"Feature-stripping a product like television does not yield benefits in terms of cost." Nabankur Gupta, Group President, Raymond

There has been a raging debate for several years with regard to the potential of the rural market, particularly for high-ticket items like colour televisions (CTVs). Historically, and even in the recent past, reach and coverage attempted by the companies in the consumer durables segment have been major financial failures in the absence of the necessary critical mass.

Consequently, the strategic intent of the company to choose the rural path may be a risky. Besides the economic feasibility of such distribution, the following elements need to be kept in mind:

• Feature-stripping a product like television does not yield benefits in terms of cost. Consequently, the lowering of the selling price becomes a commercial tactic to boost volumes, it severely impacts the bottomline. On the contrary, adding certain features does tend to give more perceived benefits to the customer at a very marginal incremental cost.

Here's what I would recommend to Big Sound:

• It should continue to pursue markets on the basis of Pareto analysis (80:20), which would eliminate most of the rural markets. It should analyse reach and coverage within the framework of urban markets.

• The company should build its rural brand strategy around vernacular communication and lay emphasis on product quality and reliability.

• It should consider developing a sound product range covering all feature- and price segments.

• The company should promote one major differentiating factor for the rural customer namely, after sales service. Rural customers are extremely sensitive to this aspect.

It must also be mentioned that in terms of psychographics many urban areas have clearly defined rural customers. Generally, very little is done to target these customers, both on the product as well as the communication front.

All in all, Big Sound must remember that brands are never built on price alone.

"It is important to ensure that the product adequately reflects the value proposition that is to be communicated." Anish Gupta, Senior Manager, Accenture

From a strategy formulation perspective, Big Sound must focus on gearing all aspects of its business model towards the rural market. For this, it should address the following key elements:

• Target consumer segment: In addition to demographics, Big Sound should use psychographic profiling to segment the rural consumers and define its target consumer segment sharply. The rural market is not a homogeneous group and it is imperative to fully understand the requirements and behaviour of the target segments.

After this, Big Sound would need to develop a clear value proposition for its target. Even for the stripped-down version, the company is planning to charge a premium and it must define a differentiated ''reason-to-buy''. This is especially important due to the extreme price sensitivity of the rural market. It is only after this that the issue of an appropriate way to communicate the value proposition-for example, through vans-should be addressed.

• Product: Although Big Sound has developed a stripped-down product, it is important to ensure that the product adequately reflects the value proposition that is to be communicated. In addition, the product cannot be far removed from the basic tenets of the Big Sound brand. For example, if quality is a hallmark of Big Sound then it has to be retained in the stripped down version. Overall it is important that the new product is perceived as different from the existing products. Consequently, Big Sound must ensure that only truly ''superfluous'' features have been done away with.

• Distribution model: Given the lower margins, not just the product, but the entire business system would need to be low cost. Having a low-cost distribution model focused on a ''variable-cost'' approach, rather than making large ''fixed-cost'' investments early on would be key.

• Internal organisation: To keep operating costs low, the focus should be on leveraging the current organisation for the rural initiative. The extent of leverage would critically depend on the distribution model adopted. The company should identify opportunities for synergy in all areas including logistics, front-line sales force, sales, general management, trade, marketing, and finance.

• Cannibalisation: While undertaking the break-even and other financial assessments for the rural initiative, cannibalisation of the existing product range should be incorporated. To minimise this, it is important to differentiate the rural offering not only from other local competitors, but also from the ''mainline'' Big Sound offerings in the urban markets.

In addition to formulating a well-thought-out strategy, Big Sound should also focus on good implementation. Here are a few things that it can do:

• Identify areas for initial pilot launch, clearly specifying what would be considered a ''success''.

• Prepare a plan for subsequent roll-out and define key milestones, including trigger events for scaling down/exiting.

• Assign the appropriate organisational resources with its performance-management weighted towards this initiative.

• Institute a formal review mechanism-it is very important.

These measures should assist Big Sound in making a considered attempt at tapping the rural market. The final decision, however, rests with marketers Ganguly and Sherwani, who would have to take the ''leap of faith'' that underpins all business decisions.

"Big Sound should tie-up with rural financial institutions to ensure the availability of cheap financing options." Rajeev Karwal, Senior VP (Consumer Electronics), Philips India

I am not sure what big sound wants to achieve. Is it the rural market that Big Sound wants to penetrate in large numbers? Is it finding it difficult to sustain high prices in the urban market? Or is it worried about its profitability?

Has Big Sound analysed what the rural consumer wants, or has it simply decided that the rural consumer wants a stripped-down product because he currently buys cheap products of brands like Rocket, Dura, and Electon? From the background provided, I would say that Big Sound is definitely taking a foolish step. It must go to the consumer and understand as to whether the consumer is buying cheap brands due to a lack of purchasing power or is it because the major brands do not invest enough in terms of supply chain, after-sales network, and brand building.

It must also examine the price elasticity available to Big Sound, and the reasons why the trade is selling other brands and not pushing its brand in the rural market. Is it the distribution strength-or reach-or is it the margins that Big Sound provides to the trade vis-à-vis these other brands? And can Big Sound fight this kind of local or regional competition all across India with a price-fighter. The answer, I believe, is a 'no'.

After a thorough analysis of these issues, the company must then design a product that may not necessarily be one of the cheapest products, yet provides proper value for money to the rural customer. The company's supply chain and after-sales network should be able to take care of the trade and consumer in a proper manner-thereby gaining wider acceptance, and increased marketshare. If the company simply bets on prices over features and quality, then over a period of time it will lose its brand positioning and customer goodwill.

The rural consumer is as discerning as the urban consumer, the only difference being that his choices are limited. Big Sound should also examine the possibility of tie-ups with certain nationalised banks and financial institutions like NABARD to ensure that cheap financing options are available to rural consumers.

I strongly believe that while price cuts are an easy way to grow markets, they are fraught with big risks. I don't advocate profiteering, but companies need to be profitable and have sustainable growth. In the end, that's what keeps all stakeholders (customers included) happy.