ABM- 516, RURAL

MARKETING
TO P I C
W H Y C O R P O R AT E S A R E I N T E R E S T E D I N R U R A L M A R K E T ?

SUBMITTED TO SUBMITTED BY
Dr. P. K. Singh Biswaswar mondal
Department of Agricultural Economics MABM, 2nd Year.
IAS, BHU.
IMP OF RURAL MARKET

India’s vast rural market offers a huge potential for a marketer facing stiff
competition in the urban markets. The rural market environment is very
different from the familiar surroundings of the urban market. Rural consumers
have customs and behavior that the marketer may find difficult to contend with.
But now a days with vast change in technology and modernization rural
consumers behavior is also changing, which opens up with new opportunities to
the corporates.
WHY CORPORATES ARE INTERESTED
IN RURAL MARKET
When rural customers discover the new and exciting choice of brands available
in urban markets, a demand for these brands is created in rural areas. Marketers
have entered the rural markets by extending the distribution of their existing
offering or developing a separate marketing strategy for the rural markets.
When Titan, the watch manufacturer, found rural consumers purchasing their
Sonata brand of quartz watches, they formulated a marketing strategy
accordingly to the requirements of the rural market.
REASON FOR THE INTEREST
There are quite a few reasons for the growing interest in rural markets.
A very straightforward reason is the growth of these markets are :
• Untapped Potential
▫ The large number of consumers
▫ Largely untapped markets
• Market Size and Potential
• Unmet /Low Penetration
• Current Consumption a Pointer to Potential
• Increasing Income and Purchasing Power
• Accessibility of Markets
• Competition in Urban Markets
• Consumer Behavior Changes
RURAL POPULATION

• Rural population (% of total population) in India was reported at 66.46 % in

2017, according to the World Bank collection of development indicators,
compiled from officially recognized sources.
• Of the 121 crore Indians, 83.3 crore live in rural areas while 37.7 crore stay
in urban areas, said the Census of India's 2011 Provisional Population Totals of
Rural-Urban Distribution in the country, released by Union Home Secretary
RK Singh.
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 sales of
certain products in rural areas as compared to sales of the same products in
urban areas.
• Largely untapped markets: The penetration levels for many products are low in
rural areas.
MARKET SIZE, PENETRATION AND
POTENTIAL
The estimated size of India’s rural market stated as a percentage of world
population in 2007 is 12.4 per cent (GeoHive, 2007; Central Statistical
Organization, 2003). This means that 12.4 percent of the world’s consumers live
in rural India. In numbers, this works out to about 120 million households. In
India, rural households form about 72 per cent of total households. The rural
market consists of 74.5 Cr persons out of the total population of 103 Cr in the
country (Central Statistical Organisation,2003). This is a huge market by world
standards.
UNMET NEEDS/LOW PENETRATION
• Increase in the consumption of various types of products in rural markets
creates opportunities for marketers. Moreover, products that were considered
suitable only for urban markets are now in demand in rural markets as well.
The estimated demand for consumer non-durables reflects the potential in the
rural markets waiting to be tapped. The market size for nail polish is estimated to
be around Rs. 270 million in rural areas as against only Rs. 81 million in urban
markets. The potential rural market for lipsticks is estimated at around Rs. 250
million in rural areas as against Rs. 131 million in the urban segment. Face cream
demand in the rural market is estimated at about 1,099 tonnes compared to
about 426 tonnes in the urban market. (Guha Ray, 1998).
CURRENT CONSUMPTION A POINTER
TO POTENTIAL
• The purchase and use of certain durables and non-durables by consumers in
rural areas is more than that by consumers in urban areas. Some of these
items are sewing machine, radio/transistor, bicycle, wristwatch, table fan,
television and pressure cooker.
INCREASING INCOME AND
PURCHASING POWER
• India’s rural population of has 58 per cent of the country’s total disposable
income. The rural markets also indicate increasing incomes, with agricultural
output increasing from 176 million tonnes in 1991 to 215 million tonnes in
2004 (IBEF, 2004). The agriculture development programmes of the government
have helped to increase income in the agriculture sector. This, in turn, has
created greater purchasing power in rural markets. Studies by NCAER provide
evidence of the increased income of rural households
ACCESSIBILITY OF MARKETS

• The attraction of a market depends not only on its potential but also on its
accessibility.
• The road network has facilitated a systemized product distribution system to
villages.
• Delivery-cum-promotion vans traversing eight to 10 villages a day and covering
haats or mandis(markets) is a widely used method of direct contact in rural
areas.
COMPETITION IN URBAN MARKETS

• Intensified competition in urban markets increases costs and reduces market

share. Rural markets are, therefore, increasingly attractive in relation to urban
markets. The automobile market brings this out clearly. Motorcycles, certain
models of scooters and vans find ready acceptance in rural markets as
compared to urban markets. Eg.TVS Heavy Duty
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 durable and non-durable. There is a visible increase in the consumption
and use of a variety of products. The younger generation appears to seek
variety and is more discriminating. The young adult in a village likes to sport a
fashionable watch and the preferred brand of toilet soap for the youth is not
necessarily Lifebuoy, the brand preferred by the elders.
RISK REDUCTION

• During recession in urban markets, the rural markets help to reduce risk.
Companies selling to both urban and rural markets better withstand
fluctuations in demand. As recession mainly affect the people have continuous
and constant flow of income, which is mainly seen in urban society, where as
rural people have seasonal income so here recession does not affect as much
as it affect the urban society. So the risk factor get reduced somehow in the
rural markets.
EMERGING INTO MIDDLE & HIGHER
MIDDLE CLASS
Government has initiated and implemented many schemes for the increment of the income and
purchasing power of rural people, which has help to edify the people standards and leading to
emergence of middle class from backward section or to higher middle class from middle class.
According to Deutsche Bank Research, there are around 300 million middle-class people in India
in 2011. If we see maximum of the Indian market is based for middle class people, the more this
people get rich the more the outlays and maximum of this middle class are from rural India. So
keeping in mind about this emerging middle class of people companies are more concentrating
to invest in this rural market.
THANK YOU