STRATEGIC IMPACT OF ELECTRONIC MEDIA FOR FMCG PRODUCTS IN RURAL MARKET.doc

1

Research Project Report

OnSTRATEGIC IMPACT OF ELECTRONIC MEDIA FOR FMCG PRODUCTS IN RURAL MARKET

In the partial fulfillment For the degree

Of

Master in Business Administration (MBA)By G.B. Technical UniversitySubmitted by

Submitted to

AJAY KUMAR SINGH

MRS. SWATI TIWARI

ROLL.NO-1166670006

( ASSTT. PROFESSOR ) Specialization- Marketing & HR

SRM Business School Lucknow

NH-24, Sitapur Road, Bakshi Ka Talab, Lucknow

CERTIFICATEThis is to certify that Ajay Kumar SIngh of Master of Business Administration session 2012-2013 has completed his Research Report on the Topic STRATEGIC IMPACT OF ELECTRONIC MEDIA FOR FMCG PRODUCTS IN RURAL MARKET for partial fulfillment for award of Master of Business Administration. The Report submitted by his is a genuine work done by his and the same is being submitted for evaluation.

Place: Lucknow

(Name &Signature of the Internal Guide)

Date:

( Mrs. Swati Tiwari ) Asst. Professor

PREFACE

Research on strategic impact of electronic media for FMCG product, who have been considered as the relevant decision making unit in a family. However, the role of electronic media influences to the FMCG products, such as children and rural areas, on decision making strategies and negotiations is essential to taking a broader view of the relevant unit of analysis. Traditionally, women were seen to be the purchasing agents for the family. Nevertheless, increasing participation of women in the workforce has prompted a shift in this role as Family members are increasingly the "buyers" for the entire family. Even in families where women do not work, members are observed to share this role with their families. They enjoy greater discretion not only in making routine consumption decisions for the family but also in pestering their parents to buy other products desired by them. Contemporary researchers express that peoples constitute a major consumer market, with direct purchasing power for snacks and sweets, and indirect purchase influence while shopping for FMCG items. Indian consumers have recently attracted considerable attention from marketers because the market for FMCG's products offers tremendous potential and is rapidly growing. According to available industry data, the FMCG market is estimated.

Anybody can do a work but very few can excel it and they are said to be repository of expertise skills of that work.

Ajay Kumar SinghACKNOWLEDGEMENT

"Sometimes our light goes out

But is blown into flame by another human being.

Each of us owes deepest thanks

To those who have rekindled this light"

Dedication and devotion of the researcher aided or backed by the guidance, support, and encouragement of a guide is required to attain the specified objectives. My research project report is not an exception to this. For this research project, I have been fortunate enough to have assistance, co-operation, and blessings of a few but valuable persons. All they have played a decisive role in helping me out to prepare this research project report a worthwhile one.

Research Report is the most vital part of an MBA course, I therefore, consider myself fortunate to receive this Research report yet the opportunity could not have been utilized without the guidance and support of many individuals who although held varied positions, but were equally instrumental for successful completion of my research report.

I would like to express gratitude to the respected Director Professor Dr. Vivek Inder Kocchar and HOD Dr. Vivekanand Pandey for his valuable inputs and direction that rendered success to the project.

I owe a deep intellectual debt to all of them who through their rich &varied contribution have greatly improved my understanding of various concepts of my report.

TABLE OF CONTENTS

CHAPTER-1

Introduction Of Rural Marketing

Objective Of Study

Scope Of Study

CHAPTER-2

Literature Review

CHAPTER-3

Research Methodology

CHAPTER-4

Data Analysis & Findings

SWOT Analysis

CHAPTER-5

Suggestion And Recommendations

CHAPTER-6

Conclusion

Limitation Of Study

Bibliography

ANNEXURE

Questionnaire

CHAPTER-1

INTRODUCTION OF RURAL MARKETINGFMCG products: fast moving consumer goods; relatively low-priced, frequently purchased items, such as groceries and toiletries.

Consumer goods: goods that are sold to individuals for their own or their families' use.

The Indian Fast Moving Consumer Goods (FMCG) industry began to shape during the last fiftyodd years. The FMCG sector is a cornerstone of the Indian economy. This sector touches every aspect of human life. Indian FMCG market has been divided for a long time between the organized sector and the unorganized sector. Unlike the US market for FMCG which is dominated by a handful of global players, Indias Rs. 460 billion FMCG market remains highly fragmented with roughly half the market going to unFMCG , unpackaged home made products. This presents a tremendous opportunity for makers of FMCG products who can convert consumers to buy FMCG products. Globally, the FMCG sector has been successful in selling products to the lower and middle income groups, and the same is true in India. Over 70% of sales are made to middle class households today and over 50% is in rural India. The sector is excited about a burgeoning rural population whose incomes are rising and which is willing to spend on goods designed to improve lifestyle. Also with a near saturation and cut throat competition in urban India , many producers of FMCGs are driven to chalk out bold new strategies for targeting the rural consumer in a big way. MART, the specialist rural marketing and rural development consultancy, has found that 53 per cent of FMCG sales and 59 per cent of consumer durable sales lie in the rural areas. Of two million BSNL mobile connections, 50 per cent went to small towns and villages; of 20 million Rediffmail subscriptions, 60 per cent came from small towns; so did half the transactions on Rediff's shopping site. According to a study by Chennai-based Francis Kanoi Marketing Planning Services Pvt Ltd, the rural market for FMCG is worth Rs.65,000 crore, for durables Rs 5000 crore, for tractors and agri-inputs Rs.45,000 crore and two- and four-wheelers, Rs.8000 crore. In total, a whopping Rs.123,000 crore. This could be doubled if corporates understood the rural buying behavior and got their distribution and pricing right.

Rural Marketing in IndiaThe future lies with those companies who see the poor as their customers. When C K Prahalad addressed to the Indian CEOs in January 2000, he clearly pinpointed on the raw fact that there is vast potential for profits in the rural markets. In his book The Fortune at the Bottom of the Pyramid he cites numerous examples of companies that have generated wealth for the poor and profits for themselves by focusing on underserved rural markets. As urban markets become more saturated,businesses are retooling their marketing strategies, and in many case their products, to target rural consumers with tiny incomes but rising aspirations fueled by the media and other forces, giving birth to a new era of rural marketing. Rural marketing involves delivering manufactured or processed inputs or services to rural producers or consumers so as to soak up the huge size of the untapped rural market.In today's congested and difficult markets, both local and global, all FMCG as well as other companies search for new opportunities, consumers and markets.The 800 million potential consumers in rural India presented both an opportunity and a problem, as this market has been characterized by unbalanced growth and infrastructural problems.Thus looking at the opportunities which rural markets offer to the marketers it seems that the future is very promising for those who can understand the dynamics of rural markets and exploit them to their best advantage. A radical change in attitudes of marketers towards the vibrant and burgeoning rural markets is expected in the coming years so that they vividly understand the bottom of the pyramid model of CK Prahalad and start capitalizing on it.My paper discusses the various strategies to be adopted in order to launch a product in the rural market of India.

Social Changes and the Growth of Indian Rural Market : An Invitation To FMCG Sector

The Fast Moving Consumer Goods (FMCG) sector is a corner stone of the Indian economy. This sector touches every aspect of human life. The FMCG producers now realize that there is a lot of opportunity for them to enter into the rural market. The sector is excited about the rural population whose incomes are rising and the lifestyles are changing. There are as many middle income households in the rural areas as there are in the urban. Thus the rural marketing has been growing steadily over the years and is now bigger than the urban market for FMCGs. Globally ,the FMCG sector has been successful in selling products to the lower and middle income groups and the same is true in India. Over 70% of sales is made to middle class households today and over 50% of the middle class is in rural India. The sector is excited about a burgeoning rural population whose incomes are rising and which is willing to spend on goods designed to improve lifestyle. Also with a near saturation and cut throat competition in urban India, many producers of FMCGs are driven to chalk out bold new strategies for targeting the rural consumers in a big way. But the rural penetration rates are low. This presents a tremendous opportunity for makers of FMCG products who can convert consumers to buy FMCG products. Many companies including MNCs and regional players started developing marketing strategies to lure the untapped market. While developing the strategies, the marketers need to treat the rural consumer differently from their counterparts in urban because they are economically, socially and psycho-graphically different to each other. This paper covers the attractions for the FMCG marketers to go to rural, the challenges, the difference between the rural and the urban market and the suitable marketing strategy with the suitable example of companies and their experience in going rural.Impulse to go Rural

There are many reasons that have urged the FMCG companies to enter the uncharted territory of rural India. Some of the attractions are discussed below;

1. Large Population

The rural Indian population is large and its growth rate is also high. Over 70% Indias one billion plus population lives in around 627,000 villages in rural areas. This simply shows the great potentiality rural India has to bring the much needed volumes and help the FMCG companies to bank upon the volume driven growth.

Table 1. Percentage distribution of households and income

Area Households Population

Rural 72.6 74.6

Urban 27.4 25.4

All-India 100 1002. Rising Rural ProsperityIndia is now seeing a dramatic shift towards prosperity in rural households. To drive home the potential of rural India just consider some of these impressive facts about the rural sector. As per the National Council for Applied Economic 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 lower middle income households in rural areas as in the urban areas.

Table 2. Distribution of people income-wise

Income groups Total R20u0r1a l- N 0o2. % Total R2u00ra6l - N 0o7. %

High 1.48 0.41 27.7 2.96 0.7 23.6

Middle 69.18 4.83 64.8 90.25 59.85 66.3

Low 32.29 29.52 91.42 20.41 95.8 95.7

Total 102.95 74.76 72.6 114.52 80.96 70.7

According to NCAER projections, by 2012-13, the lowest income class (i.e.Rs.2500 and below) will shrink by more than 60%. The higher income classes are likely to double by 2012-13. This apparently is the result of development work, which happened under the five years plans and other special programmes such as land reforms, rural electrification rural communication, and rural credit facilities, etc. The absolute size of the rural market is thus expected to double that of urban India. But despite the high rural share in these categories, the rural penetration rates are low, thus offering tremendous potential for growth. According to Mr. D. Shivakumar, 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.

3. Growth in MarketThe purchasing power in rural India is on steady rise and it has resulted in the growth of the rural market. The market has been growing at 3-4% per annum adding more than one million new consumers every year and now accounts for close to 50% of volume consumption of FMCG. The growth rates of lot of FMCG are higher in rural markets than urban markets.In product categories like toilet soaps, talcum powder, cooking iol, vanaspati ghee, tea, cigarettes and hair oil, the share of rural market is more than 505. The table above indicates the projected market size of FMCG products in 2012-13 based on the annual growth rates compounded period.The estimated annual business from rural markets was Rs.1,23,000 crore, comprising Rs.65,000 crore of FMCG, Rs.5,000 crore of durables, Rs.45,000 crore of agricultural inputs including tractors and Rs 8,000 crore of two-wheelers and fourwheelers. Twenty nine per cent of the rural people own cars, 27 per cent own colour televisions, 24 per cent own refrigerators and 10 per cent own washing machines, which points to the untapped potential in the rural areas. "We therefore have to look at the rural market very seriously for future expansion," said Mr Nandakumar while inaugurating the Business Line Club and delivering the keynote address on the topic, `Brand Building Beyond the Urban' under the auspices of the Departments of Business Management and Commerce of the Auxilium College here on Friday.

Table 4. Rural FMCG market Projections Category Growth 201213 ProjectedTotal Rural share Rural market share %Toilet soaps 13.4 9645 6021 18086 11291 62.4

Body talcum

powder 23.65 1445 793 4237 2292 54.1

Toothpaste 23.5 3198 1441 9376 4140 45.1

Cooking oil 10.91 20946 15731 35295 25806 73.4

Vanaspati 7.63 4549 2846 6648 4108 62.64. Effectiveness of Communication

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", says Mr. R.V Rajan, CMD, Anugrah Madison Advertising. 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.5. IT Penetration in Rural India

Today there are over 15 million villagers in India who are aware of the Internet and over 300,000 villagers have used it! Ten years back, history was created with Public Call Office phone booths (essentially manually operated payphone facilities), opening in every corner of the country. This experiment was an instant success and contributed to hundreds of thousands of jobs. Over the next two years, WorldTel is expected to provide 1000 centres in Tamil Nadu with 2 to 20 terminals in each centre. If successful, this experiment can be replicated easily to all 27 states leading to over half a million Internet users through this experiment alone! The existing 600,000 public call offices in India will soon be transformed into public 'tele-info-centres' offering a variety of multimedia information services. The rural consumers spend time and money to access higher level information. Studies have indicated that if the content has direct relevance and will result in commercial gains, people in rural areas are willing to pay for information services. Consumerism has altered rural buying behavior in recent years. Spending patterns of those who spend are now adapting to face the technology bug. Today's rural children and youth will grow up in an environment where they have 'information access' to education opportunities, exam results, career counseling, job opportunities, government schemes and services, health and legal advice and services, worldwide news and information, land records, mandi prices, weather forecasts, bank loans, livelihood options. If television could change the language of brand communication in rural India, affordable Web connectivity through various types of communication hubs will surely impact the currency of information exchange. As the electronic ethos and IT culture moves into rural India, the possibilities of change are becoming visible.6. Impact of Globalization

The impact of globalization will be felt in rural India as much as in urban. But it will be slow. It will have its impact on target groups like farmers, youth and women. Farmers, today 'keep in touch' with the latest information and maximize both ends. Animal feed producers no longer look at Andhra Pradesh or Karnataka. They keep their cell phones constantly connected to global markets. Surely, price movements and products' availability in the international market place seem to drive their local business strategies. On youth its impact is on knowledge and information and while on women it still depends on the socio-economic aspect. The marketers who understand the rural consumer and fine tune their strategy are sure to reap benefits in the coming years. In fact, the leadership in any product or service is linked to leadership in the rural India except for few lifestyle-based products, which depend on urban India mainly.OBJECTIVE OF STUDY1. To evaluate the customers perceptions toward purchase of FMCG products.

2. To know the role of the family members in information search about the brand they possess.

3. To study the consumer satisfaction towards FMCG Products4. To evaluate the socio-economic factors influencing the consumers to buy FMCG Products.

5. To know the advertisement effectiveness of FMCG Products.

6. To know the brand loyalty of the respondents towards FMCG Products.

7. In this study more focus was to understand the Consumer Buying Behavior while purchasing FMCG Product.

8. In the changing market scenario, and post globalization, Do Brand Loyalty really exists?

9. Determine the impact branding has on the consumer purchase decision-making possessed.

10. To know the satisfaction of consumer on the basis of attributes.

11. To know the basic aim for buying the. FMCG Product set.

12. To know the role of the family members in information search about the brand they posses.

13. To know the post purchase experience with your FMCG Product set.

14. To know the aware about different promotion of activities adopted by FMCG Product set.

15. To know the mode of payment for purchasing the FMCG Product set.

SCOPE OF STUDY1. This study focuses on how and why customers make decisions to purchase FMCG Products.

2. The dissatisfaction with choice FMCG Products of may have been caused due to a variety of reasons.

CHAPTER-2

LITERATURE REVIEW The Customer Perception Report includes questions in four key areas, Expectations, Purchase Decisions, Customer Service, and Future Purchases. So the customer should be invited to participate in the survey. Setting realistic expectations during the sales process is a vital component of making happy customers. How a company sets and meets product and service expectations plays a pivotal role in fashioning customer opinions. How a companies meets or exceeds expectations is measured in three important areas: product/service, support, and price. These three areas will be used to factor a score for the Expectations category. The results of the three questions will be used to factor an overall expectations perception score. The Purchase Decision category gives us a better understanding of how the customer perceives the purchase process. Two key areas for questions include an open ended question on why they purchased and a ratings question on their experience. The rating

Question data will be used for the analysis of Purchase Decision category. The open ended responses from the Why questions will be used for product strengths analysis. The results of the purchase experience question will be used for the overall Purchase perception analysis. Customer service is one of the most important differentiations a company can have. For this report, customers will rate a company in three key areas: customer service, timeliness for problem resolution, and expertise. These three areas will be used to factor a score for the Customer Service category.

Purpose o of Literature Review

Literature review is one of the prime parts of every project. The very basic purpose of the literature review is to gain insight on the theoretical background of the research problem. It helps the researcher to gain strong theoretical basis of the problem under study and also help to explore whether any one has done research on the related issue. Growth in production of FMCGThe sectors which have recorded double digit growth in terms of value are shaving cream (20 per cent), deodorant (40 per cent), FMCG coconut oil (10 per cent),anti dandruff shampoos (15 %), hair dyes (25 per cent), cleaners & repellents (20 per cent).The performance of the industry during the periods April-March 2013-14 and the corresponding previous year, April-March 2012-13 in terms of absolute figures and the percentage growth rates sector wise are presented below:Production (market size)Unit2012-2013% growthEst 2013-2104EST % growth

FMCG (overall)Rs billion6002%6091.5%

Soap & Toiletries (overall)Rs billion90-5%90.91%

Soap & Toiletries (overall)Mn tonn604%60.091.50%

Fabric wash marketMN tonn504%50.250.50%

Laundry soaps/barsRs billion53.3-6.5%50.64-5%

Detergent cakesMN tonn1510%15.32%

Washing powderMN tonn2510%25.632.5%

Dish washRs billion4.425%4.27-3%

Personal wash marketRs billion455%45.451%

Toilet soapRs billion42-3.2%40.11-4.5%

Personal health careRs billion525%50.44-3%

Oral careRs billion264%24.7-5%

Tooth pasteRs billion17.3-13%16.44-5%

Tooth powderRs billion4.6-6%4.23-8%

Tooth brushRs billion4.010%4.25%

Skin care & cosmeticsRs billion125%12.65%

Skin/fairness creamRs billion512%5.0751.5%

Shaving creamRs billion1.115%1.3220%

DeodorantRs billion0.840%1.1240%

Hair Care

Coconut oilRs billion152%15.231.5%

Coconut oilTonn30004%31505%

FMCG coconut oilRs billion86%8.810%

ShampoosRs billion10.2-5%10.513%

ShampoosTonn2900010%3335015%

Anti dandruff shampoosRs billion115%1.1515%

Hair dyesRs billion230%2.525%

Feminine HygieneRs billion20%2.042%

Cleaners/RepellentsRs billion820%9.620%

Segment wise analysis:-Fabric wash market: The demand for detergents has been growing at an annual growth rate of 10-11 per cent during the past five years, while the laundry bar market has witnessed a negative growth. This year growth rate is low at 2 per cent for detergent cakes and 2.5 per cent for washing powder. In the urban markets, people prefer to use washing powder and detergents, instead of bars, on account of convenience of usage, increased purchasing power, aggressive advertising and increased penetration of washing machines.Personal wash market: While the growth rate for the overall personal wash market is only 1 per cent compared to average growth rate of 5 per cent, premium and middle-end soaps are growing at a rate of 10 per cent. The leading players in this market are HLL (Lux, Lifebuoy, Breeze, Rexona), Nirma (Nima), Godrej Soaps (Cinthol, FairGlow, Shikakai, Nikhar), and Reckitt & Colman (Dettol). Oral care market: The oral care market valued at Rs. 26 bn has suffered a negative growth of 5 per cent in 2013-14. Toothpaste and toothpowder have suffered negative growth of 5 % and 8 % respectively. The market for tooth brushes valued at Rs 4 bn has grown at 5 per cent in 2013-14 as compared to 10 % in 2012-13.

Skin care and cosmetics market: Skin care and cosmetics valued at Rs 12 bn and includes cold creams, lotions, moisturizers, cleansers, talcum powders, deodorants, lipsticks, nail enamels, etc. The shaving cream market valued at Rs 1.1 bn, has grown by 20% in 2013-14. The market is dominated by C-P, Gillette India and Godrej Soaps. The skin care market has seen the entry of a number of international brands, like Oriflame, Avon and Aviance. The herbal-based products are also quite popular in this market.Hair care market: Hair care includes a variety of FMCG and unFMCG products like hair oils, shampoos, creams, conditioners hair dyes, etc. The Coconut Oil Market account for 72 per cent of the hair oil market. In the FMCG coconut hair oil market, Marico (with Parachute) and Dabur are the leading players. HLL is also extending its Sunsilk brand to hair oils. The market for FMCG coconut oil valued at approximately Rs. 8 bn has grown by 10 %. The market has been witnessing a shift in usage patterns in both urban and rural markets. Feminine hygiene market: The feminine hygiene market is estimated to be worth Rs. 2 bn market. The market has reversed from a negative growth in previous years and flat growth in the last year has recorded a growth of 2 per cent in 2013-14. This has got a boost from the withdrawal of excise duties. Deodorants market: The deodorant market is estimated to be worth Rs 0.8 bn and has been growing at 40 per cent annually. The organized segment is dominated by HLL with its Rexona, Axe, Denim and Impulse brands in different categories targeting different segments of the market.

Dish wash market: The total size of the dish wash market, estimated at Rs 4.4 bn has recorded a negative growth of 3 per cent in 2013-14. Over 60 per cent of the market is dominated by bars, while dish wash powders accounts for 32 per cent. The penetration levels are, however, still very low.Cleaners / Repellents Market: The cleaner market covering products like floor cleaners, air, phenyl and toilet cleaners, and is estimated to be growing at 20 per cent per annum. The key players are HLL, Reckitt & Colman India (RCI), Henkel Spic, Bayer India and Balsara Hygiene. The market for insecticides and repellents is estimated to be around Rs 8 bn has grown by 20 per cent in 2013-14. Godrej Sara Lee is the world's largest manufacturer of mosquito mats, with an all-India market share of about 66 per cent. The organized sector is trying to increase penetration levels by higher brand visibility.The survey outlines some measures for raising productivity, efficiency and making FMCG competitive as follows: -

Level of abatement for soaps and detergents should be revised to 45 per cent in consideration of hike in the prices of various inputs.

Excise duty of about 50 per cent without CEN VAT credit facilities on alcohol based toiletries is very high and should be on par with non-alcoholic toiletries.

Higher and different sales tax rates in different states.

VAT applicable for these products should fall in the proposed 4 per cent slab.

Companies need to have a distribution system of its own or rely on other companies and for product awareness and demand creation try new products with already established popular product lines.

The companies should introducing product variants that account for distinctive regional tastes as well as a wide range of package sizes and prices to suit to purchasing preferences of Indias varied consumer segments. The survey confirms that the FMCG sector is poised for further growth because of the emerging opportunities and strong fundamentals developing in the economy.The FICCI survey highlights the need for pro-active government action for helping the industry to achieve lower cost, improved quality and better performance in the competitive environment.The survey foresees that future growth will come from newer segments such as the youth and through increased rural and small town penetration. The Internet and e-commerce will change the dynamics of this industry helping companies improve their procurement, distribution and selling efficiencies. This will, in turn, help them reduce prices and still remain profitable. A package of fiscal incentives provided by various State governments like Himachal Pradesh, Uttranchal, have encouraged companies to set up manufacturing facilities in these regions. Some companies setting up units in backward areas are: Britannia Industries Colgate Industries Dabur Industries Godrej Consumer Products Hindustan Lever Marico Industries

FMCG market remains highly fragmented with almost half of the market representing unFMCG, unpackaged home made products. This presents a tremendous opportunity for makers of FMCG products who can convert consumers to FMCG products.In the past decade, the personal care industry has witnessed a consumer boom. This has been possible due to liberalization, growing urbanization and an increase in the disposable incomes due to rise in Gross Domestic Product. The changing lifestyles, higher level of awareness among the rural community as a result of the onslaught of satellite television has fuelled demand.The boom has also been fuelled by the reduction of excise duties, de reservation from the small-scale sector and the concerted efforts of personal care companies to tap the potentials of the segment of the middle class through product and packaging innovations.FMCG Products and Categories

- Personal Care, Oral Care, Hair Care, Skin Care, Personal Wash (soaps);

- Cosmetics and toiletries, deodorants, perfumes, feminine hygiene, paper products;

- Household care fabric wash including laundry soaps and synthetic detergents;

HYPERLINK "http://www.naukrihub.com/india/fmcg/overview/household-cleaners/"household cleaners, such as dish/utensil cleaners, floor cleaners, toilet cleaners, air fresheners, insecticides and mosquito repellents, metal polish and furniture polish;

AVAILABILITY OF PRODUCT The first challenge is to ensure availability of the product or service. India's 627,000 villages are spread over 3.2 million sq km; 700 million Indians may live in rural areas, finding them is not easy. However, given the poor state of roads, it is an even greater challenge to regularly reach products to the far-flung villages. Any serious marketer must strive to reach at least 13,113 villages with a population of more than 5,000. Marketers must trade off the distribution cost with incremental market penetration. Over the years, India's largest MNC, Hindustan Lever, a subsidiary of Unilever, has built a strong distribution system which helps its brands reach the interiors of the rural market. To service remote village, stockists use autorickshaws, bullock-carts and even boats in the backwaters of Kerala. Coca-Cola, which considers rural India as a future growth driver, has evolved a hub and spoke distribution model to reach the villages. To ensure full loads, the company depot supplies, twice a week, large distributors which who act as hubs. These distributors appoint and supply, once a week, smaller distributors in adjoining areas. LG Electronics defines all cities and towns other than the seven metros cities as rural and semi-urban market. To tap these unexplored country markets, LG has set up 45 area offices and 59 rural/remote area offices.

AFFORDABILITY OF A PRODUCT

The second challenge is to ensure affordability of the product or service. With low disposable incomes, products need to be affordable to the rural consumer, most of whom are on daily wages. Some companies have addressed the affordability of Cinthol, Fair Glow and Godrej in 50-gm packs, priced at Rs 4-5 meant specifically for Madhya Pradesh, Bihar and Uttar Pradesh - the so-called `Bimaru' States. Hindustan Lever, among the first MNCs to realise the potential of India's rural market, has launched a variant of its largest selling soap brand, Lifebuoy at Rs 2 for 50 gm. The move is mainly targeted at the rural market. Coca-Cola has addressed the affordability issue by introducing the returnable 200-ml glass bottle priced at Rs 5. The initiative has paid off: Eighty per cent of new drinkers now come from the rural markets. Coca-Cola has also introduced Sunfill, a powdered soft-drink concentrate. The instant and ready-to-mix Sunfill is available in a single-serve sachet of 25 gm priced at Rs 2 and mutiserve sachet of 200 gm priced at Rs 15. ACCEPTABILITY OF A PRODUCT

The third challenge is to gain acceptability for the product or service. Therefore, there is a need to offer products that suit the rural market. One company which has reaped rich dividends by doing so is LG Electronics. In 1998, it developed a customised TV for the rural market and christened it Sampoorna. It was a runway hit selling 100,000 sets in the very first year. Because of the lack of electricity and refrigerators in the rural areas, Coca-Cola provides low-cost ice boxes a tin box for new outlets and thermocol box for seasonal outlets. The insurance companies that have tailor-made products for the rural market have performed well. HDFC Standard LIFE topped private insurers by selling policies worth Rs 3.5 crore in total premia. The company tied up with non-governmental organisations and offered reasonably-priced policies in the nature of group insurance covers. With large parts of rural India inaccessible to conventional advertising media only 41 per cent rural households have access to TV.

AWARENESS OF A PRODUCT

This is another challenge. Fortunately, however, the rural consumer has the same likes as the urban consumer movies and music and for both the urban and rural consumer, the family is the key unit of identity. However, the rural consumer expressions differ from his urban counterpart. Outing for the former is confined to local fairs and festivals and TV viewing is confined to the state-owned Doordarshan. Consumption of FMCG products is treated as a special treat or indulgence. Hindustan Lever relies heavily on its own company-organised media. These are promotional events organised by stockists. Godrej Consumer Products, which is trying to push its soap brands into the interior areas, uses radio to reach the local people in their language. Coca-Cola uses a combination of TV, cinema and radio to reach 53.6 per cent of rural households. It doubled its spend on advertising on Doordarshan, which alone reached 41 per cent of rural households. It has also used banners, posters and tapped all the local forms of entertainment. Since price is a key issue in the rural areas, Coca-Cola advertising stressed its `magical' price point of Rs 5 per bottle in all media.LG Electronics uses vans and road shows to reach rural customers. The company uses local language advertising. Philips India uses wall writing and radio advertising to drive its growth in rural areas. problem by introducing small unit packs. Godrej recently introduced three brands To expand the market by tapping the countryside, more and more MNCs are foraying into India's rural markets. Among those that have made some headway are Hindustan Lever, Coca-Cola, LG Electronics, Britannia, HDFC Standard Life, Philips, Colgate Palmolive and the telecom companies. OPPORTUNITY IN RURAL MARKET

The Indian rural market with its vast size and demand base offers a huge opportunity that MNCs cannot afford to ignore. With 128 million households, the rural population is nearly three times the urban.

As a result of the growing affluence, fuelled by good monsoons and the increase in agricultural output to 200 million tonnes from 176 million tonnes in 1991, rural India has a large consuming class with 41 per cent of India's middle-class and 58 per cent of the total disposable income. The importance of the rural market for some FMCG and durable marketers is underlined by the fact that the rural market accounts for close to 70 per cent of toilet-soap users and 38 per cent of all two-wheeler purchased. The rural market accounts for half the total market for TV sets, fans, pressure cookers, bicycles, washing soap, blades, tea, salt and toothpowder, What is more, the rural market for FMCG products is growing much faster than the urban counterpart. APPROACHES TO RURAL MARKETING The rural market may be alluring but it is not without its problems: Low per capita disposable incomes that is half the urban disposable income; large number of daily wage earners, acute dependence on the vagaries of the monsoon; seasonal consumption linked to harvests and festivals and special occasions; poor roads; power problems; and inaccessibility to conventional advertising media. However, the rural consumer is not unlike his urban counterpart in many ways. The more daring MNCs are meeting the consequent challenges of availability, affordability, acceptability and awareness of products.

Projected Growth in Production of FMCG Sector

On the basis of the above positive developments conducive for further positive growth, the white goods industry makes the following projection in respect of the commodities for the first two quarters of 2014-15 as per the table below:SECTORUNITFirst two quarters(Apr-Sept 2013-14) ActualFirst two quarters(Apr-Sept 2014-15) Projected

FMCG (overall)Rs billion1.50%2%

Soap & Toiletries (overall)Rs billion-4%1.50%

Soap & Toiletries (overall)MN ton2%4%

Fabric wash market

Laundry soaps/barsRs billion-8%0%

Laundry soaps/barsMN Tonn-5%1%

Detergent cakesMN Tonn7%3%

Washing powderMN Tonn7%4%

Dish WashRs billion10%5.5%

Personal wash marketRs billion7%1.5%

Toilet SoapRs billion-5%1.5%

Personal health careRs billion5%2%

Oral careRs billion4%0.5%

Tooth pasteRs billion-4%0.5%

Tooth powderRs billion-6%0.2%

Tooth brushRs billion12%6%

Skin care & cosmeticsRs billion5%7%

Skin/fairness creamRs billion12%12%

Shaving creamRs billion15%20%

DeodorantRs billion32%25%

Hair Care

Coconut oilRs billion1.5%2%

Coconut oilTonn3.5%6%

FMCG coconut oilRs billion6%12%

ShampoosRs billion2%5%

ShampoosTonn12%15%

Anti dandruff shampoosRs billion15%17%

Hair dyesRs billion25%26%

Cleaners/repellantsRs billion20%22%

Feminine hygieneRs billion0%2.5%

Company experiences in Going Rural

It becomes amply clear that rural India has to be the hot target in future for FMCG companies as it presents a plethora of opportunities, all waiting to be harnessed. Many of the FMCG companies are already busy formulating their rural marketing strategy to tap the potential before competition catches up. With extensive competition not only from MNCs but also from the numerous regional players and the lure of an untapped market has driven the marketers to chalk out bold new strategies for targeting the rural consumer in a big way. All biggies in the industry be it HLL, Marico, Colgate-Palmolive or Britannia, are showing deep interest in rural India. However not everything is all rosy and there exist some gray areas in the rural strategies also. To increase sales, growing the consumer pie rather than sharing it, has emerged as one of the key strategies being used by FMCG majors. Offering more product variants, categories, price points, sizes and different marketing and distribution channels, all form part of a FMCG corporates strategy. To gauge the extent of shift in focus of the FMCG giants just sample this: recently Godrej Consumer Products Ltd (GCPL) did something that it hadn't done before; it introduced smaller pack sizes of some of its soaps and put them on the market for Rs 5. And FMCG giant HLL has just launched a green variant of Lifebuoy soap, which, it hopes will be a winner in the rural areas. Also, don't be too surprised if you village folk having their hair washed and dyed en masse as they are only taking advantage of the live demonstrations conducted by Chennai-based CavinKare Products. So it is clear that rural markets have caught the eyes of FMCG marketers and it is being targeted through experiments in a big way. But is it a right marketing strategy? Or will it prove to be an expensive mistake? Well thats the issue most FMCG companies face today and the one we discuss here. HLL has also established a single distribution channel by consolidating categories. The channel seeks to build a network of sub-stockists. In 2003, about 6000 such sub stockists were appointed to service 50,000villages with a total population of 250 million. Likewise, at Coca Cola India, to reach out to rural villages, the company started out by drawing up a hit list of high-potential villages from Indias various districts. To ensure full loads, large distributors were appointed, and they were supplied from the companys depot in large towns and cities. Full load supplies were offered twice weekly. On their part, the large distributors appointed small distributors in adjoining areas. The small distributors in turn fixed journey plan on a weekly basis.In addition to these innovative distribution techniques, a number of FMCG companies have now started relying on savvy entrepreneurs who trawl the rural hinterland, gathering mountains of village level data. One such entrepreneur, Pradeep Lokhande, distributes used computers to schools in about 28,000 villages through his Pune-based rural consumer organisation, Rural Relations. Lokhande supplies computers, collects data in exchange, which is then sold to companies. The company now has a database of 35, 000 schools. Besides tapping schools, Lokhande also strikes direct contacts with opinion leaders in villages and recording obscure details of the local economy. This data is now being lapped up. In 1996, Lokhande got his first customers for the data: Tata Tea and Parle. Today, he has clients like HLL, P&G, Marico, Asian Paints, Telco and DSP Merrill Lynch. The focus on rural markets doesnt really come as a surprise. Indias rural market has been growing steadily over the years and is now bigger than the urban market for fast moving consumer goods (53% share of the total market). The annual size in value terms currently estimated at around US $ 11 billion. According to a study by the National Council for Applied Economic Research (NCAER), there are as many 'middle income and above' households in the rural areas as there are in the urban areas. Moreover, there are almost twice as many 'lower 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. As per the NCAER 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 middle and high-income market 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. But despite the high rural share in these categories, the rural penetration levels are low, thus offering tremendous potential for growth. This is why Coke and HLL are looking to increase their reach. And others are following suit. Chennai-based CavinKare Products which makes hair dyes, organises live demonstrations in remote areas where villagers get a free tinge of jet black or blonde or red free of cost. Brooke Bond Lipton India markets its rural brands through magic shows and skits. Reckitt and Colemen uses NGOs in rural areas to educate customers about product benefits.

But rural India isnt just being developed as a consumer market. It is also being developed as a cost effective supply chain. Tobacco and foods major ITC is focusing on the rural segment to bring down its transaction costs. With a judicious blend of click & mortar capabilities, agricultural communities in villages use internet kiosks - known as echoupals - to access ready information in their local language on the weather & market prices. They are also able to disseminate knowledge on scientific farm practices & risk management. The aggregation of the demand for farm inputs from individual farmers gives farmers access to high quality inputs from established and reputed manufacturers at fair prices. As a direct marketing channel, virtually linked to the mandi system for price discovery, e-Choupal eliminates wasteful intermediation and multiple handling. Thereby it significantly reduces transaction costs. While the farmers benefit through enhanced farm productivity and higher farm gate prices, ITC benefits from the lower net cost of procurement (despite offering better prices to the farmer). Launched in June 2000, 'e-Choupal', has already become the largest initiative among all Internetbased interventions in rural India. 'e-Choupal' services today reach out to more than two million farmers growing a range of crops - soyabean, coffee, wheat, rice, pulses, shrimp - in over 21,000 villages through 4100 kiosks across six states. Whether the objective is to increase market share or to lower transaction costs, the end objective is to improve the robustness of the rural supply chain. Moreover, these are scalable and robust models, and, given the right policy environment, it should be possible to seamlessly integrate them in the months and years to come. Cokes spokesperson: We are launching a new version of our Sprite brand, Sprite Zero, for the metro audience. Similarly, we have introduced variants of our Maaza brand in the market. We have also introduced 200 ml versions of Diet Coke at Rs 10, compared to the 500 ml Rs 20 version. This, Coke maintains, is its strategy to grow the consumer pie, rather than share it with players in existing categories. It is creating more choices and price points for the carbonated and non-carbonated drink consumers, who at present stand at less than three per cent of the total market. Agrees Mr Shahra. He says consumer base is different across categories.For instance, we offer different products for different target audiences. We provide soya products at different price points in different markets. Realising the importance of reaching the consumer, more and more companies are experimenting with alternative channels like direct marketing, rural haats.

Mr Press says Godrej generally keeps experimenting with alternate channels to pump up volumes. Our strategy hinges on effective communication and distribution plans, he adds. ITC is experimenting with its e-choupal as a procurement and marketing channel to expand its presence in rural India, while HLL has a similar initiative in Project Shakti. Over the next ten years Indias per capita income is likely to double. In FMCG, there is an opportunity to catalyse penetration, increase usage and upgrade consumers. Volume growth at HLL is following value growth as a result of building capabilities and strengthening brands. This, in turn, he says, will bring profit growth. This seems to be the story of rest of the Indian FMCG sector as well. They seem to have done everything right. They have consolidated brands, built capacities and have increased reach. Buoyed by GDP growth at 8.5% and 6.9% for 03-04 and 04-05, respectively, there have been two years of successive economic growth. Consumer sentiments and spends are positive. Monsoons are on track and rural demand is also believed to be on track. So bring on the tea, cold drinks, juices, and ready-to-eat snacks now. The FMCG party seems like a long one.Rural Vs Urban Consumers - Challenges

The biggest mistake a FMCG company can make while entering the rural India is to treat it as an extension to the existing urban market. But there is a vast difference in the lifestyles of the rural and urban consumers. The rural Indian consumer is economically, socially, and psychographically different from his urban counterpart. The kind of choices that an urban customer takes for granted is different from the choices available to the rural counterparts.The difference in consumer behavior in essence stems from the way of thinking with the fairly simple thought process of the rural consumer in contrast to a much more complex urban counterpart. On top of this there has hardly been any research into the consumer behavior of the rural areas, whereas there is considerable amount of data on the urban consumers regarding things like - who is the influencer, who is the buyer, how do they go and buy, how much money do they spend on their purchases, etc. On the rural front the efforts have started only recently and will take time to come out with substantial results. So the primary challenge is to understand the buyer and his behavior.One more gray area that needs to be probed into is the importance of retailer in rural trade. Rural consumers brand choices are greatly restricted and this is where the retailer comes into the picture. The rural customer generally goes to the same retailer to buy goods. Naturally theres a very strong bonding in terms of trust between the two. Also with the low education levels of ruralsector the rural buying behavior is such that the consumer doesn't ask for the things explicitly by brand but like "laal wala sabun dena" or "paanch rupey waali chai dena". Now in such a scenario the brand becomes subservient to the retailer and he pushes whatever brand fetches him the greatest returns. Thus, as there is a need to understand the rural consumer, similarly need is there to study the retailer as he is a chief influencer in the buying decision.Developing effective rural marketing strategy

Till recently most FMCG companies used to treat rural markets as adjuncts to their urban strongholds and rural consumers as a homogeneous mass without segmenting them into target markets and positioning brands appropriately. However it is beyond doubt that the treat rural markets are not dumping grounds for low-end products basically designed for an urban audience. The winning strategy instead is to focus on their core competency such as technological expertise to design specific products for the rural economy. The most remarkable example in this context is the launch of sachets which has transformed the rural market considerably as packaging in smaller units and lesser-priced packs increases the products affordability. Also companies like HLL and Nestle who have adopted this strategy have benefited tremendously. Another case is of Britannia with its Tiger brand of low priced and conveniently packaged biscuits becoming a great success story in rural markets.Companies also need to change the profile of their brand managers as they are usually urban-bred MBAs, fed on a staple diet of western marketing principles and are alien to the rural India. A step in this direction like hiring managers from the Institute of Rural Management Anand (IRMA) could probably go a long way in improving the situation. Along with the cultural dynamics, the needs and latent feelings of the rural people have to be well understood before launching products in rural segments. Marketers would do well to first understand this and then designing products accordingly. For example, Cadburys has launched ChocoBix, a chocolate flavored biscuit which is based on the consumer insight that rural mothers opt for biscuits rather than chocolates for their children. Another very important factor that needs to be looked at is the proliferation of spurious products.Rural masses are illiterate people and they identify a product by its packaging (color, visuals, size etc.). So it becomes very easy for counterfeit products to eat into the market share of established reputed brands. The retailer also gets a larger profit on selling the counterfeits rather than the genuine products and hence is biased towards the fakes. Brands such as "Jifeboy", "Bonds Talcum", "Funny & Lovely" etc., which are doing the rounds of rural markets, pose considerable challenge to rural marketers. Companies would also do well to have a proper sales and distribution network. In terms of sheer reach the companies can gain significant competitive advantages as the rural market is highly fragmented and a brand needs to be on the shop shelf before it can be sold. Companies should also make sure that the prices of their products are not pushed up because of a channel of middlemen who are neither required nor add any value to the product. The rural market remains quite price-sensitive and thus squeezing costs at every stage is of vital importance. Some FMCG giants like HLL are in process of enhancing their control on the rural supply chain through a network of rural sub-stockists, who are based in the villages only. Apart from this to acquire further edge in distribution HLL has started Project Shakti in partnership with Self Help groups of rural women. However not all traditional strategies need to work and the need is to generate creative ideas. A very significant step for change could be an effort to directly tap the haats, mandis, melas and local bazaars which provide an opportunity of promoting the brand in front of a large congregation of rural consumers. Finally an effective rural strategy for FMCG companies must include the use of traditional media for creating awareness about their products in the rural markets. The need for unconventional media arises as the mass media is too glamorous, interpersonal and unreliable for a rural consumer. The traditional media on the other hand with its effective reach, powerful input and personalized communication system will help in realizing the goal. Besides this when the advertisement is couched in entertainment it goes down easily with the villager.CONSUMER BEHAVIOURConsumer behaviouris the study of individuals, groups, or organizations and the processes they use to select, secure, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.It blends elements frompsychology,sociology,socialanthropologyandeconomics. It attempts to understand the decision-making processes of buyers, both individually and in groups. It studies characteristics of individual consumers such asdemographicsand behavioural variables in an attempt to understand people's wants. It also tries to assess influences on theconsumerfrom groups such as family, friends, reference groups, and society in general.Customer behaviour study is based on consumer buying behaviour, with the customer playing the three distinct roles of user, payer and buyer. Research has shown that consumer behaviour is difficult to predict, even for experts in the field.[2]Relationship marketingis an influential asset for customer behaviour analysis as it has a keen interest in the re-discovery of the true meaning of marketing through the re-affirmation of the importance of the customer or buyer. A greater importance is also placed on consumer retention, customer relationship management, personalisation, customisation and one-to-one marketing. Social functions can be categorized intosocial choiceand welfare functions.Each method for vote counting is assumed as social function but ifArrows possibility theoremis used for a social function, social welfare function is achieved. Some specifications of the social functions are decisiveness,neutrality,anonymity,monotonicity,unanimity, homogeneity and weak and strongPareto optimality. No social choice function meets these requirements in an ordinal scale simultaneously. The most important characteristic of a social function is identification of the interactive effect of alternatives and creating a logical relation with the ranks. Marketing provides services in order to satisfy customers. With that in mind, the productive system is considered from its beginning at the production level, to the end of the cycle, the consumer (Kioumarsi et al., 2009).Black box modelENVIRONMENTAL FACTORSBUYER'S BLACK BOXBUYER'S RESPONSE

Marketing StimuliEnvironmental StimuliBuyer CharacteristicsDecision Process

ProductPricePlacePromotionEconomicTechnologicalPoliticalCulturalDemographicNaturalAttitudesMotivationPerceptionsPersonalityLifestyleKnowledgeProblem recognitionInformation searchAlternative evaluationPurchase decisionPost-purchase behaviourProduct choiceBrand choiceDealer choicePurchase timingPurchase amount

The black box model shows the interaction of stimuli, consumer characteristics, decision process and consumer responses.[3]It can be distinguished between interpersonalstimuli(between people) or intrapersonal stimuli (within people).[4]The black box model is related to theblack box theoryofbehaviourism, where the focus is not set on the processesinsidea consumer, but therelationbetween the stimuli and the response of the consumer. Themarketingstimuli are planned and processed by the companies, whereas the environmental stimulus are given by social factors, based on the economical, political and cultural circumstances of a society. The buyers black box contains the buyer characteristics and the decision process, which determines the buyers response.The black box model considers the buyers response as a result of a conscious, rational decision process, in which it is assumed that the buyer has recognized the problem. However, in reality many decisions are not made in awareness of a determined problem by the consumer.Information searchOnce the consumer has recognised a problem, they search for information on products and services that can solve that problem. Belch and Belch (2007) explain that consumers undertake both an internal (memory) and an external search.

Sources of information include:

Personal sources

Commercial sources

Public sources

Personal experience

The relevant internal psychological process that is associated with information search is perception. Perception is defined as "the process by which an individual receives, selects, organises, and interprets information to create a meaningful picture of the world". Consumers' tendency to search for information on goods and services makes it possible for researchers to forecast the purchasing plans of consumers using brief descriptions of the products of interest.The selective perception processStage Description

Selective exposure consumers select which promotional messages they will expose themselves to.

Selective attention consumers select which promotional messages they will pay attention to.

Selective comprehension consumer interpret messages in line with their beliefs, attitudes, motives and experiences.

Selective retention consumers remember messages that are more meaningful or important to them.

The implications of this process help develop an effective promotional strategy, and select which sources of information are more effective for the brand.Evaluation of alternativesAt this time the consumer compares the brands and products that are in their evoked set. The evoked set refers to the number of alternatives that are considered by consumers during the problem-solving process. Sometimes also known as consideration, this set tends to be small relative to the total number of options available. How can the marketing organisation increase the likelihood that their brand is part of the consumer's evoked set? Consumers evaluate alternatives in terms of the functional and psychological benefits that they offer. The marketing organisation needs to understand what benefits consumers are seeking and therefore which attributes are most important in terms of making a decision. It also needs to check other brands of the customers consideration set to prepare the right plan for its own brand.Purchase decisionOnce the alternatives have been evaluated, the consumer is ready to make a purchase decision. Sometimes purchase intention does not result in an actual purchase. The marketing organisation must facilitate the consumer to act on their purchase intention. The organisation can use a variety of techniques to achieve this. The provision of credit or payment terms may encourage purchase, or a sales promotion such as the opportunity to receive a premium or enter a competition may provide an incentive to buy now. The relevant internal psychological process that is associated with purchase decision is integration. Once the integration is achieved, the organisation can influence the purchase decisions much more easily.There are 5 stages of a consumer buying processthey are: The problem recognition stage, meaning the identification of something a consumer needs. The search for information, which means you search your knowledge bases or external knowledge sources for information on the product. The possibility of alternative options, meaning whether there is another better or cheaper product available. The choice to purchase the product and then finally the actual purchase of the product.[6]This shows the complete process that a consumer will most likely, whether recognisably or not, go through when they go to buy a product.Postpurchase evaluationThe EKB (Engel, Kollat, Blackwell) model was further developed by Rice (1993) which suggested there should be a feedback loop, Foxall (2005) further suggests the importance of the post purchase evaluation and that it is key because of its influences on future purchase patterns.

Other influencesConsumer behaviour is influenced by internal conditions such asdemographics,psychographics(lifestyle),personality,motivation, knowledge, attitudes, beliefs, and feelings. Psychological factors include an individuals motivation, perception, attitude and belief, while personal factors include income level, personality, age, occupation and lifestyle.Congruence between personality and the way a persuasive message is framed (i.e., aligning the message framing with the recipients personality profile) may play an important role in ensuring the success of that message. In a recent experiment, five advertisements (each designed to target one of the five major trait domains of human personality) were constructed for a single product. The results demonstrated that advertisements were evaluated more positively the more they cohered with participants dispositional motives.[7]Tailoring persuasive messages to the personality traits of the targeted audience can be an effective way of enhancing the messages impact.Behaviour can also be affected by external influences, such asculture,sub-culture,locality, royalty,ethnicity, family,social class, past experience reference groups, lifestyle, market mix factors.

CUSTOMER RETENTIONCustomer retentionis the activity that a selling organization undertakes in order to reduce customer defections. Successful customer retention starts with the first contact an organization has with a customer and continues throughout the entire lifetime of a relationship. A companys ability to attract and retain new customers, is not only related to itsproductor services, but strongly related to the way it services its existing customers and the reputation it creates within and across themarketplace.Customer retention is more than giving the customer what they expect, its about exceeding their expectations so that they become loyal advocates for yourbrand. Creating customer loyalty puts customer value rather than maximizing profits andshareholder valueat the center of business strategy.[1]The key differentiator in a competitive environment is more often than not the delivery of a consistently high standard of customer service.Customer retention has a direct impact on profitability. Research by John Fleming and Jim Asplund indicates that engaged customers generate 1.7 times more revenue than normal customers, while having engaged employees and engaged customers returns a revenue gain of 3.4 times the norm.Customer lifetime valueCustomer lifetime valueenables anorganizationto calculate the net presentvalueof theprofitan organization will realize on acustomerover a given period of time. Retention Rate is the percentage of the total number of customers retained in context to the customers that approached for cancellation.Standardization of customer servicePublished standards exist to help organizations deliver process drivencustomer satisfactionin order to increase the lifespan of a customer.The International Customer Service Institute(TICSI) has released The International Standard for Service Excellence (TISSE 2012). TISSE 2012 enables organizations to focus their attention on delivering excellence in the management of customer service, whilst at the same time providing recognition of success through a 3rd Party certification scheme. TISSE 2012 focuses an organizations attention on delivering increased customer satisfaction by helping the organization through a Service Quality Model. TISSE Service Quality Model uses the 5 P's -Policy,Processes,People,Premises,Product/Service, as well as performancemeasurement. The implementation of a customer service standard leads to improved customer service practices, underlying operating procedures and eventually, higher levels of customer satisfaction, which in turn increasescustomer loyaltyand customer retention.Brand preferenceOne of the indicators of the strength of abrandin the hearts and minds of customers,brand preferencerepresents which brands are preferred under assumptions of equality in price and availability.PurposeMeasures of brand preference attempt to quantify the impact ofmarketingactivities in the hearts and minds of customers and potential customers. Higher brand preference usually indicates more revenues (sales) and profit, also making it an indicator of company financial performance.

ConstructionThere are at least three classes of methodologies to measure brand preference directly:

Surveyquestions (self-report, unaided preference)

Brand choice measures (choice of preferred brand from a competitive set of brands)

Constant sum measures (planned purchases amongst a competitive set of brands)

Methodologies ARS Persuasion[1]

HYPERLINK "http://en.wikipedia.org/wiki/Brand_preference" \l "cite_note-2" [2]

HYPERLINK "http://en.wikipedia.org/wiki/Brand_preference" \l "cite_note-Shirley-3" [3]









HYPERLINK "http://en.wikipedia.org/wiki/Brand_preference" \l "cite_note-Ideal_Metric-12" [12]

HYPERLINK "http://en.wikipedia.org/wiki/Brand_preference" \l "cite_note-13" [13]is a brand choice methodology applied at various stages of the marketing process. It is derived by comparing the percent choosing a particular brand versus competing brands before and after marketing activity .

Firstepapplies the methodology to a selling proposition before moving on to creative execution.[3] APM Factsare the results of the methodology applied to TV ads. It has been audited and profiled by theMarketing Accountability Standards Board (MASB)according toMMAP (Marketing Metric Audit Protocol). A MMAP audit examines the 10 characteristics of an "ideal metric," including reliability, calibration, predictive validity, etc.[12]


HYPERLINK "http://en.wikipedia.org/wiki/Brand_preference" \l "cite_note-15" [15] Brand Preference Monitor (BPM)tracks the impact of all marketing activity over time.

Brand

Marque" redirects here. For other uses, seeMarque (disambiguation).

Coca-Colalogo

Applelogo

Brandis the "name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers."Initially,Brandingwas adopted to differentiate one person's cattle from another's by means of a distinctive symbol burned into the animal's skin with ahot iron stamp, and was subsequently used inbusiness,marketingandadvertising. A modern example of a brand isCoca Colawhich belongs to the Coca-Cola Company.A brand is often the most valuable asset of a Corporation. Brand owners manage their brands carefully to create shareholder value, andbrand valuationis an important management technique that ascribes a money value to a brand, and allows marketing investment to be managed (e.g.: prioritized across a portfolio of brands) to maximize shareholder value. Although only acquired brands appear on a company's balance sheet, the notion of putting a value on a brand forces marketing leaders to be focused on long term stewardship of the brand and managing for value.

The word "brand" is often used as ametonym, referring to the company that is strongly identified with a brand.Marque[ormakeare often used to denote a brand ofmotor vehicle, which may be distinguished from acar model. Aconcept brandis a brand that is associated with an abstract concept, likebreast cancer awarenessorenvironmentalism, rather than a specific product, service, or business. Acommodity brandis a brand associated with acommodity.Got milk?is an example of a commodity brand. The word "brand" is derived from theOld Norsebrandrmeaning "to burn." It refers to the practice of producers burning their mark (or brand) onto their products.[4]The oldest generic brand, which is in continuous use in India since theVedic period(ca. 1100 B.C.E to 500 B.C.E), is known as 'Chyawanprash', an herbal paste consumed for its purported health benefits and attributed to a reveredrishi(or seer) named Chyawan.This brand was developed atDhosi Hill, an extinct volcano in northern India.The Italians were among the first to use brands, in the form ofwatermarkson paper in the 1200s.Blind Stamps,hallmarksand silver maker's marks are all types of brand.Although connected with the history oftrademarksand including earlier examples which could be deemed "protobrands" (such as the marketing puns of the "Vesuvinum" wine jars found atPompeii),brands in the field of mass-marketing originated in the 19th century with the advent of packagedgoods.Industrializationmoved the production of many household items, such assoap, from local communities to centralizedfactories. When shipping their items, the factories would literallybrandtheirlogoorinsigniaon the barrels used, extending the meaning of "brand" to that of trademark.Bass & Company, theBritishbrewery, claims their red triangle brand was the world's first trademark. Lyles Golden Syrup makes a similar claim, having been named as Britain's oldest brand, with its green and gold packaging having remained almost unchanged since 1885. Another example comes from Antiche Fornaci Giorgi inItaly, whose bricks are stamped or carved with the same proto-logo since 1731, as found inSaint Peter's BasilicainVatican City.Cattlewere branded long before this. The term "maverick," originally meaning an unbranded calf, comes fromTexasrancherSamuel Augustus Maverickwhose neglected cattle often got loose and were rounded up by his neighbors. The word spread among cowboys and came to be applied to unbranded calves found out wandering alone.Even the signatures on paintings of famous artists like Leonardo da Vinci can be viewed as an early branding tool.

Factories established during theIndustrial Revolutionintroduced mass-produced goods and needed to sell their products to a wider market, to customers previously familiar only with locally-produced goods. It quickly became apparent that a generic package of soap had difficulty competing with familiar, local products. The packaged goods manufacturers needed to convince the market that the public could place just as much trust in the non-local product.Pears Soap,Campbell soup,Coca-Cola,Juicy Fruit gum,Aunt Jemima, andQuaker Oatswere among the first products to be 'branded', in an effort to increase the consumer's familiarity with their products. Many brands of that era, such asUncle Ben'srice andKellogg'sbreakfast cereal furnish illustrations of the problem.Around 1900,James Walter Thompsonpublished a house ad explainingtrademarkadvertising. This was an early commercial explanation of what we now know as branding. Companies soon adoptedslogans,mascots, andjinglesthat began to appear onradioand earlytelevision. By the 1940s,manufacturers began to recognize the way in which consumers were developing relationships with their brands in a social/psychological/anthropological sense.From there, manufacturers quickly learned to build their brand's identity and personality (seebrand identityandbrand personality), such as youthfulness, fun or luxury. This began the practice we now know as "branding" today, where the consumers buy "the brand" instead of the product. This trend continued to the 1980s, and is now quantified in concepts such asbrand valueandbrand equity. Naomi Klein has described this development as "brand equity mania".In 1988, for example,Philip MorrispurchasedKraftfor six times what the company was worth on paper; it was felt that what they really purchased was itsbrand name.Marlboro Friday: April 2, 1993 - marked by some as the death of the brand- the dayPhilip Morrisdeclared that they were cutting the price ofMarlboro cigarettesby 20% in order to compete with bargaincigarettes. Marlboro cigarettes were noted at the time for their heavyadvertisingcampaigns and well-nuanced brand image. In response to the announcementWall streetstocks nose-divedfor a large number of branded companies:Heinz,Coca Cola,Quaker Oats,PepsiCo,Tide,Lysol. Many thought the event signalled the beginning of a trend towards "brand blindness" (Klein 13), questioning the power of "brand value."Concepts

Proper branding can result in higher sales of not only one product, but on other products associated with that brand. For example, if a customer loves Pillsbury biscuits and trusts the brand, he or she is more likely to try other products offered by the company such as chocolate chip cookies. Brand is thepersonalitythat identifiesa product, service or company (name, term, sign, symbol, or design, or combination of them) and how it relates to key constituencies: customers, staff, partners, investors etc.Some people distinguish the psychological aspect, brand associations like thoughts, feelings, perceptions, images, experiences, beliefs, attitudes, and so on that become linked to the brand, of a brand from the experiential aspect. The experiential aspect consists of the sum of all points of contact with the brand and is known as thebrand experience. The brand experience is a brand's action perceived by a person. The psychological aspect, sometimes referred to as thebrand image, is a symbolic construct created within the minds of people, consisting of all the information and expectations associated with a product, service or the company(ies) providing them.People engaged in branding seek to develop or align the expectations behind the brand experience, creating the impression that a brand associated with a product or service has certain qualities or characteristics that make it special or unique. A brand is therefore one of the most valuable elements in anadvertisingtheme, as it demonstrates what the brand owner is able to offer in themarketplace. The art of creating and maintaining a brand is calledbrand management. Orientation of the whole organization towards its brand is calledbrand orientation. The brand orientation is developed in responsiveness to market intelligence.Careful brand management seeks to make the product or services relevant to thetarget audience. Brands should be seen as more than the difference between the actual cost of a product and its selling price - they represent the sum of all valuable qualities of a product to the consumer.

A brand which is widely known in the marketplace acquiresbrand recognition. When brand recognition builds up to a point where a brand enjoys a critical mass of positive sentiment in the marketplace, it is said to have achievedbrand franchise. Brand recognition is most successful when people can state a brand without being explicitly exposed to the company's name, but rather through visual signifiers like logos, slogans, and colors.For example,Disneyhas been successful at branding with their particular script font (originally created for Walt Disney's "signature" logo), which it used in the logo forgo.com.Consumers may look on branding as an aspect of products or services, as it often serves to denote a certain attractive quality or characteristic (see alsobrand promise). From the perspective of brand owners, branded products or services also command higher prices. Where two products resemble each other, but one of the products has no associated branding (such as ageneric, store-branded product), people may often select the more expensive branded product on the basis of the quality of the brand or the reputation of the brand owner.Brand awareness

Brand awareness refers to customers' ability to recall and recognize the brand under different conditions and link to the brand name, logo, jingles and so on to certain associations in memory. It consists of both brand recognition and brand recall. It helps the customers to understand to which product or service category the particular brand belongs and what products and services are sold under the brand name. It also ensures that customers know which of their needs are satisfied by the brand through its products (Keller). Brand awareness is of critical importance since customers will not consider your brand if they are not aware of it.There are various levels of brand awareness that require different levels and combinations of brand recognition and recall. Top-of-Mind is the goal of most companies.Top-of-mind awarenessoccurs when your brand is what pops into a consumers mind when asked to name brands in a product category. For example, when someone is asked to name a type of facial tissue, the common answer is Kleenex, which is a top-of-mind brand.Aided Awarenessoccurs when a consumer is shown or reads a list of brands, and expresses familiarity with your brand only after they hear or see it as a type of memory aide.Strategic Awarenessoccurs when your brand is not only top-of-mind to consumers, but also has distinctive qualities that stick out to consumers as making it better than the other brands in your market. The distinctions that set your product apart from the competition is also known as the Unique Selling Point or USP.Marketing mix modelingcan help marketing leaders optimize how they spend marketing monies to maximize the impact on Brand Awareness or sales effects. Managing brands for value creation will often involve applyingmarketing mix modelingtechniques in conjunction withbrand valuation.Brand elements

Brands typically are made up of various elements, such as: Name: The word or words used to identify a company, product, service, or concept.

Logo: The visual trademark that identifies the brand.

Tagline or Catchphrase: "The Quicker Picker Upper" is associated with Bounty paper towels. "Can you hear me now" is an important part of the Verizon brand.

Graphics: The dynamic ribbon is a trademarked part of Coca-Cola's brand.

Shapes: The distinctive shapes of the Coca-Cola bottle and of the Volkswagen Beetle are trademarked elements of those brands.

Colors: Owens-Corning is the only brand of fiberglass insulation that can be pink.

Sounds: A unique tune or set of notes can denote a brand. NBC's chimes are a famous example.

Scents: The rose-jasmine-musk scent of Chanel No. 5 is trademarked.

Tastes: Kentucky Fried Chicken has trademarked its special recipe of eleven herbs and spices for fried chicken.

Movements: Lamborghini has trademarked the upward motion of its car doors.

Customer relationship managementGlobal brand variables

Relationship between trade marks and brand

The brand name is quite often used interchangeably with "brand", although it is more correctly used to specifically denote written or spoken linguistic elements of any product. In this context a "brand name" constitutes a type oftrademark, if the brand name exclusively identifies the brand owner as the commercial source of products or services. A brand owner may seek to protectproprietary rightsin relation to a brand name through trademark registration and such trademarks are called "Registered Trademarks". Advertising spokespersons have also become part of some brands, for example:Mr. WhippleofCharmintoilet tissue andTony the TigerofKellogg's Frosted Flakes. Putting a value on a brand bybrand valuationor usingmarketing mix modelingtechniques is distinct to valuing atrade mark.

Types of brand names

Brand names come in many styles.[15]A few include:Initialism: A name made of initials such, as UPS or IBMDescriptive: Names that describe a product benefit or function, such as Whole Foods or AirbusAlliteration and rhyme: Names that are fun to say and stick in the mind, such as Reese's Pieces or Dunkin' DonutsEvocative: Names that evoke a relevant vivid image, such as Amazon or CrestNeologisms: Completely made-up words, such as Wii or KodakForeign word: Adoption of a word from another language, such as Volvo or SamsungFounders' names: Using the names of real people, (especially a founder's name), such as Hewlett-Packard, Dell or DisneyGeography: Many brands are named for regions and landmarks, such as Cisco and Fuji FilmPersonification: Many brands take their names from myths, such as Nike; or from the minds of ad execs, such asBetty CrockerThe act of associating a product or service with a brand has become part ofpop culture. Most products have some kind of brand identity, from commontable salttodesigner jeans. Abrandnomeris a brand name that hascolloquiallybecome a generic term for a product or service, such asBand-Aid,Nylon, orKleenexwhich are often used to describe any brand of adhesive bandage; any type of hosiery; or any brand of facial tissue respectively.Xerox, for example, has becomesynonymouswith the word "copy".Brand identity

The outward expression of a brand including its name, trademark, communications, and visual appearance is brand identity. Because the identity is assembled by the brand owner, it reflects how the ownerwantsthe consumer to perceive the brand and by extension the branded company, organization, product or service. This is in contrast to the brand image, which is a customer's mental picture of a brand.The brand owner will seek to bridge the gap between the brand image and the brand identity.Effective brand names build a connection between the brand personality as it is perceived by thetarget audienceand the actual product/service. The brand name should be conceptually on target with the product/service (what the company stands for). Furthermore, the brand name should be on target with the branddemographic. Typically, sustainable brand names are easy to remember, transcend trends and have positive connotations. Brand identity is fundamental to consumer recognition and symbolizes the brand's differentiation from competitors.

Brand identity is what the owner wants to communicate to its potential consumers. However, over time, a product's brand identity may acquire (evolve), gaining new attributes from consumer perspective but not necessarily from the marketing communications an owner percolates to targeted consumers. Therefore, brand associations become handy to check the consumer's perception of the brand. Brand identity needs to focus on authentic qualities real characteristics of the value and brand promise being provided and sustained by organizational and/or production characteristics.Visual brand identity

The visual brand identity manual forMobil Oil(developed byChermayeff & Geismar), one of the first visual identities to integrate logotype, icon, alphabet, color palette, and station architecture.The recognition and perception of a brand is highly influenced by its visual presentation. A brands visual identity is the overall look of its communications. Effective visual brand identity is achieved by the consistent use of particular visual elements to create distinction, such as specific fonts, colors, and graphic elements. At the core of every brand identity is a brand mark, orlogo. In the United States, brand identity and logo design naturally grew out of the Modernist movement in the 1950s and greatly drew on the principles of that movement simplicity (Mies van der Rohes principle of "Less is more") and geometric abstraction. These principles can be observed in the work of the pioneers of the practice of visual brand identity design, such asPaul Rand,Chermayeff & GeismarandSaul Bass.Color is a particularly important element of visual brand identity and color mapping provides an effective way of ensuring color contributes to differentiation in a visually cluttered marketplace (O'Connor, 2011).Brand trust

Brand trust is the intrinsic 'believability' that any entity evokes. In the commercial world, the intangible aspect of Brand trust impacts the behavior and performance of its business stakeholders in many intriguing ways. It creates the foundation of a strong brand connect with all stakeholders, converting simple awareness to strong commitment. This, in turn, metamorphoses normal people who have an indirect or direct stake in the organization into devoted ambassadors, leading to concomitant advantages like easier acceptability of brand extensions, perception of premium, and acceptance of temporary quality deficiencies.The Brand Trust Reportis a syndicated primary research that has elaborated on this metric of brand trust. It is a result of action, behavior, communication and attitude of an entity, with the most Trust results emerging from its action component. Action of the entity is most important in creating trust in all those audiences who directly engage with the brand, the primary experience carrying primary audiences. However, the tools of communications play a vital role in the transferring the trust experience to audiences which have never experienced the brand, the all important secondary audience.Brand parity

Brand parity is the perception of the customers that some brands are equivalent.[21]This means that shoppers will purchase within a group of accepted brands rather than choosing one specific brand. When brand parity is present, quality is often not a major concern because consumers believe that only minor quality differences exist.Expanding role of brand

It was meant to make identifying and differentiating a product easier, while also providing the benefit of letting the name sell a second rate product. Over time, brands came to embrace a performance or benefit promise, for the product, certainly, but eventually also for the company behind the brand. Today, brand plays a much bigger role. Brands have been co-opted as powerful symbols in larger debates about economics, social issues, and politics. The power of brands to communicate a complex message quickly and with emotional impact and the ability of brands to attract media attention, make them ideal tools in the hands of activists.Cultural conflict over a brand's meaning have also been shown to influence the diffusion of an innovation.Branding strategies

Company name

Often, especially in the industrial sector, it is just the company's name which is promoted (leading to[citation needed]one of the most powerful statements of branding: saying just before the company's downgrading, "No one ever got fired for buying IBM"). This approach has not worked as well forGeneral Motors, which recently overhauled how its corporate brand relates to the product brands.Exactly how the company name relates to product and services names is known asbrand architecture. Decisions about company names and product names and their relationship depends on more than a dozen strategic considerations. In this case a strong brand name (or company name) is made the vehicle for a range of products (for example,Mercedes-BenzorBlack & Decker) or a range of subsidiary brands (such asCadburyDairy Milk, Cadbury Flake or Cadbury Fingers in the United States).Individual branding

Each brand has a separate na

STRATEGIC IMPACT OF ELECTRONIC MEDIA FOR FMCG PRODUCTS IN RURAL MARKET.doc

Documents

Transcript of STRATEGIC IMPACT OF ELECTRONIC MEDIA FOR FMCG PRODUCTS IN RURAL MARKET.doc