New Products Development

New Products Development

Consumer Adoption Process

The adoption of new products and services is slow among rural consumers in comparison to urban consumers due to poor awareness of new products because of low media access and resistance to trying new products in the absence of demonstrations.

The sarpanch, the school teacher, and salaried people who have better media access and market exposure become early adopters, some of who in turn act as opinion leaders for other potential buyers.

The inducement of product trials and demonstrations works well in rural for the adoption of new products.

Product Life Cycle

In most cases, the product is developed for the urban market and is later pushed into the rural market. Only in recent years have companies started customizing their products for  rural markets. Eg. LG Television, Philips Free power radio.

PLC of a product in the rural market is often longer due the multiple challenges involved in the distribution, communication and adoption of the product.

Low growth in the rural market has forced companies to reengineer their products (Free power Radio) or introduce low price packs (sachets, 200 ml Chota Pepsi).

They are also trying to change consumption patterns through consumer education (increasing soap usage frequency from weekly to daily) and adopting alternate channels to reach deeper (HUL‘s Project Shakti, haats, mandis) to grow the market.

Product Mix

The product mix in rural markets is simple.

Mostly only one product of a particular company registers its availability on rural shelves.

Limitations of investment in stocks, the slow movement and replenishment of stocks and the dominance of the retailer in rural markets are some of the important factors

responsible for the smaller range of products available at retail shops in rural.

HUL has good product width, with a presence in toothpaste, shampoo, detergent etc.

Packaging in Rural India Packaging in rural India needs special focus because of the

Following factors:

Poor Transport System (poor road conditions)

Difficulties of safe storage (rats, moisture, heat, rainwater)

Poor Facilities (erratic power supply leading to poor cold-storage facilities for food products)

The product for rural should :

Have a longer shelf life than the product for urban. Be able to withstand extreme weather conditions

Be able to withstand sudden and jerky movements on dusty roads. Have alternate storage arrangements (ice box for cold drinks).

Packaging Aesthetics

Bright colors like red, yellow, green etc.

Use of local languages on the pack, images.

Texla TVs –Launched new range in bright red and yellow color as the old one with black and grey cabinet was a failure.

ITC –Goldflake with a yellow cover in the south whereas golden color in north because yellow is associated with ill-health and jaundice in north.

Branding in Rural India

Brand Association is mainly with Colors, numbers, and visuals and not necessarily with

the name of the brand.

Retailers play a major role in brand promotion. Due to strong bonding and trust between customers and retailers, coupled with low brand awareness, consumers often do not ask

for the product by brand but insteadPaanchwillrupaye waalirequestchai th dena‘. It is upto the retailer to push the brand.

First mover brands become generic brands –Detergent powder came to be identified with Surf, mosquito coil with Kachua Chaap,vegetable oil with Dalda.

Brand Building in Rural India

Brand name development –Facilitates easy brand recall and in drawing any color, visual or numeric association. Eg. Ajanta for toothpaste, Sansar for sewing machines.

Creating a brand identity –Involve the need to relate the brand with the rural lifestyle, or with appropriate status symbols, or with the rural environment. Eg. Britannia Tiger

Biscuits created an identity associated with a smart, active and sharp child.

Building a brand image –Brand should have a personality of its own. Eg. Mahindra & Mahindra have maintained their sterling image in rural.

Brand Spectrum in Rural

Brand choices are often limited due to the small market size and the limited investment capacity available with the rural retailer.

Only Three brands are available in rural retail shop against six to nine brands in urban shops.

Brand Loyalty Vs Stickiness

Low levels of literacy and awareness make rural people less likely to switch brands as they do not have the required knowledge or information to exercise a choice. They are more comfortable in purchasing tried and tested brands. They are therefore, brand sticky rather than brand loyal.

First / Early mover advantage –Whichever brand enters a village market first seems to gain acceptance in the community through ‗word of mouth‘ communication and There after many prefer to stick to this particular brand.

Fake Brands

Rural markets suffer from the problems of low penetration and poor availability of branded products. Hence, although there exists a huge demand for branded products, there are no distribution channels to make the product reach the customer. This has led to the growth of fake brands.

Ponds has been replaced by Bond‘s talc

Fair & Lovely by Fair & Lonely

Lifebuoy by Likebuoy

The Fakes Market

Lookalikes –Products where the color scheme on the packaging material closely resembles that of a popular brand but the pack carries a different name. Shagun for Lifebuoy, Lalita Amla for Dabur Amla

Spellalikes –Fakes of original brands packaged in colors and designs similar to those of the originals but have names that are subtly and cleverly misspelt. Eg. Paracute for

Parachute, Fair & Lonely for Fair & Lovely.

Duplicates –Exact replicas of original brands. The color, design, and name on the package are the same as those of the original brands.

Strategy to counter fakes

Introduce upgraded packaging which is difficult to copy –Dabur replaced its plastic blow-moulded container with a premium four-color shrink-sleeve packaging, which has a grainy texture and water bubbles. The packaging is difficult to replicate. Tetra packs for Juices.

Raids or Legal course –Raids on the premises of the fake manufacturer and seize the products. File a patent for the product. Eg. P&G initiated action against the manufacturers of lookalike Vicks Vaporub.

Educate the customers – Coca Cola has put into place 48 consumer response coordinators, who work with their teams to redress the consumers complaints about overcharging and fake bottling.

Structure of Competition in Rural India

Other urban national branded products –In certain villages, the proliferation of national brands is quite evident. More likely in villages that are on the periphery of larger towns because of the spillover from urban centers.

Regional urban branded products –regional brands of unorganized sector are quite common. True for soaps.

Local urban brands –These products are manufactured in urban centers and find their way into rural India through the wholesale channels like washing products, bangle etc.

Local village brands –Products manufactured in the village itself. For eg ropes, bread etc.

Substitutable products or indirect competition –Products that can be substituted. Eg. Ash for washing vessels, neem twigs for toothpaste.

Product warranty and after sales service

When purchasing high-value durable products, rural consumers attach a great deal of value to the warranty offered on the products.

With the increase in the usage of machinery, appliances and equipment, there has been a continuous demand for after-sales service.

Tractor servicing –Most tractor companies regularly organize service camps in big villages/ small towns. They invite tyre, battery, fuel injection and other component suppliers to participate. Advance notice is sent to tractor owners of the company brand with a request to come on a scheduled date for a free-check up.

Videocon servicing –Company mechanics go around to villages twice a week to provide after-sales service, an important factor in the decision to purchase consumer durables.