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INTRODUCTION

DEFINATION

Rural marketing is a process of developing, pricing,


promoting, and distributing rural specific goods and services
leading to desired exchange with rural customers to satisfy
their needs and wants, and also to achieve organizational
objectives.

Rural marketing is similar to simply marketing. Rural


marketing differs only in terms of buyers. Here, target market
consists of customers living in rural areas. Thus, rural
marketing is an application of marketing fundamentals
(concepts, principles, processes, theories, etc.) to rural
markets.

Rural marketing concerns with planning and implementing


marketing programmes (often referred as marketing
strategies or simply 4Ps) for rural markets to achieve
marketing goals.
Rural marketing is a process of developing, pricing,
promoting, and distributing rural specific goods and services
leading to desired exchange with rural customers to satisfy
Definition of marketing stated by American
Marketing Association can be equally applicable in
relation to rural segments. We will add only
specific word rural to define the term: Rural
marketing is a process of planning, and executing
the conception, pricing, promotion, and
distribution of ideas, goods, and services to create
exchange (for rural segments) that satisfy
individual and organizational objectives.
(Only the word rural has been added to the
definition adopted by the AMA. The word implies
that marketing activities are undertaken in rural
areas to satisfy rural segments.)
Rural Marketing means to produce products
(goods and services) for the rural customers and to
make necessary arrangement to supply them.

Rural marketing is the marketing for the


SCOPE OF RURAL MARKETING
Scope for Rural Marketing inIndia

Let us take at some of the points with respect to Rural India as per Census
Population density of less than 400 per sq.km.
At least 75% of the male working population is engaged in agriculture.
No municipality or board.
If we go by statistics, roughly around 70% of the Indian population lives in the rural areas. That is almost 12 % of the
world population. To expand the market by tapping the countryside, more and more MNCs are foraying into Indias
rural market.

Below are the few points why organizations are looking at rural marketing with a positive attitude

1. Population : According to 2011 Census rural population is 72% of total population and it is scattered over a wide
range of geographic area. That is 12% of the world population which is not yet fully utilized.
2. Rising Rural Prosperity : Average income level has unproved due to modern farming practices, contract farming
industrialization, migration to urban areas etc. There has been an overall increase in economic activities because
during the planned rural development heavy outlay of resources on irrigation, fertilizers, agricultural equipments
and agro processing industry has been made. Saving habits in rural people also has increased. This too contributes
in higher purchasing power
3. Growth in consumption : There is a growth in purchasing power of rural consumers. But, the average per capita
house hold expenditure is still low compared to urban spending
4. Change in life style and Demands : Life style of rural consumer changed considerably. There has been increase
in demand for durables and non-durables like table fans, radios, mopeds, soaps, etc. by rural consumers. This
provides a ready market for the producers. Rural market is expanding day after day.
5. Market growth rate higher than urban: The growth rate of fast moving consumer goods [FMCG] market and
durable market is high in rural areas. The rural market share is more than 50% for products like cooking oil, hair oil
etc.
6. Life cycle advantage : The products which have attained the maturity stage in urban market is still in growth
stage in rural market.
7. Decision-making Units : Women in rural areas are beginning to make fast decisions for purchases. Studies
reveal that 72.3% decisions are taken jointly in a family. With education and mass media, role of children in decision
making is also changing
CONCEPTS
COMPONENETS OF RURAL MARKETS
CLASSIFICATION OF RURAL MARKETS
RURAL vs URBAN MARKETS
CHARACTERISTICS & DIAMENSIONS OF RURAL MARKET

Characteristics of Rural Marketing

Mostly, major part of rural market holds a very divergent pattern of reacting to marketing. So, marketer
needs to design a specific marketing mix for the rural segments. For rural market, a marketing manager
has three options one is, to design marketing programme common for all types of customers; the
second is, to design marketing programme purely for rural customers; and the third is, to design
marketing programme for customers residing in rural but reacting as if they were global.
Excepts some villagers of some progressive states like Maharashtra, Gujarat, Haryana, etc., most rural
customers are poor, backward, illiterate, and orthodox. They vary significantly in terms of preference
and habits. They are to be treated in different patterns.

1. More Prospective:
With the initiation of various rural development programmes, there has been an upsurge of employment
opportunities for the rural poor. One of the biggest cause behind the steady growth of rural market is
that it is not exploited and also yet to be explored.

2. Size:
The rural market in India is vast and scattered, and offers a plethora of opportunities in comparison to
the urban sector. It covers the maximum population and regions, and thereby, the maximum number of
consumers. Rural market is account for about 74% of total Indian population.
3. Nature:
The social status of the rural regions is precarious (uncertain) as the income level and literacy is
extremely low along with the range of traditional values and superstitious beliefs that have always been
a major impediment (obstacle) in the progression of this sector.
Rural Population Statistics
Population Number of Villages Percentage of total villages

Less than 200 114267


17.9
200 499 155123
24.3
500 999 159400
25
1000 1999 125758
19.7
2000 4999 69135
10.8
5000 9999 11618
1.8
10000 & above 3064
0.5
4. Response to Products:
Product-related features of rural segment are:
i. Rural markets (buyers) believe in product utility rather than status and
prestige. However, they like novel products with distinctive features.
ii. Most village customers consider tastes rather than usefulness in long run.
iii. They like simple and long-life products. They are interested in immediate
results. Products must offer immediate benefits.
iv. They respond to those products that suit their religious faith, and social
norms and customs.
v. They ask for such products which can assists in their traditional
occupations and life style.
vi. They have minimum urge for individuality. They prefer family-used
products than personal- used products.
vii. They strongly prefer such products that can change and improve their
life-style.
viii. They are less concerned with product services associated with products
like after-sales services, guarantee and warrantee, home delivery, and other
similar services. Branding, packaging, and labeling have less influence
compared to urban segments.
5. Response to Price:
Price-related features of rural segments include:
i. Rural customers are price-sensitive and highly influenced by level of
pricing. Price is the strongest factor that affects their buying decision.
ii. They buy those products which are low in price and medium in quality.
iii. They are easily attracted by price discounts and rebates.
6. Response to Promotion:
Promotion-related features of rural segment include:
i. Rural customers are highly attracted by local and regional promotional
efforts.
ii. Their reference groups consist of educated and non-educated family
members and relatives living in urban areas and foreign countries as well.
iii. Personal selling seems more influential to convince rural mass.
iv. They are attracted by such sales promotional tools or articles which are
useful in their routine life such as knife, gas lighter, rings, key-chains, caps,
photos of local actors, calendars and cards with religious impression, etc.
v. They have a strong faith on local religious and spiritual leaders. Such
leaders are among the most influential reference groups.
vi. Publicity efforts related to local vocational and agricultural activities can
impress them.
vii. They can be appealed by visual or pictorial advertisements published in
local and regional languages.

7. Response to Distribution:
Distribution-related features of rural segment include:
i. Normally, they buy from familiar retailers and salesmen. They are hesitant
to buy from big shopping malls or departmental stores. However, situation is
changing gradually.
ii. Rural customers strongly favour relations. They continue buying from
known and established retailers who maintain close family relations with
them.
v. They are not interested in home-delivery. They want immediate possession.
They lack patience. They are found eager to possess and use the products
immediately.
vi. Caste, religion, political party, relations, etc., play important role in
selecting the retailers.
vii. Online and direct marketing are not much popular in rural areas.
Sometimes, a few of them are interested in network marketing.

8. Predictability:
Unlike urban markets, the rural markets are difficult to predict, and possess
special characteristics. The featured population is predominantly illiterate,
have low and irregular income, lack of monthly income, and flow of income
fluctuating with the monsoon winds. They dont have a stable pattern of
reacting due to income factors.

9. Role of Government:
Demand of products depends on availability of basic facilities like electricity,
transportation, schools, hospitals, etc. The steps taken by the Government of
India to initiate proper irrigation, infrastructural developments, prevention of
flood, grants for fertilizers, and various schemes to cut down the poverty line
have improved the condition of the rural masses. Rural market depends on
governments contribution to the rural sector.

10. Rigidity:
Most rural customers are illiterate, backward, and orthodox. It is very difficult
11. High Level of Heterogeneity:
We find different types of buyers in rural areas. Some are simple, while some
are sophisticated; some are extreme rich, while some are extreme poor;
some are highly educated, while some are complete illiterate; some are
dynamic and modern, while some are very rigid and orthodox; some believe
in quality and status, while some believe in availability and price.
Rural customers are gradually transforming into urban, metropolitan, and
even cosmopolitan customers. Improved education, rapid means of
transportation, access to advance communication, raised living standards,
craze to follow modern (even ultramodern) life pattern, and many similar
factors have drastically changed rural consumer behaviour. The gap between
urban and rural segments tends to be notably narrow. Sometimes, rural and
urban customers exhibit no difference at all.
RURAL MARKET IN INDIA
SIZE & SCOPE
ENVIRONMENT & EMERGING PROFILE OF RURAL MARKET IN INDIA
CONSTRAINTS IN RURAL MARKETING
Important Constraints in Rural Marketing

1. Vastness and Uneven Growth.

2. Transport Problem

3. Communication Problems - Communication infrastructure consisting of


posts, telegraphs and telephones are inadequate.

4. Warehousing Problems
5. Many Languages and Dialects

6. Market Organization & Staff - Rural marketing needs large marketing


organization and staff to have an effective control, which requires huge
investment.
7. Non-Availability of Dealers

8. Hierarchy of Market: Rural consumers have identified market places for


different items of their requirements. Thus depending upon the purchase habit
of rural people, distribution network of different commodities has to be
different.
Potential of Rural Market
With urban market showing signs of saturation, companies are excited about
the potential of rural India. Some major companies that have focused in the
rural sector are Philips, Parle, Proctor & Gamble, Colgate-Palmolive, Godrej
Soap, Bajaj Auto, TVS, Atlas Cycle and HUL.
Following points indicate the potential of rural markets:
Scope / Attractiveness of Rural Market / Why Companies Go Rural
Large Population
Rising Rural Prosperity
Growth in Consumption
Changing Lifestyle
Life Cycle Advantage E.g. popular soaps, skin cream, talcum
powder, etc.
Market Growth Rate Higher than Urban like body talcum powder,
toilet soaps cooking oil, hair oil etc.
Rural Marketing is not Expensive: To promote consumer durables
inside a state costs Rs one crore while in urban areas it will costs in
millions.
Constraints in Rural Marketing
Vastness and Uneven Growth: India has about 5 lakhs villages,
which are scattered over a wide range of geographical area, and also
they are not uniform in size.
*Transport Problem many villages remain outside the railway network, only
kaccha roads, many of rural interiors are totally unconnected by roads.
Communication Problems: Communication infrastructure consisting of
posts, telegraphs and telephones is inadequate.
Warehousing Problems: Central Warehousing Corporation and State
Warehousing Corporation do not extend their services to the rural parts. The
warehouses at mandi level are managed by co-operative societies who
provide services to members only.
Many Languages and Dialects: The number of language and dialects vary
widely from state to state, region to region and even from district to district.
Though the recognized languages are only 16 the number of dialects is
around 850.
Market Organisation & Staff: Rural marketing needs large marketing
organisation and staff to have an effective control, which requires huge
investment.
Non-Availability of Dealers: It is not possible to have direct outlets in each
rural market; firms have to have service of dealers, which is not easily
available.
Hierarchy of Market: Rural consumers have identified market places for
different items of their requirements. Thus depending upon the purchase
habit of rural people, the distribution network of different commodities has to
be different.
Factors Contributing to the Growth of Rural Markets
Employment Opportunities: The income from new employment and rural
development efforts has increased the purchasing power of rural people.
Favourable Government Policies: cession, incentives and heavy
investment.
Literacy Growth: Literacy rate is increasing in rural areas,This brings social
and cultural changes in buying behaviour of the rural customers.
Rising Disposable Income: Good monsoons, green revolution and
Administered Pricing Mechanism (PAM) have raised disposable income in rural
areas.
Attraction of Higher Standard of Living: Rural people have been
motivated to change their lifestyles and have higher standard of living.
Spread of Cable Television: . This has led to a change in lifestyle and
consumption pattern.
Market Segmentation in Rural Market
1. Geographic Segmentation: Segmentation on the basis of geography is
done depending on various factors such as
Region: North, South, East and West.
Village Size: < 500 people, 501 2000 people, 2001 5000 people, > 5000
people
Proximity to the feeder town:
Density: The number of people per sq. km
Climate: Moderate, rain fed or dry with scanty rainfall.
Level of Irrigation: Whether good, moderate, scanty or none at all.
2. Demographic Segmentation: It is based on the population, age group,
literacy level and income of the rural consumer.
3. Psychographics / Behavioral Segmentation: Such segmentation is
done using variables such as Lifestyle of the people, (whether rigid,
STRATEGY TO OVERCOME THE CONSTRAINTS
RURAL MARKETING ENVIRONMENT
POPULATION
OCCUPATION PATTERN
Farming in Indian Village...Fishing in Indian Village... Weaving in Indian Village...
Teaching in Indian Villag... Handicrafts in Indian Vil.
Occupation in Indian villages reflects the base of the socio-economic culture
prevalent in rural areas of the country. The main occupation types in Indian villages
comprise of agriculture, fishing, weaving, cottage industry, handicrafts etc.

Apart from agriculture, the villagers are also involved in other occupations like
fishing, farming, cottage industry, pottery, business, various small, medium or large
scale industries, carpentry, etc. .

Traditional Occupation in Indian Villages Agriculture remains the principal


occupation in Indian village society from the ancient period.
Other occupation in Indian villages includes the priests, carpenters, blacksmiths,
barbers, weavers, potters, oil pressers, leatherworkers, sweepers, water bearers,
toddy-tappers and many others.

Non-Traditional Occupation in Indian Villages


However, most of the modern day Indian villages present a different scenario with
villagers taking up the non-traditional occupations. They are involved in academics
as teachers; truckers, clerks or getting engaged with various cottage industries,
regardless of which caste or class they belong to.

Cottage Industry in Indian Villages


Another major occupation in Indian villages is the cottage industry. Cottage industry
has emerged as a major source of employment in Indian villages over the period of
time. Many villagers are occupied in various kinds of art and crafts works. The
villagers produce different types of handicrafts products and many of them are
earning their livelihoods by marketing them. The occupations like artisan in pottery,
wood, cloth, metal and leather have been in existence in Indian villages, since the
The women in the rural areas, too are actively getting involved in different
industries like matchbox and firework industries, Bidi making, agate and
slate industries, coffee and tea industries, brick industry, construction
industry, electronics industry, spice industries, etc. Among these, the Bidi,
slate or brick making industries are the most well spread industries in Indian
villages. Apart from these industries, the Indian villagers have also become
sweepers and scavengers.

Tourism Industry in Indian Villages


Tourism in India in the Indian villages has emerged as one of the chief
occupations in Indian villages, in the contemporary period. Villages in most
parts of India are endowed with natural beauty and have a rich tradition and
cultural heritage.

The rich cultural diversity in the villages attracts many tourists from all over
the world every year. This has encouraged many villagers to get involved in
various tourism related occupations. The villagers work as tourist guides or
run different kinds of business in the famous tourist spots or even provide
accommodation facilities to the tourists to earn their livelihoods.

Other than the occupations mentioned above, there are several other means
of livelihood in rural India such as community, social and personal services;
mining and quarrying; real estate; post and telecommunication; health and
social work; educational services; public administration and national defence;
wholesale and retail trade; utilities supply and other activities.

The occupation scenario in Indian villages has changed mainly due to the
changing economical scenario of the villages of India. The invention of new
INCOME GENERATION
Location of Rural population
Expenditure Pattern
Literacy Level
Land Distribution
Land Use Pattern
Irrigation
Development Programs
Infrastructure Facilities
Rural Credit Institutions
Rural Retail Outlet
Media in Rural Market
Rural Area Requirement
Problems In Rural Marketing
Rural Marketing: 12 Problems Faced in Rural Marketing
Twelve problems faced in rural marketing are as follows: 1.Deprived people and deprived markets 2. Lack of
communication facilities 3. Transport 4. Many languages and dialects 5. Dispersed markets 6. Low per capita Income 7.
Low levels of literacy 8. Prevalence of spurious brands and seasonal demand 9. Different way of thinking 10.
Warehousing problem 11. Problems in sales force management 12. Distribution problem.

1. Deprived people and deprived markets:


The number of people below the poverty line has not decreased in any appreciable manner. Thus, poor people
and consequently underdeveloped markets characterize rural markets. A vast majority of rural people is
tradition bound, and they also face problems such as inconsistent electrical power, scarce infrastructure
and unreliable telephone system, and politico-business associations that hinder development efforts.

2. Lack of communication facilities:


Even today, most villages in the country are inaccessible during the monsoons. A large number of villages in
the country have no access to telephones. Other communication infrastructure is also highly underdeveloped.

3. Transport:
Many rural areas are not connected by rail transport. Many roads have been poorly surfaced and got severely
damaged during monsoons. The use of bullock carts is inevitable even today. Camel carts are used in
Rajasthan and Gujarat in both rural and urban sectors.

4. Many languages and dialects:


The languages and dialects vary from state to state, region to region and probably from district to district.
Since messages have to be delivered in the local language, it is difficult for the marketers to design
promotional strategies for each of these areas. Facilities such as phone, telegram and fax are less developed
in villages adding to the communication problems faced by the marketers.

5. Dispersed markets:
Rural population is scattered over a large land area. And it is almost impossible to ensure the availability of a
brand all over the country. District fairs are periodic and occasional in nature. Manufacturers and retailers
prefer such occasions, as they allow greater visibility and capture the attention of the target audience for
larger spans of time. Advertising in such a highly heterogeneous market is also very expensive.
6. Low per capita Income:
The per capita income of rural people is low as compared to the urban people. Moreover, demand in rural markets
depends on the agricultural situation, which in turn depends on the monsoons. Therefore, the demand is not stable
or regular. Hence, the per-capita income is low in villages compared with urban areas.

7. Low levels of literacy:


The level of literacy is lower compared with urban areas. This again leads to a problem of communication in these
rural areas. Print medium becomes ineffective and to an extent irrelevant, since its reach is poor.

8. Prevalence of spurious brands and seasonal demand:


For any branded product, there are a multitude of local variants, which are cheaper and hence more desirable. Also,
due to illiteracy, the consumer can hardly make out a spurious brand from an original one. Rural consumers are
cautious in buying and their decisions are slow, they generally give a product a trial and only after complete
satisfaction they buy it again.

9. Different way of thinking:


There is a vast difference in the lifestyles of the people. The choice of brands that an urban customer enjoys is not
available to the rural customer, who usually has two to three choices. As such, the rural customer has a fairly
simple thinking and their decisions are still governed by customs and traditions. It is difficult to make them adopt
new practices.

10. Warehousing problem:


Warehousing facilities in the form of godowns are not available in rural India. The available godowns are not
properly maintained to keep goods in proper conditions. This is a major problem because of which the warehousing
cost increases in rural India.

11. Problems in sales force management:


Sales force is generally reluctant to work in rural areas. The languages and dialects vary from state to state, region
to region, and probably from district to district. Since messages have to be delivered in the local language, it is
difficult for sales force to communicate with the rural consumers. Sales force finds it difficult to adjust to the rural
environment and inadequate facilities available in rural areas.

12. Distribution problem:


Effective distribution requires village-level shopkeeper, toluka-level wholesaler/dealer, district-level
stockist/distributor, and company-owned depot at state level. These many tiers increase the cost of distribution.
Rural markets typically signify complex logistical challenges that directly translate into high distribution costs. Bad
roads, inadequate warehousing and lack of good distributors pose as major problems to the marketers.
Rural Demand
Rural Market Index