Download role of promotion mix in mounting the sales of various fmcg

INTERNATIONAL JOURNAL OF MARKETING,
FINANCIAL SERVICES & MANAGEMENT RESEARCH
Online Available at indianresearchjournals.com
Vol.1 No. 3, March 2012, ISSN 2277 3622
ROLE OF PROMOTION MIX IN MOUNTING THE SALES
OF VARIOUS FMCG COMPANIES IN RURAL MARKETS
DR. SUKHMANI, DR. SHAVETA GUPTA, S. NEHA KALRA
Assistant Professor(s), Apeejay Institute of Management, Jalandhar
ABSTRACT
The study was conducted in order to comprehend the role of the elements of promotion
mix in influencing the rural consumers, consumers were asked to rank the most significant element
of promotion mix. Public Relations were adjudged as the most important element, which increased
the sales of an organization. Also, gender was found to have no difference in attributing importance
to the elements of promotion mix. The most important factor in deciding the optimal mix was found
to be very rational choice on part of rural respondents, which showed high levels of awareness levels.
INTRODUCTION
work in developing FMCG products for rural market
Promotion Mix is a term used to describe the set of
and initiating collaborative and innovative strategies.
tools that a business can use to communicate effectively
The major rural sales promotion tools for FMCG
the benefits of its products or services to its customers.
products are: Free samples, cash rebates or discounts,
The Promotion Mix includes the tools like Advertising,
gifts, contests, prizes, games, product warranties, free
Public Relations, Sales Promotion, Direct Marketing
trials, sale counter displays, and trade promotion to
and Personal Selling (Chunnawala and Sethia, 1994).
stimulate wholesalers, retailers, and field workers with
Fast Moving Consumer Goods have always been
gifts and awards. The trend of FMCGs in rural India is
attracting the Indian consumers. With the urban
growing at a fast pace. For example in 1998-99, 140
demands of the goods getting saturated, the
households per thousand were consuming health
`
manufacturing companies are taking this development
beverages. In 2001-02, the number touched 175
as an opportunity to expand and diversify their
households per thousand and in 2006-07, 247
businesses in rural markets too. Large FMCG
households per thousand have consumed health
companies including multinational companies are
beverages, according to NCAER. Another category on
planning their own strategies to enter this large and
the growth path within the foods sector is that of
developing rural market. The marketing strategies have
packaged biscuits. From an observed penetration level
to be tailor made to suit rural conditions. Leading
of 349 per thousand households in 1998-99, the
companies in India have taken up a developmental
category's penetration has gone up to 480 per thousand
approach to nourish this new market. The companies
households in 2006-07. Among personal care
like Hindustan Levers Ltd, Godrej, Procter and
products, while toilet soaps have reached saturation,
Gamble, Nirma, Reckett and Coleman, Karnataka
there is immense potential for penetration of shampoos
Soaps and Detergents Ltd. HLL have done pioneer
in Indian households, according to NCAER. Shampoo
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DR. SUKHMANI, DR. SHAVETA GUPTA, S. NEHA KALRA
penetration has grown from 314 per thousand
conducted a study on "Rural marketing of consumer
households in 1998-99, to 502 per thousand
softs" and found that brand awareness for consumer
households in 2006-07. The penetration of washing
softs prevails among rural consumers. Since their
powder has also gone up from 660 per thousand
purchasing power is low, they are able to buy only the
households in 1998-99, to 770 per thousand
products from the available outlets, and mostly a few
households in 2006-07. (Ranade, 2005)
local brands dominate in selected consumer softs. The
Meanwhile, the rural consumer continues to have scant
use of shampoos that are sold in sachets are gaining
regard for brand loyalty, according to Mr R.K. Shukla,
momentum. The familiarity of brand names in selected
Senior Statistician, NCAER. "It is smaller pack sizes,
consumer softs among these rural masses makes one
functional products, value for money, reluctance to shift
understand the desirability of these people to use these
from one brand to another and zero brand
products. The study also points out that the
consciousness that continue to call the shots here" (The
shopkeepers have only limited options in catering to
Hindu, 2002).
the needs of the consumers. They cannot be expected to
REVIEW OF LITERATURE
variety of consumer softs as it would not fetch them the
The rural India is breaking away from the shackles of
desirable amounts of profit for the risk they undertake.
spend large amounts of money in procuring and storing
the past. Rural India is now widening its aspiration
The study revealed that unlike urban consumers the
horizon and is looking for goods and services which
shopping habits of rural consumers are irregular and
will provide them comfort and luxury (Nabi and Raut,
scanty.
1995). Spread of communication and the widening
As the competition in urban markets is hotting up,
reach of mass media especially radio, television and
marketers are turning up to rural markets to explore the
cinema are exposing rural populace to a vast array of
untapped potential. A deep analysis by Narsimham
products and services. The demand for the host of
(1995) indicates that the contribution of rural market is
consumer products like soaps, detergents, shoes,
more significant than urban markets for many durables
fabrics, toiletries, mopeds, refrigerators, packages and
as well as nondurable products, and also the share of
processed foods etc. are emerging out of rural areas
rural markets is increasing overtime. Due to peculiar
which indicates the incremental purchasing power of
features of rural markets, the product and marketing
the rural people and the aspiration for improving their
strategies designed for urban markets are not suitable
living standard. This change offers a clear opportunity
for successful penetration into rural markets. It is
for sellers to market their products and services to first
necessary for marketers to adopt rural oriented
generation consumers of India. According to the
product, promotion and distribution strategies, and
authors, as the international sellers are entering the
focus on long-term gains. Simon (1997) concluded
Indian market and homegrown marketers are resorting
from his study that the foundation of the persistence
to strategic tie-ups, there is scramble for new markets.
concept is that single phenomenon- a "shock"- can lead
On account of its sheer size, rural market is most likely
to a permanent change. In marketing, short term
to emerge as the hotbed for the marketers of products
advertising cannot itself result in permanent sales
and services in the coming years. Rajendran (1995),
increases, but a strong advertising "shock" can lead to
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ROLE OF PROMOTION MIX IN MOUNTING THE SALES OF VARIOUS FMCG COMPANIES IN RURAL MARKETS
long lasting change in sales.
collected through a non-disguised structured
The rural market has a potential untapped by many
questionnaire consisting of questions of multiple
marketers was reported by Sushma (2005). The market
choices. 450 rural respondents were selected from
share of rural market is comparatively higher than
various villages of districts of Punjab viz. Amritsar,
urban markets. The growing demand for various
Jalandhar, and Ludhiana with different demographic
products other than agro-products paves way for the
characteristics. 432 questionnaires could be
success of the marketer trying to unfold the latent
administered due to non- cooperation of some of the
segment. The marketer needs to have a profound
respondents. In the data cleaning process 32
understanding of rural mindset to thrive in this
questionnaires were found inappropriate for the reason
business.
that they had incomplete, inconsistent and illegible
According to Pankaj (2005), the marketers in India
responses and were excluded from the final analysis,
have not been able to tap the existing opportunities in
thereby the sample size was finally reduced to 400.
rural market which is well reflected in the penetration
Friedman Anova and Independent "t" test was used for
figures across the various product categories. One of
analysis purposes.
the key reasons can be attributed to their failure to
address the issue of affordability in Indian Hinterland.
DISCUSSIONS AND CONCLUSIONS
Affordability, in turn, is related to larger issue of
Elements of Promotion Mix Which Help in
development on socio-economic front which will result
Increasing the Sales
in wealth generation. This in turn kindles the latent
To study the role of elements of promotion mix which
need for various products and services in the Rural
help the companies in increasing their sales, the
Market. Still this aspect has been largely ignored by
respondents were asked to rate the elements in
most of the marketers, barring a select few, who have
accordance to their significance. Rank 1 depicts most
even taken the support of Information and
significant and rank 5 depicts least significant element
Communication Technology (ICT) to cater to this
of promotion mix. Data collected (Table 1) signifies
phenomenon with significant results.
that Public relations are considered as the most
significant element of promotion mix which increases
OBJECTIVES OF THE STUDY
the sales of a company. Public relations help in creating
•
To identify the various elements of Promotion Mix
and increasing the goodwill for the organization and
which influence the sales
thus retaining the customers over a period of time. The
•
To know the factors responsible for deciding the
next significant element of promotion mix is Sales
optimum Promotion mix
Promotion, which provides extra benefits to the
customers through various promotional schemes etc.
DATA RESEARCH AND METHODOLOGY
and is a very common and attractive feature of rural
The universe of the study consists of consumers
markets. Direct marketing holds its significances in
residing in the rural areas of Amritsar, Jalandhar and
making the products available to the consumers at their
Ludhiana districts of Punjab State of India. The present
doorstep whereas advertising creates awareness about
study is based on primary data and the same has been
the product and enhances the exposure levels of
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DR. SUKHMANI, DR. SHAVETA GUPTA, S. NEHA KALRA
customers. Personal selling though gives a chance to the
personnel, yet it is regarded as the least significant
consumers to interact directly with the company
element of the promotion mix by the rural consumers.
TABLE 1 Elements of Promotion Mix
Note: Figures in parentheses indicate percentages
H0: There is no significant difference between gender
The significance level was >.05, indicating the
regarding the importance they attach to the various
acceptance of null hypothesis. Thus it has been inferred
elements of Promotion mix.
from tables 2 and 3 that the gender does not affect the
To test the hypothesis independent "t" test was applied.
importance of elements in promotion mix.
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ROLE OF PROMOTION MIX IN MOUNTING THE SALES OF VARIOUS FMCG COMPANIES IN RURAL MARKETS
Rationale behind the Significant Element of
for rating the Public Relations as the most significant
Promotion Mix
element is its helpfulness in making the final purchase
Table 1 shows the preference of the respondents about
decision. Other reasons for the choice in Table 4
the various elements of the promotion mix. Public
includes building awareness, effectiveness in reaching
Relations have been rated as the most important
large audience, builds customer trust, gives detailed
element followed by Sales Promotion, Direct
information about the product, stimulates the increase
marketing, Advertising and Personal Selling. Table 4
in sales in rural areas and highly interactive nature of the
depicts the reasons for the preference of the elements of
element of the promotion mix.
the promotion mix. The table suggests that the reason
TABLE 4 FRIEDMAN ANOVA
Rationale behind the Significant Element of Promotion Mix
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DR. SUKHMANI, DR. SHAVETA GUPTA, S. NEHA KALRA
Notes: The mean is the average on a scale of 1 is Most Preferred
ethical issues involved with the product, distribution
and 8 is Least Preferred; SD=Standard Deviation; scores are
channel, PCL stage, Government Regulations, market
significantly different on Friedman two-way ANOVA test
size and location and strategies for competitors.
(p<0.001); N=400
The factors chosen by the rural consumers which they
Factors Responsible for Deciding the Optimal
promotion mix confirm the level of awareness among
Promotion Mix
the rural respondents about the elements of promotion
consider accountable for deciding the optimal
In order to find the factors which help in deciding the
mix. Each of the elements of promotion mix has its own
optimal promotion mix, the respondents were asked to
impact on the rural masses. They understand the
rank the factors from 1-9, where 1 depicts most
significance of various elements of promotion mix in
important and rank 9 depicts least important factor.
increasing the sales of the company, wherein public
Perusal of Table 5 portrays that the most important
relations have been considered as the most important
factors responsible for the deciding the optimal
element. The rating given to the reasons responsible for
promotion mix are available budget followed by
their choice is quite rational.
complexity of product, promotional message, the
TABLE 5
Decision Factors for Optimal Promotion Mix
Notes: The mean is the average on a scale of 1 is Most
accordance to their significance. Data analysis signified
Preferred and 9 is Least Preferred; SD=Standard
that Public relations were considered as the most
Deviation; scores are significantly different on
important element of promotion mix which increases
Friedman two-way ANOVA test (p<0.001); N=400
the sales of a company, followed by Sales Promotion,
Direct Marketing, Advertising and Personal Selling.
CONCLUSIONS
Observations clearly depict the role of various elements
To study the role of elements of promotion mix which
of promotion mix in raising the sales of the companies.
help the companies in increasing their sales, the
Public Relations have been rated as the most important
respondents were asked to rate the elements in
element followed by Sales Promotion, Direct
36
ROLE OF PROMOTION MIX IN MOUNTING THE SALES OF VARIOUS FMCG COMPANIES IN RURAL MARKETS
marketing, Advertising and Personal Selling as the
REFERENCES
important elements of promotion mix. The reasons
Chunnawala, S.A. and Sethia, K.C. (1994)
given by the consumers for their preference of a
"Foundation of Advertising Theory and
Practice",
particular element of the promotion mix is its
Himalaya Publishing House, Mumbai, pp. 17 Nabi,
helpfulness in making the final purchase decision.
M.K., and Raut, K.C. (1995), "Problems and
Other reasons for the choice include building
Imperatives of Rural Marketing in India", Indian
awareness, effectiveness in reaching large audience,
Journal of Marketing, February, 16-24.
builds customer trust, detailed information about the
Rajendran, D. (1995), "Rural Marketing of Consumer
product, stimulation in sales in rural areas and highly
Softs", Indian Journal of Marketing, April, 10-13
interactive nature of the element of the promotion mix.
Simon, H. (1997), "Hysteresis in Marketing - a New
The choice of factors accountable for deciding the
Phenomenon", Sloan Management Review (spring),
optimal promotion mix, revealed the level of awareness
pp. 39-49
among the rural respondents about the elements of
Sushma (2005), "Indian Rural Market-Knowing the
promotion mix other than advertising. Each of the
Potential", Marketing Mastermind, The ICFAI
elements of promotion mix had its own impact on the
University Press, July, pp. 26-29
rural masses. They understood the significance of
Narasimham, N.V. (1995), "Rural Markets-Features
various elements of promotion mix in increasing the
and Marketing Strategies", Indian Journal of
sales of the company, wherein public relations had been
Marketing, April, 5-11.
considered as the most important element. The rating
Pankaj P. (2005), "Developmental Marketing as a
given to the reasons responsible for their choices are
Strategy for Rural Market: An Exploratory Analysis",
quite rational.
LBS Journal of Management & Research, 3 (1&2): 13-
In order to comprehend the role of the elements of
16.
promotion mix in influencing the rural consumers,
consumers were asked to rank the most significant
element of promotion mix. Public Relations were
adjudged as the most important element, which
increased the sales of an organization. The attributed
reason was that public relations helped the consumers
in making the final purchase decision as it adds to the
value of a product. It also builds up confidence in the
purchase. The most important factor in deciding the
optimal mix was found to be ethical issues involved
with the product and the least important was found to
be strategies of the competitors. While making the
choices about the promotion mix, the rural consumer
has proved itself to be a rational consumer.
37