EXECUTIVE SUMMARY

The vital role rural marketing have to play in the economic development of a
developing country, is beyond doubt at present. An intensive effort in order to provide
the basic facilities to rural consumers is the need of the hour. Indian rural marketing
system should be made much more competitive by infusing competition within the
country and preventing the external system equation from interfering with the local
markets in the larger interests of the nation.

A wide array of problems hinders marketers in approaching rural areas with

confidence. The lack of fair weather roads, widely dispersed villages, low density of
population, lack of bank and credit facilities, multiple tiers, higher costs and
administrative problems, and lack of retailers are the problems in rural distribution.
Intelligent way of approaching rural areas is required. The emerging distribution
approaches include: Cooperative societies, petrol bunks, agricultural input dealers,
NGOs, etc. Latest approaches include the direct to home selling methods: network
marketing and internet marketing

Ultimately, the ball lies in the court of rural 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. 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 not so poor as it used to be a decade or so back. Things are sure a changing
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 growing 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 e-Choupal model shows that a large corporation can combine a social mission and
an ambitious commercial venture; that it can play a major role in rationalizing markets
and increasing the efficiency of an agricultural system, and do so in ways that benefit
farmers and rural communities as well as company shareholders. ITC‘s example also

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shows the key role of information technology—in this case provided and maintained
by a corporation, but used by local farmers—in helping to bring about transparency, to
increase access to information, and to catalyze rural transformation, while enabling
efficiencies and low cost distribution that make the system profitable and sustainable.
Critical factors in the apparent success of the venture are ITC‘s extensive knowledge
of agriculture, the effort ITC has made to retain many aspects of the existing
production system, including retaining the integral importance of local partners, the
company‘s commitmentto transparency, and the respect and fairness with which both
farmers and local partners are treated.

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Chap 1:- INTRODUCTION TO RURAL MARKET

1.1 Introduction:-

GONE ARE the days when a rural consumer went to a nearby city to buy branded
products and services. Time was when only a select household consumed branded
goods, be it toothpaste or soap. There were days when big companies flocked to rural
markets to establish their brands. Today, rural markets are critical for every marketer -
be it for a branded shampoo or an automobile.

To open a business daily or business magazine today, you will read about some
company or other announcing its intention to `go rural'. Is going rural that simple? A
number of today's marketers who believe that consumers in rural India are less
demanding and easily satisfied are in for a rude shock. It is high time these marketers
realize that an indiscriminate marketing strategy, a replication of that used for the
urban customer, will not work with his rural counterpart. The latter have a different set
of priorities, which necessitates a different approach, both in terms of developing
appropriate products to suit them and using appropriate communication strategies,
which they will comprehend better.

There is a debate in some quarters that the rural market is mature enough to
understand communication developed for urban markets, especially in the case of
FMCGs. This is partly true, if the communication is such that it makes the product
promise in a simple and easy-to-understand style.

It is also true that the section of rural society, which is exposed to urban lifestyles
because of employment, is beginning to appreciate and understand all types of
communication aimed at it. But they are in small numbers and the vast majority of
rural folks, even today, cannot understand clever communication. What to
communicate and how to communicate to the rural audience is a subject which must
be understood clearly before any attempt to develop a communication package aimed
at them is undertaken.

“Real India lies in Rural India”, ‗India is a land of ‗villages‘, ‗Rural economy is the
backbone of the Indian economy‘, ‗India lies in its villages‘, etc, are the perpetual and
common slogans. India is predominantly an Agricultural Economy and the rural

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markets hold immense potentials for any company to expand. Thus the next word after
“expanding sales” today is “targeting the rural markets”. Also, intensified
competitions in the urban-markets have resulted in increase in costs but not higher
market share and profits. This has resulted in change of focus by a host of organizations.
Thus, rural bazaars are becoming more important than urban markets and many
organizations have realized that in a host of product classes the winners of tomorrow are
going to be those who focus on rural India. Industrial giants and
other savvy small to medium firms are awakening to the potential of India‘s jackpot
rural market of nearly 733 million consumers, more than twice the population of the
USA. It has thus become very necessary to study the rural markets because this
market, which is mostly underestimated, is drastically changing.

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“Rural Marketing is Real Marketing‖

Predominantly rural character of India‘s national economy is reflected in the very high
proportion of its population living in rural areas: They were
Year Rural Population
In 1901 89 per cent
In 1951 83 percent
In 1971 80 percent
In The 1981 76 per cent
In 1991 74 per cent
In 2001 73 per cent

With more than 700 million people living in rural areas, in some 5,80,000 villages,
about two—third of its workforce was engaged in agriculture and allied activities with
a contribution of 29 percent of India‘s Gross Domestic Product (GDP), India‘s
economy is predominantly rural in character.

India‘s economy can be thought of as comprising of two main sectors, namely, the
Rural Sector and the Urban Sector. The Rural sector is, in turn, composed of two main
sub sectors i.e. the agricultural sub sector and the non— agricultural sub sector.

See Fig.:

Classification of Indian Economy

The non-agricultural sub sector comprises agricultural and allied economic activities
such as Crop Cultivation, Animal Husbandry, Dairying, Fisheries, Poultry and
Forestry (Floriculture) etc.

The non-agricultural sub sector consists of economic activities relating to Industry,

Business and Services. Industry have refers to cottage and village industries, Khadi,
handloom, handicraft, etc.

Business refers to trading of general goods, small shops, petty traders etc., whereas
services refer to Transportation, Communications, Banking, Postal, Education etc. The
size and potential market of the rural sector could be measured in terms of the rural
population, the population of livestock, the extent of land, forest and other natural
resources.

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According to the population census of 1991, India‘s rural population was 62.87 crore,
which accounted for 74.3 percent of the country‘s total population.

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 in now attracting more and more marketers.

Increase in competition, saturated urban markets, more and move new products
demanding urban customers, made the companies to 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 Caving Kara 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 satisfaction and repeat purchase/sales.

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1.2 BACKGROUND OF RURAL MARKETING:

It was in the late 1960s and 1970s that rural marketing became a topic of general
discussion. The Green Revolution and the consequent pockets of rural prosperity that
appeared on its wake awakened many manufacturers to the new purchasing power.
The NCAER‘s Market Information Survey of Households (MISH) shows that the
1980‘s saw a rapid improvement in the distribution of income in the rural as compared
with urban India. In 1989-90, the number of households with income over Rs. 25,000/-
per annum as 9 million (around 50 million people), and above Rs. 12,500 per annum
was 35 million households (around 160 million people).

However, aggressive Rural Marketing is not a recent activity. With the Green
Revolution, companies like Siemens with a package of products for water drilling
marketers of fertilizers, pesticides, seeds, bicycles, etc., were followed by
manufacturers of motorcycles, and many others who took their products to the rural
consumers.

Earlier, consumers who were illiterate or unable to read English created symbols to
identify their favourite products-Red Soap for Lifebuoy, Palm tree for Dalda, etc.
Manufacturers now began to deliberately build symbols and colours into their products
to enable identification of their brands.

Nineties was a phase when the advocates of rural marketing convinced corporate India
that villages were big, this decade is differentiating between companies that can
unlock the potential of the rural market and those that cannot. Today rural population
is 741,660,293 while that of urban India is 285,354,954 (Census of India 2001). There
is a 241 million strong working population, spread across 6.38 lakh villages in the
rural hinterlands. The rural population has been dependent primarily on agriculture as
their main source of income. However, after 50 years of independence, and the advent

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 WHAT IS RURAL MARKETING?

‗Rural marketing is a process of developing, pricing, promoting, distributing rural

specific goods and services leading to exchanges between urban and rural markets,
which satisfies consumer demand and also achieves organizational objectives‘. Rural
marketing involves a two way marketing process, however, the prevailing flow of
goods and services from rural to rural areas cannot be undervalued. The process
should be able to straddle the attitudinal and socio-economic disparity between the
urban and rural customers.

RURAL URBAN

RURAL RURAL

URBAN TO RURAL (U 2 R)

A major part of rural marketing falls into this category. It includes the transactions of
urban marketers who sell their goods and services in rural areas. The following are
some of the important items, which are sold in rural areas and manufactured in urban
areas: pesticides, fertilizers, seeds, FMCG products, tractors, bicycles, consumer
durables, etc.

RURAL TO URBAN (R 2 U)

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, fruits and vegetables, milk and related
products, forest produce, spices, etc.

RURAL TO RURAL (R 2 R)

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 agricultural tools,
handicrafts and bullock carts, dress materials, etc.

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 1.3 RURAL MARKET ENVIRONMENT

► Untapped Potential

Rural markets offer a great potential for marketing branded goods and services for two
reasons. The large number of consumers. A pointer to this is the larger volume of sales
of certain products rural areas as compared to the sales of the same products in urban
areas. Largely untapped markets. The penetration levels for many products are low in
rural area.

► Market Size and Penetration

The estimated size of India‘s rural market stated as the percentage of world population
is 12.2 percent. This means 12.2 percent of the world‘s consumers live in rural India.
In numbers, this works out to about 120 million households. In India, the rural
households form about 72 percent of the total households. This is a huge market by
world standards.

Rural consumers own only 52 percent of available consumer durables, even though they
form 72 percent of the total households in India. On an average, rural household own three
consumer durables as Compared to seven consumer durables owned by an average urban
household (NCAER, 1998).
The gap clearly indicates the untapped potential among the large number of rural
households.

► Increasing Income and Purchasing Power

The agricultural development programs of the government have helped to increase

income in the agricultural sector. These in turn have created greater purchasing power
in rural markets. Households in the lower income group have reduced while there is a
strong growth in the number of households in upper middle and higher income
households.

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► Accessibility of Markets

The attraction of a market depends not only on its potential but also on its
accessibility. A market that cannot be exploited is a case of “sourgrapes”.
Development of infrastructural facilities and marketing institutions has increased the
accessibility of these markets.

The road network has facilitated a systemized product distribution system to villages.
In the past, companies relied on a „trickle down‟ of stocks to the buyer in interior
villages that resulted from the active participation of channel members. In this system,
the village retailer made fortnightly purchase visits to a bigger retailer in the nearest
tehsil (sub-division of a district) level town. The large retailer in the tehsil town
procures goods from district headquarters. The district headquarters were therefore the
terminal point of the company distribution channel.

Today, an increasing number of companies are supplying village markets directly.

Increasing direct contacts to villages helps product promotion and availability of the
product in the village shop.

► Competition in Urban Markets

Intensified competition in urban markets increases costs and reduces market share.
The rural markets are therefore increasingly attractive in relation to urban markets.
The automobile market brings this out clearly. Rajdoot motorcycles, Bajaj scooters or
Ambassador Cars find ready acceptance in rural markets as compared to urban
markets where there is a proliferation of brands.

► Consumer Behavior Changes

Increased literacy and greater awareness in rural markets create new demands and
discriminating buyers. This is observed more in the younger generation. In villages
today, this segment of buyers consumes a large variety of products, both durables and
non-durables. There is a visible increase in the consumption and use of a variety of
products, which is easily observed.

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 1.4 CHANGING PATTERNS IN RURAL
DEMAND - REASONS

2.1 To gain from a market where demand is expected to grow from 11% in
1995-96 to 21% in 2006-07, marketers have to come to terms with the poor
transport and communications that characterizes this market far more quickly and
competitively than before.

► New Employment Opportunities

Government schemes like IRDP (Integrated Rural Development Programmer),

JRY (Jawahar Rozgar Yojana) and TRYSEM (Training Rural Youth for Self
Employment) have created new employment opportunities in Rural India. Co-
operative banks and Public sector banks are extending loans to rural people,
thereby creating job opportunities for them. As a result very few rural people are
now flocking to urban centers‘. This creates more purchasing power for the
people.

► Green Revolution

The vision of Dr. Swami Nathan, the father of the green revolution to achieve
self sufficiency in food grain production in 1995, gave a major breakthrough in
food grain production by the use of scientific methods in agriculture. At present,
Rural India generates 299 million tons annually.

► Various Government Policies

The government‘s stress on self-sufficiency resulted in various schemes like

Operation Flood (White Revolution), Blue Revolution, Yellow Revolution, etc.
resulted in the production of 15 million tones of milk per annum.

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► Better credit facilities through banks

With co-operative banks taking the lead in the rural areas, every village has access
to short, medium, long-term loans from these banks. The credit facilities extended
by public sector banks through Kisan Credit Cards help the farmers put seeds,
fertilizers and every consumer goods on instalment.

► Green Card / Credit Card

The government initiated credit cards for farmers through public sector banks.
Canara bank and Andhra bank were the pioneers in the launch of the Kisan Credit
Card. The farmer had a choice to take short or medium term loans through these
credit cards to buy seeds, fertilizers, etc. This enabled him to produce more and
thereby increase his income.

► Improved exports due to Export Policy

The new Export Policy 2000 paves the way for open market (OGL- Open General
License System) status for agriculture. The World
Trade Organization‘s (WTO) Policy for agro-exports has increased exports of
Indian agricultural produce thereby increasing incomes of the rural population.

► Remittances from Indians working abroad

These remittances are a sizeable contribution to growing rural income &

purchasing power.

► Political & Social changes through favorable overnmentpolicies

The Indian Government launched a number of schemes like IRDP (Integrated

Rural Development Programmer) and REP (Rural Electrification Programmer) in
the 1970‘s, which gave a boost to the agrarian economy. This resulted in changes
in people‘s habits .

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► Marketing Efforts

FMCG players like HLL, Marico Industries, Colgate Palmolive, Britannia

Industries, etc. have been gung-ho about rural marketing. MNC‘s in consumer
durables like Samsung, LG are designing products targeted at rural customers.
These companies are changing the lifestyles of rural Indians.

► Media

Mass Media has created increased demand for goods and services in rural areas.
Smart marketers are employing the right mix of conventional and non-
conventional media to create increased demand for products. The role cable
television has been noteworthy in bringing about the change in rural people‘s
mindset and influencing their lifestyles.

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 1.5 RURAL CUSTOMER PROFILE

The rural customer shows distinctive characteristics, which makes him different
from the urban buyers.

► Education Profile

Nearly 45% of the rural Indians are literate (men 59%, women 31%). The rural
customer has much lesser education than his/her urban counterpart. Generally, the
maximum education that one sees among rural areas is still primary school or high
school level. Though rural literacy programmes have made significant headway,
we are still confronted with a customer who is illiterate. This comes in the way of
the marketer using print media and handbills to promote the product. Visual
displays and phonetics become important in promoting the product in the rural
areas. Demonstration on product usage and even on how to use it becomes
integral to the marketer‘s promotion strategy.

► Low income levels

Though rural incomes have grown manifold in the last one decade, still an average
rural consumer has a much lower income than his or her urban counterpart. Still a
large part of his income goes to provide the basic necessities, leaving smaller
income to be spent on other consumer goods. This makes the rural consumer more
price sensitive than the urban consumer. Marketers have evolved various
strategies to lower the final prices. One such strategy is designing special products
as reflected by Hindustan Levers strategy of Developing sunlight detergent
powder and the other in even reducing the size of the product. Another aspect of
this low income is that an average rural customer buys a single unit of the product
and not in bulk.

► Occupation

Typically, in the rural area one finds that the principal occupation is farming,
trading, crafts, and other odd jobs like plumbing, electric works, etc. One also
finds primary health workers and teachers in the rural areas. Since farming,
animal husbandry and poultry farming are the principal occupations we find that
even here we have different types

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► Media Habits

A rural customer is fond of music and folklore. In a state like Maharashtra the
rural theatre called “Tabatha” has held sway with the people. Likewise,
“Nautanki” in which the artists are a part of the audience entertains the rural
Uttar Pradesh. Today, television and radio are important forms of media, which
hold the attention of rural folks, so is the video. Radio Programmes reach almost
95% of the Indian population, while television programmes is now as high as
85%.

As we mentioned earlier because of a low education level print media does not
have that much of an impact as the audio and the audiovisual media does.

► Importance of customs

Basic cultural values have not yet faded in rural India. Buying decisions are still
made by the eldest male member in the rural family whereas even children
influence buying decisions in urban areas. Further, buying decisions are highly
influenced by social customs, traditions and beliefs in the rural markets. Many
rural purchases require collective social sanction, unheard off in urban areas.

The rural attitude towards consumption has been traditionally based on the values
of restrain and self-denial. But the high exposure to T.V advertising in recent
years where brands are working relentlessly to loosen this restraint by
communicating escape/release.

15
1.6THE PROBLEM AREAS IN RURAL MARKETING

Where the rural market does offer a vast untapped potential, it should also be
recognized that it is not that easy to operate in rural market because of several
attendant problems. Rural marketing is thus a time consuming affair and requires
considerable investments in terms of evolving appropriate strategies with a view
to tackle the problems.

► Underdeveloped People and Underdeveloped Markets

The number of people below poverty line has not decreased in any appreciable
manner. Thus underdeveloped people and consequently underdeveloped market
by and large characterize the rural markets. Vast majorities of the rural people are
tradition bound, fatalistic and believe in old customs, traditions, habits, taboos and
practices.

► Lack of Proper Physical Communication Facilities

Nearly fifty percent of the villages in the country do not have all weather roads.
Physical communication of these villages is highly expensive. Even today most
villages in the eastern parts of the country are inaccessible during the monsoon.
Moreover, 300,000 villages in the country have no access to telephones. Local
telecom companies are working with the Department of Telecommunications
(DOT) to provide service in rural areas at local costs which could be a costly
affair considering the underdeveloped infrastructure.

► Low Growth Rate

The slowdown in the economy is of serious concern to everyone in Government,

industry and every other sector of the economy. Our GDP growth target for the
Tenth Plan is 7.7%, rising to 8.1% in the subsequent one. Today we are at a 6%
level, which is itself below the current Plan. Even more worrying is the fact that
our growth rate has been slowdown are very telling. Agricultural growth has
dropped to 0.9% from an average of 3.9% in the 1980's and 3.3% in the 90's.

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► Low Per Capita Income

Even though about 33-35% of gross domestic product is generated in the rural
areas it is shared by 74% of the population. Hence the per capita incomes are low
compared to the urban areas. High costs in finance is a stumbling block while
higher purchase is unheard of, the small town culture works against financing of
products. The sprawling unorganized market offers prices that the organized
industry finds difficult to match. Many existing product lines continue to be too
expensive or irrelevant.

► Many languages and dialects

The number of languages and dialects vary widely from state to state,
region to region and probably from district to district. Messages have to deliver in
local languages and dialects. Even though the number of recognized languages is
only 16, the dialects are estimated to be around 850.

► Low levels of literacy

Literacy rate are low in rural areas as compared to urban areas. This again leads to
problem of communication. Print medium becomes ineffective and to extend
irrelevant in rural areas since its reach is poor

► Transport

Many rural areas are not connected by rail transport. Around 68% of the rural
roads have been poorly surfaced, and many are totally destroyed or severely
damaged by the monsoon and remain unserviceable leaving interior villages
isolated. Though it would be desirable to connect all villages by all-weather roads,
use of bullock carts is inevitable for many years.

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 1.7Exploring the available media

Promotion media may be classified broadly into 3 categories:

Mass Media Local media Personalized media

Radio Haats, meals, fairs Direct communication

Cinema Wall Paintings Dealers
Press Holdings Sales Person
TV Leaflets Researchers
Video Vans
Folk Media
Animal Parade
Transmit Media

► MASS MEDIA

A medium is called mass media when it reaches 50 million people. A rural market is
difficult to reach. Their exposure to mass media is very less. Further a universalized
communication, which comes through mass media, would become ineffective when it
comes to rural audience since they are heterogeneous – varying from region to region.

Let us examine the utility of mass media.

→ Radio
→ Cinema
→ Press/Print media
→ Television

LOCAL MEDIA

Though mass media is powerful it does not work as effectively as the local media.

→ Haats & Melas

→ Folk Theatre
Puppetry
→ Video Vans
→ Animal Parade
→ Mobile Displays
→ Hoardings

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 .► PERSONALIZED MEDIA

→ Direct Contact

Potential and Changing Pattern Of Rural Marketing

Consumer products where rural consumption is more than urban consumption are

Bicycles 80% Rural 20% Urban

Safety razor blades 67% Rural 33% Urban
Silk Clothing 59% Rural 41% Urban
Books & Stationery 55% Rural 45% Urban
Woolen Clothing 53% Rural 47% Urban
Other Consumables 53% Rural 47% Urban
Generators 95% Rural 05% Urban

Products where rural consumption growth rates are higher as compared to urban
markets are as follows:

1. Packed Tea
2. Alcoholic Beverages
3. Tobacco Products
4. Medicines
5. Detergent Powder
6. Soap Cake/Bar
7. Detergent Cake/Bar

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 1.8 Tapping the Rural Market Problems

While the rural market of India certainly offers a big attraction to marketers, it would
be totally naive to think that any firm can easily enter the market and walk away with a
sizeable share of it. A firm seeking a share of this market has to work for it, as the
market bristles away with a variety of problems. The enterprise has to grapple with
these problems and find innovative solutions to them. In fact, only because a few
pioneering firms correctly understand these problems and came up with innovative
solutions to them, that we now see a wonderful trend of growth in rural markets.

What are these problems? How are they peculiar to the rural market? And how does a
firm solve them?

Major Problems in Tapping the Rural Markets and the possible

solutions are as follows:

1. Managing Physical Distribution In Rural Markets

The main problems in physical distribution in the rural context relate to:

a. Transportation:
→ Inadequate railways
→ Bad or no roads
→ Immediate carriers or cargo operators
E.g. Accidents in India 1per day and 1 in 4 days complete loss to property and some
life

b. Warehousing Problems
→ No electricity (only 35% of India have electricity)
→ Unavailability of godowns.
→ Marketing purposes

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 1.9 MOTIVATING THE RURAL CONSUMER

What works in the urban market may not in the rural areas that are with respect to
marketing. Pesticide used by the farmers are same or similar to what are used in urban
households but have to be packed or packaged and distributed differently due to the
differentiation in usage. Also pricing becomes a factor here. Similarly water is the
universal commodity i.e. either piped or bottled for the urban consumer and canalled
or irrigated for the rural farmer. Therefore the marketer must bring the right product to
suit the needs of the rural consumer. In this connection the following can be
considered motivating.

1. Packaging:
Unlike the E.g., given earlier the rural consumer prefers smaller packages this is
because
→ The rural consumer buys in low quantity due to low purchasing power
→ Secondly the rural consumer may be trying out the product and doesn‘t like to be
saddled by the larger quantities. While designing the packages, the colour, design and
quality of the pack is of great importance. The rural consumer may prefer a pack with
either dark or bright or both dark and bright colours in a contrasting combination. He
may also prefer packs that have fancied designs.

2. Product Quality:

It is of utmost importance. The dimensions of the quality that are to be considered are
durability, features and serviceability in that order. In no way, the marketer must ever
even think of sacrificing quality or manipulating its winning combination dimensions.

3. Pricing:
The product pricing must be reasonable and must depend upon the quality of the
product. Distributing to various rural areas is very expensive. However the cost of this
should not be transferred under any circumstances on to the rural buyer. It should be
noted here is highly price sensitive and competition is not between competitors.

21
1.10 ITC COMPANY PROFILE

ITC is one of India's foremost private sector companies with a market capitalization
of over US $ 13 billion and a turnover of US $ 3.5 billion. Rated among the World's
Best Big Companies by Forbes magazine and among India's Most Respected
Companies by Business World, ITC ranks third in pre-tax profit among India's private
sector corporation.

ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers,
Packaging, Agri-Business, Packaged Foods & Confectionery, Information
Technology, Branded Apparel, Greeting Cards, Safety Matches and other FMCG
products. While ITC is an outstanding market leader in its traditional businesses of
Cigarettes, Hotels, Paperboards, Packaging and AgriExports, it is rapidly gaining
market share even in its nascent businesses of Packaged Foods & Confectionery,
Branded Apparel and Greeting Cards.

As one of India's most valuable and respected corporations, ITC is widely perceived to
be dedicatedly nation-oriented. Chairman Y C Deveshwar calls this source of
inspiration "a commitment beyond the market". In his own words: "ITC believes that
its aspiration to create enduring value for the nation provides the motive force to
sustain growing shareholder value. ITC practices this philosophy by not only driving
each of its businesses towards international competitiveness but by also consciously
contributing to enhancing the competitiveness of the larger value chain of it is a part.

―ITC wants to create a high-quality low-cost fulfillment channel for rural India. The e-
Chou pal was the first step in the last mile towards complete backward integration. But
it's also the first mile on a new information highway around which multiple suppliers
and buyers can converge. It is transformational in its implications and can make a huge
contribution towards rural wellbeing."

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1.11 ITC PRODUCT

Cigarette:

ITC is the market leader in cigarettes in India. With its wide range of invaluable
brands, it has a leadership position in every segment of the market. Its brands include
Insignia, India Kings, Gold Flake, Navy Cut, Scissors, Capstan, Berkeley, Bristol and
Flake.

Foods:

ITC made its entry into the branded & packaged Foods business in August 2001 with
the launch of the Kitchens of India brand with brand launches in the Confectionery,
Staples and Snack Foods segments. ITC's world famous 0restaurants like the Bukhara
and the Dum Pukht and other products like Aashirvaad, Sun feast, and Mint-O.

Lifestyle Retailing:

ITC's Lifestyle Retailing Business Division has established a nationwide retailing

presence through its Wills Lifestyle chain of exclusive specialty stores. Beginning with
its initial offering of Wills Sport relaxed wear from the first store at South Extension,
it has expanded with Wills Classic work wear, Wills Club life evening wear.

Greeting, Gifting, and Stationary:

ITC's stationery brands Paper Craft Classmate are the most widely distributed brands
across India. Paper Craft is targeted at working executives and college goers. The
Classmate range consists of notebooks, long books, drawing, etc. ITC's Greeting &
Gifting products include Expressions greeting cards and gifting products.

Agarbattis:

ITC has launched Mangaldeep Agarbattis across a wide range of fragrances like Rose,
Jasmine, Bouquet, Sandalwood, Madhur, Durbar, Tarangini, and Anushri.

Hotels:

The 484-room ITC Hotel Maurya Sheraton & Towers at New Delhi is not only
amongst the leading business hotel in the country and the 386-room ITC Hotel Grand
Maratha Sheraton & Towers. Fabulous Indian meal at the Bukhara.

23
Safety matches:

These matches are available in unique designs and with innovative value added
features. ITC's brands like iKno, Mangal Deep, VaxLit and Delite.

AGARBATTIS IN RURAL MARKET:

As part of ITC's business strategy of creating multiple drivers of growth in the FMCG
sector, the Company has commenced marketing agarbattis (incense sticks) sourced
from small-scale and cottage units. This business leverages the core strengths of ITC
in nation-wide distribution and marketing, brand building, supply chain management,
manufacture of high quality paperboards and the creation of innovative packaging
solutions to offer Indian consumers high quality agarbattis.

ITC has launched Mangaldeep Agarbattis across a wide range of fragrances like Rose,
Jasmine, Bouquet, Sandalwood, Madhur, Durbar, Tarangini, Anushri and Mogra. To
offer better value proposition to the consumer, Mangaldeep is also available in 3in1
and 5in1 varieties giving the consumer three and five fragrances in one pack
respectively. Attractively packaged, these brands have been appropriately priced to
appeal to a cross-section of consumers at various price segments. These agarbattis are
available in innovative 'Fragrance-Locked' packaging.

24
ITC has also entered into an MOU with the Khaki & Village Industries Commission
(KVIC) to source agarbattis from KVIC approved units, and to distribute agarbattis
through the Khadi Bhavan / Khadi Bandar outlets across the country. This
collaborative venture is expected to result in employment generation, particularly in
the semi-urban and rural areas.

25
 1.12 Marketing Mix:
Product:

1) ITC Limited has launched agarbattis in Indian Rural Market.

2) ITC has sold these Agarbattis in the name of ‗Spriha‘ and‗Mangaldeep‘.
3) These agarbattis have got different fragrances like rose, in, bouquet,
sandalwood, madhur, sambrani and nagchampa.
4) These agarbattis are available in ‗fragrance-locked‘ packets.

Pricing:

1) ITC is selling these agarbattis at very low cost seeing the economy of the
people staying in rural areas at Rs five for 10 sticks for every pack.
2) ITC has also kept cost for each stick that is 75 paisa.

Place:
1) ITC has promoted this product through the melas and Haats.
2) Some agarbattis had been given to co-operative societies to help in
distributing the agarbattis to different consumers.

Promotion:

1) ITC had chosen to promote their agarbattis in rural markets through wall
paintings in different languages so that it should be understood by everyone.
2) ITC had also chosen formal media to promote their product by TV and
Radio.

26
1.13 MARKETING STRATEGIES

As stated earlier, to a large extent, it is the Sinhala‘s influence on the farmers that can
turn the sales in ITC‘s favor or the opposite way.
Hence one of the most important things ITC needed to consider before entering the
market was the strategy they needed to use to promote their project. ITC realized the
importance of the role the San chalak can play in helping their project become
successful.

This is clear from their whole idea of appointing one of the farmers/ villagers as the
Sanchalak. They knew very well that if they appointed some outsider as the Sanchalak,
the farmers may have not taken to the project in the same way due to the presence of
an outsider. But, appointing someone from the village would only re-emphasize the
fact that e-choupal was here only by the farmers and also only, for the farmers

Once, ITC developed this strategy to assure the farmers, they had to develop a strategy
to ensure that the Sanchalaks would convince the farmers to sell their produce to ITC
and also buy ITC products. Hence, for every quintal of produce sold to ITC through an
e-choupal, the Sinhala, get Rs. 5. Also, in 2003-2004; ITC had distributed Rs. 3 Core
as commission.

Besides this, every Sinhala also gets a commission for every product bought by the
farmers from ITC. Also, the farmers who sell their produce to ITC are required to
follow a certain, minimum quality standard. When the quality of their produce exceeds

27
 this required minimum specification, then, they are given a certain discount on any
product they would like to buy from the ITC Company.

Hence the ITC Company has implemented various steps which are mutually beneficial
to both, the company and the farmers

· Mandi labourers:
·
The workers in the mandi who weighed and bagged produce have been severely
impacted by the drop in volume. In the Sonkach mandi, for example, some 28 tulavatis
and 300 laborers have been affected.
· by providing Credit facility with reasonable rate of interest to increase the
sales of the products in the rural areas. An attempt should be made to measure the
advertisement effectiveness in rural areas. There is no doubt that, advertisement is
meant for creating awareness but subsequently it should also be ensured that AIDA
model is adopted effectively by the rural consumers.

· The hat is very basic and local platform promoted by the rural people and for
the rural people, and which has already gain a good acceptance level by rural
consumers, so company should thinks to take the advantage of the same market by
making their presence available in to the hat culture and make the rural people feel that
the products are made for them only. As F.M.C.G. products are low price products and
their consumption depends on many factors, so the brand loyalty associated with it is
generally low. Hence company should design their marketing.

28
1.14 Features of Rural Marketing:
The main reason why the companies are focusing on rural market and
developing effective strategies is to tap the market potential, that can be
identified as follows:

1. Large and scattered population:

according to the 2001 census, 740 million indians forming 70 per cent of
india‘s population live in rural areas. the rate of increase in rural population is
also greater than that of urban population. the rural population is scattered in
over 6 lakhs villages. the rural population is highly scattered, but holds a big
promise for the marketers.

2. Higher purchasing capacity:

Purchasing power of the rural people is on rise. Marketers have realized the
potential of rural markets, and thus are expanding their operations in rural
India. In recent years, rural markets have acquired significance in countries
like China and India, as the overall growth of the economy has resulted into
substantial increase in purchasing power of rural communities.

3. Market growth:
The rural market is growing steadily over the years. Demand for traditional
products such as bicycles, mopeds and agricultural inputs; branded products
such as toothpaste, tea, soaps and other FMCGs; and consumer durables such
as refrigerators, TV and washing machines has also grown over the years.

4. Development of infrastructure:
There is development of infrastructure facilities such as construction of roads
and transportation, communication network, rural electrification and public
service projects in rural India, which has increased the scope of rural
marketing.

he standard of living of rural areas is low and rural consumers have diverse
socio-economic backwardness. this is different in different parts of the
country. a consumer in a village area has a low standard of living because of
low literacy, low per capita income, social backwardness and low savings.

29
 6. Traditional outlook:
The rural consumer values old customs and traditions. They do not
preferchanges. Gradually, the rural population is changing its demand pattern,
and there is demand for branded products in villages.

. 7. Marketing mix:
The urban products cannot be dumped on rural population; separate sets of
products are designed for rural consumers to suit the rural demands. The
marketing mix elements are to be adjusted according to the requirements of the
rural consumers.

30
 1.15 What is the Importance of Rural Marketing in India

Indian rural economy is getting stronger and stronger. According to Nielsen‘s

survey the rural market for FMCG (Rs 65,000 crore), Durables 5,000 crore),
and clothing and Footwear (Rs 35,000 Crore) was as large as Rs 1, 05,000
crore in 2008. Certainly the size is much bigger now. According to Nielsen, by
2025, the rural FMCG sales is estimated to reach $ 100 billion from the
current $12 billion.

Rural India offers sustainable sales and profit for growth. There are more
enterprises in rural India than in urban today contributing significantly to the
non-farm output. Following factors have contributed to the growth of rural
marketing:

1. Employment Opportunities:

The income from new employment schemes and rural development

efforts of the government and the corporate sector efforts has
increased the purchasing power of rural people.

2. Agricultural Revolution:

Due to green revolution and white technological breakthrough in the form of

green and white revolutions have taken place in rural India, which results into
substantial wealth generation in these areas.

3. Favourable Government Policies:

Tax exemption in backward areas, subsidy, concession, incentives and heavy

investment in rural development programmes have brought rapid growth of
rural markets and capital investment plans of Consumer Goods Companies.

31
4. Literacy Growth:

2011 it stood at 68.9% (2001 census 58.7%). There are now more Literacy rate
is increasing in rural areas. According to Census graduates in rural than in
urban India. This brings social and cultural changes in buying behaviour of the
rural customers.

5. Rising Disposable Income:

Good monsoons, green revolution and Administered Pricing Mechanism

(PAM), and NREGA have led to rising disposable income in rural areas.
According to Advanced Estimates of National Income released by the Central
Statistical Office (CSO) ―The per capita income at current prices during 2011-
12 is estimated to be Rs 60,972 compared to Rs 53,331 during 2010-11,
showing a rise of 14.3 per cent,‖ Roughly 50 to 60% of people are employed
in other businesses.

Many of the second generation are getting white collar jobs in nereby towns.
They earn urban salaries but continue to live in self-owned homes in the
villages, they have high purchasing power. Thus, with a growing middle class
with a monthly income there is a drastic change free from monsoon or
cropping pattern. The rural income pyramid is fast morphing into a diamond
with 150 million people crossing BPL. These will be first time users of
national brands and therefore, offer a huge opportunity to large companies.

6. Attraction of Higher Standard of Living:

Education, constant touch with urban areas, and Hindi Movies have motivated
rural people to change their lifestyles and have higher standard of living.

7. Spread of Cable Television:

The growth of satellite TV channels has made a major impact on villages. This
has led to a change in lifestyle and consumption pattern.

32
8.New growth avenues for the corporate:

It appears that the corporate will have to look at rural customers for increasing demand
for their products, after all urban demand has its own limitations. Now manufacturers
go in for forward innovation approach instead of ‗glocalisation‘. It calls for developing
products for rural consumers. Presently sale for Dabur, Jyothi Laboratories, and Wipro
Consumer Care from rural areas comprises 50%.

33
 CHAP.2. Research and Methodology

Market research helps companies know their customers. They need to find out which
products consumers want and the quantity that is required to be produced, how and
where to deliver and how best to reach the customers. All these are tasks of marketing
research. Usually researchers go out armed with questionnaires and talk to potential
consumers trying to figure out what is in their minds, how many people will actually
pay the prices fixed for the products.

Methods of Data Collection

Primary Data usually consists of the data that are collected

afresh for the first time and thus is original in character.
Primary Data that used in thestudy
Questionnaire In my Questionnaire There are 10 Questions

Secondary Data consists of data that is collected from some

existing literature. It has been already analyzed by some one
else earlier and is derived from that source. Secondary Data
that used in the studyare
➢
Newspapers
Websites
Books

Analysis Pattern
Statistical Tools- graphs &charts
Cross Tabulation OfData

· i. Define the Research Problem and Objectives:

This stage, also called problem definition, involves defining what is to be studied.
Research objectives could involve studying rural markets, distribution methods or rural
consumer behaviour. Each of these objectives will have different methods for data
collection. At this stage, the firm must establish clarity about the research and what is
to be achieved by it.

34
· ii. Develop a District-Wise Research Plan:
Since rural consumers are not homogenous, a district-wise research plan must be
developed. The firm identifies what kind of research must be undertaken, works out
the kind of questions that must be asked and to whom to ask those questions, along
with methods of analyzing the data obtained. At this stage, hypotheses that are to be
tested are devised, steps to draw a representative sample are listed and the
methodology is determined to collect data from the sample. Usually qualitative
research is done as villages would not have large number of respondents.

· iii. Search for Secondary Data:

Secondary data consists of published data available with government departments such
as data on census, transport, schools, public health, and so on. Rural secondary data is
patchy, but the researcher can tap trade associations such as Federation of Indian
Chambers of Commerce & Industry (FICCI), Confederation of Indian Industry (CII)
and industry associations, consultancies and rural journals. Professional research
companies such as Nielsen, Accenture, Indian Market Research Bureau (IMRB),
McKinsey, Ernst and Young and others undertake research and publish reports on rural
markets, but these and other secondary data give a macro view of villages.

· iv. Design a Primary Research Study:

Primary research is often needed because rural secondary data is just not sufficient.
The method of collecting primary data is decided – survey, interview, observation or
online data. Questionnaires are designed and translated into local languages and the
methodology to conduct a primary study is chalked out.

· v. Sample Selection:
Sample selection must be unbiased and as representative of the total population. This
means all socio-economic groups in a village must be covered through cluster or
stratified sampling. Though random sampling is preferred in urban areas, this is often
not possible in villages. In villages, convenience sampling has to be done. At best, the
researcher can ensure that all religious, caste and income groups are covered.

35
2.1 ITC – e CHOUPAL

2.1 THE CONCEPT

WHAT IS A CHOUPAL?

In Hindi choupal means a village place where people gather, gossip, smoke hookah,
discuss or interact with each other. There may be a Sanchalak or leader who heads the
proceedings.

WHAT IS AN e–CHOUPAL?

When a choupal is equipped with a computer & internet connectivity it is called an

echo pal. Since power is a cause for concern in rural areas it involves backing the
computer with solar power.

36
 ITC‟S e-CHOUPAL: -

The project e-Choupal is ITC‘s unique click & mortar initiative. e-Choupal is an ITC
platform for carrying out trade at a number of locations. The e-Choupal redefines
choupal, which as mentioned earlier, is the Hindi word for village square where elders
meet to discuss matters of importance. The all-important letter in the word is "e".

It stands for a computer with an Internet connection for farmers to gather around and
interact not just among themselves but with people anywhere in the country and even
beyond

37
 It begins with ITC installing a computer with solar-charged batteries for power and a VSAT
(Very Small Aperture Terminal) Internet connection in selected villages in the house of one of
their key links called the Sinhala. The computer's functioning is freed from the notorious
power and telecom facilities at the village level. E-Choupal delivers real-time information and
customized knowledge to improve the farmer's decision-making ability, thereby better
aligning farm output to market demands; securing better quality, productivity and improved
price discovery.

ITC accumulates information regarding:

• Weather,
• Modern farming practices
• And market prices etc.

From sources like the Meteorological Department; Agro-universities, mandis (regional

markets) etc., and upload all information on to thee-Choupal web site. This helps the farmers
to gather Information regarding weather and scientific farming helps farmers to select the right

38
 crop and improve the productivity of their farms. Availability of market information helps
farmers to become market oriented.

They know what price ITC is quoting and the price prevalent in the local market, thereby
helping better price realization for farmers. If the farmer decides to sell to ITC, the Sanchalak
works as the aggregator of the small farmer‘s produce to sell them to ITC. The Sanchalak also
aggregates the farmers‘ input purchase orders for various items like seeds, pesticides and
places them directly with the suppliers through the internet and thus facilitates the supply of
high quality farm inputs as well as the purchase of farm produce at the farmers‘ doorstep with
the help of intermediaries. All information is customized according to the local farmer‘s
requirements and provided in the local language through computer set up by ITC in the
Sinhala‘s house.

Thus the e-choupal model helps aggregate demand in the nature of a virtual producers'
cooperative, in the process facilitating access to higher quality farm inputs at lower costs for
the farmer. The e-Choupal initiative also creates a direct marketing channel, eliminating
wasteful intermediation and multiple handling, thus reducing transaction costs and making
logistics efficient. The e-Choupal project is already benefiting over 3.5 million farm

39
 Chap.3. Literature Review :

A literature review is a text written by someone to consider the critical points of current
knowledge including substantive findings as well as theoretical and methodological
contribution to a particular topic. Generally, a researcher conducts and surveys the related
literature in order to review the present status of a particular research topic. From the survey
of literature, a researcher is able to know the quantum of work already done on his research
topic so far and also helps to know the areas which are not touched, or yet to be undertaken.
The overview of literature at the national or an international level is to be researched with the
help of research reports, articles, books and other materials. The major benefits of literature
reviews are : firstly, it helps the researcher in avoiding duplication of efforts on the same
research topic. Secondly, helps the researcher in adopting methodologies used successfully by
other researchers, writers and policy makers. Thirdly, suggests new approaches in planning,
organizing the investigation of research topic. Fourthly, helps to narrow down the research
problem more clearly and lastly, assists investigators to develop firm understandings of
theoretical implications of proposed inquiries.

Jain, A. (2012)*2 studied that, the brand awareness in rural areas particularly in respect of
beauty care and health care products is showing an increasing tendency. Most of the people
both from illiterate & literate groups prefer branded products with the belief that quality is
assured as the manufacturers are reputed companies. They are showing willingness to spend
higher price when they realize that they can afford to spend. Since the usage of branded
products of reputed companies 213 will promote their status. This change in the attitude to
spend more on the highly priced branded products (Example : Dove Soap, Garneir Hair
Cream) among high income groups in rural areas clearly suggests that there is an ample scope
for such products to capture the markets in this areas by increasing the supply of these
products.

Kannan (2001) studied the rural marketing prospects in selected areas ofTamil Nadu
with a view to examine the potential of selected products in the areas under

40
consideration. 100 respondents were selected in this survey and multistage random
sampling was used. He concluded that the rural markets are coming up in a big way
and growing twice as fast as the urban, witnessing a rise in sales of typical urban
kitchen gadgets such as refrigerators, mixer-grinders and pressure cookers. For
successful marketing in rural areas, an integration of traditional and modern methods
of selling is required. To communicate effectively with the prospective rural
consumers and to ensure effective distribution and prompt delivery, organizations
must understand the specific requirements and needs of the villagers and then plan
their strategy to convert the prospective consumers into active consumers.

Aggarwal (2003) found out that an efficient marketing system leads to

theoptimization of resource use and output management. A well designed system of
marketing can effectively distribute the available stocks of modern inputs and thereby
sustain a faster rate of growth in agricultural production. An efficient marketing
system ensures higher level of income to the farmers by reducing the number of
market middleman, regulating marketing services, providing better prices for the
products by having competitive conditions for marketing.

A new situation is emerging in India. Governments have been emphasizing economic

development by ensuring growth rates of seven-eight percent annually, enhancing the
welfare of farmers and workers and unleashing the creativity of entrepreneurs and
marketers {Singh and Bhagat (2004)}. This

opportunity must be fully utilized to bridge the rural urban divide, using knowledge as
a tool. As such, there is a need to focus on Empowering Rural India (Kalam 2005) and
one of the ways that this can happen is through a strong and transforming
agrimarketing.

The strengthening of rural communication services is an important ingredient for the

welfare and development of rural India as it gives timely information on business,
price, market and demands within a few minutes and that too at a very low cost
{Paatnaik and Rao (2006)}. The open and transparent franchise policy for rural
areas must be worked out to enable the franchisee to provide telecom facility on a
revenue sharing basis. The rural literacy and road length, in particular, and other rural

41
infrastructure in general are considered essential for the growth of rural non-farm
sectors and for enhancing their employment generation potential, policy measures
should be directed towards strengthening these support systems which in turn would
lead to the growth of rural India and the Indian economy as a whole

{Pradhan (2005)}. Corporate and rural India has entered into

collaborativepartnerships through vertical coordination. A common thread among
these is integration and tightening the supply chain {Hans (2006)}. The agri-
initiatives taken by Indian corporates will play an important part in the dissemination
of the right information and knowledge. Corporates can act both as buyers of agri-
produce as well as providers of resources for producing the same.

Rural marketing as any marketing activity in which one dominant participant is from
a rural area. For the purpose of defining the domain of rural marketing, ―rural‖ and
―urban‖ can be visualized on a continuum, consisting of three broad groups, namely,
rural, rurban and urban. The construct called rurban is the overlap between rural and
urban, with physical features closerto urban areas and proximity to large urban
centers, but with deep rural sociological moorings. The domain of rural marketing,
thus can be seen in a two dimensional space as a flow of goods, services, and ideas
from one area to another, except in the case of urban to urban flow.

A complex set of factors influence rural consumer‘s behavior. Social norms,

42
traditions, caste, and social customs have greater influence on the consumer behavior
in rural areas than in urban areas. The seasonality of agricultural production
influences the seasonality of rural consumer‘s demand. Given the fact that the
landless laborers and daily-wage earners get their income in installments, their
purchasing is restricted to small quantities of products at a time, mostly on a daily
basis or once in tow or three days. (Jha Mithileshwar,2007)

Kaptan (2004) studied the rural marketing for HDPE pipes in rural areas
ofMaharashtra with a view to examine the dealer‘s awareness and perception towards
their respective HDPE pipes and to identify the major competitors and their market
share in the agricultural segment.

The area of the study was taken up in three districts of three regions in Maharashtra.
The size of sample was 45 dealers who sold agricultural implements like pumps,
pipes, starters etc.

He concluded that rural marketing is changing constantly. Continuous marketing

research should be conducted periodically and a database should be developed by all
the companies. By contributing towards reductions in the cost of distributing goods
from producers to farmers, marketing research makes it possible for the farmers to
enjoy better products at lower prices.

Lokhande (2004) in his study ―Rural marketing- A Study of ConsumerBehavior‖

observed the consumption pattern, purchase behavior and preferences of rural
consumers. His study was confined to two villages of Aurangabad and 150
respondents were selected on random sampling basis.

He concluded that Rural India, having more than 70% population living in 6.27 lakh
villages, is a huge market. Obviously, a number of FMCG companies are trying their
best to harness the business opportunities in rural India. Electronic media, efficient
transportation system, increasing income levels and strategic marketing policies are
the major contributing factors to enhance the scope of rural marketing.

43
A farmer in rural Punjab is more progressive than his counterpart in
Bihar, a farmer in Karnataka is far more educated that one in Rajasthan,
and so on and so forth. In an urban family, the husband, the wife and
often even the children are involved in the buying process. But in a
village, because of the lack of mobility among women and their having
very little contact with the market, it is the men who make the purchase
decisions. Further, while an urban individual is free to take independent
purchase decisions, in a village, because of the strong social levels
community decision making is quite common. Companies that took the
trouble to understand these needs and peculiarities have tested success.
(Kashyap Pradeep, 2005).

Kumar and Madhavi (2006) in their study ―Rural Marketing for

FMCG‖evaluated the level of satisfaction and brand preference of
FMCG consumers.

Timmer and Peter (2006)concluded that in the rice-based food system

inAsia, greater investment in rural human capital, more efficient rural
financial markets, and opening of the world rice market to free trade
would ensure a more prosperous future for the farmers and greater food
security for the consumers.

44
Sayulu and Reddy (1996) suggest that the rural market offers a verypromising future.
But this market has certain characteristics that hinder marketers from exploiting the
opportunities. These include low literacy level, ignorance of right consumers,
indifference to quality standards and lack of cooperative spirit.

Rao (1997) observes that the boom in rural areas is caused by such factorsas increased
discretionary income, rural development schemes, improved.

infrastructure, increased awareness, expanding private TV channel coverage and

emphasis on rural market by companies.

Rao (2002) the study of product penetration in rural market shows thatdifferent
products have different product penetration rates. Some of the products such as soaps,
detergents and hair oil in the non durable category have shown high penetration rates.
There is a need for creating mass awareness towards increasing the quality of life,
standard of living in rural areas. Low penetration rates may not imply unaffordability
factor rather it could also be due to indifference and consumers not perceiving the
value of a product.

Malhotra (2003) conducted the study on cosmetic industry in rural areas ofIndia
which described the main reasons for boom in cosmetic industry in rural areas as
increasing fashion and beauty consciousness coupled with rising incomes and focus
on health and fitness.

Gruen (2004) in his study examines the efforts of suppliers and retailers in theFMCG
channels to adopt more efficient consumer base. He examined the relationship
between the channels and the customers. People understand the local dialect and
prefer to be informed in their local language and dialect. Therefore it can be useful for
promotion of brands in rural markets by major players (Patel & Prasad, 2005).

45
CHAP.4. DATA ANALYSIS

Q1) Customized marketing strategies affects the growth of the

company in the rural market?

Series 1
45%
40%
35%
30%
25%
20%
Series 1
15%
10%
5%
0%
STRONGLY AGREE AGREE STRONLY DISAGREE
DISAGREE

Interpretation: In the above diagram we have explained that there

is 10% people are strongly agree for customizing market strategies,
30% people are agree, 20% people strongly disagree or 40% people
are disagree in a rural market.

46
Q2) Advertising affects the sales figures of the company?

30

25

20
Series 3
15
Series 2
10 Series 1

0
STRONGLY AGREE NEUTRAL STRONLY DISAGREE
AGREE DISAGREE

Interpretation;;In the above diagrame we have explaind that there

is 20% people are strongly agree for customizing market strategies
30% people are agree , 20 %,strongly disagree has been 10% and
disagree is 30%

47
Q3) Sales promotion activities in rural areas are totally different
than urban areas?

40
35
30
25
20 Series 1
15
Series 2
10
5 Series 3 Series 3
0 Series 2

STRONGLY Series 1
AGREE
AGREE NEUTRAL
STRONGLY
AGREE

Interpretation: The sales promotion activites in rural area has

strongly agree is 25,agree is 5%, natural is 30% and strongly agree
is 0% in rural areas than urban areas.

48
Q4) Rural marketing is more challenging and needs more
customized products to satisfy the needs of the rural customers?

Sales

STRONLY AGREE
AGREE
NEUTRAL
STRONLY AGREE
DISGREE

Interpretation: Rural markrting is more challenging and need more

in nautral, customized products to satisfy the need of the rural
customers is less for strongly agree.

49
Q5) Considering the fact that no digital form of marketing can be
used in rural marketing, does this pose as a phenomenon which
restricts the profit?

Sales

STRONGLY AGREE
AGREE
NEUTRAL
STRONGLY AGREE
DISAGREE

Interpretation: considering the fact that no digital form of

marketing can be used in rural marketing is more in neutral and very
strongly agree is very less this poes as a phenomenon.

50
Q6) Rural consumers are more price sensitive, the image of the
brand doesn‘t get affected by low quality products?

Sales

STRONGLY AGREE
9%
DISAGREE
34%

AGREE
34%

STRONGLY AGREE
11% NETURAL
12%

Preception: rural consumar are more price is agree 34%, the image
of the brand doesn‘t get affected by low quality product strongly
agree 9%

51
Q7) The FMCG major HUL‘s aggressive rural strategies provide a
threat to the chances of your growth in rural areas?

Sales

STRONGLY AGREE
DISAGREE 10%
26% AGREE
13%

NEUTRAL
13%

STRONGLY AGREE
38%

Interpretation: The FMCG major HUL aggressive rural strategies

provide a threat is strongly agree is 38%, and less strategies provide
is 10% in your growth in rural areas.

52
Q8) Heavy investment on packaging affects the sales of the
product?

40

35

30

25
Series 1
20
Series 2
15
Series 3
10

0
STRONGLY AGREE NETURAL STRONGLY DISAGREE
AGREE AGREE

Interpretation: Heavy investment on packaging affects the sales in

netural is 40%, than less packaging is strongly agree, and also is
agree 10%

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Chap.5. CONCLUSION

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.

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 don‘t need attractive packaging. Application of 4A* is also a major task
for the major companies in this area.

Rural market has its own set of challenges. Therefore organizations need to unlearn and
then relearn marketing strategies and tactics that will enable harnessing the rural
potential. The approach strategies and marketing mix needs to be modified and examined
from rural consumer‘s perspective to be successful in the rural market.

Developed and smaller states like Punjab, which have good infrastructure, can be a good
place to start from. 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.

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5.1 QUESTIONAIR

Q1) Customized marketing strategies affects the growth of the company in

the rural market?
• Strongly Agree
• Agree
• Neutral
• Strongly Disagree
• Disagree

Q2) Advertising affects the sales figures of the company?

• Strongly Agree
• Agree
• Neutral
• Strongly Disagree
• Disagree

Q3) Sales promotion activities in rural areas are totally different than urban
areas?
• Strongly Agree
• Agree
• Neutral
• Strongly Disagree
• Disagree

Q4) Rural marketing is more challenging and needs more customized

products to satisfy the needs of the rural customers?
• Strongly Agree
• Agree
• Neutral
• Strongly Disagree
• Disagree

55
Q5) Considering the fact that no digital form of marketing can be used in
rural marketing, does this pose as a phenomenon which restricts the profit?
• Strongly Agree
• Agree
• Neutral
• Strongly Disagree
• Disagree

Q6) Rural consumers are more price sensitive, the image of the brand doesn‘t
get affected by low quality products?
• Strongly Agree
• Agree
• Neutral
• Strongly Disagree
• Disagree

Q7) The FMCG major HUL‘s aggressive rural strategies provide a threat to
the chances of your growth in rural areas?
• Strongly Agree
• Agree
• Neutral
• Strongly Disagree
• Disagree
Q8) Heavy investment on packaging affects the sales of the product?

• Strongly Agree
• Agree
• Neutral
• Strongly Disagree
• Disagree

56
BIBLIOGRAPHY

Websites

www.yourarticlelibrary.com/essay/rural-marketing-in-india...rural-
marketing/32335/

www.ibef.org

www.yourarticlelibrary.com/marketing/rural-marketing/rural-
marketing.../48725/

www.ruralmarketing.in/

https://www.tutorialspoint.com/rural_marketing/rural_marketing

_indian_economy...

www.indianmba.com/Faculty_Column/FC1519/fc1519.html

www.youthkiawaaz.com/2011/08/itc-e-choupal-empowering-rural-
india-research/

BOOKS

Bharat (2008) ―Rural Marketing in India-With Special Reference to

Agricultural Produce in India.‖

Katiyar Ruchi, C.K.Prahalad(2000), Rural marketing: Challenges,

Opportunities & Strat

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