Everything you need to know about the rural marketing. About two-thirds of the people, especially in the developing countries live in rural areas and depend upon agriculture and related activities for their livelihood.
In urban areas, the output from the farm, i.e., food, fibre and other raw materials are processed and made available to the consumers.
Rural marketing is a compilation of the developed product, reasonable price, appropriate placing and right awareness. The marketing rule sates that, the right product, at the right price, at the right place, at the right time, through the right medium should reach the right customer.
This same rule stands good for rural marketing also.According to the National Commission on Agriculture,
“Rural marketing is a process which starts with a decision to produce a saleable farm commodity and it involves all the aspects of market structure or system, both functional and institutional, based on technical and economic considerations, and includes pre- and post-harvest operations, assembling, grading, storage, transportation and distribution.”
1. Introduction to Rural Marketing 2. Definitions of Rural Marketing 3. Meaning and Scope of Rural Marketing 4. Features 5. Rural Environment
6. Need for Exploring the Rural Markets 7. Factors Contributing to the Growth of Rural Market 8. Constraints 9. Marketing Communication in Rural Markets 10. New Dimensions of Indian Rural Marketing
11. Organisation and Working of Rural Market 12. Rural Consumers and their Behaviours 13. Importance 14. Opportunities of Rural Market in India.
What is Rural Marketing: Definitions, Meaning, Features, Rural Environment, New Dimensions, Importance and Other Details
- Introduction to Rural Marketing
- Definitions of Rural Marketing
- Meaning and Scope of Rural Marketing
- Features of Rural Marketing
- Rural Environment
- Need for Exploring the Rural Markets
- Factors Contributing to the Growth of Rural Market
- Constraints in Rural Marketing
- Marketing Communication in Rural Markets
- New Dimensions of Indian Rural Marketing
- Organisation and Working of Rural Market
- Rural Consumers and their Behaviours
- Importance of Rural Marketing
- Opportunities of Rural Market in India
What is Rural Marketing – Introduction
Indian market for the consumer products is made up of two distinct parts, one is urban and other is rural market. It has been a matter of great enquiry both for the marketing academics and practitioners whether there is a need for developing separate strategy for rural markets.
By and large, Indian market scenario shows that marketers have rarely come out with separate marketing strategy for rural markets overtly, however, marketers did develop separate marketing mix for rural markets covertly. Whenever it is rural marketing for their brands, marketer tended to price their products low, keeping the products quality at an average level, cutting costs on the extra frills added to the product.
The essence of the present thesis lies in opening up a debate as to the need for a separate marketing strategy in the context of unique features of the rural market compared to urban market. In what follows, we present a frame or an outline of marketing strategy for rural marketing.
The vastness of the rural market poses both a challenge and an opportunity to the marketers. The desire to improve the living standards is felt as keenly in the rural areas as in the urban areas. Rural incomes are rising and the poverty ratio is falling.
The marketing strategy to tap this vast market potential must take into account the special characteristics of the rural areas, attitudes and socio- psychological characteristics of the rural population.
In fact, improving the marketing channels and distribution outlets and communication facilities can themselves being about a transformation of the rural areas.
The design and development of a marketing strategy essentially has to flow from a thorough understanding of the consumer, in this context it is the rural consumer. Therefore at the first instance, the rural consumer has to be understood and next the differences between the rural and urban consumer.
The rural consumer in majority of the cases is illiterate, a low income consumer, more price sensitive, more of social interaction within his group, psychologically emotional, guided by opinion leaders, having lower aspirational levels, and having imitational characteristics. This fact matrix leads a greater challenge to deal with the rural consumer.
The marketer in rural area has to investigate:
(a) Market segmentation by market potentials which would help the assessment of the markets by consumer demand and purchasing ability.
(b) Consumer behaviour and the rural consumer’s priorities and preferences in consumer expenditure, sources of buying, quantum of each purchase, and time and conditions of purchase.
(c) How best to win over the rural consumer, and make effective use of media.
(d) Who are the catalytic agents of change and what role can they perform vis-a-vis ones products?
Against this background of the rural consumer, the marketing strategy has to be evolved. Further, there are constraints associated with rural market, the inaccessibility, scattered villages, unprofessional retailers.
What is Rural Marketing – Definitions by Experts: Thomsen, G.N. Murthy, T.P Gopalaswamy and a Few Others
There are various experts who have defined rural marketing.
Some of the definitions of experts have given below:
Thomsen defined Rural marketing as,” The study of Rural marketing comprises of all the operations, and the agencies conducting them, involved in the movement of farm produced food, raw materials and their derivatives, such as textiles, from the farms to the final consumers, and the effects of such operations on producers, middlemen and consumers.”
According to G.N. Murthy – “Rural marketing is the study of all the activity, agency and policy involved in the procurement of farm inputs by the farmers and the movement of rural products from farmers to consumers”.
According to T.P Gopalaswamy – “Rural Marketing is a two-way process which encompasses the discharge of business activities that direct the flow of goods from urban to rural area (manufactured goods) and vice versa (agriculture products) as also with in the rural areas”.
According to National Commission on Agriculture are – “Rural Marketing is a process which starts with a decision to produce a saleable farm commodity and it involves all the aspects of market structure or system, both functional & institutional, based on technical and economic considerations and includes pre and post-harvest operations, assembling, grading, storage, transportation and distribution”.
So we conclude that rural marketing in simple words is planning and implementation of marketing function for rural areas.
Some of the examples of companies involved in rural marketing are:
(a) The two major Cola brands Coca-Cola and Pepsi apart from their usual battle over market share have been trying hard to enter into rural markets. They have come up with many marketing strategies such as pricing, distribution strategies etc., like providing ice boxes, refrigerators, credit facilities etc.
Winning the rural market has been the toughest job for both the brands. Though they are largely popular in urban market, the brand image will not get them loyal customers in rural market. Both Coke and Pepsi have made huge efforts to penetrate deep into the rural markets by substantially increasing their retailer and distribution network and with innovative marketing strategies.
(b) Dabur has scaled up quickly and exceeded its original goal of serving 30,000 villages within 18 months. Sales growth is now 42% higher in its rural markets than its urban ones, even as overall gross margins have improved.
What is Rural Marketing – Meaning and Scope
Due to stiff competition in domestic as well as global markets, companies are now moving from urban areas to rural areas. Companies are establishing themselves in rural areas by developing and upgrading the knowledge of their products and creating a segment of necessity for their products among customers. The rural areas had negligibly been tapped, but increasing globalization, has forced marketers to connect with the rural markets.
Rural marketing is a compilation of the developed product, reasonable price, appropriate placing and right awareness. The marketing rule sates that, the right product, at the right price, at the right place, at the right time, through the right medium should reach the right customer. This same rule stands good for rural marketing also.
Over the last few decades, the Indian rural market has become prominent due to growth in the purchasing power of rural population. The rural areas consume a large quantity of products manufactured in urban areas; therefore, the rural market is getting more importance than urban market. Nowadays, the marketers are looking for expansion in the untapped rural market.
The majority of Indian population lives in rural areas; therefore, there is a vast scope for marketing in rural India.
An organization follows rural marketing for the following reasons:
a. Rural Population – Consists of more than 720 million people and forms a huge market for organizations.
b. Rural Economy – Contributes significantly in the country’s GDP. Rural India has a large number of households who are aware about the branded products and willing to buy them.
c. Relation between Rural and Urban Economy – Refers to economic connectivity between rural and urban areas.
What is Rural Marketing – Top 9 Features: Low Standard of Living, Traditional Outlook, Infrastructure Facilities, Market Growth, Purchasing Capacity and a Few Others
In order to focus the rural market and to develop effective strategies for tapping the market potential of the Rural Market, it is necessary for the companies to know the features of Rural Market, which are described as follows:
Feature # 1. Large, Diverse and Scattered Market:
Rural market in India is large and scattered into a number of regions. It consists of approximately 75 crores rural consumers who live in 6,38,365 villages spread over 32 lakh square kilometer area. It is scattered and widespread over 6.30 lakh villages, unlike the urban market confined to a handful of metros, cosmopolitan cities and towns. Covering, such a large and widely scattered geographical market, characterized by less population per settlement, raises the inventory and transportation cost and thus affects the viability of the route schedule operations of the distribution system in rural areas.
Rural prosperity is tied with agriculture prosperity. Major part of income of rural people comes from agriculture. In the event of crop failure, the income of rural masses is directly affected. However, the recent past has seen a gradual reduction in the sole dependence on agriculture, as other sectors have started playing significant role in the rural economy.
Rural population is employed in small-scale agricultural and related occupations. This unreliability factor in case of rural income makes the rural consumers extremely conscious in their purchase behaviour as they are not confident about their future earnings. Majority of the rural population lives below poverty line and have low literacy rate, low per capita income, social backwardness etc.
Added to this the traditions, religious pressures, cultural values and deep-rooted superstitions are the hindering factors for an upward social mobility. The prosperity to save for future exigencies makes rural people spend less to improve their standard of living even when they have good income.
Villages develop slowly and have a traditional outlook. Change is continuous process but most rural people accept changes gradually. They mostly resist to change. This is gradually changing due to literacy especially in the youth who have begun to change the outlook in the villages.
Inadequate infrastructure is the single most important factor that distinguishes urban and rural markets. The infrastructure facilities like cemented road, warehouses, communication system and financial facilities are inadequate in rural areas. Promotion and physical distribution thus becomes very difficult in the rural areas because of inadequate infrastructural facilities, which has increased the scope of rural marketing.
The rural market is growing steadily over the years. Demand for traditional products, such as bicycles, agricultural inputs, FMCG Products etc. has also grown over the years. The growth has not been only quantitative but also qualitative.
This was the result of new employment opportunities and new sources of income made available through rural development programmes which have resulted in green and white revolutions and a revolution in rising expectations of rural masses. Demand for products such as bicycles, agricultural inputs, farm products etc., has also grown over the years. This result into the increasing the potential of rural areas.
Due to dispersion of geographical areas and uneven land fertility, rural people have separate socioeconomic background, which ultimately affects the rural market. Villagers belong to different religions, culture, and social groups. Socio-cultural background influence consumer willingness to accept innovations and new products in different areas.
The variations in behavior due to consumer environment geographical, occupation, demographical and behavioral, influences the lifestyle and create altogether different sets of needs in different areas. This creates the need to segment the rural market to cater it effectively and profitability.
The literacy rate is low in rural areas as compared to urban areas and leads to the problem of communication for promotion purposes. With low literacy rates, print medium become inefficient and to an extent irrelevant in rural areas since its reach is poor.
The dependence is more on electronic media – cinema, radio and television but the rural literacy level has improved in the rural past. Rural people have started to go to urban areas for higher education. Even government has introduced various schemes for rural education. Awareness has increased and the farmers are well informed about the world around them. They are also educating themselves on the new technology around them and aspiring for a better lifestyle.
The purchasing power of the people in rural areas in dependent on several direct and indirect factors related to the rural economy. Marketing agricultural surplus and rural – urban terms of trade are the main sources of purchasing power for rural consumers. To a large extent, Indian agriculture is dependent on rainfall.
Therefore, the rural demand for consumer goods is indirectly influenced by the rainfall. This result into inadequate purchasing power of the rural consumers. But now a day’s purchasing power of the rural people is increasing because government spends huge amounts of money on irrigation, flood control, infrastructure development, antipoverty schemes, subsidies etc.
Therefore, marketers are interested in developing the market in rural area. Media has reached to rural area, so it becomes easy for marketer to sell product in rural area. Marketers have realized the potential of rural markets and thus are expanding their operations in Rural India.
About two-thirds of the people, especially in the developing countries live in rural areas and depend upon agriculture and related activities for their livelihood. In urban areas, the output from the farm, i.e., food, fibre and other raw materials are processed and made available to the consumers.
Rural environment is closely connected to nature as agricultural lands, forests, rivers, mountains, etc., whereas the environment is man-made in urban areas. In rural areas, social contacts are personal and relatively long-lasting. In urban areas, the relations are impersonal, casual and mostly short-lived.
Rural areas refer to countryside that are sparsely populated places and are distinct from thickly populated urban areas. Rural people live in villages, in farms and in isolated houses. Lifestyle in rural areas are different from urban areas due to limited availability services such as schools, banks, hospitals, libraries, sewerage, street lighting, public transport and telecommunication facilities.
The basic facilities such as housing, health, education, water supply, roads, communication and transport are poor in most of the rural areas. Half of the people in rural areas live in unhealthy and unclean environment. Poverty, unemployment and lack of financial resources for modernising agriculture and starting small industries are the other problems faced by rural people. The rural environment is different from urban environment.
What is Rural Marketing – Need for Exploring the Rural Markets: Growing Rural Market, Severe Competition in Major Urban Markets and a Few Others
Many companies having good manufacturing facilities and marketing expertise are focusing on rural markets as there are opportunities to market consumer goods and services in rural areas and also market agricultural products in urban markets.
1. Growing Rural Market:
Apart from agricultural inputs, there is a growing market for consumer goods in rural areas. According to NCAER, the rural consumers represent more than 50 per cent of India’s “consuming classes” and form the target group for consumer goods and services.
2. Severe Competition in Major Urban Markets:
Intensive competition in urban market has resulted in increase in costs but not high market share and profits. Many companies have taken a lead in establishing their products in rural markets.
Example – HUL, Colgate, Marico, Nirma, LG Electronics.
3. To Change the Attitude of the Farmers so that they will Treat Agriculture as a Business:
Traditionally, farmers have treated agriculture as a way of living and they produced just enough quantities to meet their family requirements. Many progressive farmers have increased the yields of crops by following modern agricultural practices. Even small farmers will be encouraged to increase production. When agriculture is well developed, the income of farmers will go up as a result of high marketable surplus. This provides good demand for industrial and consumer goods.
4. Rural Marketing Creates Employment Opportunities:
Diversification of agriculture, development of village level industries and marketing of modern goods and services, provide employment opportunities.
(a) As insurance companies go more and more rural in search of business, there will be opportunities in the rural sector. Those who understand rural India will be in demand.
(b) Due to high attrition rate and growing cost of human resources, many BPO companies are moving to hinterland in search of cheaper and loyal talent pools. Even software firms are setting up centres in smaller towns. In rural areas, salaries will be up to 50 per cent lower than cities and real estate about five times less expensive, resulting in cost competitiveness.
(c) The Government is planning to set up a chain of professional institutes in rural areas on public-private partnership basis to produce skilled workers for the automobile industry. The Ministry of Rural Development has also favoured the proposal and has offered to extend financial and other support. The institutes may be similar to the existing Industrial Training Institutes.
5. Rural Tourism:
Includes a range of activities, services and amenities provided by rural people to tourists. The broad areas covered are cultural and farm tourism, nature holidays and touring in rural areas. Village lifestyle and traditional hospitality are other attractions for tourists. Many urban people would opt for rural tourism since it provides an opportunity to go back to roots (villages) and be away from the pressure of urban life. Rural tourism generates employment opportunities and increase in income for villagers. In addition, rural holidays enables the young urban population to experience rural life.
(a) Kushti (Wrestling) Carnival in Kundal (Sangli District, Maharashtra) attracts close to two lakh people.
(b) Winners in Maharashtra have initiated wine tourism. The idea of having wine tourism is to have visitors stay in winery, see the vineyard and get a feel of wine-making process. This will also allow to relish the drink.
(c) Jallikattu (taming of the bull) conducted during harvest festival of Pongal has become a part of the tourism package of Tamil Nadu.
(d) Rajasthan has been presented as a destination with forts, palaces, sandstones, paintings, pottery, village crafts and community entertainment.
(e) Purushwadi, a village situated at 180 kms. from Mumbai has become a tourist centre due to the efforts of “Grass Routes” an organisation that is promoting village tourism. Started in 2006, over 60 households welcome guests to stay with them and experience village life and visiting hill temple, trekking, working in farm, bathing in the river, etc.
6. Over 70 Per Cent of Country’s Population Live in Rural Areas:
With a very large consumer base, rural markets have tremendous potential and companies foresee the rural markets as the markets of tomorrow.
The middle-class segment is urban India, is already well serviced. However, the rural markets are poorly serviced with regard to banking, insurance, basic health care, education and housing. In addition the penetration of four-wheelers, refrigerators, Colour TV, etc., is low in rural areas and there are huge opportunities for creative marketers.
7. Brand Loyalty:
Due to low income, majority of the rural consumers are price- conscious. However, they will continue to patronise a brand once they are satisfied with the product.
Example – Parle Biscuits continue to be popular over local brands.
8. Foreign Competition:
Foreign companies who are entering the Indian market, normally, focus on urban consumers. Therefore, there is less competition in rural markets.
9. Development of Regional TV Network:
Has enabled the marketers to pass on the messages about products and services to rural population.
(a) The younger village generation have a considerable exposure to various media over the earlier generation and they like to emulate their urban counterparts. Children play a major role in influencing purchase decision in rural areas.
(b) In the category of biscuits, Britannia launched the Tiger brand with children in mind. The biscuits targeted children with the tagline ‘Tiger Khao, kuch banke dikhao’.
10. Life Cycle Advantage:
Many products reach a maturity/decline stage in urban areas while in the rural areas they are still in the growth phase.
What is Rural Marketing – Factors Contributing to the Growth: Favourable Government Policies, Agricultural Development, Development of Indian Economy and a Few Others
Factor # 1. Favourable Government Policies:
Mahatma Gandhi has rightly said, “India lives in villages and to become a developed nation, villages have to be developed”. The Government has taken the initiative for economic development of rural areas and through Five Year Plans have invested heavily in development of agriculture, animal husbandry, irrigation, electricity, dairy and khadi and village industries and infrastructure facilities. In the Tenth Five Year Plan, high priority was given to the development of agriculture and rural areas, transportation, communication, electricity and social services like health, education, employment generation.
Dr. Manmohan Singh recently talked about his vision for rural India. “My vision for rural India is of modern agrarian, industrial and services economy co-existing side-by-side, where people can live in well-equipped villages and commute easily to work, be it on the farm or in the non-farm economy. There is much that modern science and technology can do to realise this vision. Rural incomes have to be increased. Rural infrastructure has to be improved. Rural health and education needs have to be met. Employment opportunities have to be created in rural areas.”
Rural development is a comprehensive programme and includes growth in agriculture, village industries, service sector, and development of housing, public health, literacy, transport, education and communication.
The government has initiated a holistic and integrated approach to rural development consisting of the following:
(i) Rural Infrastructure Development Programme under the umbrella of ‘Bharat Nirman’.
(ii) National Food for Work Programme which focuses on Employment Guarantee Programme. The work relates to water conservation, land development, flood control and rural connectivity.
(iii) Sampoorna Gramin Rozgar Yojana (1993) with the aim to provide additional wage employment in rural areas and also food security.
(iv) Pradhanmantri Gram Sadak Yojana – Launched in 2000, with the objective of constructing new roads and connecting about one lakh villages and upgrading existing roads.
(v) Rashtriya Bal Swasthya Karyakram (2013) provides – Free Treatment of Childhood Illnesses under National Rural Health Mission.
(vi) Swarnajayanthi Gram Swarojgar Yojana – Launched in 1999, the programme aims at developing self-employment among villagers through mix of need-based credit and subsidies. The earlier programmes such as Intensive Rural Development Programme, Million Wells Scheme, Development of women and children in rural areas have been merged under this scheme.
(vii) National Rural Employment Guarantee Scheme (2006)-
(a) Rural housing project or providing shelter to rural people.
(b) Stepping up credit flow to farmers and others.
(c) Insuring against risks in agriculture.
(d) Creating market for agricultural produce.
(e) Providing agricultural market information through IT and internet connectivity.
(f) National Food Security Mission to increase production of wheat, rice and pulses.
(g) Rastriya Krishi Vikas Yojana to increase public investment in agriculture.
(viii) National Agricultural Extension System towards extension training to farmers.
Example – Bihar has become the first state in the country to start e-Krishi Bhavans at block level. These fully computerised e-Krishi Bhavans would provide a package of services such as technical advice, soil testing and training to farmers. These centres have internet facilities to provide updated information on prices of agricultural commodities, arrivals in the market, weather conditions, etc.
(ix) National Horticulture Mission (NHM) is being implemented by the Ministry of Agriculture with effect from 2005-2006. The objectives of the mission are to increase production and productivity of horticulture crops (fruits, vegetables and flowers), reduce post-harvest losses, improve nutritional security, increase exports, increase farmers’ income and generate employment opportunities for the unemployed.
The floriculture exports have touched Rs.1,000 crore by 2010. The domestic market is estimated at about Rs.3,000 crore and is growing at 40 per cent per annum. The Government is setting up flower auction centres in Bengaluru, Kolkata, Noida and Mumbai and is improve cargo-handling facilities in Goa, Calicut and Coimbatore.
The latest report from Central Statistical Organisation shows that states like Bihar, Uttaranchal, Uttar Pradesh, Chhattisgarh and Jharkhand have shown higher growth between 2004-05 and 2008-09 compared to All India growth for the same period. Example-Bihar has recorded a growth of 12.10 per cent in the 11th Plan period ending 2012 compared to country’s average growth of 7.90 per cent.
Agriculture contributes to about 16 per cent of GDP of our country but over 65 per cent of the rural population is depending on agriculture for their livelihood. The agricultural sector plays a major role in the Indian economy as it provides food grains to urban population and also supplies raw materials like cotton, sugarcane and labour force to industrial sector.
Agricultural prosperity generates considerable demand for consumer goods in rural areas. States like Madhya Pradesh has shown agricultural growth of 9.04 per cent compared to all India growth rate of 3.20 per cent during the 11th Five Year Plan. Madhya Pradesh has 16 lakh hectares under irrigation compared to 7 lakh hectares in 2003.
The following initiatives have lead to growth and development of agriculture:
(a) Agricultural Education and Research – Establishment of agricultural colleges and research stations has ensured availability of technical manpower and technological developments in agriculture.
(b) The Green Revolution during late 60s and early 70s focused on increasing yields of crops through modern cultivation practices. From a food deficit nation in mid-60s, our country became self-sufficient in food production in 1971 and we are now exporting agricultural produce to other countries. There has been an increase in disposable income of rural people.
(c) Crop Diversification – Change in cropping pattern from food crops to cash crops like cotton, chilies, fruits, vegetables, flowers and production of seeds have enabled the cultivators to increase their income.
(d) Diversification of Agriculture – Considering the dependence on monsoon, many farmers have taken up production of poultry, fish culture and dairying to supplement income.
(e) White Revolution was initiated by the Government for achieving self-sufficiency in milk production. The policy envisaged producing milk through rural cooperatives and moving the processed milk products to urban areas. Milk production increased from 17 Mio tonnes in 1950 to 123 Mio tonnes in 2012 and increase in rural income. The Indian dairy industry is now the world’s largest, accounting for a 20 per cent share in world milk production.
At present, only about 20 per cent of the milk produced is processed. The demand for dairy products can be easily met by processing a major portion of milk produced. There are opportunities for export of high quality dairy products and rural India can be converted into a dollar India.
Example – Gujarat has taken a lead in dairy development, followed by states like Punjab, Andhra Pradesh, Maharashtra and Tamil Nadu.
In an underdeveloped country, a large part of national income is contributed by primary sector (Agriculture) and as the country develops, share of primary sector declines and that of secondary (Manufacturing) and tertiary sector (Services) increase.
There has been expansion of industrial and service sectors leading to more employment opportunities. Therefore, Indian economy has undergone a change from underdeveloped economy to a developing economy.
The average household income has increased from Rs.52,000 (2005) to Rs.76,000 (2010). Further it has been observed that monthly salary earners have high income compared to income from the farm. The rise in income coupled with increased awareness and the need for possess modern goods have influenced the rural marketing environment in the country.
The mobility towards higher income group has been higher in rural area compared to urban. The rural consumer is quickly moving from basic necessities to branded products.
(a) The rural youth forms a distinct segment of the population. They are modern, knowledgeable and receptive to changes than their elders. They value material comforts and are quick in adopting fashionable lifestyle. Marketers of two-wheelers, TVs, ready-made garments, soft drinks, cosmetic, etc., are targeting the youth market.
(b) Premium brands like Denim Talc and Pantene have entered the market though current volumes are low.
(c) The consumption of instant noodle, an urban product, is growing fast in rural areas.
Expansion of TV network and more channels have contributed to the growth of rural markets. Through several TV channels and internet, rural consumer is also exposed to the global village.
There are about 6 lakh inhabited villages and about 80 per cent of the villages have .been connected through Village Public Telephones. Ending 2011, there were 929 million mobile subscribers. Out of this 327 million subscribers are from rural (35 per cent) areas. Further there are about 60 lakh public telephones in villages.
The Government plans to reach rural teledensity of 40 per cent by 2014. Regarding internet users, at the end of 2013, the number of total internet subscribers in rural India stood at 68 million (All India 205 million). Total internet subscribers is expected to reach 243 million by 2014. (More than in the US the second largest internet base in the world after China).
(a) Many states have Implemented E-governance projects. Karnataka’s Bhoomi Project aims at computerisation of land records and the documents are made available through bhoomi kiosks.
(b) E. Seva, for the payment of utility bills, purchase of travel tickets, issue of birth/ death certificates, etc., initiated by Andhra Pradesh has been received well by consumers in urban and semi-urban areas.
(c) Very attractive schemes are offered by mobile operators for semi-urban and rural consumers.
(d) A key factor that has inhibited the development of rural India has been lack of access to critical information and services. Project I Shakti, an IT-based rural information service has been developed to provide information and services to meet the rural needs. I Shakti kiosk is operated by Shakti entrepreneur and provide information on health, hygiene, legal, veterinary, agriculture, education and employment.
Private agencies have contributed to growth and development of rural areas through village level programmes.
(a) Companies like HUL and Colgate have highlighted the importance of health and hygiene among villagers through school teachers, village meetings and film shows.
(b) Parry Corner, internet access centre initiated by Murugappa group in Tamil Nadu, provides information on farming techniques, bank loans, insurance, availability of agricultural inputs, Government schemes, etc., to rural population.
(c) Seeds, fertiliser and pesticide companies have created awareness among farmers about modern methods of cultivation by conducting extension activities such as farm-to-farm visits, group meetings, demonstrations and film shows.
(d) Launched in 2000 by ITC, e-Choupal has become the largest initiative among all the internet-based interventions in rural India. The farmers can sell their produce, buy a variety of products, receive all the information needed to improve their yields and get a better price for the produce through e-Choupal.
(e) Around 40 per cent of Bharti Airtel’s Wireless subscribed base resides in rural areas and for Vodafone, the rural use base is around 50 per cent (2012).
(f) Rural naukari.com provides employment opportunities by creating database of rural human resources.
(g) About 53 per cent of HDFC Bank’s branches are in rural and semiurban areas.
Number of households (in million) coming under very rich and well-off categories are high in rural areas.
The average income level has improved due to modern farming practices, industrialisation of rural area, growth of service sector, migration of rural people into cities and remittance of their money, remittance of money by family members settled abroad. Rural income (farm and non-farm) contributes to over 50 per cent of the total income of the country. The farm wages have been rising and increased from Rs.110 per day in 2006-2007 to Rs.154 per day in 2011-2012.
Rural markets are growing fast and in many states they contribute to substantial sale of FMCG products.
Rural contribution to FMCG sales is high in states that have significant rural population as shown below:
What is Rural Marketing – Marketing Communication
Marketing communication, and promotion too, poses problems in rural markets. There are many constraints emanating from the profile of the audience and the availability of media.
The literacy rate among the rural consumers being low, the printed word has limited use in the rural context. In addition to the low level of literacy, the tradition bound nature of the rural people, their cultural barriers and taboos and their overall economic backwardness add to the difficulty of the communication task. The situation is further compounded by the linguistic diversity.
Rural communication has to necessarily be in the local language and idiom. The constraints of media further compound the difficulty. It has been estimated that all organized media put together can reach only 30 per cent of the rural population of India. TV is an ideal medium for communicating with the rural masses. But its reach in the rural areas is limited even today.
As regards the print media, the various publications reach only 18 per cent of the rural population. Even in areas reached, the circulation is limited. And the low literacy level of the rural population acts as a further inhibitor in the use of the print media in rural communication. Cinema is relatively more accessible. It has been estimated that 33 per cent of the total cinema earnings in the country come from rural India.
Rural communication has also become quite expensive. For rural communication to be effective, repeat exposures is a must; and if the gap between exposures is long, the message loses its edge during this period. These factors make rural communication more expensive. Rural communication has to go through all the time consuming stages of creating awareness, altering attitudes and changing behaviour. In addition, it also has to work against deep rooted behaviour patterns.
In short, the crux of marketing communication in the rural context is one of finding a media mix that will deliver the required message in a cost- effective manner to a target an audience that is predominantly illiterate.
A company that seeks a long-term presence in the rural market has to squarely encounter these constraints and find a way of communicating effectively with the rural target audience.
Selecting the Media Mix:
Evidently, in the rural context the firm has to choose a combination of formal and non-formal media.
The possibilities are indicated below:
1. Formal / Organized Media-
iv. Other print media
v. Direct mail
i. Audio-visual vans or publicity vans
ii. Dance-dramas, puppet shows, rural specific art forms like Harikatha and Villupatu performed at village melas and temple festivals
iv. Study classes
v. Mike announcements, processions.
vi. Caparisoned elephants, decorated bullock carts carrying ad panels.
vii. Music records
viii. House-to-house campaigns by special promotion squads.
ix. Information centers on company’s products
1. The Formal Organized Media:
Among the formal/ organized media, TV, Radio, Cinema, POPs and Outdoors have a good scope in the rural context.
With the increase in coverage and the increase in TV ownership in rural areas, TV has the potential to become the primary medium for rural communication. Studies have revealed that as much as 77 per cent of the villages in India now receive TV transmission and 27 per cent of all rural people actually watch TV.
The radio is a well-established medium in rural areas. A big expansion in broadcasting facilities has taken place in the country over the years. The availability of radio sets has also expanded. While radio as a medium cannot match TV in potency and effectiveness, in the existing context, radio does have a role in rural communication.
The cinema is a useful medium in the rural context. Most Indian villages have one or more cinema houses. And 29 per cent of all rural people do see cinema as a matter of regular lifestyle and habit. Short feature films with disguised advertisement messages, direct advertisement films and documentaries that combine knowledge and advertisements, can be employed for rural communication.
The outdoor also lend itself well to rural communication. In fact, presently, many companies are using the outdoor medium imaginatively in their rural communication mix, through hoardings, wall paintings, illuminations and other displays in the rural areas.
The POPs, point of purchase (or point of sale) promotion tools are also quite useful in the rural markets. The POPs meant for the rural market should be specially designed to suit the rural requirements. More than written words, symbols, pictures and colours must be used in POPs meant for the rural markets. Colour is of particular significance in the rural context. As a general rule, the rural people love bright colours. The effective communicator utilizes such cues.
A variety of non-formal media have been developed over the years by rural marketing firms to suit the specific requirements of rural communication. Some of them are interpersonal media and the others mass media.
The more popular ones among them are analyzed below:
Audio-Visual Publicity Vans. The A V unit or the publicity van is very useful for rural, communication. The van is a comprehensive mobile promotion station at the exclusive command of the concerned firm. The firm can exhibit its films and other audio-visual presentations such as slide shows, sound and sight presentations, puppet shows, etc. from this instant promotion station.
A portable shamiana or platform can be carried in the van and used as the stage. Even mini public meetings can be organized using the shamiana. Portable exhibition kits can be carried in the van and exhibitions put up instantly. The van can also be used for sales campaigns in addition to promotion campaigns.
It can also be used for product demonstrations. In short, the van has all the advantages of carrying and delivering a tailor-made communication programme for the chosen target audience.
Naturally, the A V vans are quite popular with rural marketing firms. Practically all the firms in the agri inputs business have their own A V vans all over their respective marketing territories. Firms marketing consumer softs come second in the use of A V vans. Firms marketing consumer durables come third.
In the third category, the efforts of Philips India deserves a special mention. Philips India has very successfully used the A V vans for popularizing their radios in the rural markets.
While the AV vans are very effective tools in rural promotion, the cost is high as the target population is scattered. The cost of reaching an individual customer or prospect through the van works out high.
In the early stages of market development, in particular, the sales generated may not have any relationship to the cost involved in the extensive use of A V vans. But in view of its effectiveness, big companies with I’ resources make a conscious decision to use the vans as a long-term market development tool
Syndicated A V vans. In recent years, rural publicity vans have become a purchasable service. Firms which cannot afford to operate publicity vans of their own can utilize the syndicated AV van service offered by independent agencies.
Music records, puppet shows, Harikatha, etc. Music cassettes and records is another effective medium for rural communication. It is an appealing medium and a comparatively inexpensive medium. One complete language group can be reached on a low budget through specially developed records or cassettes. They can be played in cinema houses or in other places where rural people assemble.
People entertainment programmes like puppet shows, dance dramas, Villupattu and Harikathas specially developed for product promotion purpose are now being used in rural markets. These traditional art forms readily render themselves for communication in rural society.
Sales messages can be beautifully blended with folklore to capture the imagination of rural audiences. Village fairs, festivals and ‘melas’ are ideal venues for projecting these programmes. In certain cases, public meetings also are useful for promotion in the rural context.
Interpersonal media. Interpersonal media have a special merit in the rural context as they facilitate two way communication/interaction. They also bring market feedback to the firm. In many cases, rural people prefer face-to-face communication to mass communication.
Their confidence in the product and the firm and their goodwill towards the firm become stronger through interpersonal approach. Interpersonal media have their V unique ad vantages; they are segment-specific, market-specific and score high when it comes to involvement and participation of the audience. Rural communication can work best when it generates involvement of the target audience.
In the effort to reach out and go beyond the mass media, a firm can establish contact with the audience through fairs and festivals, folk performances and other special events. These points of contact also provide multiple media opportunities. For example, at any fair various media like audio, audio-visual and interpersonal communication could be used.
Group meetings, demonstrations, house-to-house campaigns. Group meetings of customers and prospects are an important component of interpersonal media. The salesmen or the promotion staff of the firm can effectively carry the product messages to the target audience at these meetings. On the spot demonstrations of the products can also be carried out at these meetings.
House-to-house campaigns constitute a handy tool in the rural market. In these campaigns, small squads of staff or persons specially hired for the x specific promotion make house-to-house visits in the rural areas. Several independent teams may be at work at the same time in different parts of the same village. The teams usually carry with them product promotion literature/handouts/product samples, etc.
These campaigns are different from door-to-door selling campaigns. The promotion squads do not engage in the selling job; they only propagate the product. As companies may normally find it difficult to spare their own staff for such elaborate and time consuming work, they may hire the required people on a daily wage basis, train them briefly and use them under the supervision the of company staff.
Media selection is not the only aspect that calls for great care in rural communication. The communication strategy as a whole requires unique the rural context. Experience shows that all companies, which have distinct strategies.
The following are a few examples of successful rural promotions which recognized the distinctiveness of the rural market.
In addition to the major problem areas explained above, other aspects like market segmentation and product management also require a unique handling in rural markets. Let us first discuss market segmentation.
It would be unwise for any firm to assume that the rural market is a homogeneous market and can be served with the same product-price- promotion combination. Business firms have to carry out a thorough and data based market segmentation, select the relevant segments as their target market and develop distinctive positioning strategies and marketing mix for the chosen segments. Fortunately, the rural market lends itself well to segmentation. In fact, it can be segmented in a number of ways using different bases.
In the first place, the rural market can be segmented geographically and different bases can be used for this segmentation. Climate can be the first of these bases; regions endowed with favorable climate are usually more prosperous compared with climatically handicapped regions. Level of irrigation can be another base. Irrigated areas and dry land areas pose different marketing environments.
And within irrigated areas, single crop; double crop and triple crop areas indicate varying levels of prosperity. Level of agricultural advancement in overall terms can also be a base. In this approach, parameters like adoption level of high yielding varieties, adoption level of fertilizer use and standard of agricultural practices will have to be reckoned with.
Yet another form of geographic segmentation can be tried, using ‘nearness to a feeder town’ as the base. Studies have revealed that rural consumers who are located in the immediate hinterland of a feeder town visit the feeder town at least once a month to sell their produce and/ or to buy their requirements.
Studies have also revealed that in exposure and buying habits, those who are located near a feeder town are different from those living in the remote rural areas. It may be therefore, useful to segment the rural market into consumers who are located closer to a feeder town and consumers who are located away from the feeder towns. Evidently, different
Approaches to marketing can be adopted to serve the two segments. Similarly, nearness to an industrial project center can also be used as a relevant consideration for segmentation. There is a cross flow of population between project centers and rural hinterlands. As such, the project centers act as conduits for the flow of products and ideas. This fact can be used for segmentation.
ii. Demographic Segmentation:
Demographically there are many possibilities of segmenting the rural market. Population spread or population concentration can be one base. About 36 per cent of the rural population lives in seven per cent of the villages in the country and the remaining 64 per cent live in 93 per cent of the villages. The rural market can be segmented on the basis of different size classes with respect to population.
Segmentation using age as the base also has a good scope in rural marketing. About 26 per cent of the rural population falls within the 5-15 years age group. This means that there is a population of more than 15 crore in this age group in the rural market. Similarly, there is a population of more than 20 crore in the age group of 16-30 years in the rural market.
It can serve as a base for segmentation. Surveys have revealed that the younger generation dominates the purchases in the rural market. This is partly due to their greater literacy and exposure and partly due to their changing values and styles. These facts are relevant to the marketing person.
Literacy can be another base for demographic segmentation of the rural market. Though rural India, in general, is characterized by low literacy, there are wide variations in literacy within rural India. For example, while the rural literacy rate in Kerala is 60 per cent that of Bihar is only 12 per cent.
Income too can be a base. In fact, income will be a particularly useful base for segmenting the rural market since income distribution in the market is quite uneven. It will be unwise to assume that all people in a particular rural area will be able to consume a particular product. It will be equally unwise to paint the whole area with the same brush and call it a market with ‘low purchasing power.
In product management, the most crucial decision in the rural context is whether the product that is sold in the urban market can be supplied to the rural market as it is or whether it must be adapted. The decision depends on the situation and the nature of the product.
The firm must find out what kind of product is required by the rural consumer and then make and supply the required product. In some cases, the same product may be equally acceptable in both rural and urban areas. In yet other cases, the basic product can be the same but the colour, size and package may have to be especially designed for the rural target group. For example, in the paint.
The Size and Importance of the Rural Market:
The rural market in India is made up of two broad compartments:
(a) The market for consumption goods, including both fast-moving consumer goods and durables; and
(b) The market for agricultural inputs and other investment goods.
Not surprisingly, a survey carried out recently, indicates that the entire demand potential for manufactured goods that exists in this country has been largely untapped. The truth, however, is that not even a fraction of the rural market has been serviced by the industries in the organized sector.
What is Rural Marketing – New Dimensions in India
New problems are emerging due to the invasion of corporations to take over the rural economy. One of them is opening up the rural sector to real estate development corporations, insurance companies, banking and transport, tele-communication, and power to give a surge to investment in rural industry.
The Tatas have already established plants for preservation of perishable vegetables. They have installed micro-processing plants for eradicating bacteria from fresh vegetables to ensure longer shelf life. These are examples of big business houses taking advantage of their position of vantage in acquisition of advanced technology.
At present, agriculture is contributing 40 per cent of GDP, and showing a growth of 11 per cent. The capital industry is experiencing a much higher growth-23 per cent in 1994-95 (April end). The share of the rural sector is 35 per cent in the total investment of the private sector.
Factories for production of fertilizers and pesticides, farm implements and machinery, and motorised trollies are being located in the rural regions. Development would have been faster than, at present, if power and telecommunication facilities had been developed.
A rough estimate of income in rural areas puts it at 1.6 lakh crore per annum, with 11 per cent average growth. Till recently, it was strongly believed that the rural consumption pattern is traditional. The assumption led to the conclusion that the rural economy is static and devoid of dynamism.
The awareness created by electric media began to change the traditional pattern of consumption. Watches, soaps, toothpastes, brushes, sewing machines fridges, TVs, transistors, record players. Hi-fi musical gadgets, allopathic medicines, fancy clothes, care, motorcycles, jeeps and gypsies are common durable consumer items in villages for the upper classes.
The members of the growing opulent class in the rural sector are educated. They are managing farms on commercial lines and have acquired a state for an urban life-style. The houses, interior decoration, designs, architecture furnishing and fixtures resemble those of urban villages.
The farmhouses have the guest rooms and servant quarters and poultries and dairies for the kitchen. The rich farmers are very rich. The economic activities have been vastly diversified from farming to real estate development. Access to big money has come in handy for lavish spending by rich farmers in casinos and elite clubs in cities.
On the contrary, landless workers, forming the major chunk of rural society, are finding it difficult to make both ends meet. Illiteracy, ignorance, deprivation and unemployment are major problems. They can hope rise only if the state comes forward with bold and ambitious plans to fight poverty.
Training and transfer of technology are the only means of rehabilitating landless workers, through providing jobs in industries in rural areas. In the near future, poverty can be turned into prosperity for the masses. NOIDA in Western UP and Unnao in Eastern UP can be cited as examples.
The leather footwear industry established in Unnao is a successful exporter. It employs local workers and pays a steady wage of over Rs. 100/- a day. It takes one week for a worker to learn operating modern machines. NOIDA in Ghaziabad district has developed into a vast industrial zone for electronics. Multinationals are running manufacturing units at NOIDA.
The marketing centres are growing side by side industrial units. Hightech information systems, efficient transportation and steady power supply are going to reduce the physical isolation of villages. There is mounting pressure on industries to disperse from cities.
Information-based marketing will take over the traditional marketing system. Purchases being traditionally confined to spices, salt, tobacco and textiles is no longer relevant. It is unfortunate that rural wealth goes into land and gold. Banks are gaining acceptance among the rural rich to handle and manage their investments.
A family budget allocates 50 per cent of the income to food, clothing and health. Durables consumer goods claim 30 per cent of the annual incomes, and 10 per cent is saved in the case of the upper classes. The new middle class, which has created by modern institutions, spends 30 per cent of the income on this kitchen and 30 per cent on education and clothing.
A substantial 15 per cent goes to health care. A negligible 5 per cent is saved in the form of compulsory contribution to provident fund. It is the white collar working class.
What is Rural Marketing – Organisation and Working
However, a few product of rural industry have a fair share of the market through co-operative dairies, mandis (rural markets) under the control of co-operative marketing societies, and co-operative warehousing societies, to cite a few. By looking at mandis in different states, some salient features of the rural market can be deduced from their organisation and working.
In the first instance, co-operative marketing societies are formed with membership drawn from among the farming class. The membership fees meet the cost of organisation and administration. The office-bearers are elected representatives. Policies are formulated by the general body, and the executive powers are vested in the management committees.
The day-to-day working of mandis is entrusted to the management committee. It exercises its power to supervise control and manage the marketing activities. The Food Corporation of India (FCI) is the biggest procuring agency in the public sector. It deputes its staff to procure cereal food items, jute and cotton for its buffer- stocks. The network of mandis is widespread in the country. Farmers get full value for their produce.
However, vegetables, fruits, flowers and other perishable items have to be transported to private mandis. The Azadpur Vegetable and Fruit Mandi in Delhi is the biggest mandi is Asia. It is managed by private traders. New arrivals at the time of harvest are purchased by private traders at low prices.
Most of the produce is stored in warehouses. After the harvest, the prices usually rule high at the expense of the fanners as well as the consumers. In the long run, this act’s as a disincentive to undertaking extensive cultivation of vegetables and fruits. Co-operative societies have yet to show their competitive strength in perishable items.
The problem is amenable to solution through provision of warehousing facilities by the cooperative sector. Setting up warehouses being expensive, individual fanners may not find it easy to finance it. Besides, farmers are not conversant with the organisation and management of warehouses.
Rural economic development is thwarted by the illiteracy and lack of technical know-how. The adult literacy programme and some community projects have the twin object of eradicating illiteracy and developing technical know-how.
What is Rural Marketing – Rural Consumers and their Behaviour
There are following points to understand and review regularly related to the rural consumers and their behaviours:
i. Who are the rural consumers?
ii. Their habits,
iii. Education level,
iv. Standard of living,
v. Quality consciousness,
vi. Earnings and its sources,
vii. Collection of this information i.e., rural market research.
These features are self-explanatory. But their collection mode i.e. market research is very significant job for an organisation to know the basic requirements of the rural consumers and their behaviours so as to promote the sales of their products in the rural markets.
The best method would be to send their own sales and marketing representatives regularly to the rural areas and have direct contacts with the people to know their needs and expectations besides about their other information as listed above.
Access to the rural markets may be directly or through the private sales and marketing channels. These channels may be wholesalers or retailers. The wholesalers or retailers should have their strong sales and marketing supports and facilities so as to cover the rural markets effectively.
Present practice by the companies dealing in the consumer goods (FMCG) is to take the rural market very seriously. They have realized that there is a great need to understand the rural market, the people, their needs and usage of products. Indian as well as MNCs are innovating and customizing their products for successful operation in the rural market. These companies have realized that urban products need to be changed to the rural consumers’ tastes and satisfaction.
Companies who are very successful in the rural markets are; Ghadi detergent, Priyagold biscuits, Cavinkare. Global giants like GE, Honeywell, Intel and Dupoint are all spending money and time in understanding the specific needs of the rural consumers and customizing their products accordingly.
Rural accounts for 55% of India’s total income. The number of middle class households in rural nearly equals urban and is expected to grow six times from 32 million in 2005 to 208 million by 2020. Rural accounts for 65% of the country spending. So there is a huge market waiting in the rural. For example by 2012, rural share of mobile subscribers will be 60% with 440 million subscribers from the current share of 31%.
At the same time, there are issues and challenges in the rural. Some of the issues are; road infrastructure, communication, electricity etc.
What is Rural Marketing – Importance: Future Prospective, Increase in per Capita Income, Media Effect, Growing Literacy, Social Awareness and a Few Others
In India rural marketing was neglected in early days. The obstacles were there seen as, inaccessibility, low purchasing power of rural customers, lack of distribution facilities in rural areas and very less presence of media. However, the complete transformation in rural scenario is witnessed, because of many important factors like media penetration, growing percentage of Literacy, increase in social awareness, improved farm management, road connectivity, expansion in telecom network, improved banking and credit facility, increasing population.
1. Future Prospective:
As far as India is concerned every company in India is now aware of the truth that sale can be significantly improved with targeting rural sector because of rise in the overall standard of living and want for purchasing more and more products with different varieties is also increasing day by day.
With this study, every organization is setting some special teams of marketing managers responsible for studying, analyzing, implementing marketing strategies in rural areas and thus boosts the sales figures rapidly.
Nokia is the best example of how marketing in rural area can affect sales and create a Brand value even more than the urban or metros.
Nokia is one of the most sought brand in rural area even if it’s share in total mobile companies have reduced with the aggressive strategy implemented by Samsung mobiles. In villages people buy products on the basis of trust and faith and not on technical specialties.
2. Increase in Per Capita Income:
Country spotted increase in per capita income even in rural sector which resulted in the rising demand for the various product including consumer durables and even luxuries products.
Rural sector is so attracting the organizations that they are spending millions of rupees for marketing alone in the rural areas.
3. Boosting of Overall Progress of Company:
Rural marketing with proper marketing techniques can create magical results and thus every corporate organization is keen in making such marketing and promotion mixes useful for the product sale and increase in profits.
Many loss making companies have changed their focus from urban areas to rural sector by changing some product lines and attracting rural people which resulted in their loss making status to profit seeking and even profit making corporations.
Thus rural marketing cannot be overlooked because future lies in this sector and every company must know this truth.
4. Media Effect:
Media penetration in rural area is one of the most important factors in creating awareness about products availability, change & updates in technology & current market trend. People have started to use advanced equipments for farming, home appliances, electronic gadgets and brandied clothes. Refrigerator, iron, microwaves, mobile phones, two wheelers, four wheelers are becoming mandatory things in rural area.
Advertisement on Television gets and radio leaves a big impact on the people. Most of the companies take an advantage of the customer behavior and advertise their product accordingly. Following the stardom is one of the trends which are followed by a large percentage of rural youth. This is the reason why companies can offer bollywood stars or sports persons (successful) to advertise their product.
TV entertainment is being used more effectively than often seen on Television set. Most of the events shown on the television are result of an advertisement.
5. Growing Literacy:
As a result of many government policies and promotions for creating an awareness of education in rural areas the literacy rate is constantly increasing. Literacy especially in youth of rural areas, is helping them to earn more money in available budget. People have started to use advanced equipments for farming and gaining more profit. Reducing the manpower in farming sector is creating new opportunities.
Young people get jobs in urban areas and others have started various small scale business. Hence the average income per family is increasing rapidly so the standard of living is also going high about quality of products and seemed to be rising about branded products. Durability and price are being considered while purchasing.
6. Social Awareness:
Change in lifestyle is mostly because of copying the lifestyle people see and people do, it’s observed that people play most important role in advertisements of the product. When a customer purchases a product he tells about it to everybody, he meets or at least few of them. Whatever experience of customer has had with the product is automatically spread. This factor is one of the important factors in marketing.
While living in a society people are more careful about their behavior, and the way they carry themselves. Nobody wants to look less impressive than others. They spend a large percentage of their earning on maintaining their status in the society. For maintaining the status they purchase products which at least match the market trend.
7. Improvement in Farming:
Population of world is increasing rapidly. India is the second largest in the world population. To fulfill the need of food of this much large population a lot of research has been done on farming equipments and techniques which increases productivity. Farmers have adapted themselves with the new techniques and equipments.
Eventually with the help of latest technologies and new ideas farmers have started to make more profit. Hence the market for the advanced farming equipments and market for luxurious products is also improving the overall status in rural market.
8. Improvement in Infrastructure and Expansion of Telecom Network:
A government scheme like, “Pantapradhan gram sadak yojana” has helped people in rural areas to get connected with urban areas. Which at the end helps in creating more business opportunities and more healthy distribution chain in rural areas. Network providers have reached to the rural areas and have captured a big market. Because of easy telecommunication and use of advanced phones, people in rural area are always connected to the world. They get the same updates about market trends and newly launched products as urban people.
9. Improved Banking & Credit Facility:
Organization in banking sectors has realized the opportunities of profitable business in rural areas. Most of the rural areas are being captured by nationalized as well as small banks. Rural people get the loans easily from the banks as banking organizations have lower the criteria’s and most of farmers put mortgages to get the loan. Getting financial assistance in difficult times or to start new business ends with profit to both parties, banks & customers.
What is Rural Marketing – Constraints: Scattered Markets, Physical Distribution, Channel Management, Sales Force Management, Rural Promotion and a Few Others
Rural India lives in villages with varying customs, languages, culture, education and prosperity and most marketers are not ready to face the same.
There are many reasons why companies are reluctant to explore the rural markets:
(a) Resources – The companies require resources in terms of men, money and materials to enter the rural markets.
(b) Long-term Plan – Even if they have the resources, it may not be possible to increase the sales, market share and profits within a short period and therefore companies have to treat such expenses as investment for business development in rural areas.
(c) Management Support – While the top management may be committed to development of rural markets, many of the junior level staff may not have the knowledge, skills, attitude to explore the rural markets and they continue to focus on urban marketing.
Adi Godrej, Chairman of Godrej has rightly observed — “The rural consumer is discerning and the rural market is vibrant. At the current rate of growth, it will soon outstrip the urban market. The rural market is no longer sleeping but we are.”
Industry Survey (2010) of over 100 companies shows that half of the senior executives are keen to tap the rural market. However, they are concerned about lack of infrastructure facilities like road connectivity, teledensity, availability of skilled manpower and seasonal demand.
While rural markets offer tremendous opportunities for the marketers, it is not possible to take a sizeable share of the market in the short run due to the following reasons:
The rural market consists of about 6 lakh villages and 833 million consumers. The urban population of 377 million is concentrated in about 7,000 towns and cities. Reaching such a widely scattered consumers and retailers over a large geographical area is a challenging job indeed.
(a) Transportation – It involves moving goods from one place to another. The infrastructure is very poor in our country. The roads are in bad condition and 20 per cent of the villages are not connected by road. In interior villages, animal carts are used to carry goods. This type of transport is slow and inadequate. Other problems are non-availability of rail transport, poor bus/lorry services in villages.
(b) Warehousing – Warehousing includes receiving the goods, despatching small consignments and documentation. No ‘pucca’ godown facilities are available in rural areas.
(c) Communication – We have 1,40,000 post offices in rural and semi-urban areas. Post and telegraph system is not well developed in interior rural areas. Even today 20 per cent of the villages are without telephone facility.
(a) Multi-tier System is requited to service rural customers.
Example – Company depot/C&F Agent in the city, distributor in town, stockist at Mandi/Taluka level, wholesaler in feeder market and retailer in the village result in increase in cost of distribution.
(b) No Scope for Manufacturer Owned Outlets – Low volumes do not justify own showrooms.
(c) Limited Availability Retailers – It is uneconomical to run retail shops due to low sales turnover in rural areas. In many markets, retailers are not just available. Practically, there are no shops in the villages having less than 500 population and there are about 2 lakh villages under this category.
(d) Fewer Brands – Studies conducted have shown that the rural retailer keeps less number of brands of products due to limited sales in villages.
(e) Inadequate Banking and Credit Facility – Banking facilities are inadequate in rural areas. There are no banks in villages having less than 2,000 population. Marketers find it difficult to collect funds through bank. Further, the consumers and merchants are not able to avail credit facilities.
4. Sales Force Management:
The salesperson plays an important role in promoting the products through direct contacts with the customers.
Requirements of a rural salesperson are given below:
(i) Fluency in local languages.
(ii) Capacity to work for extended hours.
(iii) Ability to undertake long journeys.
(iv) Has to put up with inadequate boarding/lodging facilities.
(v) Knowledge of values, beliefs and perceptions that influence the behaviour of consumers.
(vi) Preferably from local area.
(vii) Knowledge of different types of rural customers.
(viii) Selling skills.
(ix) Knowledge of competition.
(x) General knowledge about agriculture.
Considering communication facilities, location of personnel in small towns and the large number of salesmen required to service rural market, sales force management is a very challenging for marketers.
5. Rural Promotion:
Rural marketing requires special promotion efforts, such as AVP van, demonstrations, and group meetings due to the unique characteristics of the market. The media and the methods have to be formulated accordingly.
Example – In urban markets, print media has become very popular. The same is not very suitable for rural markets due to low literacy level. There are 18 recognised languages and 850 different dialects. Communicating with these rural consumers hence becomes very difficult.
The rural markets are highly scattered and there are barriers in reaching the rural consumers due to the following:
(i) Low literacy
(ii) Low income
(iii) Seasonal demand
(iv) Price sensitivity
(v) Low quality-consciousness
(vi) Traditional practices, and
(vii) Low reach of mass media.
What is Rural Marketing – Opportunities in India: Low Penetration Rate, Impact of Globalisation, Increase in Literacy Rate, Low Penetration Rate and a Few Others
The rural market has been growing gradually over the past few years. The saving to income percentage in rural areas is 30% higher than urban areas. At present approximately 53% of all FMCG and 59% of Consumer durables are being sold in rural areas. The immense potential of the rural market can be realised, if the marketers understand this market. The huge untapped needs of the rural mass, the growing rural economy and the increasing media penetration and brand awareness make this market extremely attractive to marketers.
So Rural markets are providing a lot of opportunities to the marketers.
Major opportunities available in rural markets are as follows:
Among the important factors contributing to the opportunities in the rural markets for the marketer, the continuous rise in rural income is the most important. More agricultural production and substantial increases in the disposable incomes of rural people and countrywide progress have been catalyzed by many rural development schemes implemented by government.
The agricultural development programs of the government have helped to increase income in the agriculture sector by increasing the productivity and better price for agriculture products, thus enhancing the purchasing power in rural markets. Continuous government efforts for narrowing income inequalities have expanded the market for consumer goods by bringing into its fold newer segments.
Increase in income and purchasing power has provided the marketer greater opportunity to expand their operations in rural markets.
The rural market in India is vast and scattered and offers a lot of opportunities in comparison to the urban sector. It covers the maximum population and regions and thereby, the maximum number of consumers.
742 million Indians constituting 138 million households reside in 6,38,365 villages (Census 2001), the size of rural market itself speaks of its potential. The current marketing environment and economic scenario have brought the corporate under contemporary roofs of modern India, which is challenging the current standards of segmenting, targeting and reaching the customers. Increased population lead to the increase in demand for the products of the marketer.
The urban market is reaching towards saturation point which brings out the urgent need to focusing on rural markets. Intensified competition in urban market increases costs and reduces market share. The rural markets are therefore increasingly attractive in relation to urban markets. The automobile market brings this out clearly. Rajdoot motorcycles, Bajaj Scooters or Ambassador Cars find ready acceptance in rural markets as compared to urban markets, where there is a proliferation of brands.
Saturation in urban market is a signal for marketers to make strategies for tapping rural markets.
Infrastructure is improving rapidly in rural areas which lead to easy access to these markets. The pro-rural long term policies and programmes (for example, Bharat Nirman, NRHM) in the last five years have brought with them the promise of sustainable infrastructure and social development of rural India, bringing rural markets back to the centre-stage of the corporate world. In 2005, the introduction of the flagship programme, Bharat Nirman which focused on an all-round infrastructure development, has brought about a remarkable transformation in the rural landscape.
The programme aims at building infrastructure and basic amanities in rural areas to reduce the gap between rural and urban areas. It covers rural housing, irrigation, potential, drinking water, rural roads, electrification and rural telephony. The road network had facilitated a systemized product distribution system to villages.
There was a time when market predictions were made on the basis of the state of the monsoon but this trend has changed over the years. There is large non farming sector, which generates almost 45% of the rural wealth. Due to this rural consumer need not be totally dependent on agriculture for their income. Corporate India is also learning to live with the uncertainty of rain.
Penetration rate in rural India is very low. Low penetration indicates the existence of unsaturated market, which are likely to expand as the income level rises as awareness increases. It provides an excellent opportunity for the industry players in form of vastly untapped markets.
Sales of branded goods have already overtaken those of non-branded products in villages. Rural consumers are also becoming aware of the branded products and also have started using branded products which provide a vast opportunity for a rural marketer.
The impact of globalization will be felt in rural India as much as in urban. But, it will be slow. It will have its impact on target groups like farmers, youth and women. Farmers, today keep in touch with the latest information and maximize both ends. Animal feed producers no longer look at Andhra Pradesh or Karnataka. They keep their cell phones constantly connected to global markets.
Surely, price movements and products’ availability in the international market place seem to drive their local business strategies. On youth, its impact is on knowledge and information and while on women it still depends on the socio-economic aspect. The marketers who understand the rural consumer and fine tune their strategy are sure to reap benefits in the coming years.
In fact, the leadership in any product or service is linked to leadership in the rural India except for few lifestyle-based products, which depend on urban India mainly. Due to effect of globalisation, there is a wide scope of rural marketing.
The rural literacy rate has improved in recent past which have increased the awareness among rural consumers. They are also interested in developing the market in rural area. Rural people have started to go to urban areas for higher education. Even government has introduced various schemes for rural education. Awareness has increased and the farmers are well informed about the world around them. They are also educating themselves on the new technology around them and aspiring for a better lifestyle.
Mass media has created the increased demand for goods and services in rural areas which provides an ample opportunity to rural marketer for earning profits. Radio and TV have revolutionized the entire marketing scenario. Practically TV is more effective in conveying and injecting an idea. TV has changed the rural folk’s outlook, attitude and lifestyles.
It penetrates into rural areas smoothly and makes the work of sales personnel easy. Radio covers 62 percent of urban and 40 percent of the rural population. TV covers 80 percent of the urban and 35 percent of the rural population. Doordarshan is being overshadowed by cable network. The net effect of increasing coverage of audio-video media is greater and it provides greater exposure to modern life-styles and brands.
Media impact on rural customers is high. This is changing their lifestyles, thereby increasing their consumption of non-food items. Interest arousal capability of TV is high. Acceptance of brands is high and attitude has changed due to media exposure. Media has reached to rural area, so it becomes easier for marketer to sell product in rural area.
Today’s rural children and youth will grow up in an environment where they have information access to education opportunities, government schemes, mandi prices, exam results, career counseling, job opportunities, weather forecasts, bank loans, worldwide news and information, livelihood options etc., If television could change the language of brand communication in rural India, affordable web connectivity through various types of communication hubs will surely impact the currency of information change.
As the electronic ethos and IT Culture moves into rural India, the possibility of change is becoming visible.
Various schemes of Government like Kisan Credit Card helped the farmers to take loans for fertilizers, seeds etc. This enables them to produce more and increase their income. Government schemes like IRDP (Integrated Rural Development Programme), JRY (Jawahar Rozgar Yojna) and TRYSEM (Training Rural Youth for Self-Employment) have created new employment opportunities in Rural India.
As a result, very few rural people are now flocking to urban cities. There is also large inflow of investment for rural development programmes from the government. In addition to this, the government’s stress on self-sufficiency resulted in various schemes like operation flood (White Revolution), Blue Revolution, Yellow Revolution etc., has resulted in the production of 15 million tons of milks per annum.
Though rural consumers are dispersed, reaching them is costly but new research indicate that selling in rural India is not expensive. Expenses on campaign like advertisement in newspaper, television etc. is lower in rural areas as compared to urban areas.