Page 187 - DMGT509_RURAL MARKETING

Rural Marketing

Notes Promotional pricing in the rural markets may involve introductory price offers targeted at
promoting trial, free samples or quantity discounts to ward off competition. The following able
summarizes the type of prices discounts that are in unusual practice.

Table 9.2: Promotional Pricing: Price Discount

Types of Discount Objectives
1.Volume discounts To encourage consumer to buy larger volumes and avail of much
lower prices. May succeed at post harvest, festival or pre marriage
seasons.
2. Trade discounts To motivate channel members to service customers effectively.
Usually given at the time of special schemes or product introduction
or new model introduction.
3. Seasonal discounts To stimulate demand in lean periods and to smoothen wide
fluctuations in demand. Usually offered in periods preceding and
following peak demand periods.
4. Promotional discounts To stimulate channel members to make special efforts to promote
demand. Usually for a limited period.

Source: Adapted from Rural Marketing by CGS Krishamacharylu and Lalita Ramkrishnan, Pearson
Education 2002.

A key consideration is also the sources of income in the rural sector, which affect consumption
patterns. With harvest season, disposable income goes up and farmers have a tendency to
experiment with purchases. The synchronising of price offers and assortment offers to such
patterns is referred to as 8 income stream and consumption basket offering". This in effect means
that the price and positioning decision is therefore influenced riot just by the income received
but also on when it is received and how it is allocated among different needs.
Haats and melas form an integral part of the rural consumer's shopping patterns. Owing to the
nature of such fairs and timings purchases are usually varied and even made in bulk. For
instance, the Sonepur Cattle Fair, finds buyers and sellers for not just cattle but as a variety of
other elements are also dovetailed onto the fair, it witnesses all kinds of purchases and bargains
beyond cattle. Naturally, price will be the key differentiator for most purchases. The Kumbh
Mela, the annual ritual of the Hindus, also witnesses a large number of visitors from the rural
countryside. Marketers encash every opportunity to offer the best deals and product, on such
occasions, to take advantage of the heightened purchase intention.

9.7 Competition and Pricing

You are aware that apart from the costs of a product and the consumers capacity to pay, the third
leg of the pricing decision tripod is the competition, In any competitive category, prices need to
be responsive to competition's price points as in price elastic and value for money kind of
market scenario, small differentials in seemingly similar product offers could see you lose
market to your competitors. The rural markets represent situation where competitor presence
may be thin at present but as more and more organisations warm to the emerging potential of
rural markets, the pricing decisions would need to be very sensitive to what the competition
offers. Competitive pricing offer takes the form of price reduction, package size reduction
accompanied by price reduction or offering more volume for the same price. Price setting
becomes an issue when your competitor either reduces his price or initiates a price increaser
While your final decision on price fixation under such situations may rest on an analysis of the
price sensitivity of the consumer and your own costs, certain generalisations can indicate direction
towards appropriate strategy. A price rise by the competitor should be matched in a period of

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