Author J.Rajesh Pursuing PhD. From CMJ university under the guidance of Dr.

Surendra Kumar of MLR School Of Management & Technology,Lucknow. M Phil. in Management from EIILM university in the year June 2011 CFA from Innobuzz in the year 2008 MBA in Finance from Sikkim Manipal University in the year 2007. B Com Hons. from Jharkhand University in the year2005 Has an Industrial experience of 3.5 years as a Branch Head of ASSBL, a stock broking firm. Teaching experience of 4.5 years presently working as a Custodian & Asst. Professor Dept of Commerce. & Management at APIC,Raipur

Co-Author Dipti Mishra M Com in Accountancy from Mumbai University in the year 2003 MPhil in Commerce from MKU in the year2007 UGC Net in the year June 2010 Associated with Mumbai University as an Asst. Prof since 9 years presently working as an HOD. & Asst. Professor Dept of Commerce. & Management at APIC,Raipur.

Rural Marketing: Opportunities and Challenges

Abstract
Management Guru Mr.C.K Pralhads thought fortune lies at the bottom of the pyramid is very true when it comes to exploring the rural markets and grabbing an opportunity to expand the market. The FMCG sector in India is the fourth largest in the economy, with a market size of over Rs 110,000 crore (around $22 billion) and is estimated to grow to over Rs 185,000 crore (around $37 billion) by 2014. Rural marketing is equated with marketing by MNC in rural India. The extent literature on rural marketing has uncritically used the same theories, models, concepts and framework as have been used in the marketing discipline. The Indian rural market has a huge demand base and offers great opportunities to marketers. Two-thirds of Indian consumers live in rural areas and almost half of the national income is generated from there. We view rural market as a periodic concourse of people for the purpose of buying and selling, i.e.,exchanging goods, services and even ideas. India has almost 5,76,000 villages, 80% of which has population less than 1000 and about 77% of whose population are dependent on land based activities. Rural areas are scattered and it is next to impossible to ensure the availability of a brand all over the country. Advertising in such a highly heterogeneous market, which is widely spread, is very expensive. The Indian Consumer market is a multi-tiered pyramid which requires multi pronged market strategies. India has roughly fifty percent of its population under 27 years of age. It is true that Consumer India is flourishing, but at the same time Indian Consumer has his roots deep into his traditions. This Paper tries to understand what rural markets are? Their traits, importance and challenges faced by the companies while penetrating these markets. Key words : Rural Market, Consumer, Marketing

Introduction:
Rural marketing can be seen as a function which manages all those activities involved in assessing, stimulating and converting the purchasing power into an effective demand for specific products and services, and moving them to the people in rural area to create satisfaction and a standard of living to them and thereby achieves the goals of the organization. This definition states that rural marketing emphasis not only on marketing of goods to rural people but also urge them to increase the standard of living by providing high quality product. In India, where about 70% population resides in the rural areas and nearly half of the national income is generated by the rural population, hence it become necessary to understand the psyche of the rural population, their needs, aspirations and also their behavior to be success in the marketing in rural areas. The fact, however, remains that there are certain unique characteristic features which call for separate marketing strategies to be distinctively developed to suit the rural and urban market behavior. Conditions existing in urban markets at present can also be analyzed in this context. First, the urban markets have almost reached at saturation level to that urban an extend further tapping them with a high profit margin had become very difficult. Secondly, competition is becoming tough in urban markets compelling many firms to incur heavy costs in as promotional expenditure. Thirdly, the awareness level of urban consumers is actively comparatively high and hence product features have to be quite changed often. Needless to say this process needs a huge investment which will have a negative impact on profitability. Perhaps for easy reach the urban markets have become as oasis. The concept of Rural Marketing in India Economy has always played an influential role in the lives of people. In India, except few metropolitan cities, all the districts and industrial townships are connected with rural markets.

Objectives of the Study

The main objectives of the study are: (1) To understand the environment in which the rural market operates. (2) To find out the inherent problems associated with rural market. (3) The market strategies which can be successfully adopted to exploit properly to the potentials of the rural market. (4)To find out the opportunities available to market the products in rural India. (5)To find out the effectiveness of Innovative marketing practices adopted by companies .

Importance of Rural Markets:

With the presence of 12.2% of the world population in the villages of India, the Indian rural market is something no one can overlook. Increased focus on farm sector will boost the rural incomes, hence providing better growth prospects .Better infrastructure facilities will improve their supply chain. Because of the low per capita consumption for almost all the products in the country, companies have immense possibilities for growth. And if the companies are able to change the mindset of the consumers, i.e. if they are able to take the consumers to branded products and offer new generation products, they would be able to generate higher growth in the near future. The rural market is an enigma for the companies. Due to the lack of deeper insights into the psyche of the rural consumers,companies are hesitant to explore this territory. With more than 700 million people living in rural areas, in some 5,80,000 villages, about twothird of its workforce was engaged in agriculture and allied activities with a contribution of 29 percent of Indias Gross Domestic Product (GDP), Indias economy is predominantly rural in character. The attitude toward rural market should be that of an investor. The growing market provide the opportunity

and approach should be one of market seeding. The market provides opportunity and opinion for the rural marketer and low penetration level suggests higher opportunities. The marketer needs to have information system that track sales to different market and help to identify market potential. Rural India offer a bigger growth opportunity through greater penetration and then consumption. Indias economy can be thought of as comprises of two main sectors, namely, the Rural Sector and the Urban Sector. The Rural sector is, in turn composes of two main sub sectors i.e. the agricultural sub sector and the nonagricultural sub sector. The non-agricultural sub sector comprises agricultural and allied economic activities such as Crop Cultivation, Animal Husbandry, Dairying,Fisheries, Poultry and Forestry (Floriculture) etc. The nonagricultural sub sector consists of economic activities relating to Industry, Business and Services. Industry refers to cottage and village industries, Khadi, handloom, handicraft, etc.Business includes to trading of general goods, small shops, petty traders etc., whereas services refers to Transportation, Communication, Banking,Postal, Education etc.The size and potential market of the rural sector could be measured in terms of the rural population, the population of livestock, the extent of land,forest and other natural resources. Increase in competition, saturated urban markets, more and move new products demanding urban customers, made the companies to think about the new potential markets. Thus, Indian rural markets have caught the attention of many companies, advertisers and multinational companies. According to a recent survey conducted by the National Council for Applied Economic Research (NCAER), the purchasing power of the rural people has increased due to increase in productivity and better price commanded by the agricultural products. By and large this rise in purchasing power remains unexploited and with the growing reach of the television, it is now quite easy for the marketers to reach as well as capture these markets.The rural markets are growing with a steady

speed as compared to the urban markets which are attaining a point of saturation. As once the market reaches the height one or the other day it would tend to decline. The potentiality of rural markets is said to be like a 'woken up sleeping giant'. These facts are substantiated in a study of market growth conducted by various researches. In recent years, rural markets have acquired significance in countries like China and India, as the overall growth of the economy has resulted into substantial increase in the purchasing power of the rural communities. On account of the green revolution in India, the rural areas are consuming a large quantity of industrial and urban manufactured products. In this context, a special marketing strategy,namely, rural marketing has taken shape. Sometimes, rural marketing is confused with agricultural marketing the later denotes marketing of produce of the rural areas to the urban consumers or industrial consumers, whereas rural marketing involves delivering manufactured or processed inputs or services to rural producers or consumers.

Factors which have been recognized as responsible for existence in the boom of rural market:
Rural marketing involves the process of developing, pricing, promoting, distributing rural specific product and a service leading to exchange between rural and urban market which satisfies consumer demand and also achieves organizational objectives. It is a two-way marketing process wherein the transactions can be: 1. Urban to Rural: It involves the selling of products and services by urban marketers in rural areas. These include: Pesticides, FMCG Products, Consumer durables, etc. 2. Rural to Urban: Here, a rural producer (involved in agriculture) sells his produce in urban market. This may not be direct. There generally are middlemen, agencies, government cooperatives, etc who sell fruits, vegetables, grains, pulses and others.

3. Rural to rural: These include selling of agricultural tools, cattle, carts and others to another village in its proximity. The factors which have been recognized are. a. Increase in population and hence increase in demand. b.. A marked increase in the rural income due to agrarian prosperity. c. Improved Standard of living. d. Large inflow of investment for rural development programmes from government and other sources. e. Increased contact of rural people with their urban counterparts due to development of transport and wide communication network. f. Increase in literacy and educational level includes inclination to sophisticated lives by the rural folks. g. Inflow of foreign remittances and foreign made goods into rural areas. h. Change in the land tenure systems causing a structural change in the ownership patterns and consequent changes in the buying behavior. i. Rural markets are laggards in picking up new products. This will help the companies to phase their marketing efforts. This will also help to sell inventories of products out dated in urban markets.

Opportunities:
1.

The price-sensitivity of a consumer in a village is something the marketers should be aware of. Rural income levels are largely determined by the vagaries of monsoon and, hence, the demand there is not an easy horse to ride on. For e.g. Britannia Industries launched Tiger Biscuits especially for the rural market. It clearly paid dividend. Its share

of the glucose biscuit market has increased from 7 per cent to 15 per cent within a very short period.
2.

An important tool to reach out to the rural audience is through effective communication strategies. ``A rural consumer is brand loyal and understands symbols better. This also makes it easy to sell look alike. The rural audience has matured enough to understand the communication developed for the urban markets, especially with reference to FMCG products. Television has been a major effective communication system for rural mass and, as a result, companies should identify themselves with their advertisements. Advertisements touching the emotions of the rural folks could drive a quantum jump in sales and it has already shown results previously. The brands have to be made relevant by understanding local needs and customize according to that. Even offering the same product in different regions with different brand names could be adopted as a strategy.

3.

The main four factors influencing demand in rural India are - access, attitude, awareness and affluence. HUL has successfully used this to influence the rural market for its shampoos in sachets. The company had developed a direct access to markets through wholesale channel and created awareness through media, demonstration and on ground contact therefore easy accessibility and the awareness that helps in influencing the rural audience makes the marketer reach them.

4.

Since marketing is to target the growing segments, the village then becomes a location or a suburb of a district. In addition, the district becomes the basic geographical entity. Since the urban-like populations in the villages are considered as a part of the district, they will represent the dominant part of the market in most of the districts. A districts perspective removes the complexities, heterogeneity, access and targetability that have

hindered rural marketing initiatives. The rural marketing requires every element of marketing including product, pricing, packaging, advertising, and media planning to have the rural customer as the target. This becomes possible when we have districts marketing as a separate entity.
5.

Marketers need to understand the psyche of the rural consumers and then act accordingly. Rural marketing involves more intensive personal selling efforts compared to urban marketing. To effectively tap the rural market, a brand must associate it with the same things the rural folks do. This can be done by utilizing the various rural folk media to reach them in their own language and in large numbers so that the brand can be associated with the myriad rituals, celebrations, festivals, "melas", and other activities where they assemble.

6.

One of the ways could be using company delivery van, which can serve two purposes - it can take the products to the customers in every nook and corner of the market, and it also enables the firm to establish direct contact with them, and thereby facilitate sales promotion.

7.

However, only the bigwigs having hefty investments plans can adopt this channel. The companies with relatively fewer resources can go in for syndicated distribution where a tie-up between non-competitive marketers can be established to facilitate distribution. Periodical "melas" organized are quite popular and provide a very good platform for distribution because people visit them to make several purchases.

8.

Haats are another potential low cost distribution channel available to the marketers. Also, every region consisting of several villages is generally served by one satellite town (termed as "Mandis" or Agri-markets) where people prefer to go to buy their durable

commodities. If marketing managers use these feeder towns, they will easily be able to cover a large section of the rural population.

Rural Marketing: Success Stories

Over the past few years schemes like ITC's echaupal, HLL's project Shakti, shampoo sachets launched by Chick, BSNL's rural schemes have made a mark in rural India. Many retail hubs like Kisan Sansar (Tata), Haryali Kisan Bazar (DMC), Reliance Fresh, Naya Yug Baazar, etc has been able to make a dent in the village economy. The most successful story is that of HUL, the Indian subsidy of Uniliver. The trigger point for HUL came when a local firm Nirma, through its new product formulation, pricing and distribution challenged HUL's detergent business. Nirma's strategy was to attack from below or at the bottom of the pyramid. This made HUL not only realise its vulnerability but also identify a new opportunity. Since then, HUL has launched various initiatives to reach out to the rural consumer. It has not only changed its packaging and product compositions but has successfully tried to broaden and strengthen its distribution channels into the grassroots level. HUL has also empowered rural women by assisting them in obtaining financial assistance through its Project Shakti. According to figures released by market researcher AC Nielsen,demand for personal care products grew faster in rural areas than urban areas during the period April-September 2009. Several FMCG companies such as Godrej Consumer Products, Dabur, Marico have increased their marketing efforts in rural India and small towns in order to establish a local distribution networks and increase visibility. 'Rural melas' are being organised by Godrej in order to access potential rural consumers. Major domestic retailers like AV Birla, ITC, Godrej, Reliance and

many others have already set up farm linkages. Hariyali Kisan Bazaars (DCM) and Aadhars (Pantaloon-Godrej JV), Choupal Sagars (ITC), Kisan Sansars (Tata), Reliance Fresh, Project Shakti (Hindustan Unilever) and Naya Yug Bazaar have established rural retail hubs. Coca-Cola and Pepsi soft drink brands suffered a setback in August 2008 due to a product contamination scare. Both of them had already cut profit margins in order to fend off competition from low-priced local fruit drinks. This prompted their focus to shift to the rural belts. Indian consumers are accustomed to drinking a variety of locally-produced soft drinks that are sold in small stands throughout the country. Rural India is still a highly price-sensitive marketplace. Moreover the average consumer has insufficient income to engage in discretionary spending.In order to position themselves for sales growth, the major soft drink companies priced a 200-ml bottle at Rs 5 per bottle. In order to remain cost competitive, soft drink companies have to bare the transportation costs involved in expanding their distribution network into distant towns and villages. Faced with high fuel and vehicle costs, companies are turning to less expensive means of transportation including ox carts and rickshaws.

Problems & Challenges of rural markets:

The rural market offers a vast untapped potential; it should also be recognized that it is not that easy to operate in rural market because of number of problems such as improper infrastructure and transportation which lead to time delay and high cost on transportation worsens logistics and distribution system . Thus Rural marketing is a time consuming affair and requires considerable investments in terms of evolving appropriate strategies with a view to encounter the problems. The problems are. a. The development of appropriate communication systems to rural market may cost up to six

times as much as reaching an urban market through established media, need rural communication facilities. b. The problems of physical distribution and channel management adversely affect the service as well as the cost aspect. The existing market structure consists of primary rural market and retail sales outlet. The structure involves stock points in feeder towns to service these retail outlets at the village levels. But it becomes difficult maintaining the required service level on the delivery of the product at retail level. c. Culture is a system of shared values, beliefs and perceptions that influence the behavior of consumers. There are different groups based on religion, caste, occupation, income, age, education and politics and each group exerts influence on the behavior of people in villages. d. Life in rural areas is still governed by customs and traditions and people do not easily adapt new practices. For example, even rich and educated class of farmers does not wear jeans or branded shoes. e. An effective distribution system requires village-level shopkeeper, Mandal/ Taluka-level wholesaler or preferred dealer, distributor or stockiest at district level and company-owned depot or consignment distribution at state level. The presence of too many tiers in the distribution system increases the cost of distribution. f. Television has made a great impact and large audience has been exposed to this medium. Radio reaches large population in rural areas at a relatively low cost. However, reach of formal media is low in rural households; therefore, the market has to undertake specific sales promotion activities in rural areas like participating in melas or fairs. g. Many rural areas are not connected by rail transport. Kacha (wet) roads become unserviceable during the monsoon and interior villages get isolated.

h. There are no enough opportunities for education in rural areas. The literacy level is as low (36%) when compared to all- India average of 52%. i. Market organization & staff:The size of the market organization and staff is very important, to manage market system effective control. However the existing organizational setup particularly at district and block level needs to be strengthened in order to make the services on various aspects available to the farmers timely with easy accessibility. j. Demand for goods in rural markets depends upon agricultural situation, as agriculture is the main source of income. Agriculture to a large extent depends upon monsoon and, therefore, the demand or buying capacity is not stable or regular.

Innovative Practices adopted by companies:

FMCG and consumer durables companies have in the past tried tinkering with all the four Ps product, pricing, promotion and place of the marketing mix. Hindustan Lever is among Indias largest FMCG companies. It has been highly successful in marketing in rural India and has been a pioneer in reaching out to the smallest of villages with innovative products such as single-use packets of shampoo that sells for a penny. (The rural consumer uses shampoo on rare occasions; they do not prefer to invest in a bottle.) Independent agencies run media vans that show movies in distant villages. They have live promotions and demonstrations during breaks.The area where innovation has moved to center stage is in the fourth P place (or distribution). Infrastructure has always been the bugbear of the Indian marketer. Distribution channels can make or break a companys rural marketing efforts. To sell in villages, products must be priced low, profit margins must be kept to the minimum and the marketing message must be kept simple.

The Annapurna Salt Story: Hindustan's Uni Lever Ltd. (HUL) technological innovation, Annapurna salt with stable iodine, demonstrates how one nonprofit and profit organization can bridge the gap between. Annapurna salt is being marketed in two phases: 1. The first message is for poor class i.e. to spread the awareness that iodized salt prevents IDD and goiters. 2. For upper market Annapurna Salt continues to emphasize that Annapruna's Iodine is different and its communication campaign highlights, Iodine makes brain sharper. Amul: Amul is considered to be a movement more than a diary cooperative in India, has introduced quality ice-cream at much affordable rate(less than Rs. 6/-). Amul offers this milk made product not only as a delicious ice cream but that also in reasonable rates. Godrej Consumer Products-Project Dharti: The hair colours and soaps majorily,intends to increase its contribution from rural sales to 50 per cent in one year, from 38 per cent right now. We are going to focus strongly on rural sales. Currently, rural sales make up around 38 per cent of our turnover. Company intends to take it to 50 per cent within a year. Godrej has implemented a special project to penetrate rual markets exclusively -project Dharti for rural India which is presently covering 17,000 villages. Soon company intends to take it to cover 50,000 villages. This also means that the 4,000 substockiest in rural India would be more than doubled, creating more employment opportunities. Hariyali Kisaan Bazaar: Was set up by DCM Shriram Consolidated Ltd. to facilitate sale of agri-inputs such as fertilizers, pesticides, farming equipment, seeds, animalfeed,etc.

TRIVENI KUSHALI Bazaar: A rural agri-inputs store run by Thriven Engineering Industries Ltd. in the sugarcane belt of U.P. is also used to sell cement and FMCG products. HUL's Project SHAKTHI: Through the state governments and NGOs involved in microfinance, women entrepreneurs in villages are identified to act as local distribution and sales point for HUL products.

Recommendations for effective rural marketing practices

The Government has to develop infrastructure facilities like roadways, railways etc.,in rural areas so as to reach large Indian rural market. The efficient marketing is predominantly influenced by efficient distribution system it means products reaches to the ultimate consumer in the quickest time possible at minimum cost. The state marketing board or federation or market committees also the producers,traders and sellers have necessarily to be consulted as they have the principle interest towards its use. Suitable structure of support prices for various farm commodities adjusted from time-totime. Adequate arrangement of agricultural produce on support price, if the price falls below the level. Rural marketing is the nerve center of a rural economy; rural markets are the channels for the movements of goods and services as well as to promote cultural integration. Greater Need for Strategic Rural Marketing Practices Which includes Client and location specific promotion Joint or cooperative promotion Bundling of inputs

Developmental marketing

Conclusion
Rural Marketing in India Economy has always played an influential role in the lives of people.In India, leaving out a few metropolitan cities, all the districts and industrial townships are connected with rural markets. India has a population that is large, heterogeneous, largely English speaking and a cultural heritage that runs back to thousands of years. The common binding factor being the historical background, over two hundred years of subjugation and the democratic republic it has developed into. Yet the most common factor is the lives of more than seventy percent of its population that lives in the rural areas and has similar economic and social circumstances. The major segmentation of mass population is located in rural area. The market potential is huge in rural areas. It is this market strength in rural area that needs to be tapped. Now days even the educational Institutions are concentrating on rural marketing, have developed special management programmes to cater to rural marketing and are doing market research in rural places. Rural markets are rapidly growing in India but have often been ignored by marketers. The following statistics is enough to throw light on the relevance of rural markets: 46% of soft drinks are sold in rural markets, 49% of motorcycles and 59% of cigarettes are also consumed by rural and small town consumers. Apart from this 53% of Fast Moving Consumer Goods and 59% of consumer durables have market in the rural belts. There are nearly 42,000 rural haats (markets) in India. LIC sells more than 50 percent of its policies in rural India. Of the 20 millions who have signed up for Rediff mail, 60 percent are from small towns The 30 million Kisan Credit Cards (KCC) issued so far exceed the 25 million credit-plus-debit cards issued in urban. These statistics clearly show a trend where the rural consumers are not only buying to

fulfill their bare necessities but are also taking care of higher needs of comfort and socialization. Moreover they have turned highly techno savvy as demonstrated through the success of ITCs echaupals and Rediffs rural success. As Paul Mazur defines, 'Marketing's role is delivery of a higher standard of living to people in the society.'Already, substantial penetration has been made by the producers of most consumer goods. Though the cost of distribution and promotion is bound to be high and producers even may sustain losses in the initial stages, this should not deter them from entering the market the potentialities of the rural market are great indeed. With the changing economic conditions in the country, and with better purchasing power, among the rural population, the newly emerging rural markets are bound to yield rich dividends.

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