SOLVED QUESTION PAPER – DIBRUGARH UNIVERSITY

B.Com – 6th Semester

RURAL MARKETING – 2017

1. Answer the following as directed : 1× 8 = 8
2. Mention the adverse impact of globalization on the rural economy.

Ans: An adverse impact of globalization on the rural economy is by established economic structure.

1. Write the full form of ISI.

Ans: Indian Standard Institute.

1. State one of the differences between rural market and urban market.

Ans: Urban market refers to markets that the inside of cities, while rural markets to markets which are outside of cities.

1. Branded products are sold at a higher price than unbranded one :

(Write True or False)

Ans: True.

1. Business logistic is a part of physical distribution.

Ans: True.

1. Digital banking can be resorted through

(a) Mobile phones (b) Internet (c) Green channel customer (d) None of the above.

Ans: (b) Internet.

1. The process of dividing a market into groups/segments is called market segmentation.
2. State one of the basic objectives of the consumer protection act, 1986

Ans: Providing better and all round protection to consumer.

1. Write short notes on any four of the following :-
2. Scope of rural marketing – The scope of rural marketing are –
3. Rising rural prosperity

Average income level has improved due to modern farming practices, contract farming, industrialization, migration to urban areas and remittance of money by family member settled abroad.

1. Growth in consumption

Here consumption pattern has a growth in purchasing power which is very much settled for rural consumers.

1. Lifecycle advantage

The products which have attained the maturity stage in urban market is still in growth in rural market.

1. Market growth rate higher than urban

As per the survey, the growth rate of FMCG markets and durable markets is higher in rural areas. The rural markets share is more than 50% for products like body talcum powder. Toilet soaps etc.

1. Rural marketing opportunities

The opportunities of rural marketing are

1. Market size

The number of people that live in rural areas is still very high as compared to the population in urban areas. Also the buyers are now more comfortable in spending money as they were a decade ago. This is due to the availability of smart phones and internet in most of the areas of our country.

1. Infrastructure is developing

Infrastructure is one very crucial factor that decides the future of a business for specific areas. Infrastructure in rural areas in improving rapidly and is opening new areas for brands to increase their sales.

1. Financial growth

Rural areas are experiencing changes in the way people used to live. Financial growth has lead to improvement in literacy rates and both these points make buyers aware of the quality and availability of brands.

1. Rural distribution channels

A distribution channel is the path or route decided by the company to deliver its goods or services to the customer. The route can be short as a direct interaction between the company and the customers or can include several interconnected intermediaries like wholesalers, distribution, retailers, etc.

Here, a distribution channel can also be referred to as a set of interdependent intermediaries that help make a product a available to the end customers.

The rapidly increasing rural markets have become a great opportunity for many companies to expand sales. However many of these back out as they find distribution as a major problem. Used to the developed distribution network in the urban markets, they try the same tracks in rural markets, namely extensive retailing and sustained pull generation through mass media advertising. As a result, they fail and place the blame on the less developed infrastructure of the rural markets. Creative companies like HLL, have been experimenting to find innovative ways o reaching the rural consumers. There are many problems in rural distribution like – difficulty in reaching rural consumers, non availability of dealers, inadequate bank facilities etc.

1. Dynamics in rural marketing

With growing influence coupled with better communication, roads, mobile phone and televisions the rural market are all set to occupy the centre stage. The buying preferences of India’s rural consumers are changing fast and several factors economic psychological and technological are changing to fuel the transformation. Rural consumer income levels are on the rise, enabling more of them to buy products and service that improve the quality of their lives. Sometimes rural marketing is confused with agricultural marketing; the later denotes marketing involves delivering manufactured or processed inputs or services to rural producers or consumers.

Dynamics of rural markets differ from other market type and similarly rural marketing strategies are also significantly different from the marketing strategies aimed at an urban or individual consumer rural marketing involves a number of strategies which include: –

1. Client and location specific promotion involves a strategy designed to be suitable to the location and the client.
2. Joint or co-operative promotion strategy involves participation between the marketing agencies and he client.
3. Bundling of inputs denote a marketing strategy in which several related items are sold to the target client, including arrangements of credit, after sales services and so on.
4. Development marketing refers to taking up marketing programmers keeping the development objectives in mind and seeing various managerial and other inputs of marketing to achieve their objective.

e) Rural marketing

Retailing can be defined as the set of securities that market products or services to final consumers for their own personal as house hold use. This is done by organizing the availability of goods and then supplying them to consumer on a relatively small scale. The mix of variables including price, location, communication, merchandise, physical attributes, services and personnel from the retail mix and these components from the overall strategic marketing components of retailing.

Rural retailing is now a tow way marketing process. There is inflow of products into rural markets for production or consumption and there is also outflow of products to urban areas.

The rural India is characterized by low per captia income, low productivity, low literacy and low rate of industrialization along with absence of basic amenities.

1. (a) “Rural market suffers from a variety of constraints. “ Explain these constraints and suggest measures to overcome these constraints.

Ans: There are very many problems to be tackled in rural marketing. They

are:

1. Lack of communication facilities

Even today most villages in the country are inaccessible during the monsoons. A large number of village in the country have no access to telephones. Other communication infrastructure is also highly underdeveloped.

1. Many languages and dialects

The language and dialects vary from state to state, region to region and probably from districts to districts. Since messages have to be delivered in the local design promotional strategies for each of these areas. Facilities such as phone, telegram and fax are less developed in villages adding to the communication problems faced by the marketers.

1. Dispersed markets

Rural population is scattered over a large land area. And it is almost impossible to ensure the availability of a brand all over the country. District fairs are periodic and occasional in nature.

1. Low per captia income: – The per captia income of rural people is low as compared to the urban people. Moreover, demand in rural markets depends on the agricultural situation, which in turn depends on the monsoons. Therefore, the demand is not stable or regular. Hence the per captia income is low in village compared with urban areas.
2. Low rate of literacy

The level of literacy is lower compared with urban areas. The again leads to a problem of communication in these rural areas. Print medium becomes ineffective and to an extent irrelevant, since its reach is poor.

1. Different way of thinking

There is a vast difference in the lifestyle of the people. The choice of brands that an urban customers enjoys is not available to the rural customer, who usually has two or three choices. As such the rural customer has a fairly simple thinking and their decisions are still governed by customs and traditions. It is difficult to make them adopt new practices.

1. Warehousing problem

Warehousing facilities in the form of godowns are not available in rural India. The available godowns are not properly maintained to keep goods in proper conditions. This is a major problem because of which the warehousing cost increases in rural India.

The four measure taken for effective rural marketing are as follows: –

1. Solving the problem of availability

The first task is to ensure availability of the product or services. Finding the rural consumers is not easy. However the poor conditions of road, it is an even greater challenge to regularly reach products to the villages over the years, India’s largest MNC, Hindustan Lever, a subsidiary of Unilever has built a strong distributor, which helps its brands reach the interior of the rural markets. To service remote village, stock list use auto rickshaws, bullocks’ carts and even boats. Coca – Cola, which considers rural India as a future growth driver, has evolved a hub and distribution model to reach the village.

1. Solving the problem of affordability

The second task is to make sure affordability of the product or service. With low disposable incomes, products need to be affordable to the rural consumer, most of whom are on daily wages. Some companies have addressed the affordability problem by introducing small unit packs.

Godrej recently introduced three brands of Cinthol, Fair Glow and Godrej in 50 gm packs, prices at Rs. 45. Hindustan lever, among the first MNC’s to realize the potential of India’s rural market, has launched a variant of its largest selling soap brand. Life busy at Rs. 2 for 50 gm. The move is mainly targeted at the rural market.

1. Solving the problem of acceptability

The third task is to gain acceptability for the product or services. Therefore, there is a need to offer products that suits the rural market. One company, which has benefited by doing so, is LG electronics. In 1998, it developed customized TV for to the rural market and named it sampoorna.

1. Solving the problem of awareness

The majority of the rural population is not exposed to mass media. Unconventional media has to be used for generating awareness. Events such as fairs, festivals and roots are used as occasions for brand communication. Cinema vans, shops fronts, wall, and wells are other media vehicles utilized to increase brand and pack visibility. Putting stickers on the hand pumps and walls are some new ideas for advertising with the objectives to advertise not only at the point of purchase but also at the point of consumption with large parts of rural India unreachable to conventional advertising media another important task.

1. Discuss the evolution and development of rural marketing in India.

Ans: Kashyup and Raut (2006) identified three phases in the evolution

Of rural marketing in India.

Phase I (before the 1960)

Rural marketing referred to marketing of rural product in rural and urban areas and agricultural inputs in rural markets. It was considered synonymous with agricultural marketing. Agricultural produces like food grains and industrial inputs like cotton, sugarcane, etc where the primary products marketed during this period.

The scope of farm mechanization equipment (tractors, pumpsets, and threshers) and agriculture inputs like fertilizers, seeds and pesticides was very limited as the rural economy was in a primitive stage, with traditional farming methods. The market was totally unorganized.

Phase II (1960s to 1990s)

The green revolution during this phase changed the face of rural India ushering in scientific farming practices better irrigation facilities, use of fertilizers, pesticides, high yield variety seeds, coupled with application of implements like tractors, power tillers, harvester, pump sets and sprinklers resulted in growth of agricultural production, changing the very content of rural market. During this phase, apart from conventional agricultural marketing a new area – ‘marketing of agricultural inputs’ emerged.

Phase III (1990s onwards)

During this phase, India’s industrial sector gained in strength and maturity. A new service sector emerged signifying and transition of an agricultural society in to an industrial one.

Meanwhile the increased plan outlay of control and state government for rural development and strengthening of local governance (through panchayati raj institution) witnessed socio-economic progress. In addition, the economic reforms further accelerated the process by introducing competition in the growth of rural markets.

Rural marketing development in India

1. NUL spends Rs. 50 – 60 crore every year for rural marketing and promotion. The rural company started ‘operation Bharat’ to tap the rural markets. Under this operation it passed out low period sample packets of its tooth paste, fairness cream, shampoo, and cold cream to 20 million household.
2. ITC with e – chaupal concept has already made a successful roads in rural India especially in UP and MP. This system has successful through rural shopping mall chaupal sagar. E – Chaupal offers all the information, products and services they need to enhance farm productivity, improve farm gate price realization and cut transaction costs.
3. BPCL introduced rural marketing vehicle (RMV) as their strategy for rural marketing. It moves from village to village and fills cylinder on the spot for rural customers. BPCL considered low income of rural population and therefore introduced a smaller size cylinder to reduce both the initial deposit cost as well as the resuming refill cost.
4. Coca – Cola, which considers India as a future growth driver, has evolved a hub and spoke distribution model to reach the villages. To ensure full loads, the company depot suppliers twice a week, smaller distribution in adjoining areas. To service remote villages stockiest use auto rickshaw, bullocks carts and even boats.
5. Hyundai Motors moves enter rural areas by deploying technician in petrol pumps. In a major thrust to increase penetration into rural areas and expand its customer care services. Hyundai Motors India Ltd. has deployed 1000 technicians across the country for carrying out car maintenance apart from setting up around 300 services points in a year. Hyundai initiative to sell cars in the rural areas has started yielding results.
6. The insurance companies that have tailor made products for the rural markets have performed with HDFC standard life have topped private insures by selling policies worth Rs. 3.5 crore on 2004 – 2005. The company tied up with NGO’ s and offered reasonably priced policies in the nature of group insurance covers.
7. To ensure affordability of the product or since among low disposable income villages, products need to be low priced for rural customers since most of them are on daily wages. Some companies have addressed the affordability problems by introducing small unit packs.
8. (a) What do you mean by rural marketing environment? Explain its dimensions.

Ans: Rural marketing is basically a focused marketing activity of an organization. The environment outlines traits and opportunities of the market. The rural marketing is complex and is changing continuously. When marketing activities are done in the rural areas or marketing enter into people, it is necessary to known the condition of the markets.

India’s vast rural market offers huge potential for a marketers facing stiff competition in the urban markets. The rural market environment is very different from the familiar surrounding elements in details to meet out the challenges and explore the opportunities provided by the rural market.

The dimensions of rural market environment are: –

1. Social factor

The social factor consists of a factor of a factors –

1. Sociological factor

Consumer society or the community is important. The consumer lifestyle is influenced by the social setup. The social constitution and changes influenced customer habits, tastes and lifestyle.

1. Anthropological factor

The reasonable cultures and sub-cultures and living pattern influence advertising sales promotion selling strategies and packing.

1. Psychological factor

Consumer behavior attitudes personality and mental make ups are unique. The study of behavior is vital to evolve marketing mix.

1. Economic factors
2. Competition

A good and healthy competition brings in good and overall improvement in economic activities.

1. Consumers

The consumer today is quite knowledgeable and choosy. His progress and well being should be the aim of any economic activity.

1. Price

Pricing is a delicate issue where it should be market friendly, not too high or too little.

1. Ethical factor

Business minus ethical values brings degeneration. In the long run, it bring problem, no standardization, exploitation and falsification are main ethical values in such organization.

1. Political factor

The government policies towards trade and commerce, internal taxation and preferences treatment have an influence on the marketing strategies. The marketing environment has to meet the political frame work in which a government is made to work.

1. Physical factor

The infrastructure availability for movement and storage of goods plays on important role in the physical distribution of goods and reaching the consumers. Efficient and cheaper logistics help the market in a big way.

1. Technological forces

The first changing services and technology give a cutting edge to the marketing of products changing warrant changes in marketing, inputs, and strategies. Taster and efficient communication and transport services have speeded up marketers. The capital is made to work faster and harder.

1. Discuss the impact of economic and social cultural environment on rural marketing operating.

Ans: The impacts of economic environment on rural marketing operations are: – Economic, demographic and political trends are changing the rural landscape and affecting activities carried out by women’s. Economic globalization has affected the overall context for rural development in the developing world in several ways.

1. The liberalization of trait and markets for food and other agricultural products.
2. Increase in privatization of resources and services.
3. The re-orientation of economic policy under at natural adjustment program.
4. The commercialization of modernization of agriculture.
5. With globalization, agriculture is becoming more and more vertically integrated co-oriented and responsible to market forces.
6. Liberalization of trait and markets affects both women and men engaged in small scale agriculture and agro processive particularly when agricultural subsidies are removed or reduced and with the opening of market to cheaper imports.

The impacts of socio cultural environment on rural marketing operations are: –

Socio-cultural environment is an important part of environment – culture, beliefs, values and lifestyle of the people within a limitation of society constitute of the people within a limitation of society constitute the socio cultural environment.

The following elements play a big role in the decision making stage to a large extent as to what the people will buy and how they will consume.

Culture

It is the combination of factors like religion language, education and upbringing. Accurate information on the consumption habits, lifestyle and buying behavior of the rural people can be obtained through a survey of the socio-cultural environment.

Social lose

Social lose is one of the main concepts in socio-cultural environment. A society consists of different social losses and all social classes are determined by income, occupation, literacy level etc. of its members. Each class has its own class values according to lifestyles, behavior etc. Thus values have a strong consumption pattern and paying behavior of the member of the class.

Social and cultural environment

The society and polity across the country varies between different religions, castes and linguistic groups. Common socio cultural behavior has been mapped as distinct socio-cultural regions, which may be spread across political boundaries. The influence of social practices shows itself in consumer preference for product features, product size, shape and color.

Caste system

Indian society had a scheme of social gradation with the Brahmins at the head of the hierarchy, followed by the kshatriyas, the vaishya’s and the shudras at the bottom. Marketers have to be sensitive towards the caste system and accordingly products in rural areas. While developing advertisements, brand communication and promotion plan, marketers should have to be sensitive to ensure relevance of characters and message which doesn’t affect any caste system.

1. (a) Discuss the importance of market segmentation in rural marketing decisions and briefly explain the methods of market segmentation.

Ans: The importance of market segmentation are: –

1. Customer – oriented philosophy

Market segmentations improve a company’s understanding of every customers do or do not buy certain product or service. It also provides an understanding that how a company can make adjustment to meet the changing market demands. Market segmentations results in many wars within in the segment such as Coke VS Pepsi, Tata salt VS Captain cooks etc.

1. Enables development of strong position of brands

By segmentations in an effective manner, a marketer can increase the company’s volume. Each segment has different pattern and when the manufacturers satisfy the demand of different segments by changing their products, the total sales of the company increases. As the organization is serving the consumer needs in a highly customer oriented manner it establishes a strong image of the organization in the target market.

1. Help in cutting of wasteful expenditure on unwanted consumer

Rural market segmentation helps in cutting the wasteful expenditure on unwanted consumer. A marketer can focus and make expenditure on a particular customer segment which will be profitable for them. Under market segmentation, marketers are in a better position to locate the target customers and compare marketing opportunities.

1. Matches needs and wants of specific groups of buyers to firms setting

Market segmentation help the marketers to match the needs and wants of specific group of buyers with firms setting. All marketing activities are directed towards the satisfaction of consumers and with the help of segmentation it becomes easy to measure the level of segmentation in each segment and also to make improvements or the segmentation level.

1. Stimulates demands through multi product for multi segments

Rural marketing segmentation also helps in stimulating demand through multi products for multi segments. In practical life the marketer does not use single variables for market segmentation rather it uses multi attribute segmentations.

1. Provides opportunities to expand market and hence enhance marketing efficiency

By segmenting the market’, a marketer is able to create new markets for their products. It enhances marketing efficiency by offering specific pricing, sales promotion and distribution channel as per the requirement of different segment.

1. Helps in knowing company capability and assessment of the competitors

By looking at a particular segment company can carry SWOT analysis. SWOT analysis detail out the strength and weakness within the company and opportunities and threat outside the company. Thus it keeps the marketer to adopt different strategies for markets especially in rural markets.

The methods of rural market segmentation are: –

1. Geographic segmentation

Geographic criteria – Nations, state, regions, countries, cities, neighborhoods, or zip codes – define the market segments. The geo – cluster approach combine demographic data with geographic data to create a more accurate profile of a specific consumer. In areas prone to rain, you can sell things like raincoats, umbrella and gumboots. In hot regions you can sell summer wear, while in cold regions you can sell warm clothes.

1. Demographic segmentation

This consist of dividing the market into groups based on variables such as age, gender, family size, income, occupation, education, religion, race and nationality. Demographic segmentation variables are among the most popular bases for segmenting customer groups because customer wants are closely linked to variables such as income and age and because there is a plethora of demographic data available.

1. Psychographic segmentation

In psychographic segmentation consumers are divided according to their lifestyle, personality, value, and social class. Foreigners within the save demographic group can exhibit very different psychographic profiles.

1. Behavioral segmentation

Consumers are divided into groups according to their knowledge of attitude towards use of or response to a product. It is actually based on the behavior of the consumer.

1. Occasions

Companies can segment the market according to the occasion of the use such as whether the product will be used alone or in a group or whether it is being purchased as a present as for personal use.

1. Benefits

Companies can segment the market according to the benefits sought by the consumer.

1. Usage rate

Markets could also be segmented by usage rates. For example – It has been suggested that targeting heavy users can lead to increase sales. Segmenting by usage could divide the market by Heavy Users VS Light Users.

(b) Why and how are market segmented? Is segmentation always necessary? Discuss.

Ans: In general, customers are willing to pay a premium for a product that meets their needs more specifically than does a competing produced. Thus marketers who successfully carry out market segmentation and adopt their products to the needs of one or more smaller segments stand to gain in terms of increased profit markets and reduced competitive pressures. There are several reasons why market segmentation needs to be done carefully. Some of the reasons are outlined below –

1. Better matching of customer needs

customer needs differ. Creating separate offers for each segment makes sense and provides customer with a better solution.

1. Enhanced profits for business

Customer has different disposable income. They are therefore different in how sensitive they are to price. By segmenting markets, business can raise average prices and subsequently enhance profits.

1. Better opportunities for growth

Market segmentation can build sales. For example – Customer can be encouraged to ‘trade up’ after being introduced to a particular product with an introductory, lower period product.

1. Retain more customer

Customer circumstances charge, for example they grow older, form families, change jobs or get promoted, change their buying patterns. By marketing products that appeal to customer at different stages of their life, a business can retain customer who might otherwise switch to competing product and brands.

1. Target marketing communications

Business needs to deliver their marketing message to a product customer audience. If the target market is too broad, there is a strong risk that.

1. The key customer are missed and
2. The cost of communicating to customers becomes too high.
3. Gain share of the market segment

Unless a business has a strong or leading share of a market, it is unlikely to be maximizing its profitability. Minor brands suffer from lack of scale economic in production and marketing pressures from distribution and limited space on the shelves.

• Methods of Market Segmentation. (5)a [written]

Market segmentation is necessary because in most cases buyers of a product or a product or a service are no homogenous group actually every buyers has individual needs, preferences resources and behavior. Since it is virtually impossible to cater for every customer individual characteristics, marketers group customer to market segments by variable they have in common. These common characteristics allow developing a standardized marketing mix for all customers in this segment.

• Importance of Market Segment. (5)a [written]

6) What factors are taken into consideration while determining the price of a consumer product? Discuss.

Ans: The factors that are taken into consideration while determining the price of a consumer product are: –

1. Cost of production

Cost of production is the main component of price. No company can sell its product or services at less than the cost of production. Thus, before price fixation, it is necessary to compile data relating to the cost of production and keep that in mind. There are two types of cost – (i) Fixed cost (example: – Rent of building, salary of permanent staff etc.) (ii) Variable cost (example: – material, Labor etc). At least the price should be able to recover the variable cost as the fixed cost is increased whether the production takes place or not.

1. Demand for product

Interview study of demand for product and services in the market be undertaken before price fixation. If demand is relatively more than supply, higher prices can be field.

1. Price of competing firms

It is necessary to take into consideration prices of the product of the competing firms prior to fixing the price. In case of cut throat competition, it is desirable to keep low.

1. Purchasing power of customer

What are the purchasing power of the customer and at what price and how much they can purchase? It should also be taken into consideration.

1. Government regulation

If the price of the commodity and services is to be fixed as per the regulation of the government, it should also be borne be mined.

1. Objectives

Usually at the time of price fixation a certain amount of profit is added to the cost of production. If company’s objectives are to earn higher it may add amount of it.

1. Marketing method used

Price is also influenced by the marketing method used by the company. Example: – Commission which is to be added to the price. Similarly if the customers are to be provided after sale service facility, then those expenses are also added to the price.

b) What are the major logistics decisions in rural marketing? Briefly explain each one of them.

Ans: Logistics is a part of a fixed corporate strategy but planning a logistics system has its own definition, components, and rules and so on.

According to the planning horizon, logistics decisions are traditionally classified as: –

Logistic decisions are generally made hierarchically in an iterative manner from the strategies to the tactical and the operational.

The major logistic decisions in rural decisions are –

1. Operational decision

Operational decisions are made in real time on a daily or weekly basis. So their scope is narrow. Decision such as vehicle loading or dispatching, shipment and warehouse routines are among the many types of operational decisions. Thus kinds of decisions are based on lots of detailed data and usually made by supervisors.

1. Tactical decision

Tactical decisions are made on a longer term basis, whether monthly term basis, whether monthly, quarter or even annually. Production planning, transportation planning and resources planning are the best known types of logistics tactical decisions. Thus decisions are often made by middle manager as logistics engineer and often with disaggregated data.

1. Strategic decisions

Strategic decisions are business objectives and mission statements as well as marketing and customer services strategies. Therefore they are long term kinds of decisions made over and or more pears. These decisions are made by sensitive administration. Top managers and stakeholders, top managers and stake holders. The data at hand for such decisions are often impressive incomplete and need forecasts.

Strategic decisions are made to optimize three main objectives: –

1. Capital education (The level of investment which depends on owned equipment and inventories).
2. Cost reduction (The total cost of transportation and storage).
3. Service level improvement (Customer satisfaction and order cycle time.

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