Segmentation, targeting and positioning of rural markets

The segmentation of rural consumers has gradually evolved with the evolution of rural markets in recent years. Marketers are progressing from the traditional descriptive geographic and demographic traits, largely used for segmenting nascent markets, to more evolved segmentation methods such as behavior, psychographics and multiple attributes, which provide deeper insights and directly relate to consumers' purchases. Segmenting markets and attracting consumers involves three key decisions— segmenting, targeting and positioning (STP), as depicted in following figure. Since rural markets have started growing rapidly, marketers need to evolve different targeting and positioning strategies for different customer groups if they want to penetrate rural markets effectively.

Segmentation is the sub-division of a market into homogeneous subsets of customers where any subset may conceivably be selected as a target market to be reached with a distinct marketing mix. The power of this concept is that in an age of intense competition for the mass market, marketers venturing into rural markets may prosper through creatively serving specific market segments whose needs are imperfectly satisfied by the mass-market offerings.

For example, 50 per cent of rural people are engaged in agriculture, but they cannot be clubbed under one category of farmers. There are large farmers, medium farmers, small farmers, marginal farmers, and then agricultural laborers. Their incomes, lifestyle and behavior are different. There is therefore a need to classify farmers under different customer segments. Further, the remaining 50 per cent of rural people are engaged in non-farm activities. Therefore, rural customers could be segmented on the basis of self-employed farmers, daily wage labor, salaried employees, traders, micro-entrepreneurs, etc.

Families in rural areas with members residing in urban locales would have a different exposure level affecting their lifestyles. Access to mass media (TV or radio) also varies widely in rural areas, which would also affect consumer behavior. So these factors can also be considered while segmenting rural customers.

Heterogeneity in Rural Markets

As discussed above, rural markets are heterogeneous in nature. There are a number of factors indicative of the heterogeneity of rural markets

• Socio-cultural differences across regions (caste-based hamlets)

• Variation in population size and population density of villages

• Difference in the levels of infrastructural development (developed versus devel­oping states)

• Media exposure levels (media dark, media grey and media green regions)

• Variation in literacy levels (Bihar versus Kerala)

• Differences in income levels and patterns of income flow (farmers versus daily wage earners)

• Family structure (large joint families, individualized joint families and nuclear families)

These factors play a significant role in consumer behavior towards the purchase of products in rural markets. The heterogeneity is not only visible across different regions of the country, but is also observed within each region, each state, and also sometimes within a village. Therefore, it becomes imminent for a marketer to segment his market carefully so that the offering can address the needs of the target customer optimally.

Pre-requisites for Effective Segmentation

For segmentation exercise to be effective, it should be measurable, accessible, differentiable and substantial.

1. Measurable

The segmentation variables should be distinct, clear and measurable. Only then can segments be described in exact terms and differences understood. Companies are unable to reach rural markets effectively due to a lack of comprehensive data related to markets and consumers. In the absence of information related to size, purchasing power, and profiles of rural consumers, they were considered similar to the urbanites. Also, factors measurable in urban (for example, monthly income) areas cannot be measured directly in rural areas due to a non-uniform income pattern and multiple sources of income. Today, rural markets are being studied by various companies to obtain valuable data that can be used for segmentation.

2. Assessable

Reach is important to serve the segments. Till recently, marketers preferred urban markets to rural ones because of the inaccessibility of the latter. Rural consumers were reached through vans and through village retailers visiting nearby town distributors and retail outlets. Now, while segmenting rural markets, it is important to ensure that the segmented market is conveniently reachable to the marketer to deliver products. With significant improvement in the connectivity of villages and increased interest among corporations in using traditional haats (weekly markets) and other new channels for distribution, rural markets are becoming increasingly accessible.

3. Differentiable

Segments merit the consideration of marketers only when they have distinguishing features. Rural consumers are identified as a different segment as their responses may be different from urban customers, at least for some products. For instance, while buying a motor bike, rural consumers accord more importance to sturdiness, mileage and the carrying capacity of the bike, whereas urban consumers look for style, power and aesthetics.

4. Substantial

A segment is attractive only when it is profitable. A segment should possess the following characteristics:

a) Homogeneity

It should consist of people who are similar in perceptions, learning preferences, attitudes and actions. As such, covering them will be easy. For example, SEC R1 consumers will behave in a certain way that will generally be consistent across different geographies.

b) Size

It should comprise either a large number of light users or a small number of heavy users so that marketing becomes beneficial to the company.

It is observed that rural areas are not homogenous. Region-wise differences are found in language, mind set and behaviour. However, designing separate promotional programmes may have limitations as the size of consumers in each segment may not be large enough to make the effort viable.

Degrees of Segmentation

If segmentation is considered a process with two polar points from zero to unity, four distinct segmentation approaches are identifiable, as depicted in figure below

1. Mass marketing

A majority of companies have used the mass marketing ap­proach in rural markets, not attempting any segmentation of consumers and treating all consumers as the same. A company can use this method to target the maximum number of consumers. This is the first step of marketing, when marketers do not have much knowledge of the market.

Initially, a majority of companies that entered the rural market treated it as an extension of the urban market. They followed the trickle-down theory and tried to sell urban products in rural markets. For example, Colgate-Palmolive successfully marketed the same Colgate toothpaste to all consumers in urban and rural markets till recently. However, as the rural market started to evolve and consumers became more demanding, Colgate introduced Cibaca.

2. Segment marketing

Segment marketing is still in its early stages in rural markets. It is only in recent years that marketers have realized the potential of different consumer segments that are substantial enough to target, and have designed and launched low-priced, innovative products for rural markets. Hindustan Unilever uses two different approaches to market its two different brands— Hamam and Lifebuoy. On the one hand it tries to reach the whole market in one go by using the mass marketing approach for its brand Hamam; on the other, it has introduced four variants of its brand Lifebuoy— Active Red, Active Orange, Plus and Gold—to reach four different segments of the Indian market.                                                 

3. Niche marketing

Niche marketing caters to a very small group in a segment with some specific and distinct need, which the marketer satisfies through specific skills.

The GoldPlus brand of jewellery from the Tata Group is an interesting case in point. Targeted at meeting the requirements and aspirations of rural and semi-urban popula­tions in south India, where jewellery is considered an investment, a reserve, this brand is hugely successful because of the Tata seal of good faith. Ghari detergent has used a unique parameter to segment the Indian market: the quality of water! On the basis of the quality of water in different regions, Ghari has introduced variants of its prod­uct, targeting different geographic segments. The "Jeevan Sadhan" service of Nokia, launched in 2009, specifically targets rural Indian consumers. It is an ambitious pro­gramme that bundles the handset along with services like providing agricultural tips, market prices, weather forecasts, career information, and entertainment services like ringtones, news, astrology, and more.

4. Micro marketing

Micro marketing refers to the tailoring of products to satisfy a particular taste or need. One of the examples of micro marketing is Dabur's Anmol hair oil, a mustard-amla based oil launched for northern Indian markets at INR 10 for a 50ml pack, targeted at rural consumers using loose mustard oil. Micro marketing can be further categorized into two: local marketing or individual marketing.

Local marketing

Local marketing involves designing brands and promotions to suit the needs and wants of local customer groups on a geographical basis. As rural people do not have much exposure, local marketing has relevance in many cases. It helps in effective marketing in the face of differences in demographics and the lifestyles of communities in different regions. Regional and local brands are very good at local marketing since they operate in a limited geography, which helps them to develop a good understanding of local consumers and their specific needs. The vegetarian bathing soap sold in the Bundelkhand region (Jhansi belt) of India is targeted specifically at the local vegetarian population. The marketers focus on the products being charbi rahit while promoting them (soaps, washing powders, detergents, etc.).

Individual marketing

Tailoring, forging and carpentry are examples of individual marketing in a rural set-up. In this approach, an individual can get a product according to his specific need. To address the great diversity of rural markets, different segmentation approaches have been attempted by marketers to reach consumers effectively. Some of the concepts discussed above provide cues to marketers on how to segment rural customers.

Bases for Segmenting Rural Consumer Markets

A thoughtful approach is always required before selecting segmentation variables for rural markets. The variables generally used for urban segmentation may not necessarily fit into the scheme of rural consumer segmentation. For example, variables like income—as used for urban markets—are clearly inadequate for rural segmentation. Income in rural set-ups is seasonal for farmers, and daily wages to farm labour are of-returns, so it is difficult to capture the true income. Similar limitations are experienced with the other urban segmentation factors. Yet it is necessary to segment rural consumers in order to target them effectively. As shown in Table below, there are four major segmentation variables used for rural consumer segmentation. These are geography, demography, psychography and behaviour.

1. Geographic segmentation    

Rural customers can be segmented according to geographic factors like region, state, district, villages and climate.

a) Regions    

The country is divided into four zones:

• North: UP, Rajasthan, J&K, Himachal Pradesh, Punjab, Haryana

• South: Tamil Nadu, Andhra, Kerala, Karnataka

• East: Bihar, West Bengal, Orissa, Assam and Northeast states

• West: Maharashtra, MP, Gujarat

Regional diversity within rural India dictates that the real challenge lies in understanding the fragmented rural consumer if marketers want to succeed in convincing them to consume. Following figure presents a pictorial representation linking variations in the cultural and behavioral traits of consumers across the four regions of the country.

It exemplifies the geographically determined traits that play an important role in determining consumer behavior and product choice. Marketers need to evolve effective strategies around products that fulfill functional needs and the need gaps of differ­ent regions.

b) Village   Population   and   Density   

The Census of India has categorized villages into different strata on the basis of their population. The rural lifestyle changes with the size (population) of the village due to a variation in the level of infrastructure and economic development. So far, most companies have targeted villages with a population of more than 2,000, which have better infrastructural facilities and high purchasing power. What marketers need to do is to segment the village markets on the basis of development indicators relevant to the product category, and target them accordingly.

c) Climate

Climatic conditions also play a significant role in the consumption of specific products (agro-based technology companies segment India into eight geo-climat-regions based on the condition of soil and the climate).

d) Culture

In the early 1970s, Rashiduddin Khan segmented the country into 56 socio-cultural regions (SCRs). For example, Uttar Pradesh has five SCRs: Avadh, Bundelkhand, Rohilkhand, Purvanchal and Braj. Each SCR has its own identity in terms of language, culture, dress and location. The culture of a region provides a window into the attitudes of the people who live there, their relationships and power structures, and ultimately their hierarchy of needs. Cultural identities have diluted to some extent in urban areas due to the influence of Western culture, but it is largely intact in rural areas. Cultural factors play a significant role in consumer buying Behaviour and also determine the dynamics of decision-making.

2. Demographic segmentation

Rural customers can be segmented on the basis of demographic factors like age and lifecycle, family structure, land ownership, occupation, income, socio-economic class, religion and caste.

a) Age   and   Lifecycle

With the changing lifecycle stage, consumers' need for products and brand preferences also change. This phenomenon is true for both urban and rural consumers. For example, in rural India, young adults exhibit a marked preference for mobile handsets with the latest features and technology, whereas elders are content with second-hand mobiles with simple and basic features.

b) Family Structure   

In rural areas, besides demographic characteristics such as age and gender, family size and structure are also important features. As the family size increases, so does the consumption of products. In such a case, the family pack or the economy refill pack works very well. Similarly, large families have more breadwinners, which translate into higher family income and, thus, greater consumption of products. This often leads to multi-brand consumption of a product category among different family members.

Rural India is gradually moving from the large joint family system to the individualized joint family system (families staying together but using separate kitchens) and the nuclear family system . This is resulting in greater demands particularly for consumer durables, as every new family unit living separately needs a refrigerator, pressure cooker, LPG connection, TV, DTH/cable connection, etc.

c) Land Ownership

Rural livelihoods, security, prosperity and sentiment are intrinsically linked to land. Urbanites tend to regard land as just another asset, and they fail to appreciate the emotional bond that farmers have with their land. Segmentation on the basis of land should include five factors: size of landholding (see Table below), quality of land and area under cultivation, irrigation method (rain-fed, tube well, etc.), agricultural productivity and crop mix, and money realization.

Therefore, rural markets can also be segmented on the basis of landholding size into the following categories: large farmers, medium farmers, semi-medium farmers, small farmers and marginal farmers.

d) Occupation   

The major occupations in rural India are: self-employment in agriculture, labourer (agriculture/non-agriculture), self-employment in non-agriculture, and regular salary/wages. The variation in the major occupational groups necessitates the segmenting of rural markets on a different basis. Both product categories and consumption patterns change among different occupation groups. Therefore, market­ers should consider occupation patterns while segmenting the rural market for their product category.

e) Income

Unlike urban India, where income for the majority of people is regular (on a monthly basis), in rural India the flow of income is mostly seasonal (post harvest for farmers) or weekly/daily (for wage earners). The salaried class with a regular monthly income constitutes a very small segment of rural consumers. Many urbanites pay in­come tax, whereas agricultural income is not taxable. Also, due to an irregular income pattern and multiple sources of income (for example agriculture, dairy, etc.), an assessment of rural income is difficult. Therefore, the urban income-based segmentation strategy is not entirely appropriate in the case of rural consumers. However, there have been some recent attempts to classify rural India on the basis of household income, as shown in table below.

f) Socio-economic Classification

The level of education and type of dwell­ing are important indicators in understanding the profile of rural consumers. These two variables have been used to segment rural consumers into four socio-economic groups—Rl, R2, R3 and R4 (See Chapter 3 for more details on this.) This kind of segmentation is widely accepted. Income and occupation are not used as the bases for segmentation in this classification because they are not well-defined and distinctive among rural people. In urban India, it is occupation and education that form the bases for defining social classes such as SEC A, B and C.

g) Religion  and  Caste

Religion and caste play an important role in influencing the social, economic, political and cultural behaviour of certain communities, particularly in rural areas. These differences are clearly visible in terms of the settlement pattern in villages, where hamlets of the upper and lower castes are kept separate. Village shops are also demarcated along similar lines in many cases. The settlement of villages has historically taken place on the basis of caste and religion, villages often having a predominance of people belonging to one particular caste or religion (for example, Rajput village, Bhumihar village, etc.). This peculiar phenomenon of caste dynamics cannot be ignored while segmenting rural markets. However, when it comes to trade and commerce, caste does not play a significant role.

3. Psychographic segmentation   

While geographic and demographic segmentation depict the visible characteristics of consumer markets, the true dynamics of pur­se behaviour can be assessed only on the basis of the psychographics of the rural consumer. Psychographics include factors such as personality traits, lifestyle and value systems.

a) Lifestyle

Lifestyle is defined by the activities, interests and opinions (AIO) of the person. It reflects the overall manner in which the person lives and spends his/her time and money. People within the same demographic group or social class can exhibit very different lifestyles, and hence different psychographic profiles. This concept enables us to grasp and predict buyer behaviour. The segmentation approach adopted in rural areas to outline the lifestyles of all four socio-economic groups is shown in table below.

4. Behavioural segmentation

Behavioural segmentation involves many param­eters, such as purchasing occasions, benefits, user status, usage rate, loyalty status and place of purchase.         

a) Occasions

Buyers can be segmented on the basis of the occasions on which they purchase a product. In rural areas, most durables are purchased during or after the harvest season because this is when farmers have cash after selling their agricultural produce. Like the Baisakhi season in Punjab, Onam and Ugadi in south India, and Diwali and Dussehra in most parts of the country, are important festival occasions when villagers prefer to buy new items. Similarly, melas which offer products at attrac­tive prices are also important because bargaining is possible. Also, weekly haat days are the times to purchase daily use products, vegetables and spices.

 Coca-Cola

Through a research study done on Indian rural consumers, Coca-Cola India tried to map various occasions of purchase of its soft drinks, both "at home" and "out of home", linking it with the level of consumption (low, moderate and high). It was found that the highest consumption of soft drinks at home is during festivals, functions, the newer rural phenomenon of birthday and anniversary cel­ebrations, or as hospitality to urban visitors. Similarly, consumption is high when rural people are out of home for picnics/get-togethers, marriages and routine outings, or are having alcohol. It is com­paratively lower during travel, along with fast food, after meals, or after school/college, as is maybe the case in urban areas. Also, a unique phenomenon of sharing a single bottle among rural youths was observed in the villages. This helped the company to identify the right occasions to promote its products and target the right customer segment. 

b) Benefits Sought   

Benefit segmentation emerges from understanding the needs of consumers. The benefit sought from a product varies from consumer to consumer. consumer satisfaction depends upon product benefits such as economy, performance, durability, status, taste, flavour, etc. Rural consumers are more concerned with the utility of a product than with its appearance and sophistication. They give more importance to the core benefit of the product. Many marketers do the segmentation on the basis of the benefits sought by consumers to position their products in rural areas. For example, Fullerton India, a non-banking financial institution, segmented the rural consumer market based on their credit and investment needs and identified five segments, namely the salaried class, large businessmen (traders and producers), small businessmen (traders and producers), service providers and farmers. The company designed a new financial product targeting the most potential segment for its business, "small businessmen".

c) User Status

On the basis of the usage of a product, consumers may be categorized into different groups as first-time user and regular user.

In the rural markets, the majority of consumers fall within the categories of potential users or first time users for most product categories. Therefore, a focus on product trials and demos is very crucial in rural areas, unlike for urban customers, who are already exposed to multiple brands and products through a number of channels (mass media, outdoor media, retail markets, shopping malls). The communication strategy of Ghari  detergent is based on the line, "pehle istemal karein phir vishwas karein" (first try it and then believe in it), to induce customers to try out the product. This approach has helped the company covert non-users and users of other brands into regular users.

d) Usage Rate

Based on the amount or rate of consumption or usage, consumers can be categorized into light, medium and heavy users. Taking this usage behaviour into account, marketers have introduced different pack sizes to meet the requirements rent users. Nowadays, most consumer goods are available in sachet packs for rural consumers, and family packs or economy packs for joint and large families.  

e) Loyalty Status   

A market can be segmented on the basis of consumer loyalty to specific brands. Segmentation based on loyalty enables marketers to tailor the communication and product appeal to retain the loyal customers, or to attract new customers from rival brands or convert non-loyal customers into loyal buyers.  

More than loyalty, the peculiar phenomenon of "brand stickiness" works in rural areas, this helps marketers to retain customers for longer periods with minimal effort. However, it may be very difficult to do so in the case of urban consumers, who keep shifting to new brands.

Rural buyers take a long time to decide on a particular brand, but once they are convinced, they are generally more brand loyal than their urban counterparts. Also, the first mover advantage plays an important role in this case. That is why there are Nirma villages and Wheel villages; Escort villages and Mahindra & Mahindra villages.

f) Place   of   Purchase   

Rural consumers buy different products and services at different marketplaces, as shown in following table.

In rural markets, the place of purchase changes with the change in product categories, as shown in table. This is unlike the situation in urban markets, where customers make most of their purchases from one place or even from one supermarket.

Taking advantage of this specific rural purchasing behaviour, marketers can promote their products by developing an understanding of the place where potential buyers congregate most often, and from where they prefer to buy specific products. Marketers like Tata Steel (Tata Shaktee roofing sheets), Colgate-Palmolive and Marico Industries have already started using traditional retail spaces such as haats, realizing the potential that they offer in terms of sales and promotion of products.

5. Multi-attribute segmentation

In practical terms, it is very difficult for a marketer to depend on a single variable for segmenting the market. Market segmentation is a complex function since it depends on multiple factors that define market dynamics. In order to identify smaller, well-defined, meaningful target groups, marketers use several variables. Some companies and research agencies have taken initiatives to develop multi-attribute segmentation so that marketers can use it as a market planning tool.

Some of these initiatives include R. K. Swamy BBDO's Index, where they came up with a prosperity index that classifies the districts and class I and II towns based on their Market Potential Value (MPV). It uses five broad factors to define the MPV of any place—means or propensity, consumption pattern, awareness through media exposure, market support, and size of market or population.

Among other recent multi-attribute segmentation approaches is the Household Potential Index (HPI) by Media Research Users Council-Hansa Research, which attempts to assign a "premiumness" value to each household. Here, premiumness has been defined as something that is "wanted by many" but "consumed by few". The concept of HPI allocates high scores for less penetrated products and services. On the other hand, lower scores are attached to higher penetrated or mass-consumed categories. A basket of 50 variables has been used for the calculation of HPI scores. These include durables, FMCG products, services and demographic variables.

Household Potential Index scores have been used to construct a pyramid of Indian consumer classes, as shown in figure below. The average HPI score of the first class needs to be (approximately) double that of the next class. In other words, as we move up the classes, the consumption potential doubles with every subsequent class.

One of the most recent attempts on this front has been by MART, which has come up with the MART MAS (Market Attractiveness Score) Index. This index captures data as granular as below 5,000 population towns in India and tries to map their market at­tractiveness

Targeting

Once segmentation has been done, one needs to evaluate each segment to decide which segment to target. Targeting involves evaluating various segments and selecting how many and which once to target. The three aspects in targeting are evaluation, selection and coverage.

Evaluation of Segments

While evaluating market segments, two broad factors are considered, the overall attractiveness of each segment, and the company's objectives and resource competencies.

1. Overall attractiveness  

The criteria for measuring the attractiveness of a segment are:

• Size

• Growth rate

• Accessibility

• Profitability

• Scale economics

• Low risk

While evaluating segments in rural areas, one should not be impressed by size alone because in rural India, the size may be large but purchasing power is limited. Therefore, growth rate of rural markets for different product categories should also be considered while targeting the market.

2. Company objectives and resource competencies

Marketers should evaluate the segment opportunity with reference to their short-term and long-term objectives. If a company's objective is to achieve long-term sustainable sales volume by expanding its consumer base, then it has to go to rural markets instead of expecting consumers to come to urban markets for products and services. This has been demonstrated by companies like Asian Paints, HUL and Colgate-Palmolive, who are now reaching rural homes with their products.

At the same time, the company should also examine its compatibility with resources and capability to service rural markets. It should take calculated risks through small pilot projects, which will provide opportunities to evaluate the target segment behaviour towards products or services. Smart marketers in rural areas like HUL and ITC have initiated "Project Shakti" and "e-Choupal" pilots, which have been transformed into mega rural marketing models.  

Selection of Segments

After evaluating segments according to the above-mentioned factors, segments can be selected by rating them on a predetermined scale (low, medium, high) with respect to the evaluation factors. Finally, segments can be ranked based on the scores obtained, and those with the highest scores can be selected as target segments to enter the rural market.

Coverage of Segments

Organizations have three alternative coverage strategies to suit their segmentation appro­aches, as shown in figure below.

1. Undifferentiated marketing

Undifferentiated marketing takes into consider­ation what is common among consumers and tries to include it in the offer. Hence, it relies on mass distribution and mass advertising. Only one product line keeps down costs of research and development, production, inventory, transportation, marketing research, advertising and product management. Due to the low cost incurred, the com­pany can set its prices low.

For example, till date Ghari detergent has not come up with any variants for targeting different segments in rural India; rather, it has tried to appeal to all types of customers.

A majority of companies try to find a convergence between rural and urban lifestyles. Coca-Cola's campaign "thanda matlab Coca-Cola" is an example, as it targets both ur­ban and rural markets.  

2. Differentiated/targeted marketing

Differentiated market strategy investi­gates and identifies differences between segments, and tries to match the market offer to the desires and expectations of each segment. This strategy results in:

• Strong identification of the company with the product category

• More costs, but higher sales and profitability                           

• More loyal consumers

One of the examples of differentiated marketing strategy is Lifebuoy. After entering rural markets initially through the mass market strategy, Lifebuoy, through its four new variants—Active Red, Active Orange, Plus and Gold—is now eyeing a well-defined seg­ment of customers instead of the faceless many.

Successful targeters thrive by securing the loyalty of their customers, who are often impervious even to price increase. Targeted marketing facilitates an intimate under­standing of what the target customers value. Therefore, it is critical for marketers to recognize the need for differentiated marketing for differentiated consumer profiles.

Winning   markets through   effective segmentation and targeting

In 2000, when one of the world's leading agribusiness companies entered India, it segmented the consumer market for its hybrid seeds and crop protection products. A hybrid segmentation approach using variables like geography, adoption behavior, crop economics and usage pattern, and farmers' attitude and behavior was used to come up with well-defined segments. The company identified three main segments in the Indian consumer market—optimal farmers, sub-optimal farmers and marginal farmers. The optimal farmers comprise one-third of the total market, mainly in the agri­culturally rich states of Punjab, Haryana, Tamil Nadu and Maharashtra. These farmers were the first to have capitalized on the Green Revolution, are the early adopters of any new farming technology, use preventive rather than curative crop protection methods, are information seekers and self-dependent for knowledge on the latest products, have greater access to agricultural markets, and have a business outlook towards farming. The company found the best fit with this segment of opti­mal farmers and targeted them for its existing products. However, it has realized that the remaining two-thirds of the market is also crucial and has to be effectively tapped. Therefore, it is currently try­ing to profile the sub-optimal farmers, for whom new products can either be developed, or existing products marketed. This segmented approach will not only help the company to expand its market in India, but will also sell the right products to the right consumers.

3. Concentrated marketing

Due to the small number of consumers in each seg­ment, targeting only one segment would spread marketing efforts thinly over a vast area. As companies put in so much effort and investment into reaching rural markets, they should have a multi-segment strategy rather than a single segment one to ensure adequate returns on investment (RoI). In the case of single segment, there is a risk of change in the preference of consumers, although the risk is less in rural markets as the pace of change in the preference of consumers is slow. This is also known as niche marketing. For example, Hindustan Unilever is dominating the mass market in rural areas with a series of niche brands, each aimed at a small section of consumer. With brands like Breeze, Lux, Liril, Ayush, etc., the company is targeting different consumer segments in the rural market.

Choosing a Coverage Strategy

The marketer's approach towards strategy selection changes with reference to the state of four variables—company resources, product variability, product lifecycle stage, and market variability.

For example, Mahindra & Mahindra as well as other tractor companies have adopted a differentiated strategy as these companies have large resources and more product variability; also, the product is in the growth stage in the market and has high market variability.

Positioning

Positioning is the act of designing the company's offering and image to occupy a distinctive place in the mind of the target segment. It is typically defined by consumers on the basis of important attributes. Companies have to plan positions that give their products the necessary advantage in the target market. Positioning involves:

• Identifying the unique feature of the product (USP), as well as differences between this offer vis-a-vis the competitor's offer;

• Selecting the differences that have a greater competitive advantage; and

• Communicating such advantages to the target audience.

Positioning begins with the construction of a visual map of the customer's mind. A mind-map is depicted as a flat space divided into four quadrants by two axes, each of which represents the continuum of a particular brand attribute such as

• Cost - expensive / economical;

• Features—traditional/modern; and

• Quality—superior/inferior.

For example, Himani campaign for Sona Chandi Chyawanprash uses contrast to position the brand on two platforms—a healthy body and a sharp mind.

The position of a brand is determined by the spot it occupies on this mind-map. Each spot represents a unique combination of the attributes represented by the two axes. As mind-mapping exercises reveal, existing brands tend to be clustered around particular spots, which represents ideal value-points for the customer. And the line connecting the intersection of the two axes to each of these value-points represent the vectors along which brands tend to be grouped. Thus, a perceptual map summarizes the image in the customer's mind.

TATA Motors

TATA Motors launched its mini truck (commercial vehicle) Ace and positioned it as" Chota Hathi”. This positioning statement was a huge hit and helped the company to create a distinct place for itself in the minds of consumers. The company used four parameters—savings, service, performance, style and comfort—to create a competitive positioning map for its new product. Tata used the following statements to position Tata Ace in the minds of consumers: India's first Mini Truck; Small is Big; Stability and Trust of big truck; Economic liberation; Feel good about the job; and Transportation at the last mile. The company successfully managed to position the Ace as high on savings, performance, style and comfort, and service. This strategy has paid off, and the Ace is currently one of the market leaders in its segment.

Smart marketers need to understand and analyze how competing brands are posi­tioned in the minds of consumers so they can place their brands away from competing brands. For example, Ghari detergent identified the vacuum in the low-price-high- quality quadrant and positioned its brand accordingly. Today, Ghari has become a rural super brand in very little time, leaving behind a brand like Wheel.

In case every value-spot on the mind-map is occupied, a new entrant has to think outside the box by making effort to create a new vector.

Identifying the Positioning Concept

Marketers have to understand consumer motives behind purchasing a product. This will help in identifying the positioning theme. A marketer can adopt several approaches in positioning his product to develop or enhance its value to the customer. A marketing offer can be differentiated on the basis of product, services, people, channel and image

1. Product differentiation

Products can be differentiated on attributes such as form, features, durability and quality. Coca-Cola introduced the "chota Coke" at INR 5 for rural India. Hero Honda came out with the lower-priced Dawn model for the rural buyer. Colgate introduced a herbal version using the positioning of the natural feel preferred in rural areas. Meswak, Neem and Babool toothpaste also followed a similar positioning strategy.

2. Service differentiation

Services may be differentiated with respect to delivery, in­stallation and maintenance. Long warranty periods, free-service coupons, service at phone-call distance, 24 hours service, emergency care, etc., are some examples. Reliance, a private LPG company pitted against the three well-established public-sector undertakings (IOCL, BPCL, HPCL), differentiated its products on the basis of distribution and better refilling facility. It successfully differentiated its prod­ucts despite the fact that they are priced higher.

3. People differentiation

People or personalities (film and sports celebrities) that consumers respect and admire bring a differentiation to the image of products and services. Aamir Khan endorsing Coca-Cola in a villager's outfit or the endorsement of Sona Chandi Chyawanprash by Shahrukh Khan bring a huge differentiation to the product image and help in pushing its sales.

4. Image differentiation

The image of a brand or a company may win the consumer over, despite the product being very similar to a competitive one. Image is built through advertisements, symbols, signs, colours, logos, and the atmosphere of organization.

Selecting the Positioning Concept

As there can be various parameters for positioning the product, the marketer has to select the best and most effective alternatives. A marketer has to select a positioning concept that serves as a bridge between the products and the target market. Some of the critical factors that should be considered while positioning a brand are:

• Attractive: Does it provide value to the customer?

• Distinctive: Is it different from the products of its competitors?

• Pre-emptive: Is it very difficult for competitors to copy it?

• Affordable: Can buyers pay for it?

• Communicable: Can the difference be clearly expressed? Is it visible? Is it under­standable?

Attributes that can offer a competitive advantage should be identified (for example, quality, service, technology).

Developing the Concept

Once the positioning strategy has been selected, the marketer needs to develop the concept in an effective manner so that it can be properly addressed to the target mar­ket. Then he has to select the appropriate media vehicle to reach the target market ef­fectively. Marketers should strive towards linking the positioning platform closer to the target customer to ensure that it appeals to them.

Communicating the Concept

An effective communication is one that clarifies the target market, value proposition, and the supporting product differentiation.

How many ideas/differences to promote?

There could be one idea, two ideas, or three ideas that could be promoted. Positioning two to three ideas would be bet­ter, as rural people would think that they were getting better value for money. The statements positioned should be consistent (should not be changed frequently). Otherwise, in the case of multiple statement positioning, there is a risk of buyers having a confused image of the brand, resulting from companies making too many claims.

Which positioning to promote?

For rural areas, the positioning statement should be the generic benefit of the product. Sprite Bujhaye Only Pyaas Baki Sab Bakwas and Thanda Matlab Coca-Cola are some of the suitable lines for rural markets.