Page 188 - DMGT509_RURAL MARKETING

Unit 9: Pricing Strategies

growing demand or rising costs. If you can manage to control your costs to existing level, and Notes
are in highly price conscious market, market advantage is likely to occur when you maintain
your prices while the competition initiates a price increase. If economies of scale or technology
enable you to get a clear cost advantage, you could benefit significantly in actually lowering
prices even if it means narrower margins because you could preempt or oust competition from
the market.

Figure 9.3: LG's Sampoorna TV Launched Exclusively for Rural India

Rural markets have been shown to be highly price conscious markets, specially when the brands
are perceived to be more or less similar. When the competition introduces a price reduction on
his products, you may need to carefully consider the price maintenance option. Not reducing the
price may mean loss of consumer franchise in extremely price conscious markets. On the other
hand, if the market is more value conscious and has displayed brand loyal behaviour, reinforcing
the value proposition of your brand may allow you to retain your position even in the face of
price reduction. Matching the price cut initiated by the competition is indicated when the market
is, as noted above, very price conscious and does not display any notable brand preference or
loyalty to your brand. A strategy to counter direct price cut is to offer more affordable, but
smaller package sizes. Dr. Shiva Kumar, GM, Marketing (Personal) Products, FILL, stressed that
while all Ps apply in the hinterland, price is the single most important determinant. Product and
package innovations however can be used to gain instant success as value preposition can be
built around smaller sized, specially designed offers for the rural market as demonstrated by
Brooke Bond's Al, Wheel, Kissan, Lipton Tiger etc. Following the reduction in excise duties for
tooth' powder, Colgate Palmolive, in a bid to convert rural non users to users, has reduced
prices even further and introduced a special 50 gram pouch and even a ten gram pouch, priced at
6 and 1.50 respectively. This has been done with an objective of initiating usage of tooth
powder among all the members of the family as well as to preempt competition.

Self Assessment

Multiple Choice Questions:

12. Haats and melas form an integral part of the rural consumer's ...................... patterns.
(a) shopping (b) design
(c) working (d) sales
13. Rural markets have been shown to be highly ...................... conscious markets.

(a) brand (b) price
(c) product (d) quality

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