Rural Marketing

Rural Market
South Asia is primarily rural in character with large

populations residing in rural areas.

India 70%
Pakistan 67% Sri Lanka 85%

Rural Marketing
Rural marketing is the process of developing, pricing, promoting, distributing rural-specific goods and services leading to exchange between urban and rural market, which satisfies consumer demand and also achieves organizational objectives.
Any marketing activity in which one dominant participant is from a rural area.

Rural market
No clear definition of rural area, however, urban area as census of India-:
Minimum population of 5000. At least 75% of male working population in non-

agricultural pursuits. Density of population at least 400 persons per square km.

Defining Rural India

Organisation NSSO (Census) Definition Population density < 400 / Sq Km 75 percent of the male working population is engaged in agriculture No Municipal corporation / board

Limitations Rural not defined

Planning Commission

Towns upto 15,000 population are considered rural

Town characteristics not defined

LG Electronics

All places other than the 7 metros

Only clarifies what are the cities

NABARD

All locations with a population upto 10, 000 considered rural

Village & town characteristics not defined

Sahara

Population characteristics Commercial establishments located in unknown areas servicing less than 1000 population

Classification of Rural Market

Consumer Market Constituents: Individuals & households Products: Consumables & durables Industrial Market Constituents: Agricultural & allied activities Products: Consumables & durables Service Market Constituents: Individuals & households, offices & production firms Services

Defining Rural Marketing

National Commission on Agriculture NGOs Corporate Rural Marketing Definition

Decisions to produce Marketing products Function that manages all saleable farm produced in rural areas to activities involved in commodities involving all urban areas assessing, stimulating the aspects of the market and converting the system or structure, both purchasing power of rural Marketing products functional and produced in rural areas in consumers into effective institutional, based on demand for specific rural markets technical & economic products and services to considerations and create satisfaction & a includes the pre & post better standard of living harvest operations. for achieving organizational goals.

Phases in Rural Marketing

S. No.
1

Time Frame
Phase One( Pre 1960s)
Marketing

Key Events & Trends

rural products in rural and urban areas Agricultural inputs in rural areas Agricultural marketing Farming methods were primitive and mechanization was low Markets unorganized

Phase Two ( 1960s to 1990s)

Green

Revolution Companies like Mahindra and Mahindra, Sri Ram Fertilizers and IFFCO emerge Rural products were also marketed through agencies like KVIC

Phase Three( 1990s to Present)

Demand

for consumables and durables rise Companies find growth in urban markets stagnating or falling

Scope of Rural Marketing

Keenly debated topic Definitions based on organizational/ institutional vision,

mission & goals

Need for a comprehensive and modular understanding
Rural Marketing is a work in progress Multi disciplinary approach is necessary for sharper

understanding

Transitions In Rural India

Food Grain Crops
Non food, cash crops

On land activities
Farm Activities

Livestock & fisheries

Manufacturing &

services

Changes in Rural India

Diverse change levers in rural India The pull of the cities & towns migration and its side effects Effect of government programs Civil society interventions Natural & manmade disasters Slow but sure change The joint family system is being replaced by the nuclear family system The occupational pattern shows a predominance of cultivators and wage

earners
Cultivators( 40.86 %) and Wage Earners( 35.28 %) according to NCAER studies

Rural India Population Trends

1971 Total Population (in million) 548.2 1981 683.3 1991 848.3 2001 1026.9 Rural Population (in million) 524.0 628.8 741.6

As a proportion of total population

76.7

74.3

72.2

Decadal Variation

19.8

16.7

15.2

Source: Census 2001

Rural Employment Patterns( Male)

Sector Year 1990 ( % share in employment) Year -2009 ( % share in employment)

Agriculture

75

67

Transport & Communication Trade & Hotels Construction

2 5 4

8 7 7

Manufacturing

Rural Settlement & Habitation Trends

Population density 253/ sq kilometer and total number of

villages is 638, 588

Villages having less than 500 population are falling Villages having 2000 + population most prosperous What are the implications of these trends?
Size of villages/ habitations are changing

Role & influence of towns is changing

Social interaction is a mix of rural and urban

What makes rural markets attractive?

72% of Indian population lives in Rural area.
Rural markets are growing at double the pace of Urban

markets.

Government spending in rural area is increasing. Saturation of Urban markets. 41% of Indias middle class lives in Rural India. 58% of disposable income is in Rural India.

What makes Rural market different from Urban market ?

Rural market
Low density of population

Urban market
Thickly populated

90% villages have population less than 2000.

75% villagers are illiterate or

semi-literate.

Most of the Urban population is

educated.
Low disposable income ,

Rural consumers have high disposable income for same level of income. Rural income is seasonal .

because of high cost of living.

Urban income is stable.

What makes rural market different from urban market ?

Rural market

Urban market
Class system is present. Brand value is present. Urban India is well connected

Caste system is prevalent. Word of mouth is more

significant.
Infrastructure : 68% of

Rural India is inaccessible.

only 41% of Rural

with roads.
Most of the people in urban

households have access to T.V.

India have access to T.V.

Strategy for Rural Marketing

4A Strategy
AVAILABILITY :Urban population of India is concentrated in 3200 cities and towns, the rural population is scattered around 6 lacs villages . The rural consumer suffers mainly from the following handicaps: illiteracy, poverty, untimely shopping etc. The distribution channels in villages are lengthy involving more intermediaries and consequently higher consumer prices. Examples: HUL uses Project Shakti. ITC E-Choupals. Hub & Spoke distribution by coca-cola.

Hindustan Unilever Ltds Project Shakti

Piloted in 2001 in Andhra Pardesh.

Women from self help groups are employed as shakti entrepreneur.

Receive stocks of 5-6 brands from cos rural

distributor.

Sell directly to customers & retailers. Serve 6-10 villages with population of 1000-

2000. loan.

Investment required is Rs.10,000 , taken as Gives an average return of 8%. Solves distribution problem. Packages in smaller sizes.

ITCs E-choupal
No. of e-choupals 6500,

no. of villages covered 40,000 in 16 states E-choupals are connected to internet. Latest information on prices of their produce, in mandis. Assist in farming, water harvesting, health-care, education facilities. In return ITC sells its FMCG goods, banking services. etc.

Hub & Spoke Distribution

distributors

Once a week

distributors

Once a week

Large Depots

Twice a week

distributors

Once a week

Strategy for Rural Marketing

AFFORDABILITY:- Godrej uses 50g soaps for Rs.5 HULs lifebuoy 50g for Rs.2. Coca-colas 200ml bottle for Rs.5. ACCEPTABILITY:- LG Electronics in 1998 launched customized T.V. set sampoorna. HDFC LIFE tailor made rural policies . Philips free power radio. AWARENESS-: haats, mandis & melas. 42000 haats , one haat covers 20-50 villages. HUL promotional activities through stockists. Godrej uses radio in local language. LG - vans & road shows. Wall writings.

Rural Advertisement By Telecom Operators.

Coca-Colas wall writing advertisement.

RESEARCHING RURAL MARKET

Low literacy level
Wide geographical dispersion Languages and multiple dialects

Non-availability of working population

Poor access to women respondents Typical layout of villages

Tendency to flock together

Rural Marketing Model

1. 2. 3. 4.

5.
6. 7.

8.
9. 10.

Research Segment the rural market Study the lifestyle of rural population Develop profile of rural consumers of different market segments Define and prioritize needs of rural customers Develop specific need profile for a product category Select target market Develop marketing mix Implementation control

Segmentation of Rural Market Geographic segmentation- climate and level of

irrigation, nearness to feeder town/industrial project Demographic segmentation- population concentration, age, literacy level, income Buying behavior segmentation- sources of data on rural consumers Psychographic segmentation- social class, personality and lifestyle sociological characteristics segmentation- proprietor of land, rich farmers, peasants, agricultural labourers.

Developing a Market Targetting Strategy

Define relevant market Analysis of characteristics and wants of potential customers Identify basis for segmenting market Define market segment Analyze competitors position Evaluate market segment Select market segments Finalize marketing mix

SALES PROMOTION IN RURAL AREAS

Mills- Farmers have to stand in long queues before

their crop gets unloaded from the tractor and accounts are settled. Stalls Outside Factories-The dealer puts up stalls outside the factories and Electricity Boards to target workers who come from nearby villages. The stalls are used for demonstrations, offer exchange and finance schemes and for sales. Interestingly, the dealer points out that such a stall does not cost him more than Rs 1,000 with which he is able to target about several hundred high potential customers.

 Game/Tournament Sponsorships- for instance,

in Punjab, kabbadi tournaments

Loan/Exchange Melas And Service Camps

Local Brand Ambassadors- His word

carries a lot of weight with the village people

Haats and Melas

STRATEGIES ADOPTED BY ORG.

BY COMMUNICATING AND CHANGING QUALITY PERCEPTION BY PROPER COMMUNICATION IN INDIAN LANGUAGE BY TARGET CHANGING PERCEPTION BY UNDERSTANDING CULTURAL AND SOCIAL VALUES BY PROVIDING WHAT CUSTOMER WANT BY PROMOTING PRODUCTS WITH INDIAN MODELS AND ACTORS BY ASSOCIATING THEMSELVES WITH INDIA BY PROMOTING INDIAN SPORTS TEAM BY TALKING ABOUT A NORMAL INDIAN BY DEVELOPING RURAL-SPECIFIC PRODUCTS BY GIVING INDIAN WORDS FOR BRANDS BY ACQUIRING INDIAN BRANDS BY EFFECTIVE MEDIA COMMUNICATION BY ADOPTING LOCALISED WAY OF DISTRIBUTING BY ASSOCIATING THEMSELVES WITH INDIAN CELEBRITIES MELAS

Challenges in Rural Marketing

Low Literacy- There are not enough opportunities for

education in rural areas. The literacy level is as low (36%) when compared to all- India average of 52%. Seasonal Demand- Demand for goods in rural markets depends upon agricultural situation, as agriculture is the main source of income. Agriculture to a large extent depends upon monsoon and, therefore, the demand or buying capacity is not stable or regular. Transportation- Many rural areas are not connected by rail transport. Kacha roads become unserviceable during the monsoon and interior villages get isolated. Distribution- An effective distribution system requires villagelevel shopkeeper, Mandal/ Taluka- level wholesaler or preferred dealer, distributor or stockiest at district level and company-owned depot or consignment distribution at state level. The presence of too many tiers in the distribution system increases the cost of distribution.

 Traditional Life- Life in rural areas is still governed by customs and

traditions and people do not easily adapt new practices. For example, even rich and educated class of farmers does not wear jeans or branded shoes.

Buying Decisions- Rural consumers are cautious in buying and

decisions are slow and delayed. They like to give a trial and only after being personally satisfied, do they buy the product.

Media for Promotions- Television has made a great impact and large
audience has been exposed to this medium. Radio reaches large population in rural areas at a relatively low cost. However, reach of formal media is low in rural households; therefore, the market has to undertake specific sales promotion activities in rural areas like participating in melas or fairs.

Career in Rural Market- While rural marketing offers a

challenging career, a rural sales person should require certain qualifications and specialized talent.

Cultural Factors- Culture is a system of shared values, beliefs and

perceptions that influence the behavior of consumers. There are different groups based on religion, caste, occupation, income, age, education and politics and each group exerts influence on the behavior of people in villages

Suggestions
Rural infrastructure

Warehousing facilities
Multipurpose cooperatives Effective distribution

Sales force management

Promotion mix Product management

Marketing research