Rural marketing

A DISSERTATION REPORT
To analyze the marketing of consumer products (both
durable and non durable products) in rural areas.

SUBMITTED BY:
DEVENDRA SINGH
MBA 4 sem (2008-2010)
0815270026
UNDER THE GUIDANCE OF:
MR. SANDEEP SHARMA
FACULTY

MANGALMAY INSTITUTE OF MANAGEMENT AND

TECHNOLOGY

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Acknowledgement
I consider my proud privilege to express deep sense of gratitude to
Mr. SUNDEEP
SHARMA for his admirable and valuable guidance, keen interest,
encouragement
and constructive suggestions during the course of the project.
I would also like to thank my father Mr. RAGHVENDRA SINGH
,for their
insperation and moral support received in completing this work as for
collecting t
the data i had to visit so many rural areas or villages.

Devendra singh
MBA (marketing)
4TH Semester

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TABLE OF CONTENTS

TOPIC

PAGE NUMBER

EXECUTIVE SUMMARY

06

RESEARCH METHODOLOGY

O8

REVIEW OF LITERATURE

11

INTRODUCTION

15

FINDINGS AND ANALYSIS

129

CONCLUSIONS

147

SUGGESTIONS AND
RECOMMENDATIONS

150

APPENDIX

151

BIBLIOGRAPHY

157

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Rural marketing

EXECUTIVE SUMMARY
Indias way is not Europes. India is not Calcutta and Bombay.
India lives
in her seven hundred thousand
villages.....................Mahatma Gandhi, 1926
Marketing in developing countries like India have often been
borrowed from the western world. Concepts like Brand identity,
Customer relationship management, 4 Ps of the marketing mix,
Consumer behavior process; Segmentation, targeting and positioning
etc. have often been lifted straight from the marketing intelligentsia
abroad and adopted in Indian conditions, often with minimal success.
Reason lies not in the fault of such concepts, but their
integration with the Indian ethos and culture.
The rural India offers a tremendous market potential.
Nearly two-thirds of all middle-income households in the country are
in rural India and represents half of Indias buying potential. Despite,
the strong potential the rural markets are by and large less exploited.
Consider the market, out of five lakhs villages in India only one lakh
have been tapped so far. According to us if the rural market has to be
adequately tapped, there has to be a change in the way marketing
concepts learnt in B-schools with adequate adoption according to
scenarios prevalent in rural India. The paper thereby present the
modified version of Philip Kotlers famous marketing mix consisting of
4Ps. The focus is on its modification and subsequent customization to
Indian rural markets perspective. The 4Ps have to be modified to
include 1P i.e. Packaging and 1R i.e. Retailer as special focus areas.
Further to ensure the sustainability of the marketing mix two Es i.e.
Education and Empowerment have to be at the core as they help in
generating widespread participation from the rural clientele by
enhancing their standard of living. The Products in the rural market
should essentially operate at the basic and expected level of product
classification. They should essentially meet the basic needs of the
consumer and should be a no-frill product, as the consumer would not
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be valuing much any further addition to the product concept.

Companies also face a daunting task in communicating about their
products to the consumer due to lack
of literacy and failure of traditional media to penetrate in the rural
households.
Hence, the advertising mix has to be more towards non-conventional
yet effective
medium like Puppetry, Folk Theater Song, Wall Painting,
Demonstration, Posters, Agricultural Games, NGOs network, etc. Thus
overall either the product or communication or preferably both need
to be customized to target the rural customer.
In terms of physical distribution due to lack of infrastructure the
costs are very exorbitant to reach the rural customer. Thus, mediums
like rural marketing vehicles and melas and haats provide better
opportunities to meet customer needs. Also the existing distribution
would need a transformation to achieve the required penetration
levels as success of Project Streamline of HLL has shown. Since, the
value for money concept is more important rural customers, there has
to be an approach of treating customer as budget seeking consumer.
Here, fitting the consumer needs into an affordable price point is
pursued first and then other features of product are fitted in. Similarly,
packaging has to meet customer needs of better brand recall and
introducing favorable price points. At the same time the importance of
retailer has to be recognized where he is one of the most major
influencer is customers decision making process. He acts as the friend
and guide in this process and hence, needs to be managed effectively
through promotion programmes and incentives to promote the brand
of a company. In order to bridge the gap between Philip Kotler and
countryside Indian what is needed the appreciation of unique features
of rural India and thus, responding to them by making adequate
improvements in the application of the marketing concepts learnt in
the class.
For achieving the desired results of capturing the
rural customer a comprehensive approach to the traditional marketing
concepts has to be taken. This marketing mix has to be responsive to
customers needs and fit into his life as a tool of self-enhancement. To
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be successful the concept of marketing has to be taken in conjunction

with its economic, psychological and social implications.

RESEARCH METHODOLOGY
OBJECTIVES OF THE STUDY:
Any task without sound objectives is like Tree without roots.
Similarly in case of any research study undertaken, initially the
objectives of the same are determined and accordingly the further
steps are taken on. A research study may have many objectives but
all these objectives revolve around one major objective which is the
focus of the study. In this study, the focus is on the emergence of
Rural markets as the most happening market on which every marketer
has an eye. And so this study will be based on studying the
emergence of rural market in various contexts.
The main objective of the study is to analyse and present the
marketing of consumer products in rural areas. The following
objectives have been set forth. They are to:
1) Present a rural marketing perspective.
2) Present a profile of Indian Rural market.
3) Study and analyse the consumer behavior in rural areas.
4) Examine the product and brand penetration in rural markets.
5) Analyze marketing of consumer product in rural markets.
6) Present marketing strategy frame for marketing consumer
products in rural areas.
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SCOPE OF THE STUDY:

The study is restricted to selected districts of UTTAR PRADESH.
Further, product and brand penetration is examined. As regards
marketing of consumer products in rural areas, the study analyzes
products from non durable category ( a bathing soap, detergents, tea,
coffee, shampoo) and from durable category ( a wrist watch,
television, refrigerator, fan and bicycle).

Data collection
Sample unit:
1.
2.
3.
4.

working people (including men &women), basically farmers.

college students
school students
senior citizen

Sample size:
1.
2.
3.
4.

working people:32%
college students:29%
school students:23%
senior citizens:16%

Sampling region:
1. I have selected uttar pradesh, of Uttar Pradesh as the area of
study.
2. I have chosen BHOWAPUR, MORTI, SHAHPUR and ATTOR as
areas of research.
The population status of these areas can be shown in a
tabulated manner, which is given as follows:

Area Population
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BHOWAPUR

2500

MORTI

3000

SHAHPUR

5000

ATTOR

4000

Data collection method:

1.Primary data: it will be collected with the help of a self
administered questionnaire. This questionnaire aims to gather
information related to various Branded products.

Questionnaire design:
As the questionnaire is self administrated one, the survey is kept
simple and user friendly. Words Used in questionnaire are readily
Understandable to all respondent. Also technical jargons are avoided
to ensure that there is no confusion for respondents.

2.Secondary data: it will be collected with the help of books,

research papers, magazines, news papers, journals, Internet, etc.

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Review of Literature
Rural market is one of the best opportunities for the FMCG sector. In
some sense we can say that rural market is future of FMCG.
1.Basu Purba (2004),suggested that the lifestyle of rural
consumers is changing. Rural Indian market and the marketing
strategy have become the latest marketing buzzword for most of the
FMCG majors. She added the strategies of different FMCG companies
for capturing rural market like Titans Sonata watches, Coco Colas
200mlbottle, different strategies of HUL and Marico etc. She takes into
consideration the study of National Council for Applied Economic
Research (NCAER).According to the NCAER
projections, the number of middle and high-income households in
rural area is expected to grow from 140 million to 190 million by
2007.In urban India, the same is expected to grow from 65 million to
79 million. Thus, the absolute size of rural India is expected to be
double that of urban India.
2.Tognatta Pradeep (2003),suggested that ,the economic growth
in India's agricultural sector in last year was over 10%,compared with
8.5%in the industrial sector. This implies a huge market potentiality
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for the marketer to meet up increasing demand. Factors such as

village psyche,
strong distribution network and market awareness are few
prerequisites for making a dent in the rural markets. The model is of
the stolid Anglo-Dutch conglomerate Unilever Group, which has
enjoyed a century-long presence in India through its subsidiary
Hindustan Lever Ltd. It was Hindustan Lever that several years ago
popularized the idea of selling its products in tiny packages. Its
sachets of detergent and shampoo are in great demand in Indian
villages. Britannia with its low priced Tiger brand biscuits has become
some of the success story in rural marketing.
.

3. Dr. N. Rajendhiran(MBA, PhD)/ Mr. S. Saiganesh(MBA, MA,

M.Phil)/ Ms. P. Asha(MBA)
Prime Minister Dr. Manmohan Singh recently talked about his vision for
rural India: "My vision of rural India is of a modern agrarian, industrial
and services economy co-existing side by side, where people can live in
well-equipped villages and commute easily to work, be it on the farm or
in the non-farm economy. There is much that modern science and
technology can do to realise this vision. Rural

incomes have to be

increased. Rural infrastructure has to be improved. Rural health and

education needs have to be met. Employment opportunities have to be
created in rural areas."
'Go rural' is the slogan of marketing gurus after analyzing the
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socio-economic changes in villages. The Rural population is nearly

three times the urban, so that Rural consumers have become the
prime

target

products,

market

for

consumer

food, construction,

electrical,

durable

and

non-durable

electronics, automobiles,

banks, insurance companies and other sectors besides hundred per

cent of agri-input products such as seeds, fertilizers, pesticides and
farm machinery. The Indian rural market today accounts for only about
Rs 8 billion of the total ad pie of Rs 120 billion, thus claiming 6.6 per cent
of the total share. So clearly there seems to be a long way ahead.
Although a lot is spoken about the immense potential of the unexplored
rural market, advertisers and companies find it easier to vie for a share
of the already divided urban pie.

The success of a br and in the Indian rural market is as unpredictable as

rain. It has always been difficult to gauge the rural market. Many brands,
which should have been successful, have failed miserably. More often
than not, people attribute rural market success to luck. Therefore,
marketers need to understand the social dynamics and attitude
variations within each village though nationally it follows a consistent
pattern 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
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rural consumers spread over approximately six hundred thousand

villages in rural India.

RURAL INDIAa new dawn

India needs creative solutions to start a
revolution which can take its villages fast
forward in time converting them into
economically viable units and growth engines,
harnessing the power of the villagers, and
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opening up new horizons with the promise of a

better tomorrow.

INTRODUCTION
India lives in her villages.
As described by Adi Godrej, Chairman , Godrej Group
The rural consumers is discerning and the rural market is
vibrant . At the current of growth , it will soon outstrip the
urban market. The rural market is no longer sleeping but we
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are.
Before gamboling into issues like where the Indian rural
market stands and the opportunities for corporates to explore there...
let's look at the definition of urban and rural India. The Census defined
urban India as - "All the places that fall within the administrative limits
of a municipal corporation, municipality, cantonment board etc or
have a population of at least 5,000 and have at least 75 per cent male
working population in outside the primary sector and have a
population density of at least 400 per square kilometer. Rural India, on
the other hand, comprises all places that are not urban!"

In our country over 70%of the total population live in villages. There
are states like U.P, M.P, Bihar, Rajasthan and Orissa where rural
population varies form 8 to
9 percent. Agriculture and agriculture related activities contribute to
about 75%of the income in rural areas. The general impression is that
the rural markets have potential only for agricultural inputs like seeds,
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fertilizers and pesticides, cattle feed and agricultural machinery. More

than 50%of the national income is generated in rural India and there
are opportunities to market modern goods and services in rural areas
and also market agricultural products in urban areas. Infact it has
been estimated that the rural markets are growing at fives times the
rate of urban markets. About 70% of bicycles, mechanical watches
and radios and about 60%of batteries, sewing machine and table fans
are sold in rural India. At the same time the sales of color television,
washing machines, refrigerators, shampoos, face cream, mosquito
repellent and tooth paste are very low and there is tremendous
potential for such products in rural markets.
Now for some facts and figures The Indian rural market today
accounts for only about Rs 8 billion (53 per cent - FMCG sector, 59 per
cent durables sale, 100 per cent agricultural products) of the total ad
pie of Rs 120 billion, thus claiming 6.6 per cent of the total share. So
clearly there seems to be a long way ahead.
Time and again marketing practitioners have waxed eloquent about
the potential of the rural market. But when one zeroes in on the
companies that focus on the rural market, a mere handful names
come to mind. Hindustan Lever Limited (HLL) is top of the mind with
their successful rural marketing projects like 'Project Shakti' and
'Operation Bharat'. The lynchpin of HLL's strategy has been to focus
on penetrating the market down the line and focusing on price point.
Furthermore, activating the brand in the rural market through
activities, which are in line with the brand itself, is what sums up HLL's
agenda as far as the rural market is concerned informs MindShare
Fulcrum general manager R Gowthaman. Amul is another case in point
of aggressive rural marketing. Some of the other corporates that are
slowly making headway in this area are Coca Cola India, Colgate,
Eveready Batteries, LG Electronics, Philips, BSNL, Life Insurance
Corporation, Cavin Kare, Britannia and Hero Honda to name a few.

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Khaitan fans' ad on a horse

cart

Wheel's wall
painting

We can safely say that until some years ago, the rural market was
being given a step-motherly treatment by many companies and
advertising to rural consumers was usually a hit and miss affair. More
often than not, the agenda being to take a short-cut route by pushing
urban communication to the rural market by merely transliterating the
ad copy. Hence advertising that is rooted in urban sensitivities didn't
touch the hearts and minds of the rural consumer. While, this is
definitely changing, the process is slow. The greatest challenge for
advertisers and marketers continues to be in finding the right mix that
will have a pan-Indian rural appeal. Coca Cola, with their Aamir Khan
ad campaign succeeded in providing just that.

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Corporates are still apprehensive to "Go Rural." A few

agencies that are trying to create awareness about
the rural market and its importance are Anugrah
Madison, Sampark Marketing and Advertising
Solutions Pvt Ltd, MART, Rural Relations, O&M
Outreach, Linterland and RC&M, to name a few. Also,
the first four agencies mentioned above have come
together to form The Rural Network. The paramount
Lifebuoy's wall objective of the Network is to get clients who are
painting
in looking for a national strategy in rural marketing and
help them in executing it across different regions.
rural India
Interestingly, the rural market is growing at a far
greater speed than its urban counterpart. "All the data provided by
various agencies like NCAER, Francis Kanoi etc shows that rural
markets are growing faster than urban markets in certain product
categories at least. The share of FMCG products in rural markets is 53
per cent, durables boasts of 59 per cent market share. Therefore one
can claim that rural markets are growing faster than urban markets,"
says Sampark Marketing and
Advertising Solutions Pvt Ltd
managing director R A Patankar.
Coca-Cola India tapped the rural
market in a big way when it
introduced bottles priced at Rs 5
and backed it with the Aamir Khan
ads. The company, on its behalf, "Yaara da Tashan..." McCann
has also been investing steadily to Erickson's ads with Aamir Khan
build their infrastructure to meet created universal appeal for
the growing needs of the rural Coca Cola
market, which reiterates the fact
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that this multinational has realised the potential of the rural market is
going strength to strength to tap the same.

Clearly the main challenge that one faces while

dealing
with
rural
marketing
is
the
basic
understanding of the rural consumer who is very
different from his urban counterpart. Also distribution
remains to be the single largest problem marketers
face today when it comes to going rural. "Reaching
your product to remote locations spread over 600,000
In 2000, ITC villages
and
poor
infrastructure
roads,
took
an telecommunication etc and lower levels of literacy are
initiative
to a few hinges that come in the way of marketers to
develop
reach the rural market," says MART managing director
direct
Pradeep Kashyap.
contact with
farmers who Citing other challenges in rural marketing, Patankar
lived in far- says, "Campaigns have to be tailor made for each
flung villages product category and each of the regions where the
in
Madhya campaign is to be executed. Therefore a thorough
Pradesh.
knowledge of the nuances of language, dialects and
ITC's
E- familiarity with prevailing customs in the regions that
choupal was you want to work for is essential. The other challenge
the result of is the reach and the available means of reaching out
this
to these markets, hence the video van is one of the
initiative.
very effective means of reaching out physically to the
rural consumers."
The fact of the matter remains that when compared to the Indian
urban society, which is turning into a consumerism society; the rural
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consumer will always remain driven by his needs first and will
therefore be cost conscious and thrifty in his spending habits.
"Decision-making is still conscious and deliberated among the rural
community. But nevertheless, the future no doubt lies in the rural
markets, since the size of the rural market is growing at a good pace.
There was a time when market predictions were made on the basis of
the state of the monsoon but this trend has changed over the years;
there is a large non farming sector, which generates almost 40 per
cent of the rural wealth. Hence the growth in the rural markets will be
sustained to a large extent by this class in addition to the farmer who
will always be the mainstay of the rural economy," affirms Patankar.

"Although the melting of the urban - rural divide will take a while, this
is not for want of the availability of the means but for want of the rural
consumer's mindset to change; which has its own logic, which is
driven by tradition, custom and
values that are difficult to shed,"
he points out.
Fulcrum's Gowthaman says, "The
biggest impending
factor
or
deterrent on rural monies going
up is that there is a general sense
of trying to benchmark cost per
Satellite dish antennas reach
contact (CPC). The television CPC
rural India
is going to anyways be cheaper to
rural CPC and unless and until the
volume - value equation turns the other way round, you will not be
able to spend disproportionate monies in the rural market."
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For HLL, a one rupee or a five rupee sachet or

the Kutti Hamam (the small Hamam) helps in
giving the consumers a trial opportunity. While
it does help in generate volume but not in
terms of values. "Till the time that volume value equation is managed better, the CPC is
preventing anybody to look at rural at a large
scale
activation
programme,"
reiterates
Typical shop in rural Gowthaman.
India stocked with
Ultimately, the ball lies in the court of rural
sachets, etc
marketers. It's all about how one approaches
the market, takes up the challenge of selling
products and concepts through innovative media design and more
importantly interactivity.

Anugrah Madison's chairman and managing director RV Rajan sums

up, "There is better scope for language writers who understands the
rural and regional pulse better. I also see great scope for regional
specialists in the areas of rural marketing - specialists like Event
Managers, Wall painters, folk artists, audio visual production houses.
In fact all those people who have specialised knowledge of a region
are bound to do well, thanks to the demands of the rural marketers."
So the fact remains that the rural market in India has great potential,
which is just waiting to be tapped. Progress has been made in this
area by some, but there seems to be a long way for marketers to go in
order to derive and reap maximum benefits. Moreover, rural India is
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not so poor as it used to be a decade or so back. Things are sure a

changing!

INDIA INFRASTRUCTURE
The best barometer of countrys economic standing is measured by its
GDP. India, the second most populated country of more than 1100
million has emerged as one of the fastest growing economies. It is a
republic with a federal structure and well-developed independent
judiciary with political consensus in reforms and stable democratic
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environment .In 2008-09 Indias economy-GDP grew by 6.5% due to

global recession. In the previous four years,economy grew at 9%.The
Indian economy is expected sustain a growth rate of 8% for the next
three years upto 2012. With the expected average annual
compounded growth rate of 8.5%, India's GDP is expected to be USD
1.4 trillion by 2017 and USD 2.8 trillion by 2027. Service sector
contribute to 50% of Indias GDP and the Industry and agriculture
sector 25% each.
Investment Opportunities In Indian Infrastructure

The robust current growth in GDP has exposed the grave inadequacies
in the countrys infrastructure sectors. The strong population growth in
India and its booming economy are generating enormous pressures to
modernize and expand Indias infrastructure. The creation of world
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class infrastructure would require large investments in addressing the

deficit in quality and quantity. More than USD 475 bn worth of
investment is to flow into Indias infrastructure by 2012. No country in
the world other than India needs and can absorb so many funds for
the infrastructure sector. With the above investments Indias
infrastructure would be equal to the best in the world by 2017.
In the next five years planned infrastructure investment in India in
some key sectors are (at current prices): Modernization of highways
-US$ 75 billion, Development of civil aviation US$ 12 billion,
Development of Irrigation system- US$ 18 billion, Development of
Ports-US$ 26 billion, Development of Railways- US$ 71 billion,
Development of Telecom- US$ 32 billion, Development of Power -US$
232 billion. Thus in the eleventh five year plan ,investment in the
above sectors (Aviation infrastructure ,Construction infrastructure,
Highway infrastructure ,Power infrastructure, Port infrastructure
,Telecom infrastructure ) will be US$ 384 billions(Rs 17,20,000 Crores)
considering the huge infrastructure market potential in India. In
addition to the above, investments to the tune of US$ 91 billions have
been planned in other infrastructure sectors like Tourism
infrastructure ,Urban infrastructure ,Rural infrastructure, SEZs ,and
water infrastructure and sanitation infrastructure thus making the
total infrastructure investments in the eleventh plan period 2007-08 to
2011-12 as US$475 billions. Domestic and global infrastructure funds
have exposure to Indian infrastructure sectors.

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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,
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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 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.

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Rural marketing

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.

INDIAN RURAL MARKET:

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
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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

SOURC
PHA
SE

MAJOR
ORIGIN

FUNCTION
PRODUCTS MARKE
T

DESTINATI
ON

MARKET

Before
Mid-1960
(from

Agricultur

Agricultur

al

al
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27

Rural

Urban

Rural marketing

independe

Marketing

Produce

Marketing

Agricultur

Of

al

to Pre-

Agricultur

Inputs

liberalizati

al Inputs

nce to
green
revolution)
II

MidSixties
(Green
revolution

Urban

Rural

Urban

Rural

on period)
III

MidNineties
(Postliberalizati

Consuma
bles And

Rural
Marketing

Durables

&

For

Rural

on period
on 20th

Consumpt

century)

ion &
Productio
n

IV

21st

Developm

All

Urban

Urban &

century

ental

products

&

Rural

marketing & services

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28

Rural

Rural marketing

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

20 th

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 quickfix 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 longPage
29

Rural marketing

term commitment with 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 is now attracting more and more marketers.
Increase in competition, saturated urban markets, more and move
new products demanding urban customers, made the companies to
Page
30

Rural marketing

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, and Calvin 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

purchase/sales.

Page
31

satisfaction

and

repeat

Rural marketing

The Indian growth story is now spreading itself to India's hinterlands.

Rural India, home to about two-thirds of the countrys 1 billion
population, is not just witnessing an increase in its income but also in
consumption and production. The union budget for 2009-10 hiked the
allocation for the National Rural Employment Guarantee Act (NREGA)
to US$ 8.03 billion, giving a further boost to the rural economy. This is
in addition to the farmer loan waiver of US$ 13.86 billion and the
ambitious Bharat Nirman Programme with an outlay of US$ 34.84
billion for improving rural infrastructure. Additionally, the rural
economy has not been impacted by the global economic slowdown,
according to a recent study by the Rural Marketing Association of India
(RMAI). The study found that the rural and small town economy which
accounts for 60 per cent of Indias income has remained insulated
from the economic slowdown. Moreover, rural incomes are on the rise
driven largely due to continuous growth in agriculture for four
consecutive years. According to a McKinsey survey conducted in 2007,
the rural India market would grow almost four times from its existing
size in 2007, which was estimated at US$ 577 billion.

RURAL INFRASTRUCTURE:
1) 46 percent of villages are connected by all weather roads.
2) 84 percent of villages are electrified.
3) 5700 regulated markets.
In the early 2000s, around 700 million people, i.e. 70% of the
Indian population lived in 6,27,000 villages, in rural areas. Of this,
90% were concentrated in villages with population less than 2000. 3
According to a study

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32

Rural marketing

conducted in 2001 by the National Council for Applied Economic

Research (NCAER), there were as many "middle income and above"
households in rural areas as there were in urban areas.
There were almost twice as many "lower income households" in rural
areas as in urban areas. There were 2.3 million "highest income"
households in urban areas as against 1.6 million in rural areas. NCAER
projections indicated that the number of "middle income and above"
households was expected to grow to 111 million in rural India by 2007,
compared to 59 million in urban India. Gone were the days when a
rural consumer had to go to a nearby town or city to buy a branded
product. The growing power of the rural consumer was forcing big
companies to flock to rural markets. At the same time, they also threw
up major challenges for marketers.

FMCG
There was a time when the FMCG companies ignores rural
market,they took no any interest to produced or sell products in rural
market in India.It was the initial stage of FMCG companies in India.As
per as the time had
passed,the strategy and marketing style of FMCG companies had been
changed.
The rural market is the one of the best opportunity for the FMCG
sector in the India.It is wider and less competitive market for the
FMCG.As the income level of the rural consumers increasing,the
demand of FMCG is
increasing continuously.

Top Players in FMCG Sector

1.Hindustan lever limited (HLL)
2.ITC (Indian Tobacco Company)
3.Nestle India
4.GCMMF (AMUL)
5.Dabur India
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33

Rural marketing

6.Asian Paints (India)

7.Cadbury India
8.Britannia Industries
9.Procter &Gamble Hygiene &Health Care
10.Marico Industries
Secondary Players
1.Colgate-Palmolive (India)Ltd.
2.Godrej Consumers Product Ltd.
3.Nirma Ltd.
4.Tata Tea Ltd.
5.Parle Agro
Rural consumers spend around 13 per cent of their income, the
second highest after food (35 per cent), on fast moving consumer
goods (FMCG), as per a RMAI study.
The FMCG industry in India was worth around US$ 16.03 billion in
August 2008 and the rural market accounted for a robust 57 per cent
share of the total FMCG market in India.
The FMCG sector saw rural markets post 20 per cent growth, ahead of
the 17-18 per cent growth from urban India, aided by three years of
good monsoon, higher prices of farm produce and farm-loan waiver.
Most FMCG companies are now working on increasing their
distribution in smaller towns and focussing on marketing and
operations programme for semi-urban and rural markets.
For instance, Godrej Consumer Products intends to increase revenue
from rural areas from 38 per cent to 55 per cent in the next three
years by increasing its distribution network substantially. The products
will reach out to 50,000 villages in the next couple of years from the
present 18,000 villages while the number of towns covered will double
from 3,300 to almost 6,500 in a year.

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34

Rural marketing

Retail
The rural retail market is currently estimated at US$ 112 billion, or
around 40 per cent of the US$ 280 billion retail market. Major
domestic retailers like AV Birla, ITC, Godrej, Reliance and many others
have already set up farm linkages. Hariyali Kisan Bazaars (DCM) and
Aadhars (Pantaloon-Godrej JV), Choupal Sagars (ITC), Kisan Sansars
(Tata), Reliance Fresh, Project Shakti (Hindustan Unilever) and Naya
Yug Bazaar are established rural retail hubs.

Pharmaceuticals
According to a report by McKinsey, the rural and tier-II pharma market
will account for almost half of the growth till 2015. The tier-II market
will grow to 44 per cent by 2015, amounting to US$ 8.8 billion.
This growth will be further augmented with the government increasing
the allocation under National Rural Health Mission (NRHM) by US$
424.3 million over interim budget estimate 2009-10 of US$ 2.49
billion.
Elder Pharmaceuticals is increasing its focus on the rural market. The
company that largely makes active pharmaceutical ingredients, plans
to increase its sales by 8-9 per cent mainly from rural areas and has
allocated US$ 8.26 million to strengthen the sales force for this
segment.

Telecommunication
A Gartner forecast revealed that Indian cellular services revenue will
grow at a compound annual growth rate (CAGR) of 18.4 per cent to
touch US$ 25.6 billion by 2011, with most of the growth coming from
rural markets. Also, a joint Confederation of Indian Industries (CII) and
Ernst & Young report reveals that of the next 250 million Indian
Page
35

Rural marketing

wireless users, approximately 100 million (40 per cent) are likely to be
from rural areas, and by 2012, rural users will account for over 60 per
cent of the total telecom subscriber base in India.

In a bid to acquire rural subscribers, most Indian telecom operators

have started investing in infrastructure to roll out their services in
these areas. Realising this as a huge potential, small Indian handset
manufacturing companies, including Micromax, Intex Technologies and
Karbonn, have lined up a marketing spent of around US$ 21.02 million
for the financial year 2009-10.

Automobiles
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36

Rural marketing

For the auto industry, semi-urban and rural markets contribute close
to 40 per cent of sales, led by demand for two-wheelers, entry-level
cars and tractors. Significantly, car sales grew 8.3 per cent in June
2009, aided by rising demand in semi-urban and rural markets.
Mahindra & Mahindra is bullish on the rural and semi-urban markets,
with its utility vehicle, Scorpio clocking 60-65 per cent sales

from the rural markets as against 20 per cent earlier. TVS Motor also
registered around 50 per cent of its sales from the rural and semiurban markets.

Consumer durables
A survey carried out by RMAI has revealed that 59 per cent of
durables sales come from rural markets.
Presently, around 50 per cent of sales in the US$ 5.14 billion
consumer electronics industry come from the urban markets, 30 per
cent from tier-II and -III towns and balance 20 per cent from rural
India.
Many leading consumer durable companies are now increasing their
presence in rural India. Recently, LG has set up 45 area offices and 59
rural and remote-area offices. Moreover, it has outlined plans to invest
around US$ 40 million towards development of entry-level products
targeted at rural markets.
Samsung has also rolled out its 'Dream Home' road show which was to
visit 48 small towns in 100 days in an effort to increase brand
awareness of its products. Samsung expects that its rural revenues
would increase to US$ 287.7 million in 2009 from US$ 164.4 million
last year. The company also plans to expand its sales channel by 2530 per cent in rural India.
Page
37

Rural marketing

Whirlpool, is eyeing rural markets in India for its next phase of growth.
The company is set to tap markets with a population between 100,000
and 500,000 in the first phase, and in the next phase, will look at
expanding the base in villages with a population of 50,000.

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

Agriculture:

of

Rural

Rural
Prosperity

consumers

is

is

agriculture

tied

with

from

prosperity. In the event of a crop failure, the income of the rural

masses is directly affected.
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38

Rural marketing

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

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.

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39

Rural marketing

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.

Some Myths:
1.Myth-1: Rural Market Is a Homogeneous Mass
Reality: Its a heterogeneous population. Various Tiers are present
depending on the incomes like Big Landlords; Traders, small farmers;
Marginal farmers: Labors, artisans. State wise variations in rural
demographics are present viz. Literacy (Kerala 90%, Bihar 44%) and
Population below poverty line (Orissa 48%, Punjab 6%).

2.Myth-2: Disposable Income Is Low

Reality: Number of middle class HHs (annual income Rs 45,000- 2,
15,000) for rural sector is 27.4 million as compared to the figure of
29.5 million for urban sector. Rural incomes CAGR was 10.95%
compared to 10.74% in urban between 1970-71 and 1993-94.

3.Myth-3: Individuals Decide About Purchases

Reality: Decision making process is collective. Purchase processinfluencer, decider, buyer, one who pays can all be different. So
marketers must address brand message at several levels.Rural youth
brings brand knowledge to Households (HH).
Page
40

Rural marketing

Is rural marketing transactional or developmental in

its approach?
It is true, rural markets have become an attractive proposition for
commercial business organizations.
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.N

Aspect

Transactional

Development

Concept

Consumer

Society orientation,

orientation,

societal concept

o
1.

Marketing concept
2.

Role

Stimulating and

Catalytic and

conversional

transformation agent

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41

Rural marketing

marketing
3.

Focus

Product-market fit

Social change

4.

Key task

Product

Social innovations and

innovations and

communications

communications
5.

Nature of

Commercial

activity
6.

Participants

Socio-cultural,
economic

Corporate

Government,

enterprises,

voluntary agencies,

Sellers

corporate enterprises,
benefactors

7.

Offer

Products and

Development,

services

projects/schemes/prog
rams

8.

Target group

Buyers

Beneficiaries and
buyers

9.

Communicati

Functional

Developmental

Profits, Customer

Market development

on
10.

Goal

satisfaction

Corporate Image

Brand image
11.

Time-Frame

Short-medium

Medium-Long

12.

Motivation

Profit-motive

Service-motive
Ideological or Public

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42

Rural marketing

Business policy

Model:

policy

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.
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43

Rural marketing

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".

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
manufactured goods and is fast expanding. Farmers cultivating
sugar cane in UP and Karnataka fall in this category.
The Poor: This constitutes a huge segment. Purchasing power
is less, but strength is more. They receive the grants from
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44

Rural marketing

government and reap the 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 Market

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 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.

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45

Rural marketing

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 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.
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46

Rural marketing

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.
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Rural marketing

Attractiveness of rural market

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.

2.Rising Rural Propensity:

2000-

2005

2008-

01

-06

09

RS. 1.6

3.8

5.6

100,000
RS. 77,001- 2.7

4.7

5.8

INCOME GROUP
ABOVE

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48

Rural marketing

100,000
RS .

50,001- 8.3

13.0

22.4

41.1

44.6

37.4

20.2

77,000
RS .

25,001- 26.0

50,000
RS.25,000 & 61.4
BELOW

Thus we see that population between income level of Rs. 25,00077,000 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 (IN RS.)

LEVEL

STATES

O.

High

EXPENDIT
URE

Punjab

614

Kerala

604

Haryana

546

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49

Rural marketing

(Above

Rs

Rajasthan

452

Gujarat

416

Andhra

386

Pradesh

382/-)

Maharashtr 384
a
West

382

Bengal
Average
5
(Rs. 382/-)

Orissa

381

Tamil

381

Naidu
Uttar

373

Pradesh

Low
(Below
382/-)

Rs. 3

Karnataka

365

Assam

338

Madhya

326

Pradesh
Bihar

289

Distribution households income wise (projection in

Rs Crore)
2001 02
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50

2006 07

Rural marketing

INCOME
GROUPS

RURAL
TOTA
L

HIGH

MIDDLE
LOW

TOTAL

0.26

RURAL
NO. %

TOTA
L

NO. %

0.0

26 0.52

0.1

23

.9

.1

12.0

7.7

64 16.7

10.

61

.2

32

.8

5.7

5.0

88 3.68

3.5

95

.7

.7

18.0

12.

71 20.9

13.

66

89

.4

96

.7

Spending pattern (Rural Households in Rs.)

ITEM

% RIC
H

FOOD ARTICLES 4 14
4 7
TOILETRIES

2
0

67

Page
51

PO

AVERA

OR

GE

73

95

33

43

Rural marketing

WASHING

MATERIAL

COSMETICS

43

22

28

33

17

21

OTC PRODUCTS 4 13

OTHERS

15

19

9 30

TOTAL

33

166 215

Average rural household spends on consumables excluding food

grains, milk & vegetables are Rs. 215/-.

4.Life style changes:

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

HOUSEHOLD

INCOME

(RS.)
GOODS

WASHING

UP

TO

351 751

150

350

750

1500

1+

60

78

86

91

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52

Rural marketing

CAKES/BARS
SHAMPOOS

57

72

89

93

TOOTH

22

36

65

85

BATHING SOAPS

20

25

41

63

TEA (PACKAGED)

22

30

48

64

PASTE/POWDER

5.Life cycle advantage:

STAGES IN LIFE CYCLE
PRODUCT

URBAN

MARKET

RURAL

GROWTH
RATE %
Popular

Maturit

soaps

Premium

Late

soaps

growth

Washing

Late

powder

growth

Skin

Maturit

creams

Tea

Maturit

Growth

11

Early
growth

Early
growth

1.1

Growth

Growth

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Rural marketing

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.
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
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Rural marketing

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.

RURAL VS URBAN MARKETING

N

ASPECT

URBAN

RURAL

O.

PHILOSOPHY

Marketing &

Marketing &

Societal

Societal

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55

Rural marketing

Concepts &

Concepts,

Relationship

Development

Marketing

Marketing &
Relationship
Marketing

A) MARKET
B) DEMAND

High

Low

C)

Among Units In

Mostly From

Organized

Unorganized

Sector

Units

LOCATION

Concentrated

Widely Spread

LITERACY

High

Low

INCOME

High

Low

EXPENDITURE

Planned, Even

Seasonal,

COMPETITION

CONSUMERS

Variation
NEEDS

High Level

Low Level

INNOVATION/ADO

Faster

Slow

AWARENESS

High

Low

CONCEPT

Known

Less Known

POSITIONING

Easy

Difficult

USAGE METHOD

Easily Grasped

Difficult

PTION

PRODUCT

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56

To

Rural marketing

Grasp
QUALITY

Good

Moderate

SENSITIVE

Yes

Very much

LEVEL DESIRED

Medium-high

Medium-low

Wholesalers,

Village shops,

stockists,

Haats

PREFERENCE
4

PRICE

DISTRIBUTION

retailer,
CHANNELS

supermarket,
specialty
stores, &
authorised

TRANSPORT

showrooms
Good

Average

FACILITIES
PRODUCT

High

Limited

Print, audio

TV, radio, print

visual media,

media to some

outdoors,

extent. More

exhibitions etc.

languages

AVAILABILITY
6

PROMOTION

ADVERTISING

few languages
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Rural marketing

PERSONAL

Door-to-door,

Occasionally

SELLING

frequently

SALES

Contests, gifts,

Gifts, price

PROMOTION

price discount

discounts

PUBLICITY

Good

Less

opportunities

opportunities

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
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Rural marketing

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 tractor-trolley.
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 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.
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Rural marketing

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.

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Rural marketing

Need-Product Relationships and the changes happening in

Rural India
Needs

Old Products

New Products

Brushing Teeth

Neem sticks,

Toothpaste, tooth

Charcoal, Rocksalt,

powder

Husk
Washing Vessels

Coconut fiber,

Washing Powders,

Earthy materials,

soaps and liquids

Brick Powder, Ash

Transport

Bullock Cart, Horses, Tractors, LCVs,

Donkeys

Mopeds, Scooters,
Motor cycles

Irrigation

Wells, Canals, Water

Bore-wells, Motors,

lifters, Wind Mills

Power Generators,
Pump Sets

Hair Wash

Shikakai powder,

Shampoos and

Retha, Besan

hair care soaps

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CONSUMER BEHAVIOR IN RURAL MARKETS:

Promotion of brands in rural markets requires the special
measures. Due to the social and backward condition the personal
selling efforts have a challenging role to play in this regard. The word
of mouth is an important message carrier in rural areas. Infect the
opinion leaders are the most influencing part of promotion strategy of
rural promotion efforts. The experience of agricultural input industry
can act as a guideline for the marketing efforts of consumer durable
and non-durable companies. Relevance of Mass Media is also a very
important factor.
The Indian established Industries have the advantages, which MNC
don't enjoy in this regard. The strong Indian brands have strong brand
equity, consumer demand-pull and efficient and dedicated dealer
network which have been created over a period of time. The rural
market has a grip of strong country shops, which affect the sale of
various products in rural market. The companies are trying to trigger
growth in rural areas. They are identifying the fact that rural people
are now in the better position with disposable income. The low rate
finance availability has also increased the affordability of purchasing
the costly products by the rural people. Marketer should understand
the price sensitivity of a consumer in a rural area. This paper is
therefore an attempt to promote the brand image in the rural market.
Indian Marketers on rural marketing have two understanding (I) The
urban metro products and marketing products can be implemented in
rural markets with some or no change. (ii) The rural marketing
required the separate skills and techniques from its urban counter
part. The Marketers have following facilities to make them believe in
accepting the truth that rural markets are different in so many terms.
(i) The rural market has the opportunity for.
(ii) Low priced products can be more successful in rural markets
because the low purchasing, purchasing powers in rural markets.
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Rural marketing

(iii) Rural consumers have mostly homogeneous group with similar

needs, economic conditions and problems.
(iv) The rural markets can be worked with the different media
environment as opposed to press, film, radio and other urban centric
media exposure.
How does reality affects the planning of marketers? Do villagers have
same attitude like urban consumers? The question arises for the
management of rural marketing effects in a significant manner so
than companies can enter in the rural market with the definite goals
and targets but not for a short term period but for longer duration. The
Research paper will discuss the role of regard. The strategy, which will
be presented in the paper, can be either specific or universally
applicable.
The ultimate objective of all production is consumption. A free
market economy provides freedom to the consumers to buy and
consume goods of their choice. The buying preferences of consumers
send signals to producers to produce various commodities in required
quantities. Producers, therefore, produces only those commodities
which are desired by the consumers. In India, consumer behavior has
changed in recent years owing to enhanced awareness, information
technology, and, more importantly, governmental intervention
through legislations. India's rural consumers account for about 73
percent of the total consumers. In recent years, the lifestyle of a large
number of rural consumers in India has changed dramatically and
continues to do so. The buying behavior of the rural consumers is
influenced by several factors, such as socio-economic conditions,
cultural environment, literacy level, occupation, geographical location,
efforts on the part of sellers, exposure to the media, etc. This book
examines the buying behavior of India's rural masses and the diverse
factors which influence their choices. The work is useful for

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understanding the Indian rural consumer psyche in order to formulate

an appropriate marketing strategy. It includes:
1) Media
2) Newspaper brand
3) Sources of information.

RURAL CONSUMER PREFERENCES:

In order to assess the buyer behavior towards certain critical
aspects of marketing, the preferences of the consumers is
directly related to:
1) Price
2) Quality
3) Credit
4) Variety
5) Dealer advice
6) Specific brand.

PURCHASE BEHAVIOR:
Rural people can buy only from three places includes:
1) From the shop in the same village
2) Weekly bazaar
3) From the shop of nearby town.

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
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Rural marketing

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. 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
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Rural marketing

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 behavior

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
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Rural marketing

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 re-launched 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.

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Rural marketing

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.
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
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Rural marketing

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)

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.
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Rural marketing

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 semi-urban
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 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

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Rural marketing

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, Coca-Cola provides low-cost ice boxes
a tin box for new outlets and thermocol box for seasonal outlets.

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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 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.
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Rural marketing

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.
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.

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Rural marketing

Evolving a New Marketing Mix for Selling to Rural

Indians
The marketing mix in the case of Indian rural markets consists of 4Ps
i.e.
Product, Price, Promotion, Place combined with 1 P that is Packaging
and one R i.e. Retailer as special focus areas. However, at the base
of this marketing mix will be 2 Es of Education and Empowerment.
r

i l e

CUSTOMIZATIO
NN

i n

i c

EDUCATIO
N

l a

c e
a
n
d
EMPOWEREMEN
T

i o

The traditional marketing hypothesis tends to ignore the requirement

of a developing countrys rural needs. The concept of marketing has
to be taken in conjunction with economic, psychological and social
implications. Hence, the concept of Mega-Marketing where all such
factors are taken into consideration while developing the Marketing
Mix is more relevant to succeed and build enduring brands. In rural
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Rural marketing

Indias case the two most important considerations are Education and
Empowerment opportunities which traditional approaches of
marketing fail to acknowledge. Then only the opportunity provided by
the rural market can be fully tapped.
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 systems
lowering the cost of cultivation, increasing yields due to integrated
crop management practices and reducing the dependence on rainfall.
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Rural marketing

As a result, disposable income has grown sharply. The aspirants are

becoming

climbers

showing

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
Authentic marketing is the art of identifying and
understanding customer needs and creating solutions that
deliver satisfaction to the customers, profits to the producers
and benefits for the stakeholders. ................... Philip Kotler
The product offerings have to be not only customized but also at a
different plane altogether in case of rural markets. The various
product levels as outlined by Philips Kotler, namely Core Benefit, Basic
Product, Expected product, augmented product and Potential Product
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Rural marketing

should be adequately taken into consideration and the product

offerings should be henceforth customized according to the needs.
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.
Most of the times in the urban market the product is offered at the
augmented product level where the objective of the product offering
is to exceed the customer expectation. But in the rural markets of
India which have been till date characterized by the absence of the
choice, sub-standard products and cheap clones of their urban
counterparts; the immediate level to be operated is the Expected
product where his expectations are met. Also, due to the low level of
incomes and literacy levels, it is imperative that the basic needs of the
consumer are met.

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Rural marketing

C
E
B
PA
O
A
X
U
O
R
S
PT
G
E
I
E
M
E
B
C
E
N
TPE
TN
N
R
ITE
E
O
D
E
A
FPD
LD
IP
U
R
TR
C
O
R
TO
D
O
U
D
C
U
TC
C
TT

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.
Systematic, in-depth research that can help understand the depths of
the mind of the villagers, their buying criteria, purchase patterns and

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Rural marketing

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
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Rural marketing

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.

Pricing
A significant portion of the rural population is paid in daily wages.
Daily wage earners tend to have little stock of money, and therefore
tend to make purchases only to meet their daily needs. The
implication is that pack sizes and price points are critical to sales, and
importantly, that rural consumers view the purchase-tradeoff dilemma
across a much wider range of product categories. As a result, the
nature of competition is much greater; a beverage manufacturer is not
only competing with other manufacturers in its category, but also
other products that consumers may consider one-off luxury purchases
such as shampoo. So marketer will have to examine method by which
he can make the product more affordable. In the case of consumer
durable one way is to work through rural bank and offer higher
purchase terms to consumer. In short, the Value for money is the
most important concept that will differentiate the successful brand
from the rest.
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Rural marketing

STATUS SEEKING
CONSUMERS

BUDGET CONSCIOUS
CONSUMER

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
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Rural marketing

understands and demands value for money in every purchase that he

makes. Pricing therefore is a direct function of factors including costbenefit 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
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financial products, schemes or solutions that suit the needs of the

rural population.

Promotions & Advertising

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 wiseup 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
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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 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.

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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.
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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.
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
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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 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
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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
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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
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

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meagre sale is mostly on credit. The diversity in the distribution of

shops is the self-limiting factor in terms of servicing the rural
distribution network.

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

headquarters, assembly markets and such central

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towns,

district

Rural marketing

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

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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
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
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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 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.

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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.

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MARKETING 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 wants to communicate. Thus,
this positioning of technology is very crucial. The perception of the
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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.

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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.
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BY ASSOCIATING THEMSELVES WITH INDIA

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 tri-colour 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.
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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 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
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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 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
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Rural marketing

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.

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.
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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.

This method has been tested by products life

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shampoos, pickles, biscuits, Vicks cough drops in single tablets, tooth

paste, etc. Small packing stands 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
packing 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.

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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.
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
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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.

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
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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

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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 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.

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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

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
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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.

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Distribution Strategy
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.

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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 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 cooperative 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
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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 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
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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
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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

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,
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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

co-operative

supermarket

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 noncompeting 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.

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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.
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.
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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.
I. CREDIBILITY: 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.

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- 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.

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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

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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.)

3. Vans
Mobile vans long since, have an important place in distribution
and promotion of the products in villages.

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

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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?
Mass Media

Local Media

Personalized
Media

Radio

Haats, Melas, Fairs

Direct
Communication

Cinema

Wall Paintings

Dealers

Press

Hoardings

Sales Persons

TV

Leaflets

Researchers

Video Vans
Folk Media
Animal Parade
Transit Media

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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
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

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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 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,

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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.

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:
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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 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
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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

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
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Rural marketing

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 farm-to-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:
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.
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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:
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:

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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:
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
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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 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 12 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
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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:
This is based on the extension principle seeing is believing and is
one of the most effective methods to show the superiority of the
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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
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compared to other fields. Field demonstrations/field days consume lot

of time and efforts and therefore have to be planned well.

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.

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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 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
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(c)

High reach Low frequency

Van based advertising
Melas
Direct to home
Folklore group
Exhibitions/created events

(d)

Low reach Low frequency

Tin painting tree/shops
Leaflets
Posters & banners
Streamers
Danglers

FINDINGS AND ANALYSIS

1. Which soap u prefer to use?
The reaction of people towards various SOAP brands
can be tabulated in the following manner:
BRANDS

LUX

DETTOL
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135

LIFEBUOY

OTHERS

Rural marketing

PERCENTAG
E

36

18

22

24

In the survey, it could easily be concluded that LUX, the product of

HUL was highly in demand. LUX, the product of HUL covers 36%of the
market share. After LUX, the other brands (EXCEPT LUX, DETTOL,
LIFEBUOY) covers 24%of the market share. This is then followed by
LIFEBUOY, the product of HUL with a market share of 22%,which is
then followed by DETTOL, the product of RECKITT BENCKISER with a
market share of 18%.
This data can be graphically explained with the help of the
following bar graph:

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Rural marketing
40
35
30
25
LUX
LIFEBUOY

20

DETTOL
15

OTHERS

10
5
0
BRANDS

2. Which pack u prefer to use?

In order to determine the income pattern of the
consumers, it was necessary for the researcher to distribute the
consumers on the basis of their demand for the various packs of SOAP
brands available in the market. However, the reaction of people
towards various packs of SOAP can be tabulated in the following
manner:
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Rural marketing

PACK OF SOAPS

SINGLE PACK

FAMILY PACK ( 3 IN 1)

PERCENTAGE

56

44

In the survey, I tried to differentiate amongst people with below

average
household income, average household income &above household
income. This classification can be done on the basis of the daily
expenditure that people make.56% consumers demand single
pack.44% consumers demand family packs i.e.3 in 1 pack.
This data can be graphically explained with the help of the
following bar graph:
60
50
40
SINGLE PACK

30

Column1
20
10
0
PACKS PREFERRED BY CUSTOMERS

3. Which tea u prefer to use?

The reaction of people towards various TEA brands can
be tabulated in the following manner:
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Rural marketing

BRANDS

TATA TEA

BROOKE
BOND

TAJ MAHAL

OTHERS

PERCENTAG
E

32

28

18

22

In the survey, it could easily be concluded that TATA TEA, the product
of TATA has a market share of 32%.This is followed by, BROOKE BOND,
with a market share of 28%.Followed by other brands (EXCEPT TATA
TEA,BROOKE BOND,TAJ MAHAL)with a market share of 22%.This is
finally followed by TAJ MAHAL, the product of HUL which holds18%of
the market share.
This data can be graphically explained with the help of the
following bar graph:

35
30
25

TATA TEA
BROOKE BOND

20

TAJ MAHAL
15

OTHERS

10
5
0
BRANDS

4. Which tea pack u prefer to use?

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Rural marketing

In order to determine the income pattern of the consumers,

it was necessary for the researcher to distribute the consumers on the
basis of their demand for the various packs of TEA brands available in
the market. However, the reaction of people towards various TEA
packs can be tabulated in the following manner:
TEA PACKS

SACHET

MEDIUM PACK

LARGE PACKS

PERCENTAGE

48

32

20

In the survey, I tried to differentiate amongst the people, with below

average household income, average household income & above
household income. This classification can be done on the basis of the
daily expenditure that people make. However, it can be concluded
that sachets are most commonly used by the people .i.e.
48%consumers demand sachet packs. 32%consumers demand
medium pack. 20%consumers demand large pack.
This data can be graphically explained with the help of the
following diagram:

50
45
40
35

SACHET

30

MEDIUM PACK

25

LARGE PACK

20
15
10
5
0
PACKS PREFERRED BY CUSTOMERS

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Rural marketing

5. Which tooth paste u prefer to use?

In the initial years, the rural consumers preferred tooth powders,
datoons etc. But from the last decade, the preference of consumers
towards toothpaste has been changed. A huge number of toothpastes
of
different companies are sold in rural market.
However, the reaction of people towards various TOOTH
PASTES can be tabulated as follows:
BRANDS

PEPSODENT

COLGATE

CLOSE UP

OTHERS

PERCENTAG
E

27

35

22

16

In the survey that the researcher conducted, it could easily be seen

that COLGATE, the product of COLGATE PALMOLIVE is the market
leader, which covers 35%of the total market. After that, PEPSODENT,
the product of HUL is demanded by the customers, which covers
27%of the market share. Followed by CLOSE UP, the product of HUL
is demanded by the customers, which covers 22%of the market share.
Which is then followed by others brands (EXCEPT PEPSODENT,
COLGATE, CLOSE -UP), which covers 16%of the total market share.
This data can be graphically explained with the help of the
following bar graph:

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Rural marketing

35
30
25

PEPSODENT
COLGATE

20

CLOSE UP

15

OTHERS

10
5
0
BRANDS

6. Which coffee u prefer to use?

The reaction of people towards various COFFEE brands can
be tabulated in the following manner:
BRANDS

BRU

NESTLE

NESCAFE

OTHERS

PERCENTAG
E

26

32

32

10

In the survey, it can be easily concluded that all the brands are facing
tough
competition. NESTLE, the product of NESTLE S.A.& NESCAFE, another
product of NESTLE S.A., shares equal market share of 32%each.This
means that they are in a very tough competition. This is followed by
BRU, the product of HUL which holds, 26%of the market share. While
the other brands hold only 10%of the market share.
This data can be graphically explained with the help of the
following bar graph:

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Rural marketing

35
30
25

BRU
NESTLE

20

NESCAFE
15

OTHERS

10
5
0
BRANDS

7. Which cream u prefer to use?

The reaction of people towards various CREAM brands
can
be tabulated in the following manner:
BRANDS

PONDS

FAIR &
LOVELY

AYUR

OTHERS

PERCENTAG
E

28

32

14

26

In the survey, that I conducted, it can easily be concluded that FAIR

&LOVELY, the product of HUL, holds the major market with a share of
32%.This is followed by, POND s, another product of HUL, which holds
28%of the market share. This is followed by, other brands (EXCEPT,
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PONDS, FAIR &LOVELY &AYUR), which captures 26%of the market

share. This is followed by AYUR, the brand of AYUR
ACADEMY OF NATURAL BEAUTY (AANB) which holds 14%of the total
market share.
This data can be graphically explained with the help of the
following bar graph:

35
30
25

PONDS
FAIR & LOVELY

20

AYUR
15

OTHERS

10
5
0
BRANDS

8. which hair oil u prefer to use?

The reaction of people towards various HAIR OIL brands
can
be tabulated in the following manner:
BRANDS

PARACHUTE DABUR
AMLA

DABUR
VATIKA

OTHERS

PERCENTAG
E

37

19

15

29

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In the survey, it can easily be concluded that PARACHUTE, the product

of MERICO captures 37%of the total market share. This is followed by
DABUR AMLA, the product of DABUR which captures 29%of the total
market share. This is followed by DABUR VATIKA, another product of
DABUR which captures 19%of the market. And after that, followed by
other brands (EXCEPT PARACHUTE, DABUR AMLA, DABUR VATIKA)
captures 15% of the market share.
This data can be graphically explained with the help of the
following bar graph:

40
35
30
PARACHUTE

25

DABUR AMLA

20

DABUR VATIKA
OTHERS

15
10
5
0
BRANDS

9. Which biscuits u prefer to use?

The reaction of people towards various BISCUITS
brands can be tabulated in the following manner:
BRANDS

MARIE
GOLD

GOOD DAY

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PARLE G

OTHERS

Rural marketing

PERCENTAG
E

24

21

38

17

In the survey, it can easily be concluded that PARLE-G, the product of

PARLE , holds a major market share of 38%.This is followed by MARIE
GOLD, a product of BRITANNIA which holds 24%of the market share.
After that, GOOD DAY, another product of BRITANNIA, holds 21%of the
market share. This is followed by other brands (EXCEPT MARIE GOLD,
GOOD DAY, PARLE-G) which hold a market share of 17%.
This data can be graphically explained with the help of the
following bar graph:

40
35
30
MARIE GOLD

25

GOOD DAY

20

PARLE-G
OTHERS

15
10
5
0
BRANDS

10. Which detergent u prefer to use?

The reaction of people towards various DETERGENT
brands can be tabulated in the following manner:
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BRANDS

SURF

RIN

TIDE

OTHERS

PERCENTAG
E

27

35

22

16

In the survey, it could be easily concluded that RIN, the product of

HUL
captures 35%of the total market share. This is followed by SURF, the
product of HUL which has a market share of 27%.This is followed by
TIDE, the product of PROCTER & GAMBLE which has a market share of
27%.This is finally followed by other brands (EXCEPT
SURF,RIN,TIDE)which captures 16%of the market share.
This data can be graphically explained with the help of the
following bar graph:

35
30
25

SURF
RIN

20

TIDE
15

OTHERS

10
5
0
BRANDS

11. Which shampoo u prefer to use?

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The reaction of people towards various SHAMPOO brands can

be tabulated in the following manner:
BRANDS

CLINIC PLUS SUNSILK

HEAD &
OTHERS
SHOULDERS

PERCENTAG
E

33

28

25

14

In the survey, it can easily be concluded that CLINIC PLUS, the product
of
HUL, captures the major portion of the market with a market share of
33%.This is followed by HEAD & SHOULDERS, the product of PROCTER
&GAMBLE which holds 28%of the market share. This is followed by
SUNSILK, the product of HUL which holds 25%of the market share.
Finally followed by other brands (EXCEPT CLINIC PLUS, SUNSILK, HEAD
& SHOULDERS) with a market share of 14%.
This data can be graphically explained with the help of the
following bar graph:

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35
30
25
CLINIC PLUS
20

SUNSILK
HEAD & SHOULDERS

15

OTHERS

10
5
0
BRANDS

12. Which pack u prefer to use?

In order to determine the income pattern of the consumers, it
was necessary for the researcher to distribute the consumers on the
basis of their demand for the various packs of SHAMPOO brands
available in the
market.
However,the reaction of people towards various SHAMPOO packs
can be tabulated in the following manner:
SHAMPOO
PACKS

SACHET

SMALL
PACK

MEDIUM
PACK

FAMILY
PACK

PERCENTAG
E

23

32

28

17

In the survey, I tried to differentiate amongst the people, with below

average household income, average household income & above
household income. This classification can be done on the basis of the
daily expenditure that people make. However, 32%consumers
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demand SMALL PACK. 28% consumers demand medium pack.17%

consumers demand large packs.
This data can be graphically explained with the help of the
following bar graph:

35
30
25

SACHET
SMALL PACK

20

MEDIUM PACK

15

FAMILY PACK

10
5
0
PACKS PREFERRED BY CUSTOMERS

13. Which Television you prefer to use ?

The reaction of people towards various television
brands can be tabulated in the following manner:
BRANDS

ONIDA

BELTEK

CROWN

OTHERS

PERCENTAG
E

40

23

33

In the survey, it can easily be concluded that TELEVISION of ONIDA,

captures the major portion of the market with a market share of
40%.This is followed by CROWN, which holds 33%of the market share.
This is followed by BELTEK , which holds 23%of the market share.
Finally followed by other brands
( SAMSUNG, LG, SONY etc) with a
market share of 4%.
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Rural marketing

This data can be graphically explained with the help of the

following bar graph:

40
35
30
ONIDA

25

BELTEK
CROWN

20

OTHERS

15
10
5
0
BRANDS

14. Which bicycle you prefer to use?

The reaction of people towards various bicycle brands
can be tabulated in the following manner:
BRANDS

ATLAS

HERO

AVON

OTHERS

PERCENTAG
E

37

33

22

08

In the survey, it can easily be concluded that the BICYCLE of ATLAS,

captures the major portion of the market with a market share of
37%.This is followed by HERO, which holds 33%of the market share.
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This is followed by AVON , which holds 22%of the market share. Finally
followed by other brands (EXCEPT atlas, hero and avon ) with a
market share of 8%.
This data can be graphically explained with the help of the
following bar graph:

40
35
30
ATLAS

25

HERO
AVON

20

OTHERS

15
10
5
0
BRANDS

15. Which refrigerator you prefer to use?

The reaction of people towards various bicycle brands can be
tabulated in the following manner:
BRANDS

GODREJ

VIDEOCON

KELVINATO
R

OTHERS

PERCENTAG
E

38

20

28

14

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In the survey, it can easily be concluded that the REFRIGERATOR of

GODREJ, captures the major portion of the market with a market share
of 38%.This is followed by KELVINATOR, which holds 28%of the market
share. This is followed by VIDEOCON , which holds 20%of the market
share. Finally followed by other brands (LG, SAMSUNG etc ) with a
market share of 14%.
This data can be graphically explained with the help of the
following bar graph:

16. Which wrist watch you prefer to use?

The reaction of people towards various bicycle
brands can be tabulated in the following manner:
BRANDS

HMT

MAXIMA
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153

TITAN

OTHERS

Rural marketing

PERCENTAG
E

26

14

40

20

In the survey, it can easily be concluded that the WRIST WATCH of

TITAN, captures the major portion of the market with a market share
of 40%.This is followed by HMT, which holds 26%of the market share.
This is followed by MAXIMA , which holds 14%of the market share.
Finally followed by other brands (EXCEPT HMT, MAXIMA AND TITAN )
with a market share of 8%.
This data can be graphically explained with the help of the
following bar graph:

17. Which fan you prefer to use?

The reaction of people towards various bicycle brands can
be tabulated in the following manner:
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BRANDS

LOCAL FANS POLAR

KHAITAN

CROMPTON
FANS

PERCENTAG
E

32

22

18

28

In the survey, it can easily be concluded that the FANS of LOCAL

COMPANIES, captures the major portion of the market with a market
share of 32%.This is followed by POLAR, which holds 28%of the
market share. This is followed by KHAITAN , which holds 22%of the
market share. Finally followed by CROMPTON with a market share of
18%.
This data can be graphically explained with the help of the
following bar graph:

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Conclusions
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 consumers dont need attractive
packaging. Application of 4A* is also a major task for the major
companies in this area.

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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.
In this report, it can very easily be concluded that HUL, holds major
portion of the FMCG market. It holds major shares in the soap,
detergent, shampoo & cream s category. HULs products are mainly
in demand, because they provide these products in different packs.
They consider the fact that rural consumers do not have that much
money to be spent on these products. So, they prefer buying the small
or the medium packs. However, large or family packs are still been
bought by few consumers, who are from a well off families.
In the case of TEA, TATA holds a major share. In the case
of COFFEE, NESTLE & NESCAFE holds the major share. Rural
consumers favor TATA because it is an old organization &it has gained
a lot of BRAND EQUITY which finally creates BRAND LOYALTY. In these
products, consumers do get brand loyal, because they do not want to
take a risk with their tastes. So they prefer sticking to one brand.
These organizations supply their products in various packs (small,
medium &large), considering the buying capacity of their consumers.
As in the case of BISCUITS, PARLE-G holds the major market
share. Rural consumers favor PARLE-G because it is an old
organization & it has gained a lot of BRAND EQUITY which finally
creates BRAND LOYALTY. In case of BISCUITS, consumers do get brand
loyal, because they do not want to take a risk with their tastes. So
they prefer sticking to one brand. Though it is the cheapest biscuit but
still the taste is same and unique. ACHA, SASTA AND TIKAU.

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In the case of TOOTH PASTES,COLGATE PALMOLIVE holds a

major market share. Consumers are very concerned about their
health, so if any product suits

them they prefer sticking to that product. And this product is also
available in various packs, so rural consumers can se it according to
their buying capacity.
In the case of HAIR OILS,MERICO holds the major market
share. MERICO is a much known organization & its product
PARACHUTE has reached all the places. So it is a known product,
which has created a good amount of goodwill for the organization.
Consumers have confidence & trust in their product. Therefore, they
prefer buying it.
And in the case of durable goods like tv, fan etc. in rural areas
people generally dont buy the company products, they prefer to buy
local products because of lack of knowledge and the main factor is
because of income factor, which is quite low in rural areas. Illiteracy is
also a main factor. For them there is no such thing status symbol.
Although, there is a brand loyalty but the percentage is very low.

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Suggestions &recommendations
The researcher would like to suggest the following
points, so that the organizations can easily sell their products to their
consumers:
1.However,the demand of a product is also affected by its life cycle. If
the product is in the introduction stage, then it will definitely take
some time to capture the market, because in the introduction stage,
consumers are not much aware about the product. Therefore, it is the
responsibility of the organization to create awareness amongst the
consumers.
2.They should adapt rigorous marketing strategies, in order to sustain
in the market.
3.There is immense competition in this sector. Therefore, the
organizations should try to gain competitive advantage against their
competitors.
4.They should try to reach as many people as possible.
5.For the organizations that are not much popular amongst the
consumers, should adopt Sales Promotion, as their marketing
strategies.
6.Application of 4A s has also become an important task for all the
organizations. (*4A=Availability, Affordability, Acceptability,
Awareness)

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APPENDIX
1. Some Facts about the rural market
70 % of Indias population lives in 627000 villages in rural
areas. 90 % of the rural population is concentrated in villages with a
population of less than 2000. According to the NCAER projections, the
number of middle and high-income households in rural India is
expected to grow from 80 million to 111 million by 2007. In urban
India, the same is expected to grow from 46 million to 59 million.
Packaged consumer products: More than Rs. 2000 crores
Market for Non-food items: Rs. 20000 crores growing at 2.5% p.a.
Consumption of pesticides: 68,000 tonnes, growing at 12%p.a.
Share of Rural market in overall consumption
Toiletries
Safety Razor Blades
Premium Soaps
Tooth Paste
Hair Oil

48%
24%
20%
20%

OTC products
Medicated dress
Cold Analgesic
Antiseptic Creams

25%
42%
28%

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2.) Product Adoption: Hair products were introduced to rural India

in an attempt to capitalize on a culture where hair grooming is taken
extremely seriously by women. While rural women may wear faded
saris and little jewelry, few step out without ensuring that their hair is
in place. Consumer goods companies introduced a transplanted
product from developed markets, the 2-in-1 shampoo/conditioner.
Companies thought that women would be attracted to this product
because it was cost-effective; however, initial sales were dismal. What
companies failed to recognize is that most rural consumers had
previously never
used shampoo and did not value or understand the full benefits of
conditioner. However, several years back, Hindustan Lever focused on
product development strategies for rural consumers who still did not
use shampoo in India. Their research indicated that a prevailing
consumer habit in rural India was to use soap for hair and body care.
Rather than try to change instilled consumer behavior, product
developers focused on creating an opportunity. Consumers wanted a
product that was convenient and low-cost. The result was a new 2-in-1
soap, a product that cleans the hair and body, and is targeted towards
consumers in rural areas.

SOME STRANGE FACTS

Amazing innovator
With a queer psychology of purchase and usage, Indian rural market is
still a puzzle to marketers. In many a case, it stretches its imagination
to find surprisingly different uses of some of the products. And the
red-faced marketers admit that they actually sell their products in
areas they would otherwise find difficult, simply because there are
other uses for them. For instance,
Buffaloes displayed at the haats for sale are dyed an immaculate
black with
Godrej hair dye.
Horlicks is used as a health beverage to fatten up cattle in Bihar.
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In villages of Punjab, washing machines are being used to make

frothy lassi in
bulk.
Iodex is rubbed into the skins of animals after a hard day's work
to relieve
muscular pain.
3.) Communication Adaptation: Both, washing and for taking bath
- one requires water. Now for rural markets there are three sources of
water - wells, handpumps and ponds. For the first in the history of
advertising - these were branded. Special stickers were put on the
handpumps, the walls of the wells were lined with advertising tiles and
tinplates were put on all the trees surrounding the ponds. The idea
was to advertise not only at the point of purchase but also at the time
of
consumption. This case shows that the brand was some how relating
to the consumer. It was right there when the consumer wants it and
responds to his needs when wanted. So the customer could also see
the advertising when he was bathing or washing. Now, the customers
who bought these brands got a sense of satisfaction by seeing their
choice being advertised in these places while a question was put in
the minds of the customers who had bought other brands.

Questionnaire
name:
occupation:
monthly salary:
a) a.less than 10,000
b) b.10,000 25,000
c) c.25,000 50,000
d) d.More than 50,000
address:
1. Which soap u prefer to use?
a) Lux
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b) Lifebuoy
c) Dettol
d) Others
2. Which pack u prefer to use?
a) Medium pack
b) Family pack

3. Which tea u prefer to use?

a) Taj mahal
b) Tata tea
c) Brooke bond
d) Others
4. Which tea pack u prefer to use?
a) Sachet
b) Small pack
c) Medium pack
5. Which tooth paste u prefer to use?
a) Colgate
b) Close up
c) Pepsodent
d) Others
6. Which coffee u prefer to use?
a) Nestle
b) Nescafe
c) Bru
d) Others
7. Which cream u prefer to use?
a) Ponds
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b) Fair and lovely

c) Ayur
d) Others
8. which hair oil u prefer to use?
a) Parachute
b) Dabur amla
c) Dabur vatika
d) Others
9. Which biscuits u prefer to use?
a) Good day
b) Marie gold
c) Parle G
d) Others
10.

Which detergent u prefer to use?

a) Surf
b) Rin
c) Tide
d) Others

11.

Which shampoo u prefer to use?

a) Sunsilk
b) Head and shoulders
c) Clinic plus
d) Others

12.

Which pack u prefer to use?

a) Sachet
b) Small pack
c) Medium pack

13.

Which Television you prefer to use ?

a) Onida
b) Beltek
c) Crown
d) others
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14.

Which bicycle you prefer to use?

a) Avon
b) Atlas
c) Hero
d) Others

15.

Which refrigerator you prefer to use?

a) Videocon
b) Kelvinator
c) Godrej
d) Others

16.

Which wrist watch you prefer to use?

a) Titan
b) Hmt
c) Maxima
d) Others

17.

Which fan you prefer to use?

a) Local fans
b) Khaitan
c) Polar
d) Crompton

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BIBLIOGRAPHY
UTTAR PRADESH DEVELOPMENT AUTHORITY
http://business.mapsofindia.com/rural-economy/statedevelopment/marketing.html
http://www.ibef.org/economy/ruralmarket.aspx
http://en.wikipedia.org/wiki/Rural_markets
http://www.indianmba.com/Faculty_Column/FC213/fc213.html
http://www.123eng.com/forum/viewtopic.php?p=76117
http://ezinearticles.com/?Challenges-In-RuralMarketing&id=1092597
http://www.infibeam.com/Books/info/t-p-gopalaswamy/ruralmarketing-environment-problemsstrategies/9788125916178.html
http://www.naukrihub.com/india/fmcg/
http://www.naukrihub.com/india/fmcg/overview/
http://www.naukrihub.com/india/fmcg/consumer-class/income/
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Aithal K Rajesh,importance &growth of rural markets

Purba basu,research on living style of rural consumers
http://toostep.com/idea/challenges-in-rural-marketing
http://images.google.co.in/images?hl=en&rlz=1W1ADSA_en&q=
%20rural%20marketing
%20india&revid=1994801258&resnum=0&um=1&ie=UTF8&sa=N&tab=wi
http://www.articlesbase.com/marketing-articles/rural-marketinga-critical-review-1102352.html
http://www.marketresearch.com/product/display.asp?
productid=2106282
http://www.google.co.in/search?
hl=en&rlz=1W1ADSA_en&q=india+infrastructure+report+2009
&meta=&aq=2&aqi=g10&aql=&oq=INDIA+INFRA&gs_rfai
http://www.encyclopedia.com/doc/1G1-162866493.html
http://business.mapsofindia.com/indiabudget/infrastructure/india-rural-infrastructure-report.html

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