CHAPTER 23 RURAL MARKETING

Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

LEARNING OBJECTIVES
• The Jajmani system of the village economy • Sources and patterns of incomes of rural consumers

• How marketers should go about identifying and targeting relevant consumer segments in rural India
• Consumer behavior of rural consumers
Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Learning Objectives (Contd.)

• Necessity and nature of innovations for rural markets

• Planning the marketing mix for rural markets: Nature of product and service decisions, including categories of products sold in rural markets; pricing mechanisms and strategies; Distribution planning and implementation; Promotional elements
• Understanding rural market research process
Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Learning Objectives (Contd.)

• Rural marketing is identifying and serving the needs of consumers living in villages

• Geographical location of villages vary
• Primary source of rural income is agriculture

• Rural markets different from urban markets in significant ways
• Marketers should understand the living conditions of rural consumers before attempting to sell to them
Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

JAJMANI SYSTEM
• A self-sufficient economy system

• Revolved around the farmers who owned land
• „Specialist castes‟ who provided services to the farmers and to each other • System under threat due to urbanization that provided relief from exploitation • Village economy is in a transition stage
Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

SOURCES AND PATTERNS OF INCOME
• Primary source is agriculture

• No regular income throughout the year
• Cash only at the time of harvest • Marketers should notice of time of year when incomes are due • Crop patterns vary, and time of cash surpluses from harvests vary geographically • Cash crops and services leading to stable cash flows throughout the year.
Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

TARGET SEGMENTS
• Distinct segments in rural markets

• Rich farmers who own lot of land; Farmers who own some land; Daily wage workers
• Visible changes in last group due to government policies and urbanization • Uncertainty whether village consumers will grow richer or poorer • Rural economy and community is in a flux
Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

• Super rich rural population ostentatious customers • Village a close community

RURAL CONSUMER BEHAVIOR

• Average rural consumer very reluctant purchaser • Difficult to sell expensive products and services to rural consumer
Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Rural Consumer Behavior (Contd.)

• Rural consumers already have a settled way of life and marketers‟ products and services not really needed
• Marketers‟ products and services either have to change lives of rural consumers in significant ways, or be very inexpensive to become acceptable to them

Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

INNOVATIONS FOR RURAL MARKETS
• Have to innovate profusely • Companies‟ products and services must fit in existing life conditions • Products must be designed differently for rural markets • Most of the current products and services are not saleable in rural markets • Products and services in the urban market should not be the reference points for rural markets
Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

PRODUCT AND SERVICE DECISIONS
• Consumer durable products
Lack reliable supply of electricity

Rural families reluctant to buy durable items
Consumer durable products will be used differently Consider such products to be „luxury‟
Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Product and Service Decisions (Contd.)

• Fast moving consumer goods Self sufficiency barrier to product purchase Substitutes available and in use Products cannot be sold by rural invasion Products adoption slow and educative process Companies need to be patient
Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Product and Service Decisions (Contd.)

• Services Rural markets most attractive for services Big vacuum in the rural service infrastructure Changes in social structure hastening the requirement of services

Professional services emerging opportunity
Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Product and Service Decisions (Contd.)

• Farming equipments and products
Obvious requirement of farming equipments Changing rural scenario presents very different opportunities from the past

Huge opportunity for companies in areas of farm mechanization
Small farmers a captive market Enter profitable partnerships with farmers
Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Product and Service Decisions (Contd.)

• Primary services
Huge market for services like telecommunication, health, education, transport, drinking water, housing, electricity etc.

Companies should take initiative to provide these services
Profitable ventures not difficult to find Inefficiency and ineffectiveness of the government: Potential opportunities
Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

PRICING DECISIONS
• Both edifices of self-sufficient economy and closed community of villages crumbling • Do more than just offer products at low prices • Most rural consumers do not have a steady and regular source of income • Money normally controlled by the eldest male member
Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Pricing Decisions (Contd.)

• Understand the revenue cycle and management of cash of rural consumers
• Not insist on cash payment after every purchase. Extend credit till harvest time • Accept payment through other modes such as grains • Companies understand the difficulties and payment preferences of rural consumers and encourage their rural retailers to adopt these practices
Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

DISTRIBUTION DECISIONS
• Villages geographically scattered.
• Predominant reliance on “local markets”

• Buy their products as they get exhausted, not for a whole month, unlike urban India
• Product is only bought when it is required. If not available, will use substitutes. Purchase postponement common.
Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Distribution Decisions (Contd.)

• Products should be available locally • Interested companies should promote a common retailer in one village • Chosen retailer to stock practically everything that the rural consumer of the village may require • Running a retail operation not expensive as perceived

• Alternatives to rural retailing: Door to door selling
Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

PROMOTION DECISIONS
• Rural consumers deferential to elders, people in authority, and highly educated people • Word-of-mouth promotion crucial in rural markets • Companies should engender word-of-mouth promotion
Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

Promotion Decisions (Contd.)

• Ensure that product reaches influential people in the village • Celebrity endorsements can be very useful • Rural consumers are fanatic about listening to and viewing news programs: Useful for media planners

• Rural consumers avid readers of newspapers
Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

RESEARCHING RURAL MARKETS
• Researcher has to live in the rural market for a reasonably long period
• Should possess sensibilities to notice the lifestyle of rural consumers • Be one of them to understand them

• Else, rural consumers will suffer innate policies and programs of urban marketers
Marketing Management by Arun Kumar and N Meenakshi © Vikas Publishing House Pvt. Ltd. 2006

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