Understanding Shopping and Shoppers

Well this should be the favourite topic for a ‘shopoholic’ like me. That’s what my friends and family thinks I am. Well I enjoy shopping. And there is nothing wrong in feeling good; feeling happy.

When I was a little girl, my mom told me that I demanded something new to wear every day. Inability to provide a sparkling new dress would result in a whole lot of hue and cry that would bring the house down. So my mom found out an easy way to go about me. She learned stitching and went to tailors to pick up little pieces of fabric to stitch me a new dress everyday. She used to dress Daddy’s little girl everyday before dad came home from work with tiara, flowers and accessories. However, as I grew up and the little pieces would no longer suffice me, she got fed up of daily tantrums. Sure I no longer looked like a cute doll anymore. So that’s when I got introduced to shopping. However I realized very early that things come in two prices. The ‘me’ prices that got all shiny and bright stuffs that would not last more than a few weeks; and ‘mom’ prices that got boring and dull things that would last months. Yes being dependent on parents there is not much to do except to go for ‘mom’ prices. But when I passed through the streets and stopped by a window, I saw a different world. A dream where every thing was perfect. I saw that if you grew up and earned your own money, you could get whatever you wanted. Little did I know that soon I got possessed by an obsession. An obsession to identify every piece on someone’s body with a brand. Shirt – Raymonds, jeans – Levis, Belt – Hidesign, Shoes – Catwalk. Yes, for me, these brands are worth every penny. With a job and money in my pocket, the brands I dreamed of owning, were soon stacked in my wardrobe. But one dream gives rise to another BIGGER dream. So now I dream of GUCCI, PRADA, ARMANI, LOUIS VUITTON, JIMMY CHOO, VERSACE, and BURBERRY… ooh and lots more. And its not only clothes and accessories. I think I am as fussy about gadgets and pets as I am with clothes.

That’s just not me; there are hundreds and thousands of us out there. Can you catch us? Do we come easy? No. we are the well informed ones. We know what price will fetch us what status and what quality. With one glance we can tell you what brand you are wearing and with a touch we can tell you what’s the composition. We know the do’s and the don’ts.

And then there are my brother types. They will wear anything they can lay hands on or people gift them. For them, shopping is a chore. If they want a shirt, they pick up the 1st decent one which fits well. It’s quick and short; means boring. But these very people when asked to buy something they really really want... Will follow the same pattern. Ask my brother to buy a gadget, and he will go gaga over it. He would search for every detail, every model, brand and features available and pick the best piece which would be value for money. So you see these people are not excited about how they look but they are as excited and sensitive to what they want as the previous category.

Shopping comes naturally to everyone. It just depends on what you really like and what you really want. And off course, how you want it. Some enjoy mall hopping by walking through the long aisle of merchandise. While some cannot think of shopping without putting up a bargain while others are merely disgusted with the though of it. For some it’s a get away, and for many like me, it’s a Therapy. Some love it, some deny it. But the bottom line is you can’t escape it...

A few I have come across often complaint the brands to overcharge on merchandise. Well, Lemme tell you that the brand does not charge you just for the brand name. They charge for assurance. Assurance of quality, longevity and comfort. For example you wish to buy a pure cotton t-shirt for the summers. Most of the things you see which are ‘not branded’ or ‘counterfeits’ look good the first time you see it. Until you look closely or use it sometime and realize it’s not real as it claims itself to be. Its cotton blended with terylene or other synthetic fibres. Maybe longer lasting, shiny and low maintenance, but when summer comes you realize that it definitely lacks the pure comfort of pure cotton. What a brand does is that it tells you what it offers. Turn any branded t-shirt or shirt you own inside out. On the left you will find a tag that tells you not only the composition (e.g. 100% cotton; 90% cotton 10% spandex etc) but it also tells you how to handle it to ensure longevity, where it is made and maybe also the size you are. So with brands, you can trust what you are getting into.

So does that mean all that’s on the streets is bad? Hell NO. There are certain things that brands cannot offer. Like cheap and easy disposable accessories which grow out of fashion real fast. Authentic Lucknow Chikan kadhi kurta, Cashmere shawls, Benarasi sari. Are they anything that I claimed earlier non branded items to be earlier? No. and that’s because they are a brand in themselves. Yes they are not endorsed by sport stars and movie stars who come expensive. Yes they are not aired on television on prime hour’s everyday. And no they do not come with wash care labels. “Cost and worth are very different things”… from the movie ‘Confessions of a Shopoholic’.

Also I have come across those who blindly follow brands, just because they are ‘branded’. Please remember. Do not shop to show others, but to please yourself. You are not defined by clothes or labels or brands. Its YOU who define them!

Stores are put there to enjoy. So next time you go shopping, (branded or not doesn’t matters), observe the glitter around you, the sheer shine and smell of new merchandise and enjoy the moment.

AGRI INPUT MARKETING – Things I Can Never Learn In Class

Every Monday morning we rush to attend a class with a sleepy head called Agri Input Marketing. Having religiously attended all classes (except the day she showed the movie and remembered me with a remark stating “the youth today is not motivated”), I though I should share a few things that I learned about Agri Input Marketing which off course I did not learn in class (also I did not learn a lot IN class either). With my previous blogs we have started viewing the rural market and we have understood that the rural population is diversified. Let’s take up a particular district to understand how marketing goes on in rural pockets. The area we would we concentrating is Lower Himachal (Una, Mandi, Kangra, Hamirpur etc).

We all know that the government provides various subsidies for agricultural produce. And seeds are also subsidized products. Anyone would like to buy for cheap. Can you imagine what role the government can play in making a product subsidized and making it available for consumption? Let’s look at seeds in particular. To understand how the government reaches the rural corners, we need to understand the government model for distribution and control.

Every District has a District Development Administrator (DDA) / District Agriculture Officer (DAO). Every district comprises of approximately five Block Offices. Now every Block office has a Subject Matter Specialists (SMS), an Agriculture Development Officer (ADO) and some Agriculture Extension Officer (AEO). Each AEO is assigned a circle to work in (i.e. a designated area). The AEO collects the demand of his circle and reports to the ADO. The ADO confirms the same from every AEO and sends the final report to the SMS. The SMS forwards the demand to the DDA. Every block office is in charge of at least 50 panchayats and every panchayat has 5 villages. So this is how the government reaches the rural population.

Now, which is the most important Agricultural input? Seeds off course... And we know that in India, seeds are subsidised. So the sale price of a seed might be say Rs. 100 per kg. Hence subsidised seeds purchased from block offices will come down to approximately Rs. 80 – 90 per kg. This margin is huge for rural population as on an average minimum 10 kg (in case of corn) is required for 1 acre of land. Now if a seed company has to tab the rural farmers to use its product, they have to make sure that their product is available at block offices at the right time. However just pushing the seeds through the government is not enough. Research says that 44% of farmers make their purchase from co operative societies (e.g. IFFCO) and distributors where as a major chunk of 56% of the farmers make their purchase through government stores/block offices. Not only that, when asked to the farmers why they choose to buy products from the above source, 41% favoured for fair price, 24% for close proximity, 14% for availability and 21% for other factors like personal relations. Let’s see now what are the other various channels that are used by companies to market their products but along we that we also need to understand the consumer behaviour of the farmers. Farmers either possess no knowledge, or they are extremely well informed. It has been found that most of the farmers were educated, at least till primary level. The well informed farmers are mostly the zamindars or ‘progressive farmers’. Progressive farmers are large land owners. These are looked upon by the smaller farmers who simple follow what these progressive farmers practice. The well informed farmers are aware about every nitty gritty detail of the farms like the technological advancements, the varieties available, the fertilizers to be used, the pros and cons of using hybrid, the PH level of soil etc. These farmers are the ones who are often willing to adapt to new technology. In rural India the most effective way to market a product is through word of mouth. Hence if a progressive farmer recommends a particular brand, immediately the word spreads like wild fire. Also what works is WYSIWYG (What You See Is What You Get). One cannot go on advertising about the benefits of using ones product unless one can prove the same. The rural population does not believe in experimenting as it might lead them to incur huge loss. Hence if you need to market your product and its benefits, show them so. Also the results must be visible quickly at a short period of time. To prove that, seed companies actually own farms or adopt farms to show the yield as promised. If by any chance the crop fails, it’s the end of story then and there. Word of mouth is the most reliable source of information available to the farmers. It’s wrong to say that only progressive farmers are well informed. Even small land owners are packed with knowledge. They never fail to miss an agricultural fair, a product launch campaign or agricultural meets. The farmers are inquisitive and are sensitive to both price and quality of the products.

The second most important distribution channel is the distributor. In order to succeed, the distributor must be a local as a mutual trust is established between the distributor and the consumer. A snowball effect is developed in rural areas. The distributor mostly draws customers on basis of his personal contacts. Once a good relation is established between the distributor and the customer (i.e. based on good results from the products), the customer further recommends the product to other farmers who again recommend the same when desired results are achieved. Hence a hub and spoke model is developed which deepens with every contact. Hence it is very crucial for a company to choose the right distributor for itself. Personal contact is the key to tab the rural market.

Some other interesting facts found out were that agriculture is no more the primary occupation of the rural population. Most have shifted to join the armed forces or are entrepreneurs (e.g. shop owners). Women infact are the ones tending the farms. As a result of which various Farmer Women Groups (FWG) are flourishing in these rural areas. These groups are similar to Self Help Groups (SHG) in functionality. Input companies can also see an opportunity to market its products through these FWG’s.

The present agriculture input marketing environment has thrust input companies into intense battles . This has necessitated the need for adoption of efficient marketing strategies to market new products, ideas and services to farm customers.

This Blog would not have shaped the way it has without the valuable inputs from Ms. Rishika Mittal, Summer Internee at Monsanto India Ltd, 2010.

A way towards rural markets

We have all realized by now that India is on the cusp on momentous change. The economy is vibrant, incomes are rising, and the habits, preferences and attitudes are changing rapidly. And it’s not less evident in rural India as well.

There are three major challenges that a rural marketer must overcome.

1. Reach

2. Awareness

3. Influence

Markets in rural India are small and scattered, making them both inaccessible and unviable. However ensuring that your product is available is just the start. Large parts of Rural India remain media dark. Low literacy rate and poor infrastructure add further as limiting factor. But it is important for organizations to understand that it should not let it hamper them even as others overcome it with innovation. Economic and technological progress is making it easier to communicate with a rural audience. The challenge however lies in engaging with the rural population, understand them and develop a communication that connects with them. However the biggest challenge in rural marketing is that of influence. Across product categories, rural penetration and awareness remain low. And the need is not just to reach or communicate but to actually influence consumption and buying behavior. However apart from the above three challenges, some other minor hurdles on the road are:

1. Languages and Dialect: The number of languages and dialects vary from state to state, region to region and probably from district to district.

2. Low per capita income: Even though about 33-35% of GDP is generated in rural areas it is shared by 74% of the population.

3. Prevalence of spurious brands and seasonal demands: For any branded product there are a multitude of ‘local variants’ which are cheaper, and therefore more desirable to the rural segment.

4. Traditional lifestyle: The rural consumer values old customs and traditions. They often do not prefer change.

There have been many innovative projects which have attempted to address these challenges. A few are listed as below:

Marketing to Rural India: Cavinkare (My Favorite)

Multinational companies sold products in big bottles and not in sachets and they sold only from fancy stores. They did not look at the small kirana stores, nor did they look at the rural market. When Chik entered the market, Velvette Shampoo was being marketed aggressively by Godrej. They went to the rural areas of South India where people hardly used shampoo. They showed them how to use it. They did live demonstration on a young boy and asked those assembled to feel and smell his hair.

Next they planned Chik Shampoo-sponsored shows of Rajniknath's films. They also distributed free sachets among the audience after these shows. This worked wonders in rural Tamil Nadu and Andhra Pradesh. After every show, the shampoo sales went up three to four times.

But a scheme became extremely successful -- they exchanged five sachets of any shampoo for a Chik Shampoo sachet, free. Later, they altered the scheme -- started giving one free Chik Shampoo sachet in lieu of five Chik Shampoo sachets only. Soon, consumers started asking for Chik sachets only. The sales went up from Rs 35,000 to Rs 12 lakh (Rs 1.2 million) a month.

Brand Activation by Sangeeta Bhabhi: P&G India

After a two year long push into the hinterland, P&G has come up with a new addition to its marketing strategy in the form of a character called Sangeeta Bhabhi, a dedicated housewife. The personality was conceived to push P&G’s leading brands, Tide and Head & Shoulders as a dual proposition called ‘kamyab jodi’ in rural areas of the country. After much deliberation over the eight to nine categories that P&G operates in, marketers picked the detergent brand Tide and shampoo Head & Shoulders as the focus in this particular rural initiative.

More than 100 villages in central UP were covered as part of the pilot stage of the ‘kamyab jodi’ initiative. The exercise involved teams narrating Sangeeta Bhabhi’s story, an educated married woman, who highlights the benefits of using the two brands. The particular style was used to communicate the value add proposition of the brands. Tide being a value added brand priced higher than the regular brands, the challenge was to communicate it to the target audience on the benefits of using a brand superior in quality.

Through this initiative, P&G is attempting to generate user trials for both SKU pack size as well as satchets. it is understood that after studying the initial response to the pilot programme, the company is planning to roll the initiative further to cover nearly 5,000 villages across the state of UP. Also, to ride on the demand generated from this exercise, P&G is simultaneously beefing up its distribution network to ensure reach and availability of the products. Surely, P&G’s hoping Sangeeta Bhabhi will tide over the competition. And also keep her head firmly over her shoulders.

Reaching rural villages through Project Shakti: Hindustan Lever

In 2001 HLL initiated Project Shakti in Nalgonda district, Andhra Pradesh, to provide microcredit and to train women to become direct-to-home distributors through self-help groups in rural areas. As an extension of this project, HLL set up Internet kiosks— commonly referred to as “iShakti”—in these rural areas to disseminate information in local languages, including material on health education. Today Project Shakti has spread to 15 Indian states, reaching 85,000 villages in 385 districts through 20,000 female entrepreneurs, or “Shakti ammas.” The distribution network formed by these female entrepreneurs could in the future distribute condoms in rural areas. HLL estimates that by 2010 the network will grow to around 100,000 trained women covering 50,000 villages.

A true innovation through e-Choupal: ITC Limited

e-Choupal is an initiative of ITC Limited, to link directly with rural farmers via the Internet for procurement of agricultural and aquaculture products like soybeans, wheat, coffee, and prawns. e-Choupal was conceived to tackle the challenges posed by the unique features of Indian agriculture, characterized by fragmented farms, weak infrastructure and the involvement of numerous intermediaries. The programme involves the installation of computers with Internet access in rural areas of India to offer farmers up-to-date marketing and agricultural information. At the same time ITC Limited has obtained benefits from the programme:

1. elimination of non value added activities

2. differentiated product through identity preserved supply chains

3. value added products traceable to farm practices

4. e-market place for spot transactions and support services to futures exchange

There are presently 6,500 e-Choupals in operation. ITC Limited plans to scale up to 20,000 e-Choupals by 2012 covering 100,000 villages in 15 states, servicing 15 million farmers

Other Rural Marketing initiatives: Dabur, Amul

Some Interesting Siteshttp://cb.hbsp.harvard.edu/cb/product/604016-PDF-ENG

ibef.org/economy/ruralmarket.aspx

etstrategicmarketing.com/smJune-July2/art6_1.htm

Reference: Web Sites: wikipedia, icmrindia.org, rmai.com, echoupal.com, etc

Books: The Rural Marketing Book by Pradeep Kashyap and Siddhartha Raut

Rural Marketing in India by Ruchika Ramakrishnan

Basic Retail Concepts Made Easy

Retailing is a crucial function that marketers perform in order to deliver the promised offer to their customers. It is an integral part of the value chain in an organization and provides ‘last mile connectivity’ between an organization and its customers. In most cases, it is performed by forms called retailers. These entities make the suitable product available to the customers through packaging, stocking, and other distribution outputs described as ‘decentralization’, ‘waiting time’, ‘lot size’ and ‘variety’. Retailing is an integral function of marketing that creates utilities in terms of economic, social, emotional, conditional, and epistemic values sought by customers.

With more and more customers making purchase decisions at the store, retailing has gone beyond being a part of distribution function and more into buying process. Retailing has been linked to the economic development of a society. It represents a consumption oriented economy.

Shopping has been regarded as a chore as well as an enjoyable experience. Some like me have used terms like ‘shopping therapy’ to signify a relief from monotony. A customer seeks different values from shopping, based on the motive of purchase. Retailing provides several utilities to customers which have been described as “distribution service outputs” by Louis P. Bucklin as-

1. Better product availability – more depth and width of products

2. Reduced waiting time

3. Desired lot size

4. Variety – enhanced merchandise mix available to customers

So far the discussion indicates that manufactures are not the only agencies that add value to the product through production and communication. Retailers convert the merchandise received from manufacturers into desired forms and also get involved in the communication function by providing information about availability and delivery of merchandise. In addition, retailers also communicate through store ambience and point of purchase communication.

Customer choice is a function of multiple values, including values that extend beyond economic utilities.

1. Functional

2. Emotional – psychological needs

3. Social – need for belongingness

4. Epistemic – need for novelty and ego satisfaction

5. Conditional – need arising out of a particular condition

Several theories have been posited to explain how retailing develops.

• Phenonmenon of Dual Adoption – When a product is launched, customers adopt it symbolically, the actual adoption happens only when the retailers put forth the product in the right perspective.

• Wheel of retailing - Retail marketing process whereby original low-price discounters upgrade their services and gradually increase prices. As they evolve into full-line department stores, a competitive opportunity develops for new low-price discounters to develop, and the process continues with the next generation.

• Retail Accordion Theory - A theory of retail institutional change that suggests that retail institutions go from outlets with wide assortments to specialized narrow line store merchants and then back again to the more general wide assortment institution. It is also referred to as the general-specific-general theory.

• Melting Pot Theory – Also called “Dialectic Process”. A new value proposition by one retailer gives rise to two new retailers with the same proposition. Retail firms adapt mutually to the emerging competition and tend to adopt the plans and strategies of the opposition.

• Polarization Theory – this theory suggests that, in a longer term, the industry consists of mostly large and small size retailers. The medium size becomes unviable. This is called polarization. Large stores offer one stop shopping. The smaller ones tend to offer limited range of products, but add value to their offers with other services. It is found that firms tend to be more profitable when they are either small in size or big. The medium ones fall into the “Bermuda Triangle”

• Bermuda Triangle Effect – This refers to the phenomenon where the performance of mid sized firms suffers if big mid sized firms continue to act small or small mid size firms set up costly big firm practices. However, organizations do not have a transition at the optimal point. Some move from informal to formal too early, others wait too long before making the transition. The result is higher costs and lower profitability. This leads to the Bermuda Triangle of management – many firms enter it, not all get out of it at the other end.

A retailer uses three main resources – inventory, real estate and people – to deliver value to its customers and to remain competitive. A retailer should access its performance at the corporate level, store level, and also at the department or category level. It is also advised that it carries out a comparison of its performance with its competitors to find out whether it has been efficient in its operations and whether the strategies have been effective in providing the desired result.

Some interesting sites:www.indiaretailforum.in

www.indiaretailing.com

www.retailindustry.com

Reference: Web sites: Wikipedia, answers.com, retailingconcepts.com etcBooks: Managing Retail – Oxford University Press