RURAL MARKETING IN INDIA

A Minor Project Report

Submitted in partial fulfillment of the requirements for BBA (Banking & Insurance) programme of Guru Gobind Singh Indraprastha University, Delhi

Submitted by Pankaj Singhal BBA (B&I) Semester-III Enrol. No.: 01812201810

Delhi College of Advanced Studies B-7, Shanker Garden, Vikas puri New Delhi- 110018

DECLARATION

I hereby declare that the minor project report, entitled Rural Marketing in India, is based on my original study and has not been submitted earlier for award of any degree or diploma to any institute or university.

The work of other author(s), wherever used, has been acknowledged at appropriate place(s).

Place: New Delhi Date: 1st September 2011

Candidate`s signature Name: Pankaj Singhal Enrol. No.: 01812201810

Name: Kanika Supervisor Delhi College of Advanced Studies

Name: Dr. J.P. Varshney Director Delhi College of Advanced Studies

ACKNOWLEDGEMENT

An independent project is a contradiction in terms. Every project involves contribution of many people. This project also bears the imprints of many people and it is a pleasure for me to acknowledge and thank all of them.

I am deeply indebted to Prof. Kanika who acted as a mentor and guide, providing knowledge and giving me her valuable time out of her busy schedule, at every step throughout the research. It is only because of her this project came into being.

I also thank Prof. (Dr.) J.P. Varshney, Director, Delhi College of Advanced Studies, for providing an opportunity to undertake this project under his leadership.

I also take the opportunity to express my sincere gratitude to each and every person, who directly or indirectly helped me throughout the project and without anyone of them the research, would not have been possible.

The immense learning from this project would be indelible forever.

Student Name: Pankaj Singhal Enrol. No.: 01812201810

Executive summary

Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. Marketing is used to identify the customer satisfy the customer, and keep the customer. The Chartered Institute of Marketing defines marketing as "the management process responsible for identifying, anticipating and satisfying customer requirements profitably."

Rural Markets are defined as those segments of overall market of any economy, which are distinct from the other types of markets like stock market, commodity markets or Labor economics. Rural Markets constitute an important segment of overall economy. On account of the green revolution in India, the rural areas are consuming a large quantity of industrial and urban manufactured products. In this context, a special marketing strategy, namely, rural marketing has taken shape.

Rural marketing is real marketing. Rural marketing is a function which manages all those activates involved in assessing, stimulating and converting the purchasing power into an effective demand for specific products and services, and moving them to the people in rural area to create satisfaction and a standard of living to them and thereby achieves the goals of the organization. Rural marketing is a two way marketing process.

The Indian rural market with its vast size and demand base offers great opportunities to marketers. Two-thirds of countries consumers live in rural areas and almost half of the national income is generated here. It is only natural that rural markets form an important part of the total market of India.

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.

Broadly rural marketing incorporates the marketing of agricultural products, rural industries products and services of many kinds. The trade channels for different types of commodities available in rural areas private, cooperatives, processors, regulated markets and state agencies. Very little attention has been paid in the planning era towards the development of rural marketing. Rural marketing constitutes the nerve centre of rural development activities. The content now encompasses not only marketing of products which flow to rural areas, but also products which flow to urban areas from rural areas.

The more daring MNCs are meeting the consequent challenges of availability, affordability, acceptability and awareness (the so-called 4 As).

Availability: The first challenge is to ensure availability of the product or service. India's 6, 40,867 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.

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.

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. Because of the lack of electricity and refrigerators in the rural areas, Coca-Cola provides low-cost ice boxes.

Awareness: Brand awareness is another challenge. Consumption of branded products is treated as a special treat or indulgence.

Earlier it was 4 P`s of marketing

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.

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.

Promotion: 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.

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.

There are various problems in rural marketing such as transportation, communication, Availability of appropriate media, Warehousing , Village structure in India , Rural markets and sales management , Inadequate banking and credit facilities , Market segmentation in rural markets , Branding, Packaging etc.

There are various roadblocks in Indian rural market such as standard of living, low literacy levels, low per capita income, transportation and warehousing, ineffective distribution channels, many languages and diversity in culture, lack of communication system, spurious brands, seasonal demand, dispersed markets etc.

Govt. also plays an important role in rural development. It provides factors such as changing rural infrastructure, employment opportunities, Sampoorna grameen rojgar Yojana, rural housing, Swaranjayanti gram Swarozgar Yojana, district rural development agency, providing institutional finance in rural India, land reforms.

There are various strategies to improve rural marketing such as product strategies which include small unit packing, new product designs, utility oriented products, brand name etc. Pricing strategies which include low cost products, refill packs, ensuring price compliance, application of value engineering etc. Promotion strategies which includes think global act local, think in local idiom, simplicity and clarity, choice of brand ambassador etc. Distribution strategy which includes coverage of large no. of villages, segmentation, mandi towns, melas, personal selling network etc.