Branding in Rural Markets

Published: 30th July 2010
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A brand is a name that distinguishes a product from others. It has its own identity in the market with its symbol and tagline. When we talk about brands in rural markets some of the names which come to our mind are Rajdoot Bikes,Ghari Detergent,Dolly TV and chic shampoo etc Findings indicated that good quality, value for money and sense of identity with brand were likely to act as key determinants of a FMCG brand in rural India. Better finish and good looks, recommendations from retailers were found be key determinants of a consumer durable brand in rural India. Lets throw some light on agro inputs also like pesticides, fertilizers, manure, seeds, tractors, harvesters, pumps and threshers etc. In this regards marketers are following market specialization strategy.HYV seeds are also becoming popular among the farmers.

It is a known fact in rural areas that price plays an important role in rural markets for purchasing the products. Now the New Era of marketing is changing the scenario of the Rural India. With Cola companies penetrating these markets with low prices (chota coke) the rural consumer has now realized the benefits of branding. However, no data is available to establish a relationship of the extent of branding and the consumer acceptance with reference to research publications. Keeping this in view, the present study was undertaken and the results have been presented.

Indian Marketers on rural marketing have two understanding (I) The urban metro products and marketing products can be implemented in rural markets with some or no change. (II) The rural marketing required the separate skills and techniques from its urban counterpart. The Marketers have following facilities to make them believe in accepting the truth that rural markets are different in so many terms.

The rural market has the opportunity for.

(i) Low priced products can be more successful in rural markets because the low purchasing, purchasing powers in rural markets.

(ii) Rural consumers have mostly homogeneous group with similar needs, economic conditions and problems.

(iv) The rural markets can be worked with the different media environment as opposed to press, film, radio and other urban centric media exposure.

Realities before the Marketers

70% of India's population lives in 627000 villages in rural areas. 90% of the rural population us concentrated in villages with a population of less than 2000, with agriculture being the main business. This simply shows the great potentiality rural India has to bring the much - needed volume- driven growth. This brings a boon in disguise for the FMCG Company who has already reached the plateau of their business urban India.

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. At the highest income level there are 2.3 million urban households as against 1.6 million households in rural areas. According to 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 same is expected to grow from 46 million to 59 million. Thus, the absolute size India is expected to be doubles that of urban India.

HUL chairman MS Banga Says, "This exercise may not pay in the immediate future, but will definitely give long-term dividends. Incidentally, over 50 percent of the sales of HUL's fabric wash, personal wash and beverages are in rural areas. And we see a future in going rural in a major way".

Industry's role in building market linkages: To make an effective market linkage, industries have to play as an engine of market, which can generate a brand image of the rural products. This initiative of industries will also strengthen the backward and forward linkages of the rural market, besides, accelerating the innovations of the rural products. Definitely, this strategy will also give a remarkable dividend to the industries & profit making companies. In micro level, it is observed that to create a sustainable market linkage for rural products, industries can develop an ecosystem of Self Help Groups (SHGs) by involving the local communities through village level empowerment. It is nothing less than the next phase in the democratization of commerce. Under this paradigm, industries can create a network with viable marketing channels covering all the linkages from villages to the global level. This architecture provides the right value of procurement through the village procurement centres and rural entrepreneurs can sell their products faster with better price realization. This model is also capable of generating a consumer business and an output business in a win-win scenario, where rural producers can get a wide marketing horizon and the industries shall get a new, lower cost 'salesforce'. Another role of industries in building market linkages for agro-based rural products can be the 'dynamic contract farming'. If a conventional industry can kick off a contract farming business, and export niche horticulture crops like cucumbers, the small and marginal farmers who could grow these small cucumbers would make Rs 30,000 in profits in a year. KRBL, one of India's largest basmati exporters, has contract farming agreements with 24,000 farmers; Global Green buys from about 12,000 farmers. Moreover, in the current era of information technology, industry and private companies can also creatively use ICT for building sustainable marketing linkages. This approach creatively leverages information technology (IT) to set up a meta-market in favour of small and poor producers/rural entrepreneurs, who would otherwise continue to operate and transact in 'unevolved' markets where the rent-seeking vested interests exploit their disadvantaged position. ITC e Choupal is the best example in this context. Through creative use of Information Technology, ITC eChoupal has been creating sustainable stakeholder value by reorganizing the agri-commodity supply chains simultaneously improving the competitiveness of small farmer agriculture and enhancing rural prosperity. eChoupal also sidesteps the value-sapping problems caused by fragmentation, dispersion, heterogeneity and weak infrastructure. ITC takes on the role of a Network Orchestrator in this meta-market by stitching together an end-to-end solution. It eliminated the traditional 'mandi' system which involved lot of middlemen as a result of which farmers failed to get the right value for their produce. The solution simultaneously addresses the viability concerns of the participating companies by virtually aggregating the demand from thousands of small farmers, and the value-for-money concerns of the farmers by creating competition among the companies in each leg of the value chain.

Scope & opportunities: The basic scope of this novel initiative will be the mutual benefits of the rural entrepreneurs and industries. The entrepreneurs - primary beneficiaries, SHGs - bridge with the community, participating companies/industries and rural consumers have befitted through a robust commercial relationship. These models of marketing linkages demonstrate a large corporation which can play a major role in reorganizing markets and increasing the efficiency of a rural product generation system. While doing so it will benefit farmers and rural communities as well as shareholders. Moreover, the key role of information technology-provided and maintained by the industry/company for building linkages, and used by local farmers-brings about transparency, increased access to information, and rural transformation. Besides, this strategy of market linkage, addresses the challenges faced by rural entrepreneurs due to institution voids, numerous intermediaries and infrastructure bottlenecks. Moreover, the prime scope of this model is the creation of opportunities for the rural entrepreneurs for product differentiation and innovation by offering them choices. Because of this sustainable market linkages, rural producers can participate in the benefits of globalization and will also develop their capacity to maintain global quality standard. Nonetheless, it creates new stakeholders for the industry sector. And subsequently, they become part of the firms' core businesses. The involvement of the private /industry sector at the rural product and market development can also provide opportunities for the development of new services and values to the customers, which will find application in the developed markets. It will be worth mentioning that building a sustainable market linkage through industry's intervention will also empower the rural mass (producers, farmers & entrepreneurs) to cope with socio-economic problems in the rural society and will ensure economic self -reliance.

The Author Sonali Saxena has been conducting research on "branding in Indian rural markets" since 2008 and presently working as a Lecturer at NSB known as one of top business schools in India.


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