Page 186 - DMGT509_RURAL MARKETING

Unit 9: Pricing Strategies

While the highest percentage of aspirants are in the rural sector, the urban sector has the highest Notes
number of well-off, which in practical term refers to middle and upper middle. With aspirants
and climbers forming a substantial part of the market, the value sought from the product will be
higher and marketers need to trudge this path very carefully. It does not have any easy correlation
to selling cheap and stripped down versions of the products, but offering the best value. Small
pack sizes will get easy.
A key concern facing marketers in respect of rural pricing is issue the branded versus unbranded
goods. Rural consumers are aware of the branded product vis-a-vis price as a critical aspect of
branded goods consumption. The local and spurious product will continue to exist alongside the
branded products. It does become difficult for consumers to choose at times, considering the
price disparities and the income scarcities. The spurious products are very common in the rural
settings where close imitation of a popular brand, with similar packaging could outsell the
original simply because it is sold at a far lower price, sometime a differential of 50%. AC
Nielson through a study conducted in rural markets were able to establish that sales of spurious
Vicks equaled that of the original brand.

Promotional Discounts/Promotional Pricing

Having discussed some of the basic issues in pricing for rural markets, this section looks at some
of the pricing strategies actually adopted by marketers, which are usually covered in the rural
markets. Though the remaining pricing strategies are also adopted by the rural markets,
promotional pricing is usually the preferred route. Geographical pricing and product mix pricing
are also adopted by marketers for any given market. LG's Sampoorna range of TV was launched
exclusively for the suburban and rural markets, which was a stripped down version of the core
product, eventually meeting with little success in the rural markets. The critical point for rural
markets are products focusing on needs of the consumers or the other alternative is to look at
low-priced products targeted at the price sensitive rural markets. The choice will purely be on
the organisation's objective to meet consumer demand effectively.

Figure 9.2: Product and Price as Critical Factors

Rural Consumer: Occupation, Income, Culture, Attitude

Benefits Availability Cost

Product features Retail Shelf/haats Price
& Packaging

Value

The figure above represents the product versus pricing issue, which will be critical to consider
for organisations entering rural markets. It is always not be true that only the cheap products
will sell in the rural markets. 'Usha found that the sale of its economy models were falling
sharply in rural areas. Farmers preferred Usha's premier Century brand, thought it was priced
20% higher, as they found the value proposition of the latter, more in keeping with their
perception of value.

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