RURAL MARKETING
Assignment
Submitted to:
Prof. Ashutosh Pandey
Submitted By:
Nabhi Bansal
281089
RM-3
Q1. What could be the probable reasons apart from price for the downfall of Chamak market share?
Enumerate the internal and external factors responsible for it.
Answer: The case can be understood by enumerating the following points for answering the above stated question.
Situation: Chamak is in the detergent category and has been a well-known brand for decades. It occupies a certain
niche in the minds of the consumers and had been doing pretty well in its product category. The product category, i.e.
Detergents, has seen a new entrant by the name of Safedi recently.
Complication: The coming in of Safedi has coincided with the decrease in sales of Chamak. The brand is
contemplating as to why this has happened.
Question: Identifying the reasons for downfall and a probable corrective action to save the brand.
In this part, we are focusing on the probable reasons for downfall in sales of Chamak which are as enlisted below:
Internal Factors:
1.
Cost: While the price of Chamak may be higher as that of the competitor, it is imperative to focus on the
margins that the company is employing. If the company is operating on thin margins, then pricing is not an
option to compete on for the brand. The cost may be in terms of raw materials, logistics, manufacturing and
packaging.
2.
Accessibility and Availability: It may be a reason for sales plummeting. In rural markets it is important to
understand the value of 4As. Out of these 4, the above two are when the product has a lot of awareness, but
due to incorrect measurement of demand, it is not available or worse accessible to the customers. This brings
us to our next reason, distribution channels.
3.
Distribution Channel: The channel employed by the company may be wrongful which has caused the
competitor to penetrate relatively deeper into the market as compared to Chamak. Easy accessibility to the
competitor’s product may be a plausible reason.
4.
Packaging: If the company can’t compete on the overall price, it could effectively compete on smaller
packaging. As we have seen in the case of Chik Shampoos, a smaller packaging saves cost and also is the
reason for growing revenue. Maybe the pack size being offered by Chamak is not in demand as compared to
that of Safedi.
5.
Marketing: There may exist a huge gap in the brand identity and image which is causing the customers to
feel dissatisfaction from the product. Also, the company may be focussed on above the line marketing while
rural segment require below the line as well.
6.
No market concentration in Tier 2 and Tier 3 cities: If the company is solely focussing on saturated urban
class, then it might create a problem. The company needs to redo its segmentation, targeting and positioning
to identify the growing segments.
External Factors:
1.
Product Life Cycle Curve: The product may be in the maturity stage and being constantly faced by
competition from substitutes. As we all know that powder detergents are giving way to other cloth washing
products like liquid detergent, it may be seeing an overall dip in the revenue across the product category. If
this needs to be rectified, a constant innovation is needed.
2.
Dynamic Government Policy: A policy change like coming in of new tax regimes may be causing a dip in
the customer income which may inturn be causing a cut down from the customer’s side in purchase of goods
and services. This can also affect the shop keepers which may in turn strat reducing the inventory keeping.
3.
Shelf space: Though Chamak is a well-known brand, yet being in the eyes of the customers in the tier 2 and
tier 3 cities is very important. A lack in adequate spacing techniques may be causing a dip in sales.
4.
Change in prices of substitute products: A lowering of price in soap bars or liquid detergents may be the
cause of dropping sales of Chamak.
Q2. Should Mr Verma create a separate marketing strategy for the rural markets?
Answer: The markets of India across Tier 1, Tier 2 and Tier 3 cities differ in terms of not only size, but also in terms
of preferences, expectations and the beliefs of the consumers. For example, while in the urban segment a product like
detergent may be targeted to even the males, in the rural backdrop, women are the majority decision makers of such
product categories. The markets also differ in terms of the retail shops which are eventually selling the detergents.
This makes it imperative to develop a separate market strategy for rural population. The reasons highlighting the
differences are as given below:
1.
Rural Market Size: 65.53% of the Indian population resides in rural regions according to the World Bank
in 2018. This makes the rural market huge. Despite the vast nature, the penetration in these markets is really
low giving the companies a large space to enter and to capture the market share.
2.
Different Awareness and Education level: The level of awareness and education differs in the rural
segment. This makes an informative campaign essential to make the consumers aware about the product
being sold. A product category like detergent may not require the explanation for usage in urban segments
but may require that in rural due to lack of education.
3.
Elasticity of Demand: Since the rural markets are highly price sensitive, even a rupee change will reflect in
the revenue of a brand. While an urban customer may not notice this change, it will be noticed by the rural
consumer making their perceptions really different.
4.
Impact Groups and Word of Mouth: Impact groups are different for rural segments. While urban class
may rely on their family, the rural is greatly influenced by celebrity endorsements, panchayats, village people
and others. This makes it imperative to cultivate a positive word of mouth to make the product or service a
success.
5.
Growth in Rural Market: The rural market is expected to double that of urban markets which poses a huge
market potential for the brands.
6.
Instead of 4P’s the rural market focuses on 4A’s which shifts the focus of the company on not only the
branding but also the logistics, infrastructure development, last mile connectivity, rural workforce, building
of trust and last mile connectivity to be efficient in selling.