Rural Markets become attractive to corporate companies

by V S RAMA RAO  on FEBRUARY 16, 2008

in SALES/MARKETING MANAGEMENT

A variety of factors have rendered the rural market quite attractive to corporates in recent years.

The Growing Opportunity One Main Driver:

The growing opportunity in the rural markets is no doubt the prime factor. The rural demand has
been growing rapidly and its composition has been changing for the better in recent years. The
increased income/purchasing power of the rural consumer and the improved income distribution
have enhanced rural demand for several products. Better access to many modern
products/brands have added to this growth.

Heat of competition in the Urban Market, A Stronger Driver:

The opportunity in the rural market becomes all the more rosier when the corporates see it in
juxtaposition with the growing competition in the urban markets. The heat of competition in the
urban market actually serves as the stronger driver behind the growing interest of corporates in
the rural Market. The fact that the rural market is still largely an untapped and virgin market and
the fact that the early entrants can tap it without having to face intense competition as in the
case of the urban market, makes the rural market all the more attractive to them.

Corporates have been finding the going increasingly tough in the urban market, especially for
products in respect of which penetration levels are already high. For example, penetration level
for toothpaste in the urban market has now reached close to 80 percent. In contrast, it is below
30 percent in the rural market. Obviously, any substantial further growth in the product can
come only from the rural market. Moreover, in the urban market, many consumers have been
using a particular toothpaste for quite some time and have settled down to the brand, its flavor
and other characteristics. They cannot be expected to switch their brands very easily. In
contrast, in rural areas, there are a lot of first-time users of toothpaste whom the companies can
tap from the scratch.

Toothpaste is but one example. Corporates find that the highly penetrated urban markets allow
little room for volume growths for most of what if what are called ‘necessity products’
toothpaste, bath soap, washing products, tea etc. Growth opportunity for many of the
‘emerging products’ (coffee, shampoo, biscuits, talcum powder etc) too is rather low in
the urban market. Thee rural market thus becomes essential for companies with strong growth
aspirations. Not competing in the rural market will keep them out of about half of the
country’s market for, ‘necessity’ products and one third of the market for
‘emerging’ products by value. It is but natural that in these circumstances, corporates set
their sights on the rural market.

Many Companies have already taken to the rural Market in a big way

It can be seen from the exhibit that many companies/industries have already taken to the rural
market in a big way.

It can be seen from the FMCG category, half of the revenue of Hindustan Lever and Colgate
comes from the rural market. In the case of many other companies too, the countryside
accounts for a substantial part (25-30 percent) of the total sales. It can also be seen that about
one-fifth of pharma sales occur in the rural India. For Glaxo, the proportion is slightly higher at
about 25 percent. In respect of high – priced durables, about one-fourth of the television sales
happen in rural India; Kinetic sells about 30 percent of its scooters, Toyota nearly half of its
vehicles and Hero Honda 40 percent of its bikes.

Tapping the Rural Markets:

While rural India does constitute an attractive and sizeable market, firms have to strive hard for
securing it. For, the market bristles with a variety of problems. The firm has to grapple with them
and find innovative solutions. Practically in every task of marketing, rural marketing poses some
unique problems.

The major tasks that need unique handling in rural marketing are:

1. Segmentation and targeting

2. Product management
3. Physical distribution
4. Channel management
5. Sales force management
6. Marketing communications
–
 Marketing Companies Of India

Popular Categories

Marketing research, advertising and promotion are now considered some fundamental processes that every company
has to conduct in order to cement their position in this competitive market. The top marketing companies of India offer
the best integrated marketing solution covering a wide range of services including marketing strategy on the objectives
and goals, target client and expected growth. The following is a list of the best marketing companies in India: 

Hindustan Lever Network :

This is the leading marketing company of India, which believes that someone somewhere chooses their product about
160 million times a day.14 categories of 400 brands ranging from personal care, food products and home touches the
lives of many which is done by no other company .The company has about 174 000 people in 100 countries across the
globe and also supports many suppliers, contractors and distributors. 

Tata Mc Graw Hill :

It is one of the most popular marketing companies of India. It is the Indian subsidiary of the McGraw-Hill Companies
and also the market topper in educational books encompassing books on variety of subjects and interest. Their main
activity is reprinting, publishing and marketing of McGraw-Hill books. This company was founded in 1970.

Proctor and Gamble:

This is the second largest FMCG Company in India which does not lag much behind than the topper Unilever. The
company has two subsidiaries in India- P&G Home Products and P&G Hygiene and Health Care Ltd. The latter is the
fastest growing Fast Moving Consumer Goods Company of India with turnover of about Rs 500 crores.

Godrej:
Noted among the top Indian marketing companies, Godrej aims at innovation. It deals in fast
moving consumer goods and operates in India and other cities across the globe. The company
Popular Categories provides variety in the brands like cosmetics, toiletries, hair care, fabric care, baby care,
household care and many others. 

Ogilvy & Mather :

This is one of the most famous marketing company of India. It not only provides services in marketing but also other
spheres like advertising,brand consulting,PR, Healthcare Communications and Sales promotion. Their relationship and
interactive marketing strategy stands out among other services. Their offices are spread world wide in Middle
East,North America, Latin America and many other places. 

Maruti Udyog Ltd:

It is the market leader in the automobile sector especially the small car segment. It was founded in the mid-80s.The
flagship brand of the company, Maruti 800, is a great success and is synonymous with the Indian cars. The company
offers direct marketing as a communication tool and also conducts regular consumer research to assess the market
trend and demand. 

ITC Limited:
The ITC is undoubtedly one among the premier marketing companies of India. The company has a market capitalization
of about $19 billion and turnover of more than $1.5 billion. It is also rated among the world's best big companies. It
specializes in hotels, agri-business, FMCG products, personal care, and branded apparel. Their business motive is to
create multiple drivers from corporate strategies. They have peerless distribution reach, great supply chain
management, and effective brand building. 

Videocon:
One among the finest marketing companies in India is Videocon. It is one of the leading consumer durables brands of
India. Their marketing strategy is the multi-branding in consumer durables keeping in mind India’s consumer
durables industry. The company's direct-to-home venture is aiming 10% subscription. Now it is focusing on how to
reiterate the role of mass marketer. 

Tata International:
It is considered as the gateway of Tata Group's business to the world. The company was founded in the year 1962.The
global business units of the company are minerals, engineering, steel, chemical and bulk commodities. This marketing
company also markets consumer products and IT services. It has offices in Thailand, India, UK, Singapore and across
other countries of the world. 

Essar:
It is a fully integrated oil company of international size. It is currently aiming to increase their exploration acreage
across the world and open 5000 retail outlets. Essar's oil refinery in Gujarat has the ability to produce diesel and petrol
in India and international markets. 

Top 50 Marketing Companies of India

1. 1- 10

2. 1- 20

3. 1- 30

4. 1- 40

5. 1- 50

Top Companies Categories

Accounting Advertising Airlines

Auto Mobile Banks BPO

Consultants E Commerce Entertainment

Export Import Fashion Houses Finance

Health Hotels Insurance

Logistics Marketing Manufacturing

Real Estate Web Designing

Buying behavior of Rural consumers
by V S RAMA RAO  on FEBRUARY 15, 2008 · VIEW COMMENTS

in SALES/MARKETING MANAGEMENT

To understand the buying behavior of rural consumers, we must go to the factors that influence
their buying behavior. The factors include:

1. Socio-economic environment of the consumer

2. Cultural environment
3. Geographic location
4. Education/literacy level
5. Occupation
6. Exposure to urban lifestyles
7. Exposure to media and enlarged media reach.
8. The points of purchase of products.
9. The way the consumer uses the products
10. Involvement of others in the purchase.
11. Marketers’ effort to reach out the rural markets
Some of these points are discussed in some detail below:

Influence of culture: Culture and tradition influence perception and buying behavior. For
example, the preference in respect of color, size and shape is often the result of cultural factors.
Rural consumers’ perception of products is strongly influenced by cultural factors.

Geographic locations: Rural consumer behavior is also influenced by the geographic location of
the consumers. For example, nearness to feeder towns and industrial projects influence the
buying behavior of consumers in the respective clusters of villages. We are discussing this
aspect in detail in the section on market segmentation in rural markets. To cite one more
example of how geographic location affects buying behavior, we can point out the fact that the
lack of electricity in many rural households acts as a barrier to the purchase of certain consumer
durables.

Exposure to urban lifestyles: Extent of exposure of rural consumers to urban lifestyles also
influences their buying behavior. An increased exposure and interaction with urban communities
has been the trend in recent years.
The way the consumer uses the products: The situation in which the consumers utilize the
product also influences their buying. The example of lack of electricity affecting buying behavior
illustrates this point as well. Lack of electricity automatically increases the purchase of batteries
by rural consumers. Similarly, since rural consumers cannot use washing powders/detergent
powders that much, as they wash their clothes in streams or ponds, they go in more for washing
bars and detergent cakes.

Places of purchase: Buying behavior of rural consumer also varies depending on the place of
purchase. Different segments of rural buyers buy their requirements from different
places/outlets. Some buy from the village shopkeepers; some from village markets/fairs; others
buy from the town that serves as the feeder to the rural area. It is also seen that the same buyer
buys different requirements from different laces. For understanding the buying behavior of the
rural consumer correctly, the marketer must ask the question: Where from do they buy the
products and why?

Involvement of others in the purchase: Involvement of others in the purchase in the purchase
decision is yet another relevant factor in this regard. There has been a change here in recent
years. In the past, the head of the family used to make the purchase decision all by himself. In
contrast, the involvement of the other members of the family in the purchase decision has been
growing in recent years. An increase in literacy coupled with greater access to information has
resulted in this development. The marketer has to reckon the role of the influencers while sizing
up the buying behavior of rural consumers.

Marketers’ efforts to reach out the rural market: In recent years, many corporate companies
have been trying hard to develop a market for their products in the rural areas, investing
substantially in these areas. This has brought about some change in the way buyers purchase
different products. Developmental marketing has created discriminating buyers and hitherto
unknown demand in the rural market.

All the above factors influence the buying behavior of rural consumer and hence their responses
to the marketing mix variables, and the reference points they use for purchase decisions.