Term Paper of

RURAL MARKETING

ON

MARKETING PLAN OF HERBAL SHAMPOO

FOR ORISSA

Submitted To:- Submitted By:-

Gaurav Arora

Lect. In mgt MBA-4A

LIM 10812415

ACKNOWLEDGEMENT

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us. We being no exception had to seek the help of others to make this Term Paper

successful.

We would like to express our gratitude to Prof. Krishan gopal, who has been provided us

with guidance, inspiration, perspective and stimulating discussion, throughout the writing

of this report. His constant review and excellent suggestions throughout the Term Paper

are highly commendable.

A study like this cannot be completed without help from other persons and therefore I

would like to express my gratitude to other faculty members to provide me crucial

guidance to complete this Term Paper.

A lot of individuals have contributed in the preparation of this Term Paper. We are

thankful to all of them for their timely help encouragement, support, valuable comments,

suggestions and many innovative ideas in carrying out these Term Papers. It is my proud

privilege and pleasure to express deep sense of gratitude to these people.

Finally we would like to give regards to our parents for their moral support and

understanding which played an important role in the completion of the Term Paper.

Executive summary

“The future lies with those companies who see the poor as their customers”

- C.K.PRAHALAD

“India’s way is not Europe’s. India is not Calcutta and Bombay. India lives in her seven hundred thousand villages.”....................Mahatma Gandhi, 1926

Marketing in developing countries like India have often been borrowed from the western world. Concepts like Brand identity, Customer relationship management, 4 P’s of the marketing mix, Consumer behaviour process; Segmentation, targeting and positioning etc. have often been lifted straight from the marketing intelligentsia abroad and adopted in Indian conditions, often with minimal success. Reason lies not in the fault of such concepts, but their integration with the Indian ethos and culture.

The rural India offers a tremendous market potential. Nearly two-thirds of all middle- income households in the country are in rural India and represents half of India’s buying potential. Despite, the strong potential the rural markets are by and large less exploited. Consider the market, out of five lakh villages in India only one lakh have been tapped so far. According to us if the rural market has to be adequately tapped, there has to be a change in the way marketing concepts learnt in B-schools with adequate adoption according to scenarios prevalent in rural India. The paper thereby present the modified version of Philip Kotler’s famous marketing mix consisting of 4P’s. The focus is on its modification and subsequent customization to Indian rural market’s perspective.

The 4P’s have to be modified to include 1P i.e. Packaging and 1R i.e. Retailer as special focus areas. Further to ensure the sustainability of the marketing mix two E’s i.e. Education and Empowerment have to be at the core as they help in generating widespread participation from the rural clientele by enhancing their standard of living.

The Products in the rural market should essentially operate at the basic and expected level of product classification. They should essentially meet the basic needs of the consumer and should be a no-frill product, as the consumer would not be valuing much any further addition to the product concept. Companies also face a daunting task in communicating about their products to the consumer due to lack of literacy and failure of traditional media to penetrate in the rural households. Hence, the advertising mix has to be more

towards non-conventional yet effective medium like Puppetry, Folk Theater & Song, Wall Painting, Demonstration, Posters, Agricultural Games, NGO’s network, etc. Thus overall either the product or communication or preferably both need to be customized to target the rural customer.

In terms of physical distribution due to lack of infrastructure the costs are very exorbitant to reach the rural customer. Thus, mediums like rural marketing vehicles and melas and haats provide better opportunities to meet customer needs. Also the existing distribution would need a transformation to achieve the required penetration levels as success of Project Streamline of HLL has shown. Since, the value for money concept is more important rural customers, there has to be an approach of treating customer as budget seeking consumer. Here, fitting the consumer needs into an affordable price point is pursued first and then other features of product are fitted in. Similarly, packaging has to meet customer needs of better brand recall and introducing favorable price points. At the same time the importance of retailer has to be recognized where he is one of the most major influencer is customer’s decision making process. He acts as the friend and guide in this process and hence, needs to be managed effectively through promotion programmes and incentives to promote the brand of a company.

In order to bridge the gap between Philip Kotler and countryside Indian what is needed the appreciation of unique features of rural India and thus, responding to them by making adequate improvements in the application of the marketing concepts learnt in the class. For achieving the desired results of capturing the rural customer a comprehensive approach to the traditional marketing concepts has to be taken. This marketing mix has to be responsive to customer’s needs and fit into his life as a tool of self-enhancement. To be successful the concept of marketing has to be taken in conjunction with its economic, psychological and social implications.

Unique features of rural marketing in India

Marketing according to a leading management theories Peter Drucker can be put in this way “The aim of marketing is to know and understand the customer so well that the product or service fits him and sell itself."

We feel that the above quote is the gist of marketing, be it in rural areas or urban areas, western world or developing world. Marketing in nothing but creating customers and thus its concepts remain the same. But, due to the differences in the needs, buying behaviour, values and aspirations of the customers the marketing concepts have to be modified to be successful. The unique features of rural India which call for special attention and thus, subsequent changes in the application of marketing concepts are as follows:

a) Traditional Outlook: The rural consumer values old customs and tradition. Basic cultural values have not yet faded in rural India. Buying decisions are highly influenced by social customs, traditions and beliefs in the rural markets.

b) Levels of Literacy: - The literacy rate is low in rural areas as compared to urban areas. This comes in way of the marketer in promoting the product. Advertising is very expensive making it difficult to communicate with the target audience.

c) Lack of Proper Communication and infrastructure facilities: - Nearly fifty percent of the villages in the country do not have all weather roads. The Infrastructure Facilities like roads, warehouses, communication system, financial facilities are inadequate in rural areas making physical distribution becomes costly.

d) Many Languages and Dialects: - The number of languages and dialects vary widely from state to state region to region and probably from district to district. Even though the numbers of recognized languages are only 16, the dialects are estimated to be around 850

e) Low Per Capita Income: - Even though about 33-35% of gross domestic product is generated in the rural areas it is shared by 74% of the population. Hence the per capita

Incomes are low compared to the urban areas. Normally the rural consumers spent a majority of their income in basic necessities, which makes them very price sensitive.

The above points indicate the need for subsequent adoption of ‘Marketing principles’ as propounded by Kotler and other management thinkers, with requisite changes suiting the Indian Market. The marketing mix in the case of Indian rural markets consists of 4P’s i.e. Product, Price, Promotion, Place combined with 1 P that is Packaging and one R i.e. Retailer as special focus areas. However, at the base of this marketing mix will be 2 E’s of Education and Empowerment.

Rural Market : characteristics • Half the national income is generated in the Rural India.

• 2/3rd of the population live here.

• A World Of Opportunities and Challenges

• Traditional Outlook

• Large and Scattered market

• Major income from Agriculture

Tribal Population and Chronic Poverty in

Orissa

1. Introduction

Orissa has a varied physiography on account of a wide range of physical features and agro-ecological conditions. These determine to a large extent the human geography on the basis of ‘carrying capacity’ of land. The state is usually divided into four agro-climatic zones: Northern Plateau; Central

Table Land; Eastern Ghats and the Coastal Plains.

The NSSO has defined three regions for the purpose of selection of samples and their features are given

2. Incidence of Aggregate/Chronic Poverty in Orissa: Differences Across NSS RegionsWhen a poverty ratio of 48.01 per cent for the year 1999-2000 for rural Orissa was reported, the State earned the dubious distinction of being the poorest state in India ahead of Bihar (43.33 per cent). When the headcount ratio (HCR) for the three NSS regions of Orissa was worked out (Table 2), there were predictably some strong responses to it. The HCR for the coastal region of rural Orissa, at 31.74 per cent, was regarded as an achievement even though this was as expected. But, at the other extreme, the HCR for the Southern NSS region of rural

Table 1: Some Features of NSS RegionsNSS Region Districts

(undivided)Share(%) in State’s area

Share (%) inState’sPopulation

PopulationDensity (persons per sq. km)‘Northern’

(Northern Plateauplus Central TableLand)

MayurbhanjKeonjharSundergarh Sambalpur Dhenkana

42.18 34.69 194

‘Southern’(Eastern Ghats)

KalahandiKandhamalKoraput

32.02 17.47 129

‘Coastal’(Coastal Plains)

CuttackPuri Balasore Ganjam

25.8 47.84 438

Table 2: NSS Region-wise and Social Group-wise HCR, Rural

Orissa, 1999-2000

Region Social GroupsST SC Other

sAll

Coastal 66.63 42.18 24.32 31.74

Northern 61.69

57.22 34.67 49.81

Southern 92.42

88.90 77.65 87.05

Orissa 73.08 52.30 33.29 48.01Note: (i) The estimates of HCR of ST and SC at the level of NSS

regions are based on very small samples

What about the HCR for the northern NSS region? Most observers just pointed out that this fell ‘neatly’ between estimates for the coastal and southern NSS regions. However, it was not difficult to see that the HCR for the northern NSS region was much closer to that for the coastal region rather than the Southern NSS region (Table 2). Therefore, the difference in the HCR between the northern and southern NSS regions was much greater than that between the northern and coastal regions. Indeed, the HCR for the northern region was very close to that of the state as a whole (Table 2). This required an explanation. More strikingly there is a huge difference in the HCR for the tribal population between the northern and southern NSS regions –61.69 and 92.42 per cent respectively. This striking difference has not been researched, and its significance has not been given attention in discussions of tribal poverty in Orissa. This paper is essentially concerned with exploring this spatial aspect of poverty among the tribal people in Orissa.

The above observations on spatial variations in HCR are with respect to aggregate poverty. What about chronic poverty? For the state as a whole, we have an indirect estimate of the incidence of chronic poverty. Radhakrishna et. al. (2004) estimate this at 24.4 per cent for rural Orissa during 1999-2000, (the second highest after Bihar at 25.3 per cent). This meant that a little more than 50 per cent of the poor were chronically poor in rural Orissa.

Since such indirect estimates are not available at the level of NSS regions, we resort to a different indirect method to obtain estimates of the incidence of chronic poverty for the three NSS regions of Orissa. Elsewhere, it has been found using inter-state data for 1999-2000 that the incidence of chronic poverty (rural) and poverty gap (rural), are very strongly correlated (r = 0.97) (Padhi and Mishra 2005). In fact, poverty gap explains about 94 per cent of inter-state variation in the incidence of chronic poverty. Hence, we use the data on the distribution of the poor relative to the poverty line, available for 1993-94 at the level of NSS regions. Taking the category of ‘very poor’ as representing the chronically poor, the incidence of chronic poverty is taken as a per cent of ‘very poor’ in the rural population.

Table 3: Indirect Estimates of Incidence and Relative Extent of

Chronic Poverty and Poverty Gap, 1993-94

Region Incidence of Chronic Poverty

(‘Very Poor’ as per cent of rural population)

PovertyGap

Chronicallypoor as percent of All poorNorthern 18.99 10.41 41.60

Southern 34.08 18.78 49.38

Coastal 19.03 10.21 41.95

3. Tribal Communities in Orissa: A Digression on their Regional Geography

The scheduled tribe communities of Orissa contribute substantially to the demographic structure and social fabric of the state. There are 62 tribal communities, with a total population of 8.14 million (Census of India 2001), who belong to Austro-Asiatic, Dravidian and Indo-Aryan language families. Out of them, 11 tribal communities have been identified as primitive. Almost 44.21 per cent of the total land area in Orissa has been constitutionally declared as Scheduled Area. Except for the coastal belt, most of the districts of the State are either partially or fully declared as Scheduled Area. The present Scheduled Area of the State includes six districts that are fully and five districts that are partially within it. The districts of Mayurbhanj and Sundargarh are the full scheduled districts while Keonjhar is the partially scheduled district in the northern zone of the state. Similarly, Koraput (undivided) is a full scheduled district, while Kandhamal and Kalahandi are partial scheduled districts in the southern zone of the state. Out of 314 Community Development Blocks of Orissa, 118 (37.3 per cent) blocks are covered under the Tribal Sub-Plan (TSP). The tribal population of Orissa constitutes 22.08 per cent of the total State population (2001). The major tribes in the northern zone of the state, based on their numerical strength, are, Santhal, Munda, Ho, Juanga, Bhuyan, Bathudi, Kharia, Kolha, Kol Lahara, Kisan, Oraon, Gond, Lodha and Mirdha. The major tribal communities of southern zone include Khond, Koya, Gadaba, Paraja, Omanatya, Pentia, Saora, Bonda, Didayi and Shabar. There are 15 tribal groups distributed in different parts of Orissa each having more than one lakh population. The tribal communities like Santhal,

Gond, Munda, Ho, Birhor, Bhumija, Kharia, Lodha, Oraons and Kissan in the northern zone of the state cut across the State boundaries and are also found in the neighbouring States of Jharkhand, Chhatishgarh, and West Bengal. Similarly, Koya, Khond, Saora, Shabara, Paraja and Gadaba tribal communities of the southern zone are also found in Andhra Pradesh and Chhatishgarh.

Marketing Plan for an Herbal Shampoo to be launched in Orissa

Go CleanPresenting to you a totally new formulation which works both on your and scalp from the very first wash, washing away all the dandruff you are worried about so that u don’t have to hesitate, every time u go out…

Current Market Potential

The awareness to use personal care products made from herbs and other natural ingredients is increasing. Many people prefer herbal product over synthetic chemical shampoo. The product has been traditionally made by our ancestors and was widely used before the advent of chemical / synthetics and is not a totally new product for Indian customers. Since the herbal shampoo industry is not fully developed in the country and over periods of time consumers have become aware of advantages of using shampoo made from herbals, there are great future prospects for Hair care Herbals. Unlike synthetic chemical shampoo there are absolutely no side effects from using herbal shampoo and Herbal shampoos generally attracts the customers, especially the fair sex. Hence there is growing demand for such an herbal product in rural and in semi urban areas.

Market Research

1. Hair Care Facts The frequency of shampoo usage is very low. Most consumers use shampoo only once

or twice in a week. In many cases, these products are used on special occasions such as weddings, parties etc

Some customers use shampoo only to address a specific problem such as dandruff or when they need to condition their hair

About 50% of consumers use ordinary toilet soaps to wash their hair

About 15 % of consumers use toilet soaps as well as shampoo for cleaning their hair

Brand loyalties in shampoo are not very strong. Consumers frequently look for a change, particularly in fragrance

Consumers attribute lathering to the act of cleaning

Major expectations from the product are improvement in texture and manageability, giving softness and bounce to hair, curing and avoiding damage to the hair

An Indian needs more shampoo for a proper wash ( average 6 ml ) compared to 4 ml needed in Western countries as most Indian women have long hair

Most consumers do not use shampoo daily

Regular users would need smaller quantity of shampoo per bath. Hair tend to collect more dust due to dusty environment and oiling habits

Southern market is predominantly a sachet market, accounting for 70 % of sachet volumes

In Contrast, shampoo bottles are more popular in the Northern markets

About 50 % of the shampoo bottles are sold in the Northern region alone

In the North, local brands such as Ayur have strong equities and these products being low priced dilute sachet’s USP of low price

2. Market Size

Size of shampoo market - 930 Cr

Anti - Dandruff Shampoo - 20 % of above

Sachet Sales - 70 % of above

3. Shampoo Awareness

Urban areas - 90 %, accounting for 80 % of shampoo sold in the country

Rural areas - 80 %, accounting for 20 % of shampoo sold in the country

4. Usage and Penetration

Per Capita consumption of Shampoo in India - 13 ml

All India Shampoo - 14 %

Urban - 40 %

Rural - 10 %

5. Growth

Average Growth over the last few yrs - > 20 %

Expected Average growth over the next few yrs - 25 %

6. Market size of Herbal Shampoo

Only 13% of total shampoo market

Opportunity and Issue Analysis

India has a very large population and Indians have more hair than natives of any other country. The consumption of synthetic shampoos is quite high in rural and semi urban areas and the company’s objective is to transform this demand of synthetic shampoos into the demand for herbal shampoos. However, there is always a threat from the existing niche players in the market, imitative future launches and substitutes. The key issues facing Hair care Herbals are:

i. Should it target only rural and sub urban areas or also include the metropolitan cities?ii. Should it go for collaborating with some companies for transportation because of typical

roads in rural areas or do all the things on its own?

Marketing strategy

Product:

i. Brand Name: Hair care herbals

ii. Punch Line: Quality Divine.

iii. Quality: A very effective hair-strengthening and moisturizing shampoo, with refreshing herbal extracts, specially formulated to prevent hair loss and fight Dandruff. Hypoallergenic. No harmful chemicals

iv. Key Ingredients: Fenugreek (for hair-strengthening and nourishing) and Neem(for killing germs) Extracts with Shikakai Granules(anti- Dandruff properties and mint(for Freshness).

v. Safety: Completely Non- harmful. Safe to use on artificially colored or premed hair. Safe for daily use. Suitable for any person above 5 years of age.

vi. Packing and Packaging:

Packed in 7ml sachet, 35 ml, 100 ml and 200 ml plastic bottles.The 50 ml bottles will be the trial packs, which will be discontinued in the 3 rd

year of operationPictures of the key ingredients will be displayed on the pack.Safety lock will be on the cap of the bottle to ensure the customer of non-

adulteration.

vii. Labeling: Labeling will include the following:

Brief description of Quality Directions for use Key ingredients Safety Features Price, Quantity, Company’s name, company’s logo etc.

Barcode

Target Market: Targeted to the following:

Every person above 5 years of age. High income and upper middle class of rural areas. High income, upper middle and middle class of sub-urban areas.

Pricing:

i. Pricing Strategy: As in rural areas people prefer low price products and also look for value so Penetrative and Competitive pricing would be used – low price to attract more customers in comparison to the competitors.

ii. Suggested Retail price:

Quantity (in ml) Price (in Rs.)

7 135 5

100 15200 28

iii. Price Flexibility: Prices are Flexible to the rural market conditions and to the cost of manufacturing and also to the prices of competitive products.

Place:

i. Channel of distribution: Manufactured product will move through the following channel of distribution-

Manufacturer Distributor Dealer Wholesaler

Customer Retailer

This channel of distribution has been adopted as the company is new and distributing the product by ourselves may result in excessive cost to the company. So to avoid this problem the company will collaborate with a distributor (to be selected through the process of tender filling) and as the market is very large it has to go through the dealers, to ensure proper distribution.

ii. Inventory Management: Production will be done on batch basis and when one batch will be under process and the raw material for the next batch is being fed, the raw material for the second consecutive batch will be procured. This will result in low storage cost and sufficient raw material for manufacturing.

iii. Warehousing: The manufactured product will be stored in the company’s warehouse near its plant before dispatching it to the distributor.

iv. Distribution Centers: Five Distribution Centers in:

a. Ballasoreb. Cuttakc. Koraput d. Bolangire. Angul

v. Transportation: Company will collaborate with a transportation Company (to be selected through the process of tender

filling) to transport its goods from the plant to the warehouse and to the distributor’s place.

Promotion:

i. Promotion Strategy: Following strategies will be used to promote the product:

Push and Pull Strategies – Push Strategy: we will be using push strategy to concentrate some of our marketing efforts on promoting our product to retailers to convince them to stock the product. A combination of promotional mix strategies will be used in this aimed at the retailer including personal selling, and direct mail, pushing the product onto the retailer. Pull Strategy: we will also be using pull strategy to promote our product amongst the target market to create demand. Consumers will pull the product through the distribution channel forcing the wholesaler and retailer to stock it. This will be done through providing the customers with money off coupons or special offers.

AIDA strategy – The third strategy to promote our product will be the implementation of AIDA model which is

Attention Interest Desire Action

This can be illustrated briefly as grabbing the attention of the customer, then holding his interest, then making the product desirable to him and finally making him to purchase the product.

AIDA is an acronym for Attention, Interest, Desire, and Action. This strategy can be made successful through effective advertisement, distribution of free samples etc.

How AIDA model work in rural areas

As to get the rural customer’s attention we would be first advertising the product aggressively in rural areas through traditional channels like through radio, melas in rural areas, hoardings in rural areas in rural languages etc. To make rural people interested in our product we would be giving free trials through experts and local doctors who convey to the rural people that how this shampoo is going to benefit them. After this rural people will start taking interest in the product which leads to purchase of the product.

ii. Advertising: To create awareness about the product in the minds of the customers and to provoke their buying actions. Advertising will be done through the following mediums:

i.T.V. spots (regional channels) for Orissa it may be sun tv or other local regional channels

ii.Magazinesiii.Billboards in local languagesiv.Product packaging and insertsv.Posters and Flyers

vi.In – store displays and display of product on festivals and melas

vii.Distribution of free samples

iii. Public Relations and Publicity: To be done through-

i.Exclusivesii.Community involvement

iii.Opinion piecesiv.Feature stories

v.Social responsibility Activitiesvi.Through local societies

iv. Personal Selling: Personal selling will be done only in Supermarkets and big stores, where a representative of the company will be made available to tell the customers and also help them about the benefits and the uses of the product and also what differentiates our product from others available products.

Bibliography

http://www.chronicpoverty.org/uploads/publication_files/CPRC-IIPA_27.pdf

http://www.123orissa.com/exploreorissa/distinfo/default.asp

www.iimk.ac.in/mdp/MDP08/pdf/MDP13.pdf

www.indianmba.com/Faculty_Column/FC662/fc662.html

www.ziriakus.com/images/ imcplan .pdf