A

Research Report
On

RURAL MARKETING

Executive Summary
A debate continued for a long time amongst the Indian marketers, both practitioners &
academicians, on the justification for the existence of the distinct discipline of rural
marketing. Consequently, two schools of thought emerged. The first school belived that the
products/services, marketing tools & strategies that are successful in urban areas, could be
transplanted with little or no more modifications in rural areas. However, the second school
saw a clear distinction between urban & rural India, & suggested a different approach,
skills, tools & strategies to be successful in rural markets.

What differentiates the two markets is not mere income, but a host of other infrastructural &
socio-cultural factors. Thus, the rural market cannot be tapped successfully with an urban
marketing mindset & would definitely require its thorough understanding. In other words,
the approach toward rural markets needs to be distinct from the one adopted for the urban
markets.

Thus, in a large rural economy like Indias, rural marketing has emerged as an important &
distinct internal sub-division within the marketing discipline. This sub-division clearly
highlights the differences between rural marketing & mainstream marketing.

Table of contents

1) Rural marketing

2) Evolution of rural marketing

3) Nature of rural market

4) Rural marketing transactional or developmental

5) Classification of rural consumers

11

6) Roadblocks of Indian Rural Markets

12

7) Attractiveness of rural market

14

8) Rural Vs Urban Marketing

19

9) Rural consumer behavior

22

10) 4 As approach of Indian Rural Market

25

11) Rural marketing Mix

28
3

12) Marketing strategies to capture rural market

37

12.1.

Product strategies

42

12.2.

Pricing strategies

44

12.3.

Promotion strategies

45

12.4.

Distribution strategies

46

13) Media vehicles

53

13.1.

Formal media

54

13.2.

Informal/rural specific media

57

13.3.

Choosing media vehicles

64

14) Conclusion

65

15) References

66

Rural Marketing

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.

URBAN

RURAL

RURAL

URBAN

RURAL

RURAL

It is a two-way marketing process wherein the transactions can be:

1. Urban to Rural: A major part of rural marketing falls into this category. 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: Transactions in this category basically fall under agricultural
marketing where a rural producer seeks to sell his produce in an urban market. An
agent or a middleman plays a crucial role in the marketing process. The following
are some of the important items sold from the rural to urban areas: seeds, fruits and
vegetables, milk and related products, forest produce, spices, etc.
3. Rural to Rural: This includes the activities that take place between two villages in
close proximity to each other. The transactions relate to the areas of expertise the
particular village has. These include selling of agricultural tools, cattle, carts and
others to another village in its proximity.

Rural marketing requires the understanding of the complexities. Indian agricultural industry
has been growing at a tremendous pace in the last few decades. The rural areas are
consuming a large number of industrial and urban manufactured products. The rural
agricultural production and consumption process plays a predominant role in developing the
5

Indian economy. This has designed a new way for understanding a new process called Rural
Marketing.

The concept of rural marketing has to be distinguished from Agricultural marketing.

Marketing is the process of identifying and satisfying customers needs and providing them
with adequate after sales service. Rural marketing is different from agricultural marketing,
which signifies marketing of rural products to the urban consumer or institutional markets.
Rural marketing basically deals with delivering manufactured or processed inputs or
services to rural producers, the demand for which is basically a derived outcome.

Rural marketing scientists also term it as developmental marketing, as the process of rural
marketing involves an urban to rural activity, which in turn is characterised by various
peculiarities in terms of nature of market, products and processes. Rural marketing differs
from agricultural or consumer products marketing in terms of the nature of transactions,
which includes participants, products, modalities, norms and outcomes. The participants in
case of Rural Marketing would also be different they include input manufacturers, dealers,
farmers, opinion makers, government agencies and traders.

Rural marketing needs to combine concerns for profit with a concern for the society, besides
being titled towards profit. Rural market for agricultural inputs is a case of market pull and
not market push. Most of the jobs of marketing and selling are left to the local dealers and
retailers.
The market for input gets interlocked with other markets like output, consumer goods,
money and labour.

Rural marketing in India is not much developed there are many hindrances in the area of
market, product design and positioning, pricing, distribution and promotion. Companies
need to understand rural marketing in a broader manner not only to survive and grow in
their business, but also a means to the development of the rural economy. One has to have a
strategic view of the rural markets so as to know and understand the markets well. In the
context of rural marketing one has to understand the manipulation of marketing mix has to
be properly understood in terms of product usage. Product usage is central to price,
distribution, promotion, branding, company image and more important farmer economics,
thus any strategy in rural marketing should be given due attention and importance by
understanding the product usage, all elements of marketing mix can be better organised and
managed.

Evolution of Rural Marketing

PHAS
ORIGIN
E

MAJOR

SOURCE

DESTINATION

PRODUCTS

MARKET

MARKET

Rural

Urban

Urban

Rural

FUNCTION

Before Mid1960 (from

Agricultural

Agricultural

independence

Marketing

Produce

(Green

Marketing Of

Agricultural

revolution to

Agricultural

Inputs

Pre-

Inputs

to green
II

revolution)
Mid- Sixties

liberalization
7

period)
Mid- Nineties

III

IV

Consumables

(Post-

Rural

And

Urban &

liberalization

Marketing

Durables For

Rural

period on 20th

Consumption

century)

& Production

21st century

Rural

Developmental

All products &

Urban &

Urban &

marketing

services

Rural

Rural

1. Phase I ( from Independence to Green Revolution):

Before the advent of the Green revolution, the nature of rural market was altogether
different. Rural marketing then referred to the marketing of rural products in rural &
urban products.
2. Phase II (Green Revolution to Pre-liberalization period):
During these times, due to the advent & spread of the Green Revolution, rural
marketing represented marketing of agriculture inputs in rural markets & marketing
of rural produce in urban areas.
3. Phase III (Post-liberalization period on 20th century):
The third phase of rural marketing started after the liberalization of the Indian
economy. In this period, rural marketing represented the emerging, distinct activity
of attracting & serving rural markets to fulfill the need & wants of rural households,
peoples & their occupations.
4. Phase IV (21st century):
Learning from its rural marketing experiences after the independence, the corporate
world has finally realized the quick-fix solutions & piecemeal approaches will
deliver only limited results in the rural markets. And, if an organization wants to tap
the real potential of the rural market, it needs to make a long-term commitment with
8

this market. Its approach & strategies must not focus in just selling products &
services, but they should also aim at creating an environment for this to happen.

The objective of rural marketing in the current phase is the improvement of the quality of
life by satisfying the needs & wants of the customers, not through atand-alone products or
services, but by presenting comprehensive & integrated solutions which might involve a set
of inter-related products & services.

Till recently, the focus of marketers in India was the urban consumer and by large number
specific efforts were made to reach the rural markets. But now it is felt that with the tempo
of development accelerating in rural India, coupled with increase in purchasing power,
because of scientific agriculture, the changing life style and consumption pattern of
villagers with increase in education, social mobility, improved means of transportations and
communication and other penetrations of mass media such as television and its various
satellite channels have exposed rural India to the outside world and hence their outlook to
life has also changed. Because of all these factors, rural India in now attracting more and
more marketers.

Increase in competition, saturated urban markets, more and move new products demanding
urban customers, made the companies to think about 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 capture these markets.

Rural marketing has become the latest mantra of most corporate. Companies like Hindustan
Lever, Colgate Palmolive, Britannia and even Multinational Companies (MNCs) like Pepsi,
Coca Cola, L.G., Philips, Cavin Kare are all eyeing rural markets to capture the large Indian
market.

Coming to the frame work of Rural Marketing, Rural Marketing broadly involves reaching
the rural customer, understanding their needs and wants, supply of goods and services to
meet their requirements, carrying out after sales service that leads to customer satisfaction
and repeat purchase/sales.

Nature of Rural Market

Large, Diverse and Scattered Market: Rural market in India is large, and scattered
into a number of regions. There may be less number of shops available to market
products.
Major Income of Rural consumers is from Agriculture: Rural Prosperity is tied
with agriculture prosperity. In the event of a crop failure, the income of the rural
masses is directly affected.
Standard of Living and rising disposable income of the rural customers: It is
known that majority of the rural population lives below poverty line and has low
literacy rate, low per capital income, societal backwardness, low savings, etc. But
the new tax structure, good monsoon, government regulation on pricing has created

10

disposable incomes. Today the rural customer spends money to get value and is
aware of the happening around him.
Traditional Outlook: Villages develop slowly and have a traditional outlook.
Change is a continuous process but most rural people accept change gradually. This
is gradually changing due to literacy especially in the youth who have begun to
change the outlook in the villages.
Rising literacy levels: It is documented that approximately 45% of rural Indians are
literate. Hence awareness has increases 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.
Diverse socioeconomic background: Due to dispersion of geographical areas and
uneven land fertility, rural people have disparate socioeconomic background, which
ultimately affects the rural market.
Infrastructure Facilities: The infrastructure facilities like cemented roads,
warehouses, communication system, and financial facilities are inadequate in rural
areas. Hence physical distribution is a challenge to marketers who have found
innovative ways to market their products.

Is rural marketing transactional or developmental

in its approach?

It is true, rural markets have become an attractive proposition for commercial business
organizations.
11

The role of rural marketing as such is more developmental than transactional. It is more a
process of delivering better standard of living and quality of life to the rural environment
taking into consideration the prevailing village milieu.
Transactional Vs Developmental: For better comprehension of this role let us distinguish
development marketing and transactional marketing. Table brings out the differences in
brief.

Transactional Vs Development Marketing

S.No.
1.

Aspect
Concept

Transactional
Consumer orientation,

Development
Society orientation, societal

Marketing concept

concept

2.

Role

Stimulating and

Catalytic and transformation

3.
4.

Focus
Key task

conversional marketing
Product-market fit
Product innovations and

agent
Social change
Social innovations and

5.
6.

Nature of activity
Participants

communications
Commercial
Corporate enterprises,

communications
Socio-cultural, economic
Government, voluntary agencies,

Sellers

corporate enterprises,

Products and services

benefactors
Development

Buyers
Functional
Profits

projects/schemes/programs
Beneficiaries and buyers
Developmental
Market development

Customer satisfaction

Corporate Image

Brand image
Short-medium
Profit-motive

Medium-Long
Service-motive

7.
8.
9.
10.

11.
12.

Offer
Target group
Communication
Goal

Time-Frame
Motivation

12

Business policy

Ideological or Public policy

Model: The model of rural marketing represents a combination of the transactional and
developmental approaches.

Rural marketing process is both a catalyst as well as an outcome of the general rural
development process. Initiation and management of social and economic change in
the rural sector is the core of the rural marketing process. It becomes in this process
both benefactor and beneficiary.

Innovation is the essence of marketing. Innovative methods of social change for

successful transformation of traditional society are virtual. Such a change narrows
the rural-urban divide.

The process of transformation can be only evolutionary and not revolutionary. The
growth of the rural market can be a planned evolutionary process based on strategic
instruments of change rather than constitute just short-term opportunities for
commercial gains.

The exposure of ruralites to a variety of marketing transactions during the change

process puts them in the role of beneficiaries than of just `buyers' of modern inputs
and infrastructural services.

Communication is the vital element of rural marketing. It should serve to resolve

social conflicts, encourage cooperation and strengthen competitive spirit during
interactions between rural and urban as well as within rural areas. Another critical
point for communication is the point of conversion of ruralite from an "induced
beneficiary" to an "autonomous buyer".

13

Classification of rural consumers

The rural consumers are classified into the following groups based on their economic status:

The Affluent Group: They are cash rich farmers and a very few in number. They
have affordability but not form a demand base large enough for marketing firms to
depend on. Wheat farmers in Punjab and rice merchants of Andhra Pradesh fall in
this group.

The Middle Class: This is one of the largest segments for manufacturedgoods and
is fast expanding. Farmers cultivating sugar cane in UP andKarnataka fall in this
category.

The Poor: This constitutes a huge segment. Purchasing power is less,but

strength is more. They receive the grants from government and reapthe benefits of
many such schemes and may move towards the middleclass. The farmers of Bihar
and Orissa fall under this category.

Roadblocks of Indian Rural Markets

There are several roadblocks that make it difficult to progress in the rural market. Marketers
encounter a number of problems like dealing with physical distribution, logistics, proper
14

and effective deployment of sales force and effective marketing communication when they
enter rural markets. The major problems are listed below.

1. Standard of living: The number of people below the poverty line is more in rural
markets. Thus the market is also underdeveloped and marketing strategies have to be
different from those used in urban marketing.
2.

Low literacy levels: The low literacy levels in rural areas leads to a problem of
communication. Print media has less utility compared to the other media of
communication.

3.

Low per capita income: Agriculture is the main source of income and hence
spending capacity depends upon the agriculture produce. Demand may not be stable
or regular.

4. Transportation and warehousing: Transportation is one of the biggest challenges

in rural markets. As far as road transportation is concerned, about 50% of Indian
villages are connected by roads. However, the rest of the rural markets do not even
have a proper road linkage which makes physical distribution a tough task. Many
villages are located in hilly terrains that make it difficult to connect them through
roads. Most marketers use tractors or bullock carts in rural areas to distribute their
products. Warehousing is another major problem in rural areas, as there is hardly any
organized agency to look after the storage issue. The services rendered by central
warehousing corporation and state warehousing corporations are limited only to
urban and suburban areas.
5.

Ineffective distribution channels: The distribution chain is not very well organized
and requires a large number of intermediaries, which in turn increases the cost and
creates administrative problems. Due to lack of proper infrastructure, manufacturers

15

are reluctant to open outlets in these areas. They are mainly dependent on dealers,
who are not easily available for rural areas. This is a challenge to the marketers.
6.

Many languages and diversity in culture: Factors like cultural congruence,

different behaviour and language of the respective areas make it difficult to handle
the customers. Traits among the sales force are required to match the various
requirements of these specific areas.

7.

Lack of communication system: Quick communication is the need of the hour for
smooth conduct of business, but it continues to be a far cry in rural areas due to lack
of communication facilities like telegraph and telecommunication systems etc. The
literacy rate in the rural areas is rather low and consumers behaviour in these areas
is traditional, which may be a problem for effective communication.

8. Spurious brands: Cost is an important factor that determines purchasing decision in

rural areas. A lot of spurious brands or look-alikes are available, providing a low
cost option to the rural customer. Many a time the rural customer may not be aware
of the difference due to illiteracy.
9. Seasonal demand: Demand may be seasonal due to dependency on agricultural
income. Harvest season might see an increase in disposable income and hence more
purchasing power.
10. Dispersed markets: Rural population is highly dispersed and requires a lot of
marketing efforts in terms of distribution and communication.

Attractiveness of rural market

16

Large population

Rising prosperity

Growth in consumption

Life cycle changes

Life cycle advantages

Market growth rate higher than urban

Rural marketing is not expensive

Remoteness is no longer a problem

1.

Large Population: The rural population is large and its growth rate is also high.
Despite the rural urban migration, the rural areas continue to be the place of living
majority of Indians.

17

2. Rising Rural Propensity:

INCOME GROUP
ABOVE RS. 100,000
RS. 77,001-100,000
RS. 50,001-77,000
RS. 25,001-50,000
RS.25,000 & BELOW

1994-95
1.6
2.7
8.3
26.0
61.4

2000-01
3.8
4.7
13.0
41.1
37.4

2006-07
5.6
5.8
22.4
44.6
20.2

Thus we see that population between income level of Rs. 25,000- 77,000 will
increase from 34.3% in 1994-95 to 67.0% in 2006-07. The rural consuming class is
increasing by about 3-4% per annum, which roughly translates into 1.2 million new
consumers yearly.

3. Growth in consumption:
PER CAPITA HOUSEHOLD EXPENDITURE (IS RS.)
LEVEL

NO.

High
7
(Above Rs 382/-)

Average
5
(Rs. 382/-)
Low
3
(Below Rs. 382/-)

STATES
Punjab
Kerala
Haryana
Rajasthan
Gujarat
Andhra Pradesh
Maharastra
West Bengal
Orissa
Tamil Naidu
Uttar Pradesh
Karnataka
Assam
Madhya Pradesh
Bihar

EXPENDITURE
614
604
546
452
416
386
384
382
381
381
373
365
338
326
289

Distribution households income wise (projection in Rs Crore)

18

INCOME
GROUPS

HIGH
MIDDLE
LOW
TOTAL

2001 02
RURAL
TOTAL NO.
0.26
0.07
12.04
7.73
5.7
5.09
18.04
12.89

2006 07
RURAL
TOTAL NO.
0.52
0.12
16.72
10.32
3.68
3.52
20.90
13.96

%
26.9
64.2
88.7
71.4

%
23.1
61.8
95.7
66.7

Spending pattern (Rural Households in Rs.)

ITEM

% RIC
H

FOOD ARTICLES
TOILETRIES
WASHING
MATERIAL
COSMETICS
OTC PRODUCTS
OTHERS
TOTAL

POO

AVERAGE

44 147
20 67

73
33

95
43

13 43

22

28

10 33
4 13
9 30
333

17
6
15
166

21
9
19
215

Average rural household spends on consumables excluding food grains, milk &
vegetables are Rs. 215/-.

4. Life style changes:

19

Income vs. usage of packed consumer goods (% of household using)

MONTHLY HOUSEHOLD INCOME (RS.)

UP
TO 351 750 751 1500 1501 +

GOODS
WASHING CAKES/BARS
TOILET SOAPS
TOOTH

350
60
57
22

78
72
36

86
89
65

91
93
85

PASTE/POWDER
TALCUM POWDER
TEA (PACKAGED)

20
22

25
30

41
48

63
64

5. Life cycle advantage:

STAGES IN LIFE CYCLE

PRODUCT

URBAN

MARKET

RURAL

GROWTH
Popular soaps
Premium soaps
Washing powder
Skin creams
Talcum powder

Maturity
Late growth
Late growth
Maturity
Maturity

RATE %
2
11
6
1.1
4

Growth
Early growth
Early growth
Growth
Growth

6. Market growth rates higher: Growth rates of the FMCG market and the

durable

market are higher in rural areas for many products. The rural market share will be
more than 50% for the products like toilet soaps, body talcum powder, cooking
medium (oil), cooking medium (vanaspati), tea, cigarettes and hair oil.

20

7. Rural marketing is not expensive: Conventional wisdom dictates that since rural
consumers are dispersed, reaching them is costly. However, new research indicates that
the selling in Rural India is not expensive. According to one research it costs roughly
Rs.1 Crore to promote a consumer durable inside a state. This includes the expenses of
advertising in vernacular newspapers, television spots, in-cinema advertising, radio,
van operations and merchandising and point of purchase promotion. Campaign like
this, which can reach millions, costs twice as much in urban area.

8. Remoteness is no longer a problem: Remoteness in a problem but not

insurmountable. The rural distribution is not much developed for the reasons,

Lack of proper infrastructure such as all-weather roads, electrification and

sanitation, and
Lack of marketers imagination and initiative.

Marketers have so far, failed in analyzing the rural side and exploiting rural Indias
traditional selling system- Haats & Melas.Their near obsession with just duplicating
the urban-type network and that too with very limited success, has kept them blind
to the potential of these two outlets.

21

RURAL VS URBAN MARKETING-SUMMARY

NO.
1

ASPECT

URBAN
Marketing & Societal

RURAL
Marketing & Societal

Concepts &

Concepts,

Relationship

Development

Marketing

Marketing &

PHILOSOPHY
Relationship
Marketing
2

A)
B)
C)

MARKET
DEMAND
COMPETITION
CONSUMERS
LOCATION
LITERACY
INCOME
EXPENDITURE
NEEDS
INNOVATION/ADOPTION

PRODUCT
AWARENESS
CONCEPT
POSITIONING
USAGE METHOD
QUALITY PREFERENCE
PRICE
SENSITIVE
LEVEL DESIRED

High
Among Units In

Low
Mostly From

Organized Sector

Unorganized Units

Concentrated
High
High
Planned, Even
High Level
Faster

Widely Spread
Low
Low
Seasonal, Variation
Low Level
Slow

High
Known
Easy
Easily Grasped
Good

Low
Less Known
Difficult
Difficult To Grasp
Moderate

Yes
Medium-high

Very much
Medium-low
22

DISTRIBUTION

Wholesalers, stockists,

Village shops,

retailer, supermarket,

Haats

CHANNELS

specialty stores, &

TRANSPORT FACILITIES
PRODUCT

authorised showrooms
Good
High

Average
Limited

Print, audio visual

TV, radio, print media

media, outdoors,

to some extent. More

exhibitions etc. few

languages

languages
Door-to-door,

Occasionally

frequently
Contests, gifts, price

Gifts, price discounts

discount
Good opportunities

Less opportunities

AVAILABILITY
6

PROMOTION

ADVERTISING

PERSONAL SELLING
SALES PROMOTION
PUBLICITY

Special Products for Rural Markets:

Rural Transporter: Mahindra & Mahindra is busy developing the prototype of what it
calls a Rural Transporter basically a hybrid between a tractor and a rural transport
vehicle. The product at 20-25 HP will be targeted at those who cannot afford a normal
tractor and would also fulfill the need of family transporter that could take in the rural
roughs but would be much more comfortable and safer than the conventional tractortrolley.

Sampoorna TV: LG Electronics, the Korean firm has rejigged the TV to appeal to local
needs. It spent Rs. 21 Lacs to develop a set that would have on-screen displays in the

23

vernacular languages of Hindi, Tamil and Bengali. The logic, rural consumers
unfamiliar with English would still be able to use the TV without being intimidated.

Titan Watches: A recent NCAER study revealed that there is a great potential for
watches in rural areas. In fact it is considered to be a high priority list. It was also found
that a rural consumer looks for the ruggedness of the watch more than the urban
consumer does. He prefers thick watches than slim watches.

The biggest problem that the Marketers are facing in the Rural Markets is Of
IMITATIONS. Imitations may result in two types of goods depending upon the purpose,
commitment, and competence of imitator. A poor imitator will end up in producing
deceptive, spurious, fake, copycat products. He dupes the gullible customer by offering
products having close resemblance with the original. In quality, it is poor cousin to the
original. On the other hand, a poor imitator may even produce an improved version of the
original product.

In this scenario the job of the Marketer becomes even more difficult in the sense that he has
not to fight other competitors but also the imitated products.

The advantages that these products enjoy in the rural markets are that the Imitators who are
in the villages are making these and they are offering More Margins & Better credit
Facilities.

To solve this problem the Marketer has to educate the consumer about his product and show
him the benefits of his products over the imitated ones.

Need-Product Relationships and the changes happening in Rural India

24

Needs

Old Products

New Products

Brushing Teeth

Neem sticks, Charcoal,

Toothpaste, tooth powder

Washing Vessels

Rocksalt, Husk
Coconut fiber, Earthy

Washing Powders, soaps

Transport

materials, Brick Powder, Ash

Bullock Cart, Horses,

and liquids
Tractors, LCVs, Mopeds,

Irrigation

Donkeys
Wells, Canals, Water lifters,

Scooters, Motor cycles

Bore-wells, Motors, Power

Hair Wash

Wind Mills
Shikakai powder, Retha,

Generators, Pump Sets

Shampoos and hair care

Besan

soaps

25

Rural Consumer Behaviour

Consumer Buyer Behaviour refers to the buying behaviour of final consumers - individuals
and households who buy goods and services for personal consumption. All of these final
consumers combined make up the consumer market.
The consumer market in this case is Rural India. About 70% of Indias population lives in
rural areas. There are more than 600,000 villages in the country as against about 300 cities
and 4600 towns. Consumers in this huge segment have displayed vast differences in their
purchase decisions and the product use. Villagers react differently to different products,
colours, sizes, etc. in different parts of India. Thus utmost care in terms of understanding
consumer psyche needs to be taken while marketing products to rural India.
Thus, it is important to study the thought process that goes into making a purchase decision,
so that marketers can reach this huge untapped segment.

Factors influencing buying behavior

The various factors that affect buying behavior of in rural India are:
1. Environmental of the consumer - The environment or the surroundings, within
which the consumer lives, has a very strong influence on the buyer behavior,
egs. Electrification, water supply affects demand for durables.
2. Geographic influences - The geographic location in which the rural consumer is
located also speaks about the thought process of the consumer. For instance,
villages in South India accept technology quicker than in other parts of India.

26

Thus, HMT sells more winding watches in the north while they sell more quartz
watches down south.
3. Family it is an important buying decision making organization in consumer
markets. Family size & the roles played by family members exercise
considerable influence on the purchase decisions. Industry observers are
increasingly realizing that at times, purchase of durable has less to do with
income, but has more to do with the size of the family & thats where rural India
with joint family structures, becomes an attractive proposition.
4. Economic factors The quantum of income & the earning stream are one of the
major deciding factors, which determine to a great extent, what the customer will
be able to buy. Many people in the rural market are below poverty line & for
large number of people, agriculture is the primary occupation. More than 70% of
the people are in small-scale agricultural operation. These factors affect the
purchase decision.
5. Place of purchase (60% prefer HAATS due to better quality, variety & price)
Companies need to assess the influence of retailers on both consumers at village
shops and at haats.
6. Creative use of product ex Godrej hair dye being used as a paint to colour horns
of oxen, Washing machine being used for churning lassi. The study of product
end provides indicators to the company on the need for education and also for
new product ideas.
7. Brand preference and loyalty (80% of sale is branded items in 16 product
categories)

Cultural factors influencing consumer behaviour

27

Cultural factors exert the broadest and deepest influence on consumer behaviour. The
marketer needs to understand the role played by the buyers culture. Culture is the most
basic element that shapes a persons wants and behaviour.
In India, there are so many different cultures, which only goes on to make the marketers
job tougher. Some of the few cultural factors that influence buyer behaviour are:
1. Product (colour, size, design, and shape): There are many examples that support this
point.
a. For example, the Tata Sumo, which was launched in rural India in a white
colour, was not well accepted. But however, when the same Sumo was relaunched as Spacio (a different name) and in a bright yellow colour, with a
larger seating capacity and ability to transport good, the acceptance was
higher.
b. Another good example would be Philips audio systems. Urban India looks at
technology with the viewpoint of the smaller the better. However, in rural
India, the viewpoint is totally opposite. That is the main reason for the large
acceptance of big audio systems. Thus Philips makes audio systems, which
are big in size and get accepted in rural India by their sheer size.
2. Social practices: There are so many different cultures, and each culture exhibits
different social practices.
For example, in a few villages they have common bath areas. Villagers used
to buy one Lifebuoy cake and cut it into smaller bars. This helped lifebuoy to
introduce smaller 75-gram soap bars, which could be used individually.
3. Decision-making by male head: The male in Indian culture has always been given
the designation of key decision maker.
28

For example, the Mukhiyas opinion (Head of the village), in most cases, is
shared with the rest of the village. Even in a house the male head is the final
decision maker. In rural areas, this trend is very prominent.
4. Changes in saving and investment patterns From gold, land, to tractors, VCRs,
LCVs

4 As approach of Indian Rural Market

The rural market may be appealing but it is not without its problems: Low per capita
disposable incomes that is half the urban disposable income; large number of daily wage
earners, acute dependence on the vagaries of the monsoon; seasonal consumption linked to
harvests and festivals and special occasions; poor roads; power problems; and
inaccessibility to conventional advertising media.
However, the rural consumer is not unlike his urban counterpart in many ways.
The more daring MNCs are meeting the consequent challenges of availability, affordability,
acceptability and awareness (the so-called 4 As)
29

Availability

The first challenge is to ensure availability of the product or service. India's 627,000
villages are spread over 3.2 million sq km; 700 million Indians may live in rural areas,
finding them is not easy. However, given the poor state of roads, it is an even greater
challenge to regularly reach products to the far-flung villages. Any serious marketer must
strive to reach at least 13,113 villages with a population of more than 5,000. Marketers must
trade off the distribution cost with incremental market saturation. Over the years, India's
largest MNC, Hindustan Lever, a subsidiary of Unilever, has built a strong distribution
system which helps its brands reach the interiors of the rural market.
To service remote village, stockiest use autorickshaws, bullock-carts and even boats in the
backwaters of Kerala. Coca-Cola, which considers rural India as a future growth driver, has
evolved a hub and spoke distribution model to reach the villages. To ensure full loads, the
company depot supplies, twice a week, large distributors which who act as hubs. These
distributors appoint and supply, once a week, smaller distributors in adjoining areas. LG
Electronics defines all cities and towns other than the seven metros cities as rural and semiurban market. To tap these unexplored country markets, LG has set up 45 area offices and
59 rural/remote area offices.

Affordability

The second challenge is to ensure affordability of the product or service. With low
disposable incomes, products need to be affordable to the rural consumer, most of who are
on daily wages. Some companies have addressed the affordability problem by introducing
small unit packs. Most of the shampoos are available in smaller packs. Fair and lovely was
30

launched in a smaller pack. Colgate toothpaste launched its smaller packs to cater to the
travelling segment and the rural consumers.Godrej recently introduced three brands of
Cinthol, Fair Glow and Godrej in 50-gm packs, priced at Rs 4-5 meant specifically for
Madhya Pradesh, Bihar and Uttar Pradesh the so-called `Bimaru' States.
Hindustan Lever, among the first MNCs to realize the potential of India's rural market, has
launched a variant of its largest selling soap brand, Lifebuoy at Rs 2 for 50 gm. The move is
mainly targeted at the rural market. Coca-Cola has addressed the affordability issue by
introducing the returnable 200-ml glass bottle priced at Rs 5. The initiative has paid off:
Eighty per cent of new drinkers now come from the rural markets. Coca-Cola has also
introduced Sunfill, a powdered soft-drink concentrate. The instant and ready-to-mix Sunfill
is available in a single-serve sachet of 25 gm priced at Rs 2 and multi serve sachet of 200
gm priced at Rs 15.

Acceptability

The third challenge is to gain acceptability for the product or service. Therefore, there is a
need to offer products that suit the rural market. One company which has reaped rich
dividends by doing so is LG Electronics. In 1998, it developed a customized TV for the
rural market and christened it Sampoorna. It was a runway hit selling 100,000 sets in the
very first year. Because of the lack of electricity and refrigerators in the rural areas, CocaCola provides low-cost ice boxes a tin box for new outlets and thermocol box for
seasonal outlets.
The insurance companies that have tailor-made products for the rural market have
performed well. HDFC Standard LIFE topped private insurers by selling policies worth Rs
3.5 crores in total premium. The company tied up with non-governmental organizations and
offered reasonably-priced policies in the nature of group insurance covers. With large parts
of rural India inaccessible to conventional advertising media only 41 per cent rural
31

households have access to TV building awareness is another challenge. Fortunately,

however, the rural consumer has the same likes as the urban consumer movies and music
and for both the urban and rural consumer, the family is the key unit of identity.
However, the rural consumer expressions differ from his urban counterpart. Outing for the
former is confined to local fairs and festivals and TV viewing is confined to the state-owned
Doordarshan. Consumption of branded products is treated as a special treat or luxury.

Awareness

Brand awareness is another challenge. Fortunately, however, the rural consumer has the
same likes as the urban consumer movies and music and for both the urban and rural
consumer, the family is the key unit of identity. However, the rural consumer expressions
differ from his urban counterpart. Outing for the former is confined to local fairs and
festivals and TV viewing is confined to the state-owned Doordarshan. Consumption of
branded products is treated as a special treat or indulgence.
Hindustan Lever relies heavily on its own company-organized media. These are
promotional events organized by stockiest. Godrej Consumer Products, which is trying to
push its soap brands into the interior areas, uses radio to reach the local people in their
language.
Coca-Cola uses a combination of TV, cinema and radio to reach 53.6 per cent of rural
households. It doubled its spend on advertising on Doordarshan, which alone reached 41
per cent of rural households. It has also used banners, posters and tapped all the local forms
of entertainment. Since price is a key issue in the rural areas, Coca-Cola advertising stressed
its `magical' price point of Rs 5 per bottle in all media. LG Electronics uses vans and road
shows to reach rural customers. The company uses local language advertising. Philips India
uses wall writing and radio advertising to drive its growth in rural areas.

32

The key dilemma for MNCs ready to tap the large and fast-growing rural market is whether
they can do so without hurting the company's profit margins.

Evolving a New Marketing Mix for Selling to Rural

Indians

12.2% of the world lives in Rural India. Put in a different context, this works out to 1 in 8 people on
Earth. Being able to successfully tap this growing market is every marketers dream. However,
myths abound. Indias rural markets are often misunderstood. A clear distinction needs to be made
with regard to the reality versus the image of rural India. If such a distinction is not made, we will be
unable to distinguish between the serpent and the rope and the rope and the serpent.

The rural market is not homogeneous. Though the aggregate size is very large, individual subsets of
this market tend to be rather small and disparate. Geographical, demographical, statistical, logistical
differences are very apparent. Positioning and realities regarding the potential of each of these
market segments differ and lie at the very core of forming the strategy for the rural markets.

The face of Indian agriculture is changing from dry land and irrigated agriculture into high-tech and
low-tech agriculture. Farmers in states like Maharashtra and Andhra Pradesh have reaped the
benefits of adopting new age farming practices, including green house cultivation, fert-irrigation and
hydroponics. This has radically changed the economics of farming, with the investment in these

33

systems lowering the cost of cultivation, increasing yields due to integrated crop management
practices and reducing the dependence on rainfall. As a result, disposable income has grown sharply.
The aspirants are becoming climbers showing a sustained economic upturn as purchasing power is
increasing in the rural markets. The proportion of very rich has increased five- fold. The growing
incomes have modified demand patterns and buyer behaviour. Moreover, the need for a product or
service is now adequately backed up with the capacity, ability and willingness to pay.

However, the market still remains largely unexploited. At most times, potential markets need to
be found and at times, even created. Such creation of demand needs efficient management of the
supply chain. To increase market share, behavioural change needs to be at the forefront of any
strategy. Further, due to the diversity of this market, marketers need to think, plan and act locally.

It is therefore essential to develop an accurate Marketing Mix for selling to rural Indians.

Product
The Rural market is not a homogenous set of customers with preferences frozen in time. When
developing products in any category, marketers must identify the typical rural specific needs. Urban
products cannot be dumped onto rural markets without modifications. Tailor-made products are
better received by the rural audience as the consumers feel empowered and tend to dentify with the
offering.

For instance, shampoos or soaps with distinctive, strong rose or jasmine perfumes are very popular
with the rural women in South India. The urban women do not identify as strongly with these
perfumes. Sachetization is also a distinctly rural-driven phenomenon. As demand in several
categories is being created, intensity of use is quite low. On average, rural folk would use a shampoo
only once a week. Habits take time to change and making unit sachet packs affordable is the key to
inducing trial and purchase.

34

Systematic, in-depth research that can help understand the depths of the mind of the villagers,
their buying criteria, purchase patterns and purchasing power are an essential input while
developing rural specific products or services.

A common error has been to launch a completely stripped down version of the urban product in the
rural market, with the objective of offering the lowest possible price. This is not what a rural
consumer wants. What is required is to introduce a product with essential features, whose needs
are recognized and for which the consumer is willing to pay (value-adding features). Product
developers should aim at eliminating all the cost-adding features, i.e., features which a consumer is
unwilling to pay for as he sees no obvious utility. This would redefine value in the minds of the
consumer and tremendously increase product acceptability.

Product development is severely constrained by legislation in the case of agricultural inputs like
fertilizers, insecticides and pesticides. In the case of fertilizers for instance, though levels of
deficiency of nutrients have increased significantly over the past decade, no significant changes in
formulations notified under the Fertilizer Control Order have taken place. This has severely
restricted the availability of cost effective specialty fertilizers of global standards to Indian farmers.
Technological know-how for manufacture of such fertilizers exists within the country. However,
farmers using modern farming practices are unable to get an assured supply of such farm inputs due
to draconian legislation. A move to liberalize the sector could perhaps consider the accepted
worldwide norm of allowing manufacturers with a strong R&D base to decide their own
formulations with the government machinery conducting checks on market samples of finished
products to ensure that they live up to the labelled specifications. This would be a major policy
initiative that would give a huge impetus to innovative product development in the farm sector.

Product life cycles as are becoming shorter and these are having their impact on company life
cycles. Thus for any company wishing to develop its product portfolio, allegiance to the classic
American P-A-L Principle of Partnership - Alliances - Linkages is a basis for survival.

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Pricing
Every marketer must realize that the rural consumer is not a miser. He is not simply looking
for the cheapest product in every category. He understands and demands value for money in
every purchase that he makes. Pricing therefore is a direct function of factors including
cost-benefit advantage and opportunity cost. Pricing offered to consumers should be for
value offerings that are affordable. Price sensitivity is extremely high and comparison with
competitive prices is common. Consumers seem to create narrow psychological price bands
in their minds for product groups and price elasticity beyond the extreme price points is
very high. The perceived utility or value of the product or service is the ultimate decision
making factor.

It is certain however, that buying cheap is not the primary objective. Rather, it is buying smart. A
study revealed that the average rural consumer takes approximately 2 years to decide on buying a
watch! He will not do so unless he is totally convinced that he is getting value for Money. Impulse
buys and purchases for conspicuous consumption are also extremely few and far Between
considering the value for money factor that reigns supreme in most rural purchase decisions.

It must be remembered that the rural consumer does not have a budget problem. He has a cash flow
problem. This is because the village folk receive funds only twice a year. At these times, he is
capable of making high volume purchases. At all times, however, the unit price is critical and so is
the pack size. Because of this, in the lean season when there is a cash flow crunch, marketers need to
provide financial products, schemes or solutions that suit the needs of the rural population.

Promotions & Advertising

36

There are a lot of barriers that militate against homogenous media and message delivery. These
barriers stem from the fact that rural markets vary immensely in terms of tastes, habits and
preferences leading to different expectations of every segment of the population.

However, one fact is certain across all areas. The rural consumer likes to touch and feel a product
before making a choice. Demonstrations are undoubtedly the most effective promotional tool that
shapes purchase decisions of the rural population. Demonstrations establish the credentials of any
new technology used in developing the product.

In todays information era, it is very important for companies to wise-up on emerging technologies.
It has in fact become a medium to attract larger audiences for a product demonstration. Technology
must be used to prepare a database of customers and their requirements. The use of video using
mobile vans and even large screen video walls at events should be arranged.

The classic conundrums of reach and coverage of the media are shattered. Several creative
communication media have been used by various companies to tackle the problem of having to use
visual communication and non-verbal communication to reach the rural audience. This is required
because a large proportion of the rural population cannot read or write. Alliances with cottage
industries, dharmsalas, panchayats, post offices and police stations for advertising have also helped
immensely. More importantly, in rural India, experience has proved time and time again that word of
mouth is the key influencer.

Intermediaries are the foundation to rural distribution. If the intermediary understands and is
constantly reminded about your product, then the end user will not be allowed to forget. The
companies must reinforce this highly effective medium and use all their innovation and money tom
develop more dramatic point of sale and point of contact material. This becomes all the more
important when in rural India, more often than not, the overlap between the product categories sold
in a single outlet in tremendous. For instance, a store may call itself as a grocery store but will stock
everything from groceries to vegetables to fertilizers and may at times even stock medicines. In such

37

cases, the point at which the customer actually comes in contact with a product may not be the point
at which the sale is affected.

The re-use capacity and colour of the container in which the product is packed is also a crucial
factor. In fact, reusable packaging is considered a major aid in promoting sales for products in the
rural market.

Consumer and Trade schemes that Incentivise Spending using discount coupons, off season
discounts, free samples, etc. encourage spending. Lucky draws and gift schemes are a major hit in
most states.

The use of local idioms and colloquial expressions are an excellent way to strike a rapport with the
rural consumer and must be borne in mind when developing media plans and public relations
programmes. No high voltage publicity is required. The rural consumer is very down to earth but
equally discerning and marketers need to step into the shoes of the rural folk while creating product
promotion campaigns.

Another unique feature of rural markets is that the Decision making process is collective. The
persons involved in the purchase process - influencer, decider, buyer, one who pays can all be
different. So marketers must address brand messages in their campaigns at several levels. Apart
from regular household goods, several agribusiness companies have also started providing gift
schemes with offers for free jewellery that influences the ladies to pressure the farmers to purchase
agricultural inputs from select companies. This promotion strategy thus makes women influence
purchase decisions that they would ordinarily not be involved in.

Youth power is becoming increasingly evident in villages. Rural youth bring brand knowledge to the
households. This has forced several companies to change the focus and positioning of their products
and services towards this segment that is growing in absolute number and relative influence.

38

There are other attributes in the promotion strategy which are explained as under:
1.

Mass media: In the present world mass media is a powerful medium of

communication. The following are the mass media generally used:

Television.
Cinema
Radio
Print media: Handbills and Booklets, posters, stickers, banners, etc.
2.

Personal selling and opinion leaders: In personal selling it is required that the

potential users are identified and awareness is created among them about the product, its
features, uses and benefits. This can be achieved only by personal selling by highly
motivated sales person. In fact the word of mouth information holds lot validity in rural
areas even today. This is the reason why opinion leaders and word of mouth are thriving
among rural consumers. An opinion leader in rural areas can be defined as a person who is
considered to be knowledgeable and is consulted by others and his advice is normally
followed. The opinion leaders may be big landlords or politicians or progressive farmers.
3. Special campaigns: During crop harvest and marketing seasons it is beneficial to take
up special promotion campaigns in rural areas. Tractor owners (tonee) conducted by MRF
Limited is one such example. Brooks Bond carries out marches in rural areas with band,
music and caparisoned elephants to promote their brand of tea.

Mandi and Mela magic

At last count, India witnessed over 50,000 melas. Of these 25,000 meals are held to signify
religious, cultural festivals as well as local fairs and events. On an average, visitors at these melas

39

spend between Rs. 5,000 to Rs. 50,000 a day. For example, 3 lakh people visited the annual mela at
Navchadi which lasts for 7 days in Meerut. The largest such mela is the Maha Kumbh Mela which is
visited by an average of 12 crore people.

There is however, a caveat when an organization is considering using mela for marketing their
products. Is the audience at this mela fit for promotion of the product at hand? What are the
psychographics of this audience? What is the motivational and behavioural impetus that brings
visitors to each of these melas. On considering these questions, it has been observed that melas are
fit to generate product exposure, package familiarity, brand reminder and word of mouth. However,
for products that need concept marketing and those that have high prices, such melas are not suitable
promotion media. This is because the time and the mood of the people that visit these melas are not
right to digest technical information or for making large purchases. People come to melas to have a
good time and are not reminded of such high technology or high priced products when they return
home. In the words of Mr. Neville Gomes, Managing Director of Multimedia Aquarius, promotion
at melas is like a one night stand. There will be no reminder later. Thus, a large amount of
qualitative judgment is indeed in planning promotions at melas by media planners.

Place
place is the major reason behind the evolution of rural marketing as a distinct discipline. A village as
a place for promotion, distribution & consumption is very different from a town or city, thus the
general marketing theories cant be applied directly in rural markets.
Reaching the right place is the toughest part in todays rural marketing, as most of the products
reach up to the nearest townships of any village, but due to higher distribution costs, these products
fails to reach the village as the distribution channel fails to put in the required efforts. Most of the
times, the rural retailers themselves go to the urban areas to procure these goods. Rural markets
imply complex logistical challenges that show up as high distribution costs.

Significance of Distribution

40

No matter how well devised a companys product, pricing or promotion strategy, the most crucial
link in ensuring the success of rural marketing efforts is distribution. Distribution must be
strengthened and this would raise investment cost barriers for new entrants.

In Rural India, the selection and use of distribution channels is a nightmare. The reason for this is
very clear when we consider that on an average, Urban and Rural India both have approximately 3
million retail outlets. However, Urban India has only 4,000 towns where these outlets are located.
On the other hand, Rural Indias 3 million outlets are located in 6.3 lakh villages. Thus, marketers
are faced with the problem of feeding 3 million shops located in vastly diverse areas each of which
records an average sale of only Rs.5,000 per outlet. Further compounding this problem is the fact
that even this meagre sale is mostly on credit. The diversity in the distribution of shops is the selflimiting factor in terms of servicing the rural distribution network.

41

The distribution of outlets however shows that a marketer need not be present in all markets at all
times. Being present in 6 lakh villages is virtually impossible for an organization of any size. Rural
wealth and demand is concentrated typically at satellite towns, district headquarters, assembly
markets and such central locations. Rural distribution has a rigid hierarchy of markets that make
channel decisions relatively structured.

It is essential for rural marketing companies to understand this hierarchy. Rural folk are habituated
to travelling once a week for their weekly purchases to a satellite town. They do not expect such
items to be present in every village. For durables where the outlay involved is typically large, the
purchase would be made in an assembly market for reasons of choice and availability of adequate
cash flow. This is due to the fact that it is at assembly markets that auction yards are present where
the farmers congregate to sell their output. After such sale of produce, they are cash rich and can
afford to make such purchases. It is therefore not necessary for a marketer of TV sets to take their
distribution channel all the way down to the village shop. A TV will not be sold there as the cash
flow does not exist at that point in the hierarchy of markets. A television distributor must be present
at assembly markets which are much smaller in number, more controllable, easier to reach and
service. Keeping the hierarchy in mind will help decide the optimum level of penetration required to
reach a critical mass of rural consumers.

Haats

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Haats are the nerve centre of Rural India. They are a readymade distribution network embedded in
the fabric of rural society for over 1000 years. They have been held on a regular basis across the
length and breadth of the country for over 1000 years. Right from the time of Chandragupta Maurya,
Haats are seen as a place for social, cultural and economic interchange.

One in every five villages with a population of over 2000 has a haat. In villages with less than 2000
people this figure reduces to 1 in 20 villages. Typically, an average haat will have close to 300 stalls.
A haat usually serves around 5000 visitors. Considering that the average population of an Indian
village is approximately 1000, each haat serves 5 villages. A study estimates that 47,000 haats are
conducted in rural India. These rural super markets are much larger than all the world's K-marts and
Wal-marts put together.

A lot of re-distribution also occurs through haats. This is because, a large number of retailers and
sub-wholesalers buy from haats for their village stores. What is most attractive to marketers is that
90% + of sales in haats are on cash basis. Traditionally, in village shops a lot of credit sales occur
due to the fact that in a small geographic area of a village, everybody knows everybody. Considering
that over 5000 visit a haat from 5 villages, the system gets derelationalised. Apart from the 90% cash
sale, 5 to 7% is conducted on barter system and the rest 3 to 5% is on credit. Also attractive to
companies wishing to use the system is the low selling overheads. Participation fees at haats are a
flat Re.1 to Rs.5 per stall and this rate is common to a giant like Hindustan Lever and the smallest
local seller.

Distribution costs must be reduced through optimum utilization of the network. Thus, incorporating
haats in the distribution strategy of a rural marketing organization selling consumer goods and
FMCG products (typically once a week purchase items) is a tremendous opportunity.

Perhaps the other most important factor to consider while developing rural distribution strategy is
that the move from transactional marketing to relationship marketing is most evident in the village
market. A strong bond needs to be created with every consumer even in the remotest village and the

43

smallest town. Marketing in Rural India is undoubtedly a long-haul exercise and one that involves
great expense. Only those with a strong mind, a tough heart and stiff hands survive.

There is also a need to realise that the dealer is the company's "unpaid" sales force. It is essential
to educate and involve him as he is the local company representative and is the only member in
the channel of distribution that is in direct contact with the final consumer. The dealers' feedback
needs to be obtained as the direction for future strategy emanates here.

MARKRTING STRATEGIES TO CAPTURE RURAL INDIA

SEGMENTATION OF RURAL MARKET

The first step is to develop & implement any strategy for the rural market should include the
appropriate segmentation of the rural market. The important thing is that appropriate
segmentation basis need to be applied. Different product categories have different rural
markets to cater to & these can be selected by applying different criteria of segmentation.
The organization can do the following thing to start with:
Focus on select markets.
Focus on select villages.

BY COMMUNICATING AND CHANGING QUALITY PERCEPTION

Companies are coming up with new technology and they are properly communicating it to
the customer. There is a trade of between Quality a customer perceives and a company
44

wants to communicate. Thus, this positioning of technology is very crucial. The perception
of the Indian about the desired product is changing. Now they know the difference between
the products and the utilities derived out of it. As a rural Indian customer always wanted
value for money with the changed perception, one can notice difference in current market
scenario.

BY PROPER COMMUNICATION IN INDIAN LANGUAGE

The companies have realized the importance of proper communication in local language for
promoting their products. They have started selling the concept of quality with proper
communication. Their main focus is to change the Indian customer outlook about quality.
With their promotion, rural customer started asking for value for money.

BY TARGET CHANGING PERCEPTION

If one go to villages they will see that villagers using Toothpaste, even when they can use
Neem or Babool sticks or Gudakhu, villagers are using soaps like Nima rose, Breeze,
Cinthol etc. even when they can use locally manufactured very low priced soaps. Villagers
are constantly looking forward for new branded products. What can one infer from these
incidents, is the paradigm changing and customer no longer price sensitive? Indian
customer was never price sensitive, but they want value for money. They are ready to pay
premium for the product if the product is offering some extra utility for the premium.

45

BY UNDERSTANDING CULTURAL AND SOCIAL VALUES

Companies have recognized that social and cultural values have a very strong hold on the
people. Cultural values play major role in deciding what to buy. Moreover, rural people are
emotional and sensitive. Thus, to promote their brands, they are exploiting social and
cultural values.

BY PROVIDING WHAT CUSTOMER WANT

The customers want value for money. They do not see any value in frills associated with the
products. They aim for the basic functionality. However, if the seller provides frills free of
cost they are happy with that. They are happy with such a high technology that can fulfil
their need. As "Motorola" has launched, seven models of Cellular Phones of high
technology but none took off. On the other hand, "Nokia" has launched a simple product,
which has captured the market.

BY PROMOTING PRODUCTS WITH INDIAN MODELS AND ACTORS

Companies are picking up Indian models, actors for advertisements as this helps them to
show themselves as an Indian company. Diana Hyden and Shahrukh Khan are chosen as a
brand ambassador for MNC quartz clock maker "OMEGA" even though when they have
models like Cindy Crawford.

BY ASSOCIATING THEMSELVES WITH INDIA

46

MNCs are associating themselves with India by talking about India, by explicitly saying
that they are Indian. M-TV during Independence Day and Republic daytime make their logo
with Indian tri-colour. Nokia has designed a new cellular phone 5110, with the India tricolour and a ringing tone of "Sare Jahan se achcha".

BY PROMOTING INDIAN SPORTS TEAM

Companies are promoting Indian sports teams so that they can associate themselves with
India. With this, they influence Indian mindset. LG has launched a campaign "LG ki Dua,
all the best". ITC is promoting Indian cricket team for years; during world cup they have
launched a campaign "Jeeta hai jitega apna Hindustan India India India". Similarly,
Whirlpool has also launched a campaign during world cup.

BY TALKING ABOUT A NORMAL INDIAN

Companies are now talking about normal India. It is a normal tendency of an Indian to try to
associate him/her with the product. If he/she can visualize himself/herself with the product,
he /she become loyal to it. That is why companies like Daewoo based their advertisements
on a normal Indian family.

BY DEVELOPING RURAL-SPECIFIC PRODUCTS

Many companies are developing rural-specific products. Keeping into consideration the
requirements, a firm develops these products. Electrolux is working on a made-for India

47

fridge designed to serve basic purposes: chill drinking water, keep cooked food fresh, and to
withstand long power cuts.

BY GIVING INDIAN WORDS FOR BRANDS

Companies use Indian words for brands. Like LG has used India brand name "Sampoorna"
for its newly launched TV. The word is a part of the Bengali, Hindi, Marathi and Tamil
tongue. In the past one year, LG has sold one lakh 20-inch Sampoorna TVs, all in towns
with a population of around 10,000.

BY ACQUIRING INDIAN BRANDS

As Indian brands are operating in India for a long time and they enjoy a good reputation in
India. MNCs have found that it is much easier for them to operate in India if they acquire an
Established Indian Brand. Electrolux has acquired two Indian brands Kelvinator and Allwyn
this has gave them the well-established distribution channel. As well as trust of people, as
people believe these brands. Similarly Coke has acquired Thumps up, Gold Spot, Citra and
Limca so that they can kill these brands, but later on they realized that to survive in the
market and to compete with their competitor they have to rejuvenate these brands.

BY EFFECTIVE MEDIA COMMUNICATION

Media Rural marketing is being used by companies. They can either go for the traditional
media or the modern media. The traditional media include melas, puppetry, folk theatre etc.
while the modern media includes TV, radio, and e-chaupal. LIC uses puppets to educate
48

rural masses about its insurance policies. Govt of India uses puppetry in its campaigns to
press ahead social issues. Brook Bond Lipton India ltd used magicians electively for launch
of Kadak Chap Tea in Etawah district. In between such a show, the lights are switched of
and a torch is flashed in the dark (EVEREADYs tact).

BY ADOPTING LOCALISED WAY OF DISTRIBUTING

Proper distribution channels are recognized by companies. The distribution channel could
be big scale Super markets; they thought that a similar system can be grown in India.
However, they were wrong; soon they realized that to succeed in India they have to reach
the nook and the corner of the country. They have to reach the "local Paan wala, Local
Baniya" only they can succeed. MNC shoe giants, Adidas, Reebok, and Nike started with
exclusive stores but soon they realized that they do not enjoy much Brand Equity in India,
and to capture the market share in India they have to go the local market shoe sellers. They
have to reach to local cities with low priced products.

BY ASSOCIATING THEMSELVES WITH INDIAN CELEBRITIES

MNCs have realized that in India celebrities enjoyed a great popularity so they now
associate themselves with Indian celebrities. Recently Luxor Writing Instruments Ltd. a JV
of Gillette and Luxor has launched 500 "Gajgamini" ranges of Parker Sonnet Hussain
special edition fountain pens, priced at Rs. 5000. This pen is signed by Mr. Makbul Fida
Hussain a renowned painter who has created "Gajgamini" range of paintings. Companies
are promoting players like Bhaichung Bhutia, who is promoted by Reebok, so that they can
associate their name with players like him and get popularity.

49

MELAS

Melas are places where villagers gather once in a while for shopping. Companies take
advantage of such events to market their products. Dabur uses these events to sell products
like JANAM GHUTI (Gripe water). NCAER estimates that around half of items sold in
these melas are FMCG products and consumer durables. Escorts also display its products
like tractors and motorcycles in such melas.

PAINTINGS

A picture is worth thousand words. The message is simple and clean. Rural people like the
sight of bright colors. COKE, PEPSI and TATA traders advertise their products through
paintings.

Product Strategies

The specific strategies, which can be employed to develop or modify the products to targets the rural
market, can be classified as follows:

.1. Small unit packing: Given the low per capita income & purchasing habits of the rural
consumers, small unit packages stand a good chance of acceptance in rural market. Single
serve packets or sachets are enormously popular in India. They allow consumers to buy only
what they need, experiment with new products, & conserve cash at the same time.

50

This method has been tested by products life shampoos, pickles, biscuits, Vicks cough drops
in single tablets, tooth paste, etc. Small packings stand a good chance of acceptance in rural
markets. The advantage is that the price is low and the rural consumer can easily afford it.
Also the Red Label Rs. 3.00 pack has more sales as compared to the large pack. This is
because it is very affordable for the lower income group with the deepest market reach
making easy access to the end user satisfying him.
The small unit packings will definitely attract a large number of rural consumers.
2.

New product designs: Keeping in view the rural life style the manufacturer and the

marketing men can think in terms of new product designs. The rural product usage
environment is tough because of rough handling, rough roads & frequent power
fluctuations. Thus, all these environmental factors must be considered while developing the
products meant for rural audience.
Nokias 1100 model is a very good example of a customized model for rural markets. Its
design has been modified to protect it against rough usage in rural environment; it is dust
resistant & has a small torch light in view of the frequent power cuts in rural India. It is also
introduces messaging in Hindi language now, in some of the economically priced models in
order to cater to the semi-urban or rural consumers. This is in real terms, thinking global &
acting local.
3. Sturdy products: Sturdiness of a product is an important factor for rural consumers.
The product should be sturdy enough to stand rough handling, transportation & storage. The
experience of torch light dry battery cell manufacturers supports this because the rural
consumers preferred dry battery cells which are heavier than the lighter ones. For them,
heavier weight meant that it has more over and durability. Sturdiness of a product either or
appearance is an important for the rural consumers.

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4. Utility oriented products: The rural consumers are more concerned with utility of the
product and its appearance Philips India Ltd. Developed and introduced a low cost medium
wave receiver named BAHADUR during the early seventies. Initially the sales were good
but declined subsequently.
On investigation it was found that the rural consumer bought radios not only for information
and news but also for entertainment.
5. Brand name: For identification, the rural consumers do give their own brand name on
the name of an item. The fertilizers companies normally use a logo on the fertilizer bags
though fertilizers have to be sold only on generic names. A brand name or a logo is very
important for a rural consumer for it can be easily remembered. Many a times rural
consumers ask for peeli tikki in case of conventional and detergent washing soap.
Nirma made a peeli tikki especially for those peeli tikki users who might have experienced
better cleanliness with the yellow colored bar as compared to the blue one although the
actual difference is only of the color.
e.g.: Coca-Cola targeted the whole Indian rural market with the positioning of Thanda
Matlab Coca-Cola advertisements because most of the villagers say when wanting a drink
refer to it as Thanda so Coca-cola used that word.

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Pricing strategies
1. Low cost/ cheap products: This follows from the product strategy. The price can be
kept low by low unit packagings like paisa pack of tea, shampoo sachets, vicks 5 grams tin,
etc. this is a common strategy widely adopted by many manufacturing and marketing
concerns.
2.

Refill packs / Reusable packaging: In urban areas most of the health drinks are

available. The containers can be put to multipurpose uses. Such measures can a significant
impact in the rural market.
For example, the rural people can efficiently reuse the plastic bottle of hair oil. Similarly the
packages of edible oil, tea, coffee, ghee etc can be reused. Pet jars free with the Hasmukhrai
and Co Tea, Ariel Super Compact.
3. Application of value engineering: in food industry, Soya protein is being used instead
of milk protein. Milk protein is expensive while Soya protein is cheaper, but the nutrition
content of both is the same. The basic aim is to reduce the value of the product, so that a
larger segment can afford it, thus, expanding the market.
4. Large volume-low margins (Rapid or slow penetration strategy): Marketers have to
focus on generating large volumes & not big profit margins on individual products. If they
price their product at a level which can lead to good volumes, then they can still generate
good returns on the capital employed.
5. Overall efficiency & passing on benefits to consumers: For rural products, the strategy
should be to cut down the production, distribution & advertising costs & passing on these
benefits to the customers to further increase the turnover. Most often, it has been observed

53

that advertising has less to do with product sales in the rural areas. If an organization gets
the price point right, then it can work in rural market.
6. Low volume-low price strategy: This strategy of reducing prices by reducing the
package size in order to make it appear more affordable, is delivering very good results for a
large number of FMCG product categories, in the rural markets of India. In categories
where maintaining the price point is extremely critical, this strategy is delivering very good
results.
7. Ensuring price compliance: Rural retailers, most of the times, charges more than the
MRP. The manufacture has to ensure price compliance either through promotional
campaigns, as was done by Coca Cola, or by ensuring the availability of products at the
retail outlets directly.

Promotion strategies

Customized promotional media & messages need to be developed by the organizations to

effectively target the rural market. The following strategies can be considered while
developing promotional campaigns for the rural markets:
1. Think Global Act Local
Rural population is diverse, but the commonalities of their ethos & simple living
habits need to be understood for advertising to succeed. For that, the theme of the
advertisement needs to revolve among universal themes, such as family-love. But
the context, storyline, language & idioms should be such that the rural audience of
different rural market segments can relate to.
2. Think in Local Idiom
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This is the need of the advertising professionals who can think like the rural people.
The only we can have insights like Thanda matlab Coca Cola. There should be the
use of language writers who understands the rural & regional pulse better.
3. Simplicity & Clarity
All promotional messages targeted at rural audience need to be simple & clear,
which can be easily understood, & they should not include any confusing elements.
It is preferable that it has only a few propositions at a time. Bombarding rural
consumers with too much, in less time can easily confuse them & leave them
bewildered. Promotional message should highlight only the functional values of the
product & explains how those values can make the consumers life even better &
solve any of his problems.
4. Narrative Story Style
The promotional message can be delivered in the form of an entertaining story with
a message depicting how the brand delivers larger good to the family & society.
The theme of the story line can be about how the product can solve the problems of
the rural consumers.
5. Choice of Brand Ambassador
Brand Ambassador for the rural markets need to be picked carefully as urban
successes might not get replicated in the rural markets. That is why Govinda in the
Mirinda as boosted the sales of the drink in the rural markets. An organization might
spend a lot of money in hiring a brand ambassador only to find out later that it had
little impact on the rural consumer.

DISTRIBUTION STRATEGY

55

Many companies view the rural markets as great opportunity for expanding their sales but
find distribution as a major problem. Unfortunately, it is almost impossible to transplant
strategies which work successfully in urban markets onto rural markets, namely, extensive
retailing and sustained pull generation through mass media advertising.

The road blocks to reach the rural customers are:

Lack of adequate transport facilities.

Large distances between villages.

Lack of pucca roads connecting villages to nearest townships.

Lack of proper retail outlets

Lack of mass media infrastructure.

The marketers were of the opinion that the villagers would come to nearby towns and buy
the products that they want.

What has been found is that if we have to serve the rural consumer we will have to take our
products to him through the channels that he is using and some innovative ways of getting
to him.

The following distribution strategies formulated for the rural category.

1. Coverage of villages with 2000 and above population: Ideally, coverage of villages
with up to 2000 and above population could be the break-even point for a distribution setup.
By doing so the percentage of villages covered comes to only 10% of all the villages, but
56

the rural population covered will be substantial, to the extent of about 40 to 45 percent. With
a distribution network in about 55,000 villages, which have a population of 2000 persons &
above each, one can cover about 25 crores rural consumers. This strategy is good to begin
with & then subsequently, villages with lesser populations can be added.
2. Segmentation: the number of villages in India is huge & it is not viable to contact &
serve all villages directly. Therefore, companies or distributors can carefully examine the
market potential of different villages & target the villages that can be served in a financially
viable manner through an organized distribution effort.
3. Use of co-operative societies: There are over 3 lacks co-operative societies operating
in rural areas for different purposes like marketing cooperatives, farmers service
cooperatives and other multipurpose cooperatives. These cooperatives have an arrangement
for centralized procurement and distribution through their respective state level federation.
Such state level federation can be motivated to procure and distribute consumables items
and low value durable items to the members to the society for serving to the rural
consumers. Many of the societies extend credit to the members for purchases.
4.

Utilization of public distributory system: The PDS in the country is fairly well

organized. The revamped PDS places more emphasis on reaching remote rural areas like the
hills and tribals. The purpose of PDS is to make available essential commodities like food
grains, sugar, kerosene, edible oils and others to the consumers at a reasonable price. The
shops that distribute these commodities are called fair price shops. These shops are run by
the state civil Supplies Corporation, co-operatives as well as private entrepreneurs. Here
again there is an arrangement for centralized procurement and distribution. The
manufacturing and marketing men should explore effective utilization of PDS.
5.

Utilization of multipurpose distribution centers by petroleum/oil companies: In

order to cater to the rural areas the petroleum/oil companies have evolved a concept of
57

multipurpose distribution centers in rural areas. In addition to petrol/diesel, lubricants, these

outlets also stock consumables agricultural inputs like fertilizers, pesticides and seeds. It is
estimated that there are about 450 such outlets in operation in the country. The rural
consumer who has tractors, oil-engine pump sets and mopeds frequent these outlets for their
requirement. These outlets can be profitably utilized for selling consumables and durable
items also.
6.

Distribution up to feeder markets/mandi towns: Keeping in view the hierarchy of

markets for the rural consumers, the feeder markets and mandi towns offer excellent scope
for distribution. The rural customers visit these towns at regular intervals not only for
selling the agricultural produce but also for purchasing cloth, jewelry, hardware, radios,
torch cells and other durables and consumer products. From the feeder markets and mandi
towns the stockiest or wholesaler can arrange for distribution to the village shops in the
interior places. This distribution can be done by mopeds, cycles, bullock-carts, camelbacks
etc. depending upon the township.
7.

Shandies/Haaths/Jathras/Melas: These are places where the rural consumers

congregate as a rule. While shandies/heaths are held a particular day every week, Jathras
and melas are held once or twice a year for longer durations. They are normally timed with
religious festivals. Such places attract large number of itinerant merchants. Only temporary
shops come up selling goods of all kinds. It can be beneficial for companies to organize
sales of their product at such places. Promotion can be taken, as there will be ready captive
audience. For convincing the manufacturing and marketing man with regard to the
importance of these places from rural marketing point of view a visit to such places is
necessary. It is estimated that over 5,000 fairs are held in the country and the estimated
attendance is about 100 million rural consumers. Biggest fair Pushkar Mela is estimated to
attract over 10 million people. There are 50 such big rural fairs held in various parts of

58

country, which attract urbanite also like Mankanavillaku in Malappara in Kerela, Kumbh
Mela at Hardwar in U.P. Periya Kirthigai at Tiruparunkunaram in Tamil Nadu.
Merits:

Convenience: The entire market can be related to large departmental stores in cities,
where the advantage is a one-stop shopping exercise. These outlets crop up every
week, providing consumers immense choice and prices.

Attractive: The weekend shopping is not only convenient but also entertaining. The
markets start early and will be over by lunch. Afterwards, there will be
entertainment. In respect of transactions, it is an attractive place to those who want
to buy second hand durables and to those who prefer barter transactions. Further the
freshness of the produce, buying in bulk for, a week and the bargaining advantage
attract the frugal and weeklong hard working rural folk.

Availability: It is a market for everyone and for everything. Household goods,

clothes, durables, jewellery, cattle, machinery, farming equipment, raw materials and
a host of products are available.

8. Agricultural Input Dealers: Fertilizers should be made available to the farmers within
the range of 4-5 km from their residence, as per the essential commodities act. This is why
there are about 2 lakh fertilizer dealers in the country, both in cooperative & private sector.
Example of Varana Nagar in Maharashtra proved an eye opener in this regard where the
sugar and milk co-operatives have totally changed the life style of people. The supermarket
in Varana Nagar caters exclusively to rural consumers. Similarly a co-operative supermarket

59

called Chintamani in Coimbatore (T.N) arranges free transit of rural consumers to the
supermarket of their purchases.
9. Joint distribution by Non-competing Companies: As the cost of distributing the
products in the rural market through distribution vans can be unviable for a single company,
different non-competing companies can come together to jointly operate distribution vans
for the rural market. This will enable them to share the cost of operating the van & on
account of the sharing of the cost by four or five companies; the entire operation can
become financially viable for all the players.
10. Personal Selling Network: It is very successful distribution channel being developed
by companies like HUL. It adds a personal touch to the marketing, as the salesmen are the
resident of the village or community itself, making it easier to sell the product & maximise
sales for the company.

THE OLD SETUP

The historically available people & places for distribution include: - Whole seller, Retailer,
Vans, Weekly Haats, and Bazaars & Shadies.

1.

Wholesalers

The Indian wholesaler is principally a Galla Kirana (food-grain) merchant who

sustains the belief that business is speculative rather than distributive in character.

He is a trader / commodity merchant rather than a distributor and therefore tends to

support a brand during boom and withdraw support during slump.

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The reason for this speculative character and dormant role of wholesalers are: -

Indian market was largely sellers market. There was no need for active sales
growth.

Companies laid more emphasis or retailers in urban areas, who are very large in
number. As a result of retail based distribution was weakened.

Rural markets were neglected by many. The occurrence of retail outlets was low.
Therefore many companies were dependent on whole salers.

The current need is to activate and develop wholesaler of the adjoining market as a
distributor of products to rural retail outlets and build his loyalties to the company.

2.

Retailers
There are different kinds of retailers.
Shops within the village
Shops located on the main road and not exactly within the village
Kasba market or the tahsil market.
Village retailers have traditionally been among the most mobile of rural residents.
Often doubling up as money lenders.
Their multi person interaction in the closed village society.

As a result retailers play a significant role.

I. CREDIBILITY: 61

 He enjoys the confidence of the villagers.

His views are accepted and followed by the rural people whose
awareness and media exposure levels are low.

(-

The urban retailer is not trusted.

He is seen as a businessman with profit motto.

His view points are evaluated with other sources of information.)

II. INFLUENCE LEADER: His role as influence leader is indisputable. From tender twig of neem to
washing powder retailer testimony has been vital part of the product
adoption process.
The role of urban retailer is weak.
The urban consumers have numerous sources of information.
Although retailers opinion is sought it may not be 100% believed and
followed.

III. BRAND PROMOTER: In rural market retailers remains the deciding factor to sell particular
brand.
Retailers helps in identification and selection of brands, there is less
influence of shelf displays and point of purchase promotion.
Presence of spurious brands is an ample testimony to this view.

(- The urban retailer has a limited role as a brand promoter.

-

He cannot directly, recommend the brands.

62

He is to intelligently drive home his recommendations, as

urban consumers do not trust him completely.

It is through shelf displays and incentive offers that he has to push the
brands.)

IV. RELATIONSHIP MARKETER

Village retailer practices relationship marketing.
He caters to a set of buyers who have income from immovable land
resources and would be static over a much longer time span.
The relationship could extend beyond three generations, backed by
historical credibility of the retailer as a product referral.
(-

on the contrary, the urban retailers have to make an effort to adopt

relationship marketing.

His customers base comprises largely the mobile service class prone to
shift residence at least once, if not more, in less than a decade. This
limits the time span and perspective of the retailer customer
relationship.)

V. HARBINGER OF CHANGE
In an environment relatively isolated from external developments, he has
been harbinger of change.
He is one of the main sources of information and opinion as well as
supplier of product and services.

(As against this, we find urban retailer, wielding limited influence in

changing the product choices and quality of life of consumers.)
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3. Vans

Mobile vans long since, have an important place in distribution and promotion
of the products in villages.
JK Dairy launched whitener Dairy Top in small 50 gm sachets priced at Rs.
6.50. It decided to make a concerted foray into rural India in 1996. It hired vans to
penetrate the rural interior, each van traveling around 125 km a day, 25 days a
month.

4. Weekly Haats, Bazaars, Shandies

The haats are the oldest outlets to purchase household goods and for trade. These
markets are very well organized with shopkeepers having pre-assigned spaces for them
to sell their wares. A typical market is in an open field with ample space for displaying
all sorts of goods. Its location changes every week. These markets have different names
in different regions. But they are strikingly similar in what they sell. It is reported that
there are, in all, about 47,000 haats held throughout the country.

Media Vehicles

Through the rural markets offer big attractions to the marketers, one of the most
important questions frequently asked is How do we reach the large rural population
through different media and methods?

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Mass Media
Radio
Cinema
Press
TV

Local Media
Haats, Melas, Fairs
Wall Paintings
Hoardings
Leaflets

Personalized Media
Direct Communication
Dealers
Sales Persons
Researchers

Video Vans
Folk Media
Animal Parade
Transit Media

Formal media

It includes Press and print, TV, Cinema, Radio, and Point of purchase and Outdoor
advertisement. Reach of formal media is low in rural households (Print: 18%, TV: 27%,
Cinema: 30%, and Radio: 37%) and therefore the marketer has to consider the following
points:

Newspapers and magazines:

English newspapers and magazines have negligible circulation in rural areas. However
local language newspapers and magazines are becoming popular among educated
facilities in rural areas. Examples: Newspapers: Eenadu in A.P., Dina Thanthi in Tamil

65

Nadu, Punjab Kesari in the North, Loksatta in Maharashtra and Tamil magazine
Kumudam are very popular in rural areas.

Television:

It has made a great impact and large audience has been exposed to this medium. HLL
has been using TV to communicate with the rural masses. Lifebuoy, Lux, Nihar oil etc
are some of the products advertised via television. Regional TV channels have become
very popular especially in Southern states. Examples: SUN TV is very popular even in
rural areas in Tamil Nadu and Asianet is a preferred regional channel in Kerala. Many
consumer goods companies and fertilizer companies are using these TV channels to
reach the rural customer.

Radio:

Radio reaches large population in rural areas at a relatively low cost. Example: Colgate,
Jyoti Labs, Zandu Balm, Zuari industries are some of the companies using radio
communication programme. There are specific programmes for farmers like Farm and
Home/Krishi Darshan in regional languages. The farmers have a habit of listening to
regional news/agricultural news in the morning and the late evening. The advertisement
has to be released during this time to get maximum coverage in rural areas. Another
advantage is that the radio commercial can be prepared at short notice to meet the
66

changing needs of the rural folk. Example: Release of a pesticide ad at the time of
outbreak of a pest or disease in crops.

Cinema:

About 65% of the earnings from cinema are from rural markets. Film viewing habits is
high in certain states like Tamil Nadu, Karnataka and Andhra Pradesh. Village theatres
do roaring business during festivals by having four shows per day. The monthly charge
for showing an ad film is within Rs.500. Local distributor or dealer who has good
contacts with cinema houses in villages can easily monitor this activity. Examples:
Films on products like Vicks, Lifebuoy and SPIC fertilizers are shown in rural cinema
halls. Apart from films, Ad slides can also be screened in village theatres.

Outdoor advertisements:

This form of media, which includes signboards, wall painting, hoarding, tree boards, bus
boards, dealer boards, product display boards etc, is cost effective in rural areas.
Symbols, pictures and colours should be used in POPs meant for rural markets so that
they can easily identify the products. Generally rural people prefer bright colours and
the marketer should
Utilize such cues.

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 Point of purchase:

Display of hangings, festoons and product packs in the shops will catch the attention of
prospective buyers. However a clutter of such POP materials of competing companies
will not have the desired effect and is to be avoided.

Direct mail advertising:

It is a way of passing on information relating to goods or services for sale, directly to

potential customers through the medium of post. It is a medium employed by the
advertiser to bring in a personal touch. In cities lot of junk mail is received by all of us
and very often such mails are thrown into the dustbin whereas a villager get very few
letters and he is receptive to such mailers.

Wall paintings:

It is an effective and economical medium for communication in rural areas, since it stays
there for a long time depending upon the weather conditions. The cost of painting one
square foot area is just Rs.10. Retailers welcome painting of their shops so that the shop
will look better. Walls of farm houses, shops and schools are ideal places for painting
and the company need not have to pay any rent for the same. The walls have to be
painted at least one or two feet from ground level. It is better to take permission of the

68

owner. Very often the owner takes responsibility for taking care of the wall painting.
Painting to be avoided during election time and rainy season. The matter should be in
the form of pictures, slogans for catching the attention of people. Companies marketing
TV, fans, branded coffee/tea, toothpaste, pesticides, fertilizers etc. use wall painting as
promotion medium in rural areas.

Tree boards:

These are painted boards of about two square feet in dimension having the picture or name
or slogan of the product painted on it. The cost of such a painted board is about Rs.80.
These boards are fixed to the trees on both sides of the village road at a height of about 10
feet from ground level. These boards attract the attention of slow moving vehicles like
cycles, bullock carts and tractors and people walking on the road. Considering the poor
condition of roads, even the buses move at slow speed through village road. Fertilizer and
pesticide companies in rural areas extensively use tree boards. These are low priced
promotion items and can be used by consumer goods companies too.

Informal/Rural specific media

69

These media with effective reach and personalized communication will help in realizing
the promotional objectives. Companies to suit the specific requirements of rural
communication are using a variety of such media effectively and some of the more
important media and methods are given below.

Farm-to-Farm/House-to-House visit:

Rural people prefer face-to-face communication and farm visits facilitate two-way
communication. The advantage is that the sales person can understand the needs and
wants of the rural customer by directly discussing with him and answer his queries on
products and services. Potential customers in the village are identified and the
companys/distributors representative makes farm-to-farm visits and highlight the
benefits of the products. The person carries with him literature in local language and
also samples of products. The person does not sell the product but only promotes the use
of the product. Very often the local dealer also joins the representative in making farmto-farm visits. The dealer clarifies the terms and conditions of sale and also makes
independent follow up visits for securing orders. Example: This approach has been
found to be very effective for agricultural machinery, animal health products and
agricultural inputs. Many LIC agents and companies dealing with high value consumer
durables have tried this method with success in rich rural areas.

Group meeting:

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Group meetings of rural customers as well as prospects are an important part of

interpersonal media. The company is able to pass on the message regarding benefits of the
products to a large number of customers through such meetings. Group meeting of key
customers are conducted by banks, agricultural inputs and machinery companies in rural
areas. The bankers visit an identified village, get the village people in a common place and
explain the various schemes to the villagers. Such meetings could be organized in
prosperous villages for promoting consumer durables and two wheelers also. Example:
MRF Tyres conduct tractor owners meet in villages to discuss repairs and maintenance of
tractors.

Opinion leaders:

Villagers place more emphasis on the experience of others who have used a
product/brand to make purchase decision. Opinion leader is a person who is considered to
be knowledgeable and is consulted by others and his advice is normally followed. Such
opinion leaders could be big landlords, bank official, panchayath-president, teachers,
extension workers etc. Examples: a) Mahindra Tractors use bankers as opinion leaders for
their product. b) Asian Paints promoted its Utsav brand of paint by painting the village
Sarpanchs house a few months prior to the launch if the branch to demonstrate that the
paint does not peel off.

The Melas:
71

Melas are of different types i.e. commodity fairs, cattle fairs and religious fairs and may be
held only for a day or may extend over a week. Many companies have come out with
creative ideas for participating in such melas. Examples: a) Britannia promotes Tiger Brand
Biscuits through melas. b) The mahakumbh at Allahabad is the biggest mela in India. HLL
has put up 14 stalls in the mela grounds for promoting Lifebuoy. Handcarts have been
deployed for increasing access.

The Haats:

Traditionally on certain days of week, both the sellers and buyers meet in the village to buy
and sell goods and services. These are the haats that are being held regularly in all rural
areas. The sellers arrive in the morning in the haat and remain till late in the evening. Next
day they move to another haat. The reason being that in villages the wages are paid on
weekly basis and haat is conducted on the day when the villages get their wages. For the
marketer, the haat can be an ideal platform for advertising and selling of goods. By
participating in haats and melas, the company can not only promote and sell the products
but also understand the shared values, beliefs and perceptions of rural customers that
influence his buying behaviour.

Folk dances:

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These are well-appreciated form of entertainment available to the village people. The
folk dance Kuravan Kurathi is popular in Tamil Nadu. The troupe consists of dancers,
drummers and musicians and they move in a well-decorated van from one village to
another village singing and dancing. In a day the troupe covers about 8-10 villages. As
soon as the van reaches a village, film songs are played to attract the attention of the
villages. This is followed by folk dances. Mike announcement is made about the
companys products and leaflets are distributed. After the dance programme, queries, if
any, about the products are answered by the sales person. Folk dance programme costs
about Rs.5000 per day and therefore these programmes are conducted during the peak
season in selected villages. Examples: Fertilizer and pesticide companies organize folk
dance programmes during peak season in selected markets. Thumps Up has sponsored
Lavnis, the folk dance programme of Maharashtra and over 30 programmes have been
arranged in selected rural markets.

Audio Visual Publicity Vans (AVP Vans):

AV unit is one of the effective tools for rural communication. The van is a mobile
promotion station having facilities for screening films slides and mike publicity. The sales

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person makes a brief talk about situation in the village, the products and the benefits. The ad
film is screened along with some popular film shots and this continues for about 30 minutes.
At the end of the film show, he distributes handbills and answers queries of the customers.
The whole operation takes about 1-2 hours depending upon the products under promotion,
number of participants in the meeting and time taken for question and answers. The vans
move to the next village for the second show. The cost of running a fully equipped AVP unit
is about Rs.4000 per day and AVP van operation has to be considered as an investment for
business development in rural areas. Example: Companies such as HLL, Colgate, and
Phillips have made effective use of AVP vans for popularizing their products in rural areas.

Product display contests:

Package is an integral part of the product. Its main purpose is to protect the product during
transit, to preserve the quality and to avoid any loss in quality and quantity. The main
purpose of this contest is to remind the customer to buy the product as soon as he enters the
shop. Another objective is to influence the dealer to stock the product and support the
company in increasing the sales. The display contest has to be announced well in advance
and promotional materials to be distributed to all the selected dealers in a geographical area.
Prizes for best displays are announced to motivate the dealers; the contest lasts for about a
month. A well-planned product display contest not only increases the involvement of
dealers in the companys products but also increases the sales during the contest period.
This is used for promoting consumer goods such as shampoos, soaps and toothpaste.

Field demonstration:

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This is based on the extension principle seeing is believing and is one of the most
effective methods to show the superiority of the companys products to the customers. A
progressive farmer who is an opinion leader is selected and the demonstration is conducted
in his field in the presence of a group of farmers in the village. The farmers observe the
results in the field and the local dealer calls on them in their farms and persuades them to
buy the particular brand of pesticide or fertilizer. Examples: a) Spraying a particular brand
of an insecticide against insect pests and showing the farmer how effectively the insects are
controlled. b) Demonstrating the use of tractor/implements for different agricultural
operations. c) Hawkins pressure cooker has demonstration representatives who carry out
demos in rural households. The representative receives 1% commission for every customer
who approaches the dealer via demonstrations. e) Similarly effectiveness of detergents,
pressure cookers, vaccum cleaners and mosquito coils could be promoted by demonstrations
in selected markets.

Field days:

These are extension of field demonstrations. One of the main objectives of following
modern agricultural practices is to increase the yield. The company organizes
demonstrations in a piece of land belonging to progressive farmers. All the fertilizers,
pesticides, nutrients etc. are applied after making field observations. Just before harvest, all
the important farmers are invited to see demonstration plot and see for themselves how the
yields are better in the plot compared to other fields. Field demonstrations/field days
consume lot of time and efforts and therefore have to be planned well.

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 Information centers:

They provide latest information on cultivation of crops, fertilizer application, weed,

management and control of pests and diseases. Experienced agricultural graduates who
make frequent visits to the field and
advice farmers on modern agricultural practices manage the centers. They also provide
information on farm implements, seeds, fertilizers, pesticides, diesel engines, sprayers and
tractors etc. Many consumer goods companies have opened show rooms in prosperous rural
areas. Example: Hero Honda has opened extension counters with show room facilities in
major rural markets.

Life-style marketing:

Each rural market segment has certain special features i.e. they share common life-style
traits. They include village sports, religious events, prominent personalities and role models.
Examples: Textile mills maintaining community gardens, Mineral water companies
supplying clean drinking water during summer festivals in villages and Consumer goods
companies sponsoring Kabaddi.

Choosing media vehicles

The choice of different media vehicles for any market is based on an analysis of the
standard features like: reach, frequency, cost & availability. Depending on the factor of
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reach & frequency, the different media can be classified into the following categories. This
categorization can help the marketer to make a decision about which type of media would
be more suitable to the product & the organization.
(a) High reach High frequency

Jeep based advertising

Wall painting

Bus stand & bus panels

Haats

Hoardings

Postal branding

(b) Low reach High frequency

Co-operative notice board

Shop front painting

Tin plating house

Dealer boards

Village boards

Well tiles

Calendars/labels

(c) High reach Low frequency

Van based advertising

Melas

Direct to home

Folklore group

Exhibitions/created events
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(d) Low reach Low frequency

Tin painting tree/shops

Leaflets

Posters & banners

Streamers

Danglers

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Conclusion

Thus looking at the challenges and the opportunities which rural markets offer to the
marketers it can be said that the future is very promising for those who can understand the
dynamics of rural markets and exploit them to their best advantage. A radical change in
attitudes of marketers towards the vibrant and burgeoning rural markets is called for, so they
can successfully impress on the 230 million rural consumers spread over approximately six
hundred thousand villages in rural India.
The rural market is very large in compare to the urban market as well as it is more
challenging market. The consumer wants those products which are long lasting, good, easy
to use and cheaper. The income level of rural consumers is not as high as the income level
of urban consumers thats why they want low price goods. It is one of the reasons that the
sell of sachet is much larger in the rural area in all segments.
It is necessary for all the major companies to provide those products which are easy to
available and affordable to the consumers. It is right that the profit margin is very low in the
FMCG products, but at the same time the market size is much large in the rural area. The
companies can reduce their prices by cutting the costs on the packaging because the rural

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consumers dont need attractive packaging. Application of 4A* is also a major task for the
major companies in this area.
Rural market has an untapped potential like rain but it is different from the urban market so
it requires the different marketing strategies and marketer has to meet the challenges to be
successful in rural market.

References
1. www.thehindubusinessline.com/nic/073/index.htm
2. www.coolavenues.com/know/mktg/
3. www.indianmba.com/Faculty_Column/FC658/fc658.html
4. business.mapsofindia.com/rural-economy/state-development/marketing.html
5. www.icmrindia.org/casestudies/catalogue/ Marketing/MKTG081.htm

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