varun tewari

8/6/2019 VARUN TEWARI

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PROMOTIONAL MIX

The purpose of advertising is to promote a product or service in order to increase sales and

create a branding of the product so that a customer loyalty base will be established.

Without effective and targeted advertising, a business cannot succeed. There are many

types of advertising a business can utilize in effort to increase their sales.

The following lists a number of types of advertising available to businesses: -

Television and Radio

Since television was first introduced, busin esses have had tremendous success using it as an

advertising medium. This is due to the increase in consumers watching television. The cost

of television depends on the time of day or night one advertises, the popularity of the

television show (how many viewers,) and the length of the advertisement. Television

advertising can reach millions of people. Radio advertising is a traditional advertising format

that uses voice and jingles.

Print

This includes newspapers, magazines, fliers, brochures..etc. Placing advertisements in

magazines and newspapers is an age old method of advertising. Newspapers and the

magazines sell the advertising space. Prices depend on location, size, graphics, and color.

Advertising success often depends on the number of subscribers. Print advertising allows a

business to target a specific demographic. Fliers and brochures are a great way to advertise

sales and launch special product promotion programs.

Internet Advertising

Online advertising consists of small ads, banner ads, text ad s, video ads, pay-per-click

advertising, and reciprocal linking to other websites. The effectiveness of online advertising


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depends on exposure and how many people actually view the advertisement. Internet

advertising allows the advertiser to track the number of impressions an ad gets (how many

people see it), and how many visits their business website receives from particular ads,

making it simple to find out what kind of conversion rates the advertisers are obtaining.

Online advertising does not have any time restraints and can be viewed day and night

throughout the world. Businesses also have their own websites as an advertising tool. A

well-designed and well-promoted website can provide a world of customers.

Out-of-Home Advertising

This can include digital signage, billboards, kiosks, tradeshows, and out-of-home advertising.

This is advertising that takes place outside of a customer's home. This form of advertising

has become very popular because it provides a new way to reach targeted customers.

Billboards, kiosks, and tradeshows have been extremely successful advertising tools because

you can take your product or service directly to the consumer. Digital signage is a newer

method of advertising that is growing in popularity. Digital signage is where

monitors/plasma TVs are placed in strategic locations and display advertisements directed

at their targeted customer. Digital signage can deliver messages in the form of text and

digital video. Advertisers have the ability to update content from a remote locat ion. You can

find digital signage in such places as sports arenas, retail stores, department stores, malls,

schools...etc.

Regardless of the state of the economy, businesses have to keep advertising to stay

successful. Because of the broad range of advertising methods now available, businesses

now have the ability to reach their targeted customers at very affordable costs.

Promotion is one out of four basic instruments of marketing that has the purpose to inform about

other instruments of marketing mix and to contribute to sales increase on the long term. The

promotion is always serving to specific goal. These goals can be public informing, demand increasing,

product differentiation, and product value increasing or sales stabilizing. Usually the promotion is

targeting more than one goal.


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Promotion is the process of communic

tion between the company that se

s the product and the

potential customer, with the purpose of influencing the attitudes and behavior. There are specific

promotional tool that are supporting chosen promotional goal. The promotion mix represents a

combination of different promotional tools. The basicelements of promotional mix are Advertising,

Public Relationship, Personal Sales and Sales Promotion.

1. Advertising is communication with current and potential customers and consumers, donethrough paid mass media. Thechannels ofcommunication can be TV, radio, Internet.

2. Public Relationship (PR) is communication toward public, but is turned more toreputation and image of thecompany, than to its products. The PR activitycan be a

press conference, TV interview with company representative,press article about

donation of thecompany to charity orabout latest environmental projects.

3. Personal Sales is a way of promotion activity wheresales representative is directlycontacting the customer. This person-to-person contact has the goal of direct

promotion of the product and conclusion ofsales.


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Any paid form of non-personal communication of ideas or products in the "prime media": i.e.

television, newspapers, magazines, billboard posters, radio, cinema etc. Advertising is intended to

persuade and to inform. The two basic aspects of advertising are the message (what you want your

communication to say) and the medium (how you get your message across)

Personal Selling

Oral communication with potential buyers of a product with the intention of making a sale. The

personal selling may focus initially on developing a relationship with the potential buyer, but will

always ultimately end with an attempt to "close the sale".

Sales Promotion

Providing incentives to customers or to the distribution channel to stimulate demand for a product.

Publicity

The communication of a product, brand or business by placing information about it in the media

without paying for the time or media space directly. otherwise known as "public relations" or PR.


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Advantages and Disadvantages of Each Element of the Promotional Mix

Mix Element Advantages Disadvantages

Advertising Good for building awareness

Effective at reaching a wide audience

Repetition of main brand and product

positioning helps build customer trust

Impersonal - cannot answer all a

customer's questions

Not good at getting customers to

make a final purchasing decision

Personal Selling Highly interactive - lots of

communication between the buyer and

seller

Excellent for communicating complex /

detailed product information and

features

Relationships can be built up - important

if closing the sale make take a long time

Costly - employing a sales force has

many hidden costs in addition to

wages

Not suitable if there are thousands of

important buyers

Sales Promotion Can stimulate quick increases in sales by

targeting promotional incentives on

particular products

Good short term tactical tool

If used over the long-term, customers

may get used to the effect

Too much promotion may damage

the brand image


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Public Relations Often seen as more "credible" - since the

message seems to be coming from a

third party (e.g. magazine, newspaper)

Cheap way of reaching many customers -

if the publicity is achieved through the

right media

Risk of losing control - cannot always

control what other people write or

say about your product

Advertising

Advertising is the promotion of a companys products and services carried out primarily to

drive sales of the products and services but also to build a brand identity and communicate

changes or new product /services to the customers. Advertising has become an essential

element of the corporate world and hence the companies allot a considerable amount of

revenues as their advertising budget. There are several reasons for advertising some of

which are as follows:

1. Increasing the sales of the product/service2. Creating and maintaining a brand identity or brand image.3. Communicating a change in the existing product line.4. Introduction of a new product or service.5. Increasing the buzz-value of the brand or the company.

Thus, several reasons for advertising and similarly there exist various media which can be

effectively used for advertising. Based on these criteria there can be several branches of

advertising. Mentioned below are the various categories or types of advert ising:

Print AdvertisingNewspapers, Magazines, Brochures, Fliers

The print media have always been a popular advertising medium. Advertising products via

newspapers or magazines is a common practice. In addition to this, the print media also

offers options like promotional brochures and fliers for advertising purposes. O ften the


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newspapers and the magazines sell the advertising space according to the area occupied by

the advertisement, the position of the advertisement (front page/middle page), as well as

the readership of the publications. For instance an advertisement i n a relatively new and

less popular newspaper would cost far less than placing an advertisement in a popular

newspaper with a high readership. The price of print ads also depend on the supplement in

which they appear, for example an advertisement in the gl ossy supplement costs way higher

than that in the newspaper supplement which uses a mediocre quality paper .

Outdoor Advertising Billboards, Kiosks, Tradeshows and

Events

Outdoor advertising is also a very popular form of advertising, which makes use of several

tools and techniques to attract the customers outdoors. The most common examples of

outdoor advertising are billboards, kiosks, and also several events and tradeshows organized

by the company. The billboard advertising is very popular however has to be really terse and

catchy in order to grab the attention of the passersby. The kiosks not only provide an easy

outlet for the company products but also make for an effective advertising tool to promote

the companys products. Organizing several events or sponsoring those makes for an

excellent advertising opportunity. The company can organize trade fairs, or even exhibitions

for advertising their products. If not this, the company can organize several events that are

closely associated with their field. For instance a company that manufactures sports utilities

can sponsor a sports tournament to advertise its products.

Broadcast advertising Television, Radio and the Internet

Broadcast advertising is a very popular advertising medium that constitutes of several

branches like television, radio or the Internet. Television advertisements have been very

popular ever since they have been introduced. The cost of television advertising often

depends on the duration of the advertisement, the time of broadcast (prime time/peak

time), and of course the popularity of the television channel on which the advertisement is

going to be broadcasted. The radio might have lost its charm owing to the new age media


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however the radio remains to be the choice of small -scale advertisers. The radio jingles have

been very popular advertising media and have a large impact on the audience, which is

evident in the fact that many people still remember and enjoy the popular radio jingles.

Covert Advertising Advertising in Movies

Covert advertising is a unique kind of advertising in which a product or a particular brand is

incorporated in some entertainment and media channels like movies, television shows or

even sports. There is no commercial in the entertainment but the brand or the product is

subtly (or sometimes evidently) showcased in the entertainment show.

Surrogate Advertising Advertising Indirectly

Surrogate advertising is prominently seen in cases where advertising a particular product is

banned by law. Advertisement for products like cigarettes or alcohol which are injurious to

heath are prohibited by law in several countries and hence these companies have to come

up with several other products that might have the same brand name and indirectly remind

people of the cigarettes or beer bottles of the same brand. Common examples include

Fosters and Kingfisher beer brands, which are often seen to promote their brand with the

help of surrogate advertising.

Public Service Advertising Advertising for Social Causes

Public service advertising is a technique that makes use of advertising as an effective

communication medium to convey socially relevant messaged about important matters and

social welfare causes like AIDS, energy conservation, political integrity, deforestation ,

illiteracy, poverty and so on. David Oglivy who is considered to be one of the pioneers of

advertising and marketing concepts had reportedly encouraged the use of advertising field

for a social cause. Oglivy once said, "Advertising justifies its existence when used in the

public interest - it is much too powerful a tool to use solely for commercial purposes. Today

public service advertising has been increasingly used in a non -commercial fashion in several


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countries across the world in order to promote various social causes. In USA, the radio and

television stations are granted on the basis of a fixed amount of Public service

advertisements aired by the channel.

Celebrity Advertising

Although the audience is getting smarter and smarter and the modern day consumer getting

immune to the exaggerated claims made in a majority of advertisements, there exist a

section of advertisers that still bank upon celebrities and their popularity for advertising

their products. Using celebrities for advertising involves si gning up celebrities for advertising

campaigns, which consist of all sorts of advertising including, television ads or even print

advertisements.

Personal Selling

Introduction

Personal selling can be defined as follows:

Personal selling is oral communication with potential buyers of a product with the intention

of making a sale. The personal selling may focus initially on developing a relationship with

the potential buyer, but will always ultimately end with an attempt to "close the sale"

Personal selling is one of the oldest forms of promotion. It involves the use of a sales force

to support a push strategy (encouraging intermediaries to buy the product) or a pull

strategy (where the role of the sales force may be limited to supporting retailers and

providing after-sales service).

What are the main roles of the sales force?

Kotler describes six main activities of a sales force:

(1) Prospecting - trying to find new customers

(2) Communicating - with existing and potential customers about the pr oduct range


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(3) Selling - contact with the customer, answering questions and trying to close the sale

(4) Servicing - providing support and service to the customer in the period up to delivery and

also post-sale

(5) Information gathering - obtaining information about the market to feedback into the

marketing planning process

(6) Allocating - in times of product shortage, the sales force may have the power to decide

how available stocks are allocated

What are the advantages of using personal selling as a me ans of promotion?

Personal selling is a face-to-face activity; customers therefore obtain a relatively high

degree of personal attention

The sales message can be customised to meet the needs of the customer

The two-way nature of the sales process allows the sales team to respond directly and

promptly to customer questions and concerns

Personal selling is a good way of getting across large amounts of technical or other

complex product information

The face-to-face sales meeting gives the sales force chance to demonstrate the product

Frequent meetings between sales force and customer provide an opportunity to build

good long-term relationships

Given that there are many advantages to personal selling, why do more businesses not

maintain a direct sales force?

Main disadvantages of using personal selling

The main disadvantage of personal selling is the cost of employing a sales force. Sales

people are expensive. In addition to the basic pay package, a business needs to provide

incentives to achieve sales (typically this is based on commission and/or bonus

arrangements) and the equipment to make sales calls (car, travel and subsistence costs,

mobile phone etc). In addition, a sales person can only call on one customer at a time. This

is not a cost-effective way of reaching a large audience.

Sales Promotion


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Introduction

A good definition of sales promotion would be as follows:

An activity designed to boost the sales of a product or service. It may include an advertising

campaign, increased PR activity, a free-sample campaign, offering free gifts or trading

stamps, arranging demonstrations or exhibitions, setting up competitions with attractive

prizes, temporary price reductions, door-to-door calling, telemarketing, personal letters on

other methods.

More than any other element of the promotional mix, sales promotion is about action. It

is about stimulating customers to buy a product. It is not designed to be informative a role

which advertising is much better suited to.

Sales promotion is commonly referred to as Below the Line promotion.

Sales promotion can be directed at:

The ultimate consumer (a pull strategy encouraging purchase)

The distribution channel (a push strategy encouraging the channels to stock the

product). This is usually known as selling into the trade

Methods of sales promotion

There are many consumer sales promotional techniques available, summarized in the table

below:-

Price promotionsPrice promotions are also commonly known as price discounting

These offer either (1) a discount to the normal selling price of a product, or (2) more of the

product at the normal price.

Increased sales gained from price promotions are at the expense of a loss in profit so

these promotions must be used with care.

A producer must also guard against the possible negative effect of discounting on a brands

reputation.


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Coupons

Coupons are another, very versatile, way of offering a discount. Consider the following

examples of the use of coupons:

- On a pack to encourage repeat purchase

- In coupon books sent out in newspapers allowing customers to redeem the coupon at a

retailer

- A cut-out coupon as part of an advert

- On the back of till receipts

The key objective with a coupon promotion is to maximize the redemption rate this is the

proportion of customers actually using the coupon.

One problem with coupons is that they may simply encourage customers to buy what they

would have bought anyway. Another problem occurs when retailers do not hold sufficient

stocks of the promoted product causing customer disappointment.

Use of coupon promotions is, therefore, often best for new products or perhaps to

encourage sales of existing products that are slowing down.

Gift with purchase

The gift with purchase is a very common promotional technique. It is also known as a

premium promotion in that the customer gets something in addition to the main

purchase. This type of promotion is widely used for:

- Subscription-based products (e.g. magazines)- Consumer luxuries (e.g. perfumes)

Competitions and prizes

Another popular promotion tool with many variants. Most competition and prize

promotions are subject to legal restrictions.

Money refunds

Here, a customer receives a money refund after submitting a proof of purchase to the

manufacturer. These schemes are often viewed with some suspicion by customers

particularly if the method of obtaining a refund looks unusual or onerous.


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A "push" strategy tries to sell directly to the consumer, bypassing other distribution

channels (e.g. selling insurance or holidays directly). With this type of strategy, consumer

promotions and advertising are the most likely promotional tools.

Pull

A pull selling strategy is one that requires high spending on advertising and consumer

promotion to build up consumer demand for a product. If the strategy is successful,

consumers will ask their retailers for the product, the retailers will ask the wholesalers,

and the wholesalers will ask the producers.

A good example of a pull is the heavy advertising and promotion of children's toys mainly

on television. Consider the recent BBC promotional campaign for its new pre -school

programme the Fimbles. Aimed at two to four-year-olds, 130 episodes of Fimbles have

been made and are featured everyday on digital children's channel CBeebies and BBC2. As

part of the promotional campaign, the BBC has agreed a deal with toy maker Fisher -Price to

market products based on the show, which it hopes will emulate the popularity of the

Tweenies. Under the terms of the deal, Fisher-Price will develop, manufacture and

distribute a range of Fimbles products including soft, plastic and electronic learning toys for

the UK and Ireland.

In 2001, BBC Worldwide (the commercial division of the BBC) achieved sales of 90m from

its children's brands and properties last year. The demand created from broadcasting of the

Fimbles and a major advertising campaign is likely to pull demand from children and

encourage retailers to stock Fimbles toys in the stores for Christmas 2002.

Public Relations

Introduction

The Institute of Public Relations defines public relations as follows:


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The planned and sustained effort to establish and maintain goodwill and mutual

understanding between an organisation and its publics

What is meant by the term publics in the above definition?

A business may have many publics with which it needs to maintain good relations and

build goodwill. For example, consider the relevant publics for a publicly -quoted business

engaged in medical research:

1. Employees2. Shareholders3. Trade unions4. Members of the general public5. Customers (past and present)6. Pressure groups7. The medical profession8. Charities funding medical research9. Professional research bodies and policy-forming organisations10.The media11.Government and politicians

The role of public relations is to:

Identify the relevant publics Influence the opinions of those publics by:y Reinforcing favourable opinionsy Transforming perhaps neutral opinions into positive onesy Changing or neutralising hostile opinions

Public relations techniques


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There are many techniques available to influence public opinion, some of which are more

appropriate in certain circumstances than others:

Consumer communication

Customer press releases

Trade press releases

Promotional videos

Consumer exhibitions

Competitions and prizes

Product launch events

Celebrity endorsements

Web sites

Business communication

Corporate identity design

Company and product videos

Direct mailings

Web site

Trade exhibitions

Internal / employee communication

In-house newsletters and magazines

Intranet

Notice boards

Employee conferences

Email

External corporate communication


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Company literature (brochures, videos etc)

Community involvement programmes

Trade, local, national and international media relations

Financial communication

Financial media relations

Annual report and accounts

Meetings with stock market analysts, fund managers etc

Shareholder meetings (including the annual general meeting )

Given the wide range of techniques used in public relations, how is it possible to measure

the effectiveness of public relations?

It is actually quite difficult to measure whether the key messages have been communicated

to the target public. In any event, this could be quite costly since it would involve a large

amount of regular research. Instead, the main measures of effectiveness concentrate on the

process of public relations, and include:

Monitoring the amount of media coverage obtained (press cuttings agencies play a role in

keeping businesses informed of this )

Measuring attendance at meetings, conferences

Measuring the number of enquiries or orders received in response to specific public

relations efforts.

Marketing Planning - Setting Marketing Objectives

Introduction

Objectives set out what the business is trying to achieve.

Objectives can be set at two levels:

(1) Corporate level

These are objectives that concern the business or organisation as a whole


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Examples of corporate objectives might include:

We aim for a return on investment of at least 15%

We aim to achieve an operating profit of over 10 million on sales of at least 100 million

We aim to increase earnings per share by at least 10% every year for the foreseeable

future

(2) Functional level

E.g. specific objectives for marketing activities

Examples of functional marketing objectives might include

We aim to build customer database of at least 250,000 households within the next 12

months

We aim to achieve a market share of10%

We aim to achieve 75% customer awareness of our brand in our target markets

Both corporate and functional objectives need to conform to the commonly used SMART

criteria.

The SMART criteria (an important concept which you should try to remember and apply in

exams) are summarized below:

Specific - the objective should state exactly what is to be achieved.

Measurable - an objective should be capable of measurement so that it is possible to

determine whether (or how far) it has been achieved

Achievable - the objective should be realistic given the circumstances in which it is set and

the resources available to the business.

Relevant - objectives should be relevant to the people responsible for achieving them

Time Bound - objectives should be set with a time -frame in mind. These deadlines also need

to be realistic.

Marketing Planning - the link with strategic planning

Introduction

Businesses that succeed do so by creating and keeping customers. They do this by providing

better value for the customer than the competition.


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Marketing management constantly have to assess which customers they are trying to reach

and how they can design products and services that provide better value (competitive

advantage).

The main problem with this process is that the environment in which businesses operate

is constantly changing. So a business must adapt to reflect changes in the environment and

make decisions about how to change the marketing mix in order to succeed. This process of

adapting and decision-making is known as marketing planning.

Where does marketing planning fit in with the overall

strategic planning of a business?

Strategic planning (which you will cover in your studies of strategy is concerned

about the overall direction of the business. It is concerned with marketing, of course. But it

also involves decision-making about production and operations, finance, human resource

management and other business issues.

The objective of a strategic plan is to set the direction of a business and create its shape so

that the products and services it provides meet the overall business objectives.Marketing has a key role to play in strategic planning, because it is the job of marketing

management to understand and manage the links between the business and the

environment.

Sometimes this is quite a straightforward task. For example, in many small businesses there

is only one geographical market and a limited number of products (perhaps only one

product!).

However, consider the challenge faced by marketing management in a m ultinational

business, with hundreds of business units located around the globe, producing a wide range

of products. How can such management keep control of marketing decision -making in such

a complex situation? This calls for well-organized marketing planning.


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What are the key issues that should be addressed in

marketing planning?

The following questions lie at the heart of any marketing (or indeed strategic) planning

process:

Where are we now?

How did we get there?

Where are we heading?

Where would we like to be?

How do we get there?

Are we on course?

Why is marketing planning essential?

Businesses operate in hostile and increasingly complex environment. The ability of a

business to achieve profitable sales is impacted by dozens of environment al factors, many of

which are inter-connected. It makes sense to try to bring some order to this chaos by

understanding the commercial environment and bringing some strategic sense to the

process of marketing products and services.

A marketing plan is useful to many people in a business. It can help to:

Identify sources of competitive advantage

Gain commitment to a strategy

Get resources needed to invest in and build the business

Inform stakeholders in the business

Set objectives and strategies

Measure performance


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Direct Marketing

Introduction

Direct marketing is concerned with establishing an individual relationship between the

business offering a product or service and the final customer.

Direct marketing has been defined by the Institute of Direct Marketing as:

The planned recording, analysis and tracking of customer behaviour to develop a relational

marketing strategies

The process of direct marketing covers a wide range of promotional activities you may be

familiar with. These include:

Direct-response adverts on television and radio

Mail order catalogues

E-commerce (you bought this marketing companion following tutor2us direct marketing

campaign!)

Magazine inserts

Direct mail (sometimes also referred to as junk mail)

Telemarketing

Direct mail

Of the above direct marketing techniques, the one in most widespread use is direct mail.

Direct mail is widely thought of as the most effective medium to achieve a customer sales

response.

Why?

The advertiser can target a promotional message down to an individual level, and where

possible personalize the message. There are a large number of mailing databases availablethat allow businesses to send direct mailing to potential customers based on household

income, interests, occupation and other variables

Businesses can first test the responsiveness of direct mailing (by sending out a test mailing

to a small, representative sample) before committing to the more significant cost of a larger

campaign


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Direct mailing campaigns are less visible to competitors it is therefore possible to be

more creative, for longer

However, direct mail has several weaknesses:

A piece of direct mail is less interactive than a television or radio advert, although

creative packaging can still stimulate customer response

Lead times to produce direct mailing campaigns can be quite long

There is increasing customer concern with junk mail the receipt of unsolicited mail

which often suggests that the right to individual privacy has been breached.

The Direct marketing database

Direct mailing is based on the mailing list a critical part in the direct marketing process.

The mailing list is a database which collects together details of past, current and potential

customers. A properly managed mailing database enables a business to:

Focus on the best prospective customers

Cross-sell related products

Launch new products to existing customers

How is the mailing database compiled?

The starting point is the existing information the business keeps o n its customers. All forms

of communication between a customer and the business need to be recorded so that a

detailed, up-to-date profile can be maintained.

It is also possible to buy mailing lists from elsewhere. There are numerous mailing list

owners and brokers who sell lists of names. The Internet, directories, associations and other

sources are good sources.

The Promotional Mix

Promotional mix


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It is helpful to define the five main elements of the promotional mix before considering their

strengths and limitations.

Advertising

Advertising is any paid form of non-personal communication of ideas or products in the

"prime media": i.e. television, newspapers, magazines, billboard posters, radio, cinema etc.

Advertising is intended to persuade and to inform.

The two basic aspects of advertising are the message (what you want your communication

to say) and the medium (how you get your message across)

Direct marketingDirect marketing creates a direct relationship between the customer and the business on an

individual basis.

Personal Selling

Personal selling refers to oral communication with potential buyers of a product with the

intention of making a sale. The personal selling may focus initially on developing a

relationship with the potential buyer, but will always ultimately end with an attempt to

"close the sale".

Sales Promotion

Sales promotion refers to the provision of incentives to customers or to the distribution

channel to stimulate demand for a product.

Public Relations

Public relations is the communication of a product, brand or business by placing information

about it in the media without paying for the time or media space directly


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Factors that determine the type of promotional tools used

Each of the above components of the promotional mix has strengths and weaknesses. There

are several factors that should be taken into account in deciding which, and how much of

each tool to use in a promotional marketing campaign:

(1) Resource availability and the cost of each promotional tool :

Advertising (particularly on television and in the national newspapers can be very

expensive). The overall resource budget for the promotional campaign will often determine

which tools the business can afford to use.

(2) Market size and concentration:

If a market size is small and the number of potential buyers is small, then personal selling

may be the most cost-effective promotional tool.

A good example of this would be businesses selling software systems designed for

supermarket retailers. On the other hand, where markets are geographically disperse or,

where there are substantial numbers of potential customers, advertising is usually the most

effective.

(3) Customer information needs:

Some potential customers need to be provided with detailed, complex information to help

them evaluate a purchase (e.g. buyers of equipment for nuclear power stations, or health

service managers investing in the latest medical technology). In this situation, personal

selling is almost always required - often using selling teams rather than just one individual.

By contrast, few consumers need much information about products such as baked beans or

bread. Promotional tools such as brand advertising and sales promotion are much more

effective in this case.

Rural Marketing - A Critical Review

Prime Minister Manmohan Singh recently talked about his vision for rural India: "My vision

of rural India is of a modern agrarian, industrial and services economy co-existing side by


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side, where people can live in well -equipped villages and commute easily to work, be it on

the farm or in the non-farm economy. There is much that modern science and technology

can do to realize this vision. Rural incomes have to be increased. R ural infrastructure has to

be improved. Rural health and education needs have to be met. Employment opportunities

have to be created in rural areas."

'Go rural' is the slogan of marketing gurus after analyzing the socio-economic changes in

villages. The Rural population is nearly three times the urban, so that Rural consumers have

become the prime target market for consumer durable and non-durable products, food,

construction, electrical, electronics, automobiles, banks, insurance companies and other

sectors besides hundred per cent of agri -input products such as seeds, fertilizers, pesticides

and farm machinery. The Indian rural market today accounts for only about Rs 8 billion of

the total ad pie of Rs 120 billion, thus claiming 6.6 per cent of the total share. So clearly

there seems to be a long way ahead. Although a lot is spoken about the immense potential

of the unexplored rural market, advertisers and companies find it easier to vie for a share of

the already divided urban pie.

The success of a brand in the Indian rural market is as unpredictable as rain. It has always

been difficult to gauge the rural market. Many brands, which should have been successful,

have failed miserably. More often than not, people attribute rural market success to luck.

Therefore, marketers need to understand the social dynamics and attitude variations within

each village though nationally it follows a consistent pattern looking at the challenges and

the opportunities which rural markets offer to the marketers it can be said 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 called for, so they can successfully impress on the 230

million rural consumers spread over approximately six hundred thousand villages in rural

India.

What rural market buys?

Rural India buys small packs, as they are perceived as value for money. There is brand

stickiness, where a consumer buys a brand out of habit and not really by choice. Brands

rarely fight for market share; they just have to be visible in the right place. Even expensive

brands, such as Close-Up, Marie biscuits and Clinic shampoo are doing well because of deep


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distribution, many brands are doing well without much advertising support Ghadi, a big

detergent brand in North India, is an example.

Why Rural Market?

The Indian rural market has a huge demand base and offers great opportunities to

marketers. Two-thirds of Indian consumers live in rural areas and almost half of the national

income is generated here. The reasons for heading into the rural areas are fairly clear. The

urban consumer durable market for products like color TVs, washing machines, ref rigerators

and air conditioners is growing annually at between 7 per cent and 10 per cent.

The rural market is zooming ahead at around 25 per cent annually. "The rural market is

growing faster than urban India now," says Venugopal Dhoot, chairman of the Rs 989 -

crore(Rs billion) Videocon Appliances. "The urban market is a replacement and up gradation

market today," adds Samsung's director, marketing, Ravinder Zutshi.

Reasons for improvement of business in rural area

y Socio-economic changes (lifestyle, habits and tastes, economic status)y Literacy level (25% before independence more than 65% in 2001)y Infrastructure facilities (roads, electricity, media)y Increase in incomey Increase in expectations

MART, the specialist rural marketing and rural development consultancy has found that 53

per cent of FMCG sales lie in the rural areas, as do 59 per cent of consumer durable sales,

said its head Pradeep Kashyap at the seminar. Of two million BSNL mobile connections, 50

per cent went to small towns and villages, of20 million Rediffmail subscriptions, 60 per cent

came from small towns, so did half the transactions on Rediff's shopping site.

Special features of rural market

Unlike urban markets, rural markets are difficult to predict and possess special

characteristics. The featured population is predominantly illiterate, have low income,


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characterized by irregular income, lack of monthly income and flow of income fluctuating

with the monsoon winds.

Rural markets face the critical issues of Distribution, Understanding the rural consumer,

Communication and Poor infrastructure. The marketer has to strengthen the distribution

and pricing strategies. The rural consumer expects value for money and owing to has

unsteady and meager status of weekly income; increasing the household income and

improving distribution are the viable strategies that have to be adapted to tap the immense

potential of the market.

Media reach is a strong reason for the penetration of goods like cosmetics, mobile phones,

etc., which are only used by the urban people. Increasing awareness and knowledge on

different products and brands accelerate the demand. The rural audience are however

critical of glamorous ads on TV, and depend on the opinion leaders who introduce the

product by using it and recommending it.

Opinion leaders play a key role in popularizing products and influence in rural market.

Nowadays educated youth of rural also influences the rural consumers. Rural consumers are

influenced by the life style they watch on television sets. Their less exposure to outside

world makes them innocent and fascinated to novelties. The reach of mass television media,

especially television has influenced the buying behaviour greatly

Creating brands for rural India

Rural markets are delicately powerful. Certain adaptations are required to cater to the rural

masses; they have unique expectation and warrant changes in all four parameters of

product, price, promotion and distribution.


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A lot is already emphasized on adapting the product and price in terms of packaging,

flavouring, etc and in sachets, priced to suit the economic status of the rural India in sizes

like Rs.5 packs and Re.1 packs that are perceived to be of value for money. This is a typical

penetration strategy that promises to convert the first time customers to repeated

customers.

The promotion strategies and distribution strategies are of paramount importance. Ad

makers have learnt to leverage the benefits of improved infrastructure and media reach.

The television airs advertisements to lure rural masses, and they are sure it reaches the

target audience, because majority of rural India possesses and is glued to TV sets!

Distributing small and medium sized packets thro poor roads, o ver long distances, into deep

pockets of rural India and getting the stockiest to trust the mobility is a Herculean task.

Giving the confidence those advertisements will support. Sales force is being trained to win

the confidence of opinion leaders. Opinio n leaders play an important role in popularizing

the brand. They sometimes play the role of entry barriers for new products.

The method of promotion needs to be tailored to suit the expectations of the market.

Techniques that have proved to be successful are Van campaigns, edutainment films,

generating word of mouth publicity through opinion leaders, colourful wall paintings. The

Wide reach of television has exposed the otherwise conservative audience to

westernization. Panchayat televisions in Tamilnadu carries message that are well received

and contribute to community development.

Dynamics of rural markets differ from other market types, and similarly rural marketing

strategies are also significantly different from the marketing strategies aimed at an urban or

industrial consumer. This, along with several other related issues, have been subject matter

of intense discussions and debate in countries like India and China and focus of even

international symposia organized in these countries.

Rural markets and rural marketing involve a number of strategies, which include:

* Client and location specific promotion


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* Joint or cooperative promotion

* Bundling of inputs

* Partnership for sustainability

Client and Location specific promotion involves a strategy designed to be suitable to the

location and the client. Joint or co-operative promotion strategy involves participation

between the marketing agencies and the client. 'Bundling of inputs' denote a marketing

strategy, in which several related items are sold to the target client, including arrangements

of credit, after-sale service, and so on. Media, both traditional as well as the modern media,

is used as a marketing strategy to attract customers.

Partnership for sustainability involves laying and building a foundation for continuous and

long lasting relationship. Innovative media can be used to reach the rural customers. Radio

and television are the conventional media that are reaching the rural audience effectively.

But horse cart, bullock cart and wall writing are the other media, which can carry the

message effectively to the rural customers.

Rural marketing is an evolving concept, and as a part of any economy has untapped

potential; marketers have realized the opportunity recently. Improvement in infr astructure

and reach, promise a bright future for those intending to go rural. Rural consumers are keen

on branded goods nowadays, so the market size for products and services seems to have

burgeoned. The rural population has shown a trend of wanting to mo ve into a state of

gradual urbanization in terms of exposure, habits, lifestyles and lastly, consumption patterns

of goods and services. There are dangers on concentrating more on the rural customers.

Reducing the product features in order to lower prices is a dangerous game to play.

varun tewari

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