Competition in Rural Markets-Fake or Real?

Presented By

Rizwan Mahbub Khan

ID: 12132101051

Intake: 30th

Program: BBA

Department of Marketing

Bangladesh University of Business and Technology (BUBT)

What is Rural Marketing?

Rural marketing is a function which manages all those activates involved in assessing, stimulating and converting the purchasing power into an effective demand for specific products and services, and moving them to the people in rural area to create satisfaction and a standard of living to them and thereby achieves the goals of the organization.

Difference Between Rural And Urban Infrastructure: The facilities like Electricity, Internet, Roads and Buildings,

Educational Institutions, Financial Institutions, Communication and Organised Market , Other Facilities differs in urban and Rural market.

Economy: Here the Economy means, The earning Capacity in a rural Market. The cost of Living always depends upon their way of earning.

Lifestyle: The Lifestyle , that is living pattern of both the markets differ a lot. This can be important factor which influences the companies to think of when they approach rural market.

Socio- Cultural Background: Due to the illiteracy level, and Culture adaptability from long time the rural market always gets differ than the urban market. The superstition and other belief as well as the way of thinking towards products and goods differ in these two markets.

Availability or Reach: Due to the areas which are diverted Geographically and Heterogeneous market the reach is very difficult. The logistics for rural market is a tough task than to reach the Urban Market.

Habits: The daily routine of the people makes them to cultivate different habits. Apart from due to the awareness is low in Media terms there will be a difference in the habits.

Competition: The competition in the market for brands and Companies always differ . As in rural markets it is always the channel Partner and Retailer plays a vital role. But where as in Urban Market Brand Plays a great role.

Consumer Behaviour: The consumer behaviour is the task for the task for the companies . The mindset of the rural consumer is completely different from Urban Consumer.

Reasons For Selecting Market There are quite a few reasons for the growing interest in rural

markets. A very straightforward reason is the growth of thesemarkets are :

Untapped Potential• The large number of consumers• Largely untapped markets

Market Size and Potential Unmet Needs/Low Penetration Current Consumption a Pointer to Potential Increasing Income and Purchasing Power Accessibility of Markets Competition in Urban Markets Consumer Behaviour Changes

Fake Brands

Rural markets suffer from the problems of lowpenetration and poor availability of brandedproducts. Hence, although there exists a hugedemand for branded products, there are nodistribution channels to make the product reach thecustomer. 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/Lifeboy

Types of Fake Brands

Look-alike- Products where the color scheme on thepackaging material closely resembles that of a popularbrand but the pack carries a different name. Lifeboy forLifebuoy, Lalita Amla for Dabur Amla

Spell-alike- Fakes of original brands packaged in colorsand designs similar to those of the originals but havenames that are subtly and cleverly misspell. Eg. Paracutefor Parachute, Fair & Lonely for Fair & Lovely.

Duplicates- Exact copies of original brands. The color,design, and name on the package are the same as thoseof the original brands.

Why people buy fake

A few points to note about fake brand buying:

Fake brands are more affordable, often with a huge price difference to the original brand;

Fake brands can have far wider availability than the real, exclusive brand –especially in the low income countries where they are made;

Buying situations such as holidays favour fake purchases, as consumers are away from their normal social/legal restraints;

Counterfeits can reflect the prestige of exotic travel (to fake buying centres) and provide an authentication of the travel experience;

Many consumers see fake brands as fun and a form of popularising the real brand;

Consumers sometimes believe they are contributing to the local economy when they purchase fake brands.

Reason for increasing Fake products

Heavy profit

Low income group

Low level of literacy

Lack of Awareness

Lack of enforcement of law

Lack of distribution channel

Lack of transportation facilities

Available of fake products

Major victims for Fake brands

Consumers: The major victims of fake or spurious products are consumers themselves who are cheated by manufacturers of such products again and again. A major chunk of Indian consumers live in villages also who is not educated and aware of such practices.

There are various reasons for rural customer exploitation Traditional Life

Low Income Group

Low Level of Literacy

Poor distribution network

Lack of awreness

Company: There is no doubt that companies are major victims of these counterfeit products. They are not only losing their revenue but the goodwill also. A joint effort is made by FICCI and the leading FMCG Companies to bring all companies together to initiate a war against such menace.

Government: As we have discussed earlier also that government is also a victim and losing a heavy revenues in form of excise duty, sales tax.

Problems created by fake products

Fake products not only cannibalize the existing brands of genuine producers, but also will result in the loss of future markets due to the loss of consumers faith in the original brand as a result of poor experiences with fake brands.

Original companies get less profit because of low sales.

Companies loss their reputation for the fake products.

Way to tackle the problems

One method is to strengthen the distribution network.

Another way to tackle this problem is to make the packaging tamper-proof with more sophisticated and capital-intensive method.

Yet another approach is to organize consumer contest in haats and big villages to distinguish the original products from the counterfeits in order to increase consumer sensitivity to the issue.

Finally, another approach to tackle the menace of fake brands is to initiate legal action against the counterfeiters.

Conclusion

Rural market in India badly affected due to sales of spurious products. Still rural consumers are unaware and unable to differentiate the branded FMCG products from spurious products available at retail shops. Although in last decade literacy level of rural consumers rises from59% (Approx.) to 69% (Approx.), but still availability of spurious products indicate the other factors behind its sales. Spurious products badly affect the rural market sales of many branded FMCG companies. FMCG companies have taken some initiatives to counter them but unable to implement a holistic strategy to counter spurious product manufacturers strategy in long run.

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