Brand Strategy For Bottom Line Markets
Brand Strategy For Bottom Line Markets
Brand Strategy For Bottom Line Markets
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** Professor, Mudra Institute of Communications, Ahmedabad. [email protected]
RM2-04-1
Rural Brand Preference Determinants in India
Sandip Anand*, Rajneesh Krishna**
Introduction
In the last few years, spending patterns have been changing in both rural and urban India. Discretionary
incomes have started going into mobile phones, televisions, white goods and motorcycles. However,
FMCG brands penetration in India, particularly in rural India, is so low that the potential for growth
remains huge.
The Rural market has been growing steadily since the 1980s. Rural markets are vital for the growth of
most companies. For instance, more than half of HLLs annual turnover of Rs.9,954 crore comes from
rural markets. But despite the high rural share, the rural penetration rates are low, thus offering
tremendous potential for growth. The proposed agricultural reforms in the Tenth Plan, easy availability of
agriculture credit, the Rs. 60,000 crore village road programs, introduced recently to connect 1.9 lakh
villages, and improved communication network is likely to give a huge fillip to the rural economy and
incomes, resulting in higher penetration as also increased consumption rates in the coming years.
These villages and small towns, which were once inconsequential dots on maps, are now getting the
attention of global marketing giants and media planners. Thanks to globalization, economic
liberalization, IT revolution, Indian diasporas, female power, and improving infrastructure, middle class
rural India today has more disposable income than urban India. Rural marketing is gaining new heights
in addition to rural advertising. (Bhatia, T.K; 2000)
There are many challenges that companies face in tackling rural markets, some of the more critical being:
understanding rural consumers, reaching products and services to remote rural locations and
communicating with vastly heterogeneous rural audiences. Rural customers are fundamentally different
from their urban counterparts, and different rural geographies display considerable heterogeneity, calling
for rural- specific and region specific strategies. In an urban family, the entire family is involved in
making a purchase, however in the village community women have very little contact with the market, the
male makes the purchase decision, and community decision-making is quite common in a village, because
of strong caste and social structures and low literacy levels.
The demand for rural credit is estimated at Rs. 143,000 crore. For banks, the challenge is not in
disbursement but in loan recoveries because of uncertainties in Agri Sector. Therefore, it seems that gap
between demand of credit and supply may be a challenge from Rural Marketing point of view.
Methodology
This study was done in two Indian states with the objective of exploring the dynamics of branding in rural
India. The study was done through sample survey using structured questionnaire. The sample size for the
study was 354.
Data Collection
Data was collected with the help of structured questionnaire. The sample size taken for study was 354.
The data was collected in mid 2004 for four weeks.
The key variables taken for study were
1. Preference for FMCG Brand
2. Preference for Durable Brand
3. Preference for Agro Input Brand
Preference was measured on 5 point likert scale. Ratings on various dimensions of brand preference were
also collected. The various dimensions of Brand Preference are following:
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Marketing to Rural Consumers Understanding and tapping the rural market potential, 3, 4, 5 April 2008 IIMK
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Sr. No. Statements
1 Branded products have good quality
2 Branded products are very costly
3 Branded products have all the essential product features
4 Branded products give value for money
5 Branded products are more easily available
6 Branded products last longer
7 Branded products incorporate latest technology
8 Branded products are maintenance free
9 Branded products offer more variety / range
10 Branded products is easy to use
11 Branded products are reliable
12 Branded products are trustworthy
13 Branded products give me prestige
14 Branded products are stylistic
15 Branded products have a better finish and are good looking
16 Use of branded products are recommended by my kind of people
17 Purchasing branded products is risk free
18 Branded products perform as expected
19 I purchase only those brands which I have been purchasing since long
20 Branded products are not for people like me
21 Branded products provide distinction
22 Branded products are for rural people
23 Branded products are for urban people
24 Branded products offer good after sales service
25 Branded products are easy to use
26 Branded products are aesthetics / lifestyle
27 There is not much to differentiate between branded and unbranded products
28 Unbranded products also have warranty
29 I get to know of new branded products through friends / relatives / family members
30 I get to know of new branded products through shop-keepers
31 I buy products that are recommended by friends / relatives / family members
32 I buy products that are recommended by shop-keepers
33 Branded products are easily available now-a-days
Results
Multiple Regression Analysis was done to analyze the data. For regression, brand preference for 3
categories FMCG, Durables and Agro Inputs were taken as dependent variables for 3 separate
set of regression analysis.
As seen in Table 1, preference for a FMCG (Fast moving consumer goods) brand in rural India is
being significantly determined by Good Quality ( Beta = 0.301), Value for money (Beta = 0.219)
and recommended by my kind of people (Beta=0.188).
As seen in Table 2, preference for a Consumer durable brand in rural India is being significantly
determined positively by Better finish and good looks ( Beta = 0.261), Information through shop
keepers (Beta = 0.236) and negatively by warranty for Unbranded products (Beta=-0.150).
As seen in Table 3, preference for an Agro Input brand in rural India is being significantly
determined only by value for money (Beta = 0.273).
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Discussion
Results clearly indicate that if any FMCG brand (National or Global) has to get established in
rural markets of India, a very fast growing market in terms of size, they have to differentiate
themselves on quality, value for money and sense of belongingness with consumer.
Similarly, if any consumer durable brand (National or Global) has to get established in rural
markets of India, they have to differentiate themselves on Aesthetics, warranty conditions and
recommendations from Shopkeepers.
And, if any agro input brand (National or Global) has to get established in rural markets of India,
they have to differentiate themselves only on VFM, as of now. So there is long way to go in this
market. Currently, no quality factors seem to be determining brand preference.
The reasons for rural branding being determined only by few limited attributes are manifold.
However, the most important factor is lack of technology, innovation and so lack of rural
development (Venkatesh, G; 2004). Lack of rural development means lack of infrastructure, and
so lack of distribution facilities. This is very well recognized factor and probably responsible for
lack of interest on the part of marketing companies. Till date, reach to rural population has been
limited. Television penetration within rural population is still low. Moreover, even where the
ownership of TV exists, lack of electricity or limited access to electricity has been a problem. So
reach of media has been low. Due to low literacy level, reach of print media is also low. So, radio,
outdoor, cinema etc. and other localized advertising activities only have to be relied upon.
Needless to say, that these media have their own limitations.
Now, we firmly believe that treating poor as our customers is key to development (Prahalad, C.K;
2004). Earlier, the very same rural population including small towns was neglected as it did not
have enough purchasing power to be called as key markets. However, now paying attention to
this population seems to have become mandatory for category growth and market expansion. This
leads to questioning whether Indian Rural population purchases products or brands. Probably this
question needs to be answered in the context of category.
In the fast moving consumer goods category, the quality perceptions have already started
emerging along with VFM. Sense of identity or status My Kind of People has already started
emerging. Therefore brand is being signified by quality and aspirations along with VFM. It leads
to further questioning like what is the benchmark for quality perceptions. As a FMCG consumer
or prosumer, are my quality perceptions being formed by my visits to Urban India or through
media exposure or actual trial or combination of all these?
In the consumer durable category, does aesthetics determine brand preference? It may be that
despite offering warranty (service), local or unbranded products may not offer the kind of finish
and looks which a national or international brand would otherwise offer. Assumption of
technology also may underlie the perceptions of aesthetics; however it may not have been put
explicitly by rural Indian customers. However, brand does not connote reliability or trust in a
significant fashion. Trust emerges through shopkeepers recommendation. At the same time,
performance perceptions also do not seem to determine brand preference. Unlike FMCG, here
quality perceptions do no seem to determine brand preference. This is probably explainable in
terms of lack of trial. Therefore, possibly, the key task to create brand preference for a consumer
durable is to know how to remove purchase barriers.
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However, in the agro input category, nothing seems to be determining brand preference
significantly, except value for money. One wonders why in a consumption which is directly
related to livelihood, no quality or any other product parameters are emerging. Does a rural
customer not have any faith in branded products for agro-inputs? Has supply of branded agro
products been an issue? Or has performance of branded agro products been an issue? Or are agri-
practices followed by a farmer responsible for it ? It has been observed that many a times lack of
agri-productivity is due to faulty agri-practice, or due to practices which are not in consonance
with agri-inputs. Whatever the case may be, probably the challenge becomes to create quality
perceptions through controlled trial. If needed, do we need to change our agri-practices and how
it can be done?
Table 1: Determinants of A FMCG Brand In Rural India
n= 354
Method = Enter
Dependent Variable
R R
Square
Adjusted
R square
FMCG Preference - I prefer to purchase branded products in the
FMCG category like bathing soaps, shampoo, facial cream, talcum
powder etc.
0.744 0.554 0.485
Standardized Coefficients
Beta
Sig.
Branded products have good quality 0.301 0.000
Branded products give Value for money 0.219 0.001
Usage of Branded Product is recommended by
my kind of people
0.188 0.004
Table 2 : Determinants of A Consumer Durable Brand In Rural India
n= 354
Method = Enter
Dependent Variable
R R
Square
Adjusted
R square
Durable Preference I prefer to purchase branded products in the
durable like TV, transistor etc.
0.738 0.544 0.474
Standardized Coefficients
Beta
Sig.
Branded Products have better finish and
are good looking
0.261 0.001
Unbranded Products also have warranty - 0.150 0.005
I get to know of new branded products
through shop-keepers
0.236 0.000
Table 3 : Determinants of An Agro Input Brand In Rural India
n= 354
Method = Enter
Dependent Variable
R R
Square
Adjusted
R square
Agricultural Input Preference - I prefer to purchase branded
products in the agro input category like seeds, pesticide etc.
0.578 0.334 0.230*
* Low Adjusted R square
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Standardized Coefficients Beta Sig.
Branded products give value for
money
0.273 0.001
References
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Jha, Mithileshwar. Understanding Rural Buyer Behaviour. IIMB Management Review, Sep2003, Vol. 15
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Krishnamacharyulu C.S.G; and Ramakrishnan, L. (2003) Cases in Rural Marketing : An Integrated
Approach. Pearson Education , Delhi, India.
Prahalad, C.K. (2004). The fortune at the Bottom of the Pyramid, Eradicating Poverty through
Profits.Wharton School Publishing
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Zhang, X and Fan, S; How productive is infrastructure? A new approach and evidence from rural India.
American Journal of Agricultural Economics. 86 (2) (May 2004): 492-501
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