-making.

Rural Market Division

Earlier each business division of HUL dealt with rural market on an individual basis. Now with creation of rural market division, company deals with rural markets as a single organization. This approach is expected tolead to better cohesion, greater push and deeper penetration, which might eventually lead to better sales and balanced growth.

Sales Team Restructuring

The sales team was restructured from two distinct sales teams i.e. one that 155 supplied soaps and detergents and another that supplied personal products such as Fair & Lovely, Close Up and Pond’s to the brand portfolio of 30 power brands. The company needed more focus to generate better profitability from lesser number of brands. The sales teams, which comprised of Area Sales Managers, Sales Officers and Territory Sales In charges, have been restructured. Territory Sales Incharges who were earlier reporting to Sales Officers would now directly repor6t to the Area Sales Managers. The Sales Officers would now supervise promotion and activation of brands in their respective areas. HUL also tried to rejuvenate the distribution by shifting emphasis on touching the consumers with three-way convergence: product availability, branded communication and higher level of brand experience instead of just ensuring the product reach. (Prahalad and Hammond, 2002)

Multiple Price Points

Realizing that the consumers do not necessarily upgrade in a linear fashion HUL offered products at every price point and provided value added options for different product categories by practicing segmented marketing. For example, Indian detergent market is structurally like a pyramid: laundry soap, low priced detergents, mid priced detergents and premium powders. HUL has Wheel laundry soap, Wheel detergent powder and International Wheel Active at the base. Rin Shakti powder and bar, Sun Light powder and Super 501 bar at mid price level and International Surf Excel at the top.

Product Line Pruning

HUL in some of the product categories like soaps relied heavily on brand extensions. In case of Lifebuoy toilet soap, so many variants were launched that this meant diluted focus, on part of company, more investment for retailer and confusion for the consumers. HUL planned to trim its product portfolio and concentrate on key brands only. It decided to withdraw from the market variants of its toothpaste brand Close Up such as Close up Renew and Close up Oxyfresh.

Line Modernization

HUL made significant investments in quality up-gradation by investing more than Rs.400 crores or 5 per cent of the sales revenue from 2001 to 2005. For example, Wheel was strengthened with enhanced fragrance to differentiate it in the discount segment, VIM dish wash bar was re-launched with a superior formulation. As about 20 to 25 per cent of the detergent soap can be lost washing in running water. Therefore, HUL developed soap with a coating on five sides, which saves 20 per cent wastage even in a hostile user environment. (Vijayraghavan, 2005)

Lifebuoy is one of the few examples of innovation led growth. In the midst of continuous decline for 5-6 years, HUL made a drastic, non-incremental change to revive the brand of 107 years. Perfume, colour and shape were changed; it was now toilet soap as against carbolic one. The launch of green Lifebuoy is also attributed to the changing aspirations of rural consumers (Carvalho, 2005).

Brand Management

In order to promote its leading scouring brand Vim, HUL also launched live demonstration and promotional campaign across the country with special focus on small towns in states like MP, Bihar and Orissa. It was done with an objective to educate rural consumers about the ongoing Vim Ghar Ghar Challenge television commercial that portrayed the women who were struggling to clean the utensils with ordinary dishwasher bars. By conducting live demonstration about vessel cleaning, it showed the effectiveness of its brand over other brands and other available substitutes. HUL used shop-fronts, walls, wells and other water points toincrease the visibility for Vim brand in the rural markets. Special stickers were pasted on hand pumps, walls of wells were lined with the advertising tiles; tinplates were put on trees surrounding ponds, the three main water sources of any village.

The various projects instigated by HUL to uplift their sales in rural markets and to tap the rural potential were:

Swasthya Chetna Campaign

Lifebuoy Swasthya Chetna campaign, was launched by HUL to built awareness about good health and hygiene. It demonstrated how simple habits like washing of hands regularly with soap could prevent transmission of diseases. HUL expected this social benefit campaign would also boost the

sales of Lifebuoy, a leading soap brand in rural market, positioned on the health and hygiene platform.

Project Vani

The main aim of Project Vani was to increase the brand usage of HUL amongst the rural consumers. The project vani promoted the concepts like health and hygiene through public service demonstration, which in turn, increased the demand for its personal care products. In late 1999, HUL engaged Ogilvy Outreach for planning and implementing the rural communication campaign. Messages were presented through colourful flyers, entertaining jingles and traveling cinema vans. The video ads were shown from the video vans with commercial lasting from two to twenty minutes. Ogilvy

Participation in Fairs

HUL participated along with other organizations like Parle, Colgate, and Mahindra & Mahindra in rural communication programme Grameenon Ke Beech, which was organized by Rural Communication and Marketing Ltd. Before the commencement of the mela, merchandising, audio publicity and distribution of lucky draw coupons were carried out. On the mela day, interactive stalls, spot sales, product briefings, interactive games like mehndi competition, magic show and distribution of lucky draw coupon were organized. HUL also ran a campaign at the Allahabad Kumbh Mela to demonstrate to the visitors the importance of usage of soap for better health and hygiene. As typically the rural people, who could not see dirt and germs with naked eye, felt that there hands are clean and there is no need to wash them with soap frequently. HUL representatives with help of ultra violet brandshowed the area, where the dirt and germs resided on the hands. Then they educated how they could prevent this and have better health and hygiene with regular washing of the hands. With Lifebuoy, a lower priced soap widely available in rural areas and positioned as one that protects from germs, HUL hopes that this awareness would lead to higher sales for the brand. (The Financial Express, 2001)

Imperial Tobacco Co. (ITC):

ITC is another dominant FMCG player which has made its presence felt in the rural markets. It is an example, of holistic and multi-faceted positive approach of creating a win-win situation rather than the typical exploitation approach of the corporate world (Business World, 2001). The involvement of ITC with rural markets was initiated with the creation of e-choupals.

E-Choupal

E- Choupal is a powerful illustration of corporate strategy linkage business. It leverages the internet to empower small and marginal farmers, who constitute a majority of the 75% of the population below the poverty line. By providing them with farming know-how and services, timely and relevant weather information, transparent price discovery and access to wider markets, e-Choupal enables economic capacity to proliferate at the base of the rural economy. The E-Choupal kiosk programme also supports other services like soil and water testing. Thus, it is facilitating the supply of quality inputs and vital information to both farmers and ITC. The kiosks also serve as an e-procurement system for ITC and in process helps farmer to earn higher prices by minimizing transaction costs.

The strategic intent of ITC is to develop e-Choupal as a significant two-way multidimensional delivery channel, efficiently carrying goods and services out of and into rural India. By progressively linking the digital infrastructure to a physical network of rural business hubs and agro-extension services,ITC is transforming the way farmers do business, and the way rural markets work.

ITC is procuring the farm produce through the network of these choupals, which are managed by village-based entrepreneur known as sancchalak. 50 sanchalaks are managed by sanyojak (co-ordinator) who is either former manditrader of a local dealer of ITC products and acts as a link between sanchalaks and ITC and also earns 161commission on e-choupal deals.This model has favourably impacted the chain of activities related to agriculture. Not only qualityand volume but also the prices of farm produce have risen and their cost of transaction has declined. Small and poor farmers have been the principal beneficiaries. (Ramachandran, 2005)

Sustainable Development

The live stock development programme has been started by ITC to create the high yielding progenies through genetic improvements. Re.1 is contributed from every ‘Classmate’ notebook sold by ITC toward supporting rural development initiatives including primary education in villages. It has started comprehensiveness natural resource management initiative called ‘Sunehra Kal’ in the vicinity of choupals.

NIRMA Chemicals:

Detergents penetrated the Indian markets in 1959 by HUL, with the introduction of Surf. It was unchallenged and was having virtually a monopoly with brand becoming generic to the product category. Only ten years later in 1969, Karsan Bhai Patel, who worked as a chemist with Gujarat government's Department of Mining and Geology created his washing powder. It was a tiny setup almost a one-man show in 10 by 12 feet room where he himself was doing everything right from mixing, packing and then subsequently selling. The price of the washing powder named Nirma was Rs.3.50 per kg, at a time when Surf was selling for Rs.15 per kg and the lowest price detergent of the time was at Rs.13.50 per kg.The strategies and marketing mix which Nirma employed to emerge as one of the market leaders was largely related to the knowledge about customer insight.

Nirma became generic to the product category and virtually ruled the rural market with no competition worth the name for a long time (Ratna, 2002). The strategies implemented by Nirma, which resulted in tremendous success, especially in the rural market where it created a market, which never existed before, are as follows:

Product Strategy

Nirma though did not offer a very high quality product but it offered value for money and provided an alternative to the common masses at the Bottom of the Pyramid, which earlier thought that the detergent was a costly proposition and hence not a product made for them. The product symbolized the common man's value system of saving money wherever it is possible. Customers were delighted with a product made for them, which offered them benefits more than what they paid for. Nirma remained a single product company for eighteen years till 1987, till the detergent cake was launched. After that it gradually increased the product portfolio by introducing carbolic soap,

beauty soap and in 2001, it launched the Nirma Salt. The enlarged portfolio of products provided it with an opportunity to leverage the existing distribution system as the growth for the detergentmarket was saturating both the urban and rural areas.

Packaging Strategy

The strategy used for packaging by Nirma was very simple with a very simple printing to save the cost. It was pedestrian packaging i.e. the colour of printing was bad, sealing was not proper and sometimes it could not hold the powder inside or keep the moisture outside. But the most important thing for the customers was that it saved money and all the benefits were passed on to the customers.

Promotion Strategy

Nirma adopted wall paintings and celebrity advertisements as its promotion strategy. Nirma believed in long lasting commercials and ads that last for a long time without need for withdrawing a campaign. All this was done with a conscious focus on 163 the keeping the cost to the bare minimum.

Pricing Strategy

The main price strategy that was adopted by Nirma was to price its products lower than the market leaders. Although, the products of Nirma were of reasonable quality but savings from overheads and promotions were passed on to consumers as a lower price. Nirma's washing powder adopted a market penetration strategy by pricing its product 40 per cent lower than the highest priced product in the market. For keeping its prices low it opted for backward integration by setting up plants to manufacture Linear Alkyl Benzene (LAB) and soda ash both the key ingredients for detergents. The backward integration and lean distribution system helped to price the products much lower than competitors.

In the year 2000 Nirma introduced the Nima bathing soaps at penetration price of Rs.5 and took away share from Lux and other brands in the popular soap segment. (Business World, 2001)

Distribution Strategy

Nirma has utilized a very lean and simple distribution system for the detergent business with 400 Nirma distributors and 20 lakh retailers to save the margins, which otherwise would have been demanded by the additional middleman. Its distribution efforts were highly concentrated in western and northern zones. Nirma has demonstrated the fact very clearly that to be successful in rural market requires a very common sensible approach of delivering the value proposition that is very attractive for the consumer.

Coca-Cola India Limited:

Coca-Cola India has identified rural markets for volume growth in India in the new millennium. The cola giant is slowly adopting alocalized marketing strategy with regional brand ambassadors and localized marketing campaigns to reach out to the rural consumers (Ratna, 2002). Rural marketing strategies adopted by Coca Cola can be powder and other substitutes. Colgate tooth powder was direct extension to these products as they could apply Colgate tooth powder on their index finger in a similar manner as they were applying other powders. By understanding rural mouthwash habits it was able to position and successfully sell its tooth powder in the rural market. Colgate very innovatively used the rural consumers' habits to gradually upgrade them to toothpowder from other substitutes and from there on to the toothpaste. This strategy of launching the toothpowder also did not require the purchase of toothbrush for the whole family members. This reduced the overall cost, considering the fact if the entire family, which were not using oral dentifrice, had to purchase the toothbrushes, it would have been significant investment by their standards.

Colgate

Colgate has followed very successful sachet route by introducing 10 gm sachet of tooth powder for Rs.1.50 and toothpaste with Super Shakti in 15 gm packs for Rs.3 each. Affordable pricing is something that has increased its sales in rural India and there have been many who have upgraded from toothpowder to tooth paste successfully in the process. Colgate has also gone ahead with combi-packs offering a toothbrush with 30 gm toothpaste for Rs.8.50. That helped it to increase the user base in rural regions to great effect. Sachets and combi-packs are the ones that find encouraging responses in the rural segments and are the fastest moving pack sizes in these markets. It also developed the

value pouches of tooth powder of different denominations, priced in accordance with reference price points. The package size starts from as small as 10 gm. sold for Rs.1.50 and there are four different package sizes upto 200 gm, which was sold for Rs.33.75. The larger sachets of toothpowder has been developed with capping facility, because of insight that large number of bathrooms in the rural areas do not have proper storing place. The capping on the sachets prevents the spillage and loss of toothpowder as the capped sachet can be stored evenin difficult conditions and places.

Godrej Consumer Products:

Godrej is a company with country wide distribution network to cater to rural market (The Hindu Business Line, 2005). The variousstrategies employed by Godrej to promote its band in the rural market are:

Product Strategy

As a start, Godrej marketed the same pack sizes and variants of its soaps nationally. But since the poor states of India werenot responding the company decided to change the pricing and the gram mage of the soaps for these markets.

Pricing Strategy

Godrej Consumer Products introduced smaller pack sizes of some of its soap and put the 50 gm cakes of Cinthol, and Fair Glow at Rs.5 while Godrej No.1 offered for Rs.4 meant especially for states like Bihar, Madhya Pradesh and Uttar Pradesh to increase per capita consumption.

Place Strategy

Godrej tied up with FMCG Company Jyothi Labs for marketing Godrej tea across the country. As Jyothi Labs has large field sales force and distribution network, it 170 ensures faster availability of Godrej tea across the country in maximum number of outlets. Procter & Gamble had similar tie ups with Godrej, where Godrej distributed the P&G's products across the country but because of some reasons this tie-up came to an end.

Promotion Strategy

Along with promotion on mass media like television, Godrej also uses the vans, as below the line promotional activities to promote products in the rural areas. These vans play music and provide free gifts to the audience, which has

gathered in the village choupal. Thereafter the vans sell the brands to few shop in the village that are able to sell these brands on the basis of top of the mind recall, because of recent promotions and trials of the free gifts. These campaign and trials also generate lot of word of mouth publicity for the brands.

Opportunities of Rural markets

In the early 2000s, around 700 million people, i.e. 70% of the Indian population lived in 6,27,000 villages, in rural areas. Of this, 90% were concentrated in villages with population less than 2000. According to a study conducted in 2001 by the National Council for Applied Economic Research (NCAER), there were as many "middle income and above" households in rural areas as there were in urban areas.Infrastructure is improving rapidly - In 50 years only, 40% villages have been connected by road, in next 10 years another 30% would be connected. More than 90% villages are electrified, though only 44% rural homes have electric connections. Rural telephone density has gone up by 300% in the last 10 years; every 1000+ population is connected by STD. Social indicators have improved a lot between 1981 and 2001 - Number of "pucca" houses doubled from 22% to 41% and "kuccha" houses halved (41% to 23%).

Percentage of BPL families declined from 46% to 27%. Rural literacy level improved from 36% to 59%. Low penetration rates in rural areas, so there are many marketing opportunities

Comparison of usage b/w urban and rural areas

Durables Urban Rural Total (% of Rural HH)

CTV 30.4 4.8 12.1

Refrigerator 33.5 3.5 12

Shampoo 66.3 35.2 44.2

Toothpaste 82.2 44.9 55.6

Problems of Rural Markets

- The development of appropriate communication systems to rural market may cost up to six times as much as reaching an urban market through established media, need rural communication facilities.

The problems of physical distribution and channel management adversely affect the service as well as the cost aspect. The existent market structure consists of primary rural market and retail sales outlet. The structure involves stock points in feeder towns to service these retail outlets at the village levels. But it becomes difficult maintaining the required service level in the delivery of the product at retail level.

Rural consumers are cautious in buying and decisions are slow and delayed. They like to give a trial and only after being personally satisfied, do they buy the product.

Culture is a system of shared values, beliefs and perceptions that influence the behavior of consumers. There are different groups based on religion, caste, occupation, income, age, education and politics and each group exerts influence on the behavior of people in villages

As a general rule, rural marketing involves more intensive personal selling efforts compared to urban marketing. Marketers need to understand the psyche of the rural consumers and then act accordingly. To effectively tap the rural market a brand must associate it with the same things the rural folks do. This can be done by utilizing the various rural folk media to reach them in their own language and in large numbers so that the brand can be associated with the myriad rituals, celebrations, festivals, melas and other activities where they assemble

Life in rural areas is still governed by customs and traditions and people do not easily adapt new practices. For example, even rich and educated class of farmers does not wear jeans or branded shoes.

An effective distribution system requires village-level shopkeeper, Mandal/ Talukalevel wholesaler or preferred dealer, distributor or stockiest at district level and company-owned depot or consignment distribution at state level. The presence of too many tiers in the distribution system increases the cost of distribution.

Television has made a great impact and large audience has been exposed to this medium. Radio reaches large population in rural areas at a relatively low cost. However, reach of formal media is low in rural households; therefore, the market has to undertake specific sales promotion activities in rural areas like participating in melas or fairs.

Many rural areas are not connected by rail transport. Kacha (wet) roads become unserviceable during the monsoon and interior villages get isolated

There are not enough opportunities for education in rural areas. The literacy level is as low (36%) when compared to all- India average of 52%. Demand for goods in rural markets depends upon agricultural situation, as agriculture is the main source of income. Agriculture to a large extent depends upon monsoon and, therefore, the demand or buying capacity is not stable or regular.

Recommendations for Effective Rural Marketing Practices

- The Government has to develop infrastructure facilities like roadways, railways etc., in rural areas so as to reach large Indian rural market.

- The rural communication facilities like telecommunication systems, internet facilities, broadcasting systems etc., have to be improved so that there will not be any communication gap among players of the rural market segments.

- Effective Supply Chain Management practices can bring down the various costs associated with rural markets like distribution cost, cost of communication, customer cost, cost of sale etc.

- Educating rural consumers is the key to successful rural marketing. Rural consumers need to be educated in all aspects like usage of the products, gathering product information, consumer rights, laws and regulations, getting the right product at right place at right cost in right time.

- The efficient marketing is predominantly influenced by efficient distribution system it means products such ultimate consumer in the quickest time possible at minimum cost. The state marketing board or federation or market committees also the producers, traders and sellers have necessarily to be consulted as they have the principle interest towards its use.

- Suitable structure of support prices for various farm commodities adjusted from timeto-time. Adequate arrangement of agricultural produce on support price, if the price falls below the level.

- Rural marketing is the nerve center of a rural economy; rural markets are the channels for the movements of goods and services as well as to promote cultural integration.

- Greater Need for Strategic Rural Marketing Practices Which include Client and location specific promotion

- Joint or cooperative promotion- Bundling of inputsDevelopmental marketing- Unique selling proposition (USP) Extension services

The state marketing board or federation or market committees also the producers, traders and sellers have necessarily to be consulted as they have the principle interest towards its use. Suitable structure of support prices for various farm commodities adjusted from time to-time. Adequate arrangement of agricultural produce on support price, if the price falls below the level.

Government Policies and Regulatory Framework

Goods and Service Tax (GST): GST, which will replace the multiple indirect taxes levied on FMCG sector with a uniform, simplified and single-pint taxation system, is likely to be implemented soon (the benefits are likely to come in by the end of FY’14). The rate of GST on services is likely to be 16% and on goods is proposed to be 20%. A swift move to the proposed GST may reduce prices, bolstering consumption for FMCG products.

Food Security Bill: The food security Bill has been passed recently by the Union Cabinet. As per the Bill, 5Kg of food grains per Rs 69 person per month will be provided at subsidized prices from State Governments under the targeted public distribution system. With additional demand, the agriculture sector would receive a boost and this could lead to more investments in improving agriculture productivity and making it more competitive.

FDI in retail: The decision to allow 51% FDI in multi brand retail and 100% FDI in single brand retail augers well for the outlook for the FMCG sector. The move is expected to bolster employment, and supply chains, apart from providing high visibility for FMCG brands in organized retail markets, bolstering consumer spending, and encouraging more product launches. FDI of

100% under the automatic route is allowed in the food processing sector, which is considered as a priority sector. FMCG sector accounted for 1.9% of the nation’s total FDI inflows in April 2000- September 2012. Cumulative FDI inflows into India from April 2000 to April 2013 in the food processing sector stood at `9,000.33 crore, accounting for 0.96% of overall FDI inflows while that in the soaps, cosmetics and toiletries was `3,115.54 crore in, accounting for 0.32%. The food processing sector attracted FDI inflows of `6,198 crore during April 2009 to December 2012.

Relaxation of license rules: Industrial licenses are not required for almost all food and agro -processing industries, barring certain items such as beer, potable alcohol and wines, cane sugar, and hydrogenated animal fats and oils as well as items reserved fo r exclusive manufacturing in the small-scale sector.

Demographic Analysis

Rural India Demography

The rural middle-class constitutes a potential market lying to be tapped by the corporates in the business of fast -moving consumer goods (FMCG). It has been observed that rural India accounts for more than 700 mn consumers or 70% of the Indian population and 50% of the total FMCG market. The working rural population is approximately 400 mn. Average citizens in rural India have less than half the purchasing power of their urban counterparts. Still, this market has immense potential, enticing FMCG companies to take different steps to capture it.

Middle-Class household,

the underlying factor for FMCG growth The Indian middle class population is the most promising market for FMCG and give brand makers the opportunity to convert them to branded products. As per McKinsey Global Institute (MGI), middle class population in India is going to increase by about 12 times during 2005-2025; as a result, spending is expected to increase by about 2025, fuelling consumption demand.

Disposable income

Per capita disposable income determines an individual's ability to purchase goods or services. As per the BRICs report, India is likely to witness a rise in disposable income to USD 1,150 by 2015, from the current USD 556 per annum, on account of growth in industrial and services sector. As a result, spending will increase which will consequently boost the FMCG sector growth.

Modest Benefits to consumption on account of increased outlays on rural development/ changes in lowest income slab

The finance minister's decision to increase allocation for Ministry of Rural Development announced in the latest budget by 46% bodes well for FMCG companies, as rural region contributes one-third of FMCG sales. However, a large part of the increase shall involve capital stock building, while expenditures on flagship MNREGA has been raised modestly (12% growth under the head of rural employment). Further, the exemption limit has been raised modestly for the lowest income slab to `220,000. Also, the government has made promising statements over the GST implementation, which may be implemented by the end of FY’14. Further, the budget has made an extra provision of `100 bn on account of the Food Subsidy Bill, which is also a positive trigger for the FMCG sector.

Conclusion

Changes in lifestyle, rising incomes and a focus onvalue, are pushing up growth for different product categories in the rural areas. Indications of larger disposable income and a perceptible shift in consumption priority in the rural sector also appear to be favouring the FMCG organizations. But, in order to be successful, organizations need to develop business models and marketing mix strategies that are developed in accordance with this changed scenario in the rural markets of India. It is the responsibility of the companies to supply a right product to the right customer at right time at the right place at the right price. The companies shall no longer decide the marketing mix for rural market in accordance with the urban consumer alone; but the rural customer shall decide it.

Rural customers trust retailers in their villages. During the field visits, it is observed out that though the retailers are aware of the fact that their customers listen to them, they are not aware of this wonderful principle called, the ‘Trust Factor’. The companies must educate rural retailers about such modern marketing principles for a better performance. As price influences rural purchase of

FMCG, it is recommended to pursue the low-price strategy in rural marketing. Attaining low price not only requires low-cost manufacturing but also performing various marketing activities such as promotion and distribution in a cost effective manner. It is also recommended to promote goods on price plank. For rural customers, value for money results when the purchased FMCG meets the intended benefits. As the study revealed that the rural customers (along with price) also think about quality, performance, reliability, brand and other critical

aspects, it is recommended to promote FMCG in lines of rationality rather than just making low price appeals.

Rural marketers should design innovative promotional strategies for rural markets that can express messages in an easy way to the villagers and compatible with their education and understanding levels. It is recommended to offer FMCG that lasts long.

Rural consumers associate long lasting feature with bigger size and/or hardness of the product. Hence, it is suggested to promote FMCG in these lines. Quality is important in the context of rural purchase and consumption of FMCG as rural customers prefer quality FMCG.

Bibliography

D. D. (2013, April 05). Analysis of Consumer Behaviour. Retrieved March 16, 2016.

B. B. (2012, February 18). A study of an advertising impact and consumer reaction”,. Retrieved March 16, 2016.

Bijapurkar, Rama (2014), “The Marketing in India, The Economic Times,September 18, pp. 6.

Suhash, B. B., Dev. (2013, February 10). Challenges in rural marketing, Strategic Marketing,. Retrieved March 16, 2016.

Anikat, C. G., Charya. (2014, February 10). Understanding rural buyer behavior”,. Retrieved March 16, 2016.