Rural Marketing

The Rural Consumer:

A detailed Profile: The Rural Consumer: A detailed Profile Size of RCG Rural
population about 73% of total population. Acording to 2001 census – 74 crore population
12 crore households – 70% of total Location Pattern: A scattered market – Urban
population in 3,200 cities Rural population in 5,70,000 villages

Socio-economic Position Low purchasing power/per capita income Bounded by tradition,

culture, religion & community. 60% rural income from agriculture >50% have income <
Rs. 25,000 About 14% have income >50,000 In recent years, 70 % rural households have
started saving their income. (service class, non-farmers like shop keepers)

Culturally a Diverse & Heterogeneous Market In terms of – religious, linguistic, social &
cultural factors. State to state variation in extent of development From study conducted
by IMRB (Indian Market Research Bureau) provides development index points for each
state on Health & education Availability of public transport Electricity TV transmission
Banks Post offices Water supply, etc Average villages have 33 index points In Kerala –
88 index points Bihar – 22 UP, MP, Rajasthan – close to 22 Maharashtra, Haryana,
Karnataka – 40-50

Literacy level: Rural India has literacy rate of 28% compared with 55% of the whole
country. Scenes have changed since last few years. Literacy rate has increased from 20%
to 28%. Every year 8 million people get added to rural India's literate population Adult
literacy programmes have been launched Lifestyle: Conservative & tradition bound. But
it has changed to a good extent due to: Increase in income Growth in education
Enlarged media reach Growing interaction with urban area Marketer's effort to reach
rural areas

Buying Behaviour: factors that influence Literacy level Occupation Social & cultural
factors Exposure to media Exposure to urban lifestyle Marketer’s efforts The way the
product is used. Involvement of others in the purchase The buying Behaviour has
undergone a major change. There are people in the rural area whose income has increased
& they have the potential to buy expensive products.

The Rural Demand: Some well established products :The Rural Demand: Some well
established products Pressure cooker Cooking utensils Batteries Cycles, bikes, scooters
Radio/tape Pesticides, fertilizers Tea Toothpowder/paste Sewing machines Artificial
jewelry Medicines Tobacco & products Bathing soaps, washing cakes, washing powder
Cell phones Fans TV Wristwatches

Recent Trends :Recent Trends Steady growth Welcome change in the composition of
Rural Demand. Several products already well established in the rural market In many
products, rural consumption accounts for a larger share than urban In many products,
rural market has overtaken the urban in growth rate – detergent powders, washing soaps,
analgesics. Position of durables - (bicycle – 53, ceiling fan – 19, radio - 42 )

Who buys the high-priced durables in the rural areas? NCAER (National Council for
Applied Economic Research) classified durables into 3 categories- Low priced durables –
watches, radios, irons, fans, etc. Relatively higher priced durables – b/w TV, sewing
machines, mixers 2-in-1 music systems. High aspiration & high priced – color TVs,
refrigerators, motorized two-wheelers. Factors behind the Growth & Diversification in
rural demand – New income due to agricultural/ rural development Green revolution
since 1970. New employment, income & purchasing power.

The expectation revolution – The rising expectations have enlarged the desire &
awareness. Strengthened their motivation to work, earn & consume. Rural demand is
more seasonal – Agriculture dominates the income source. Purchasing on marriages &
festivals (also the harvesting time)

Rural Market Becomes Attractive To Corporates :The growing opportunity, one main
driver - Rural demand is growing rapidly Increase in income/purchasing power has
increased in access of products. Heat of competition in the urban market – Growing
competition in the urban market Rural market is largely untapped (advantage to early
entrants) Competition in urban area is tough for products whose penetration is high. (E.g.
– toothpaste penetrates to 80% in urban & 30% in rural market) Brand loyal customers in
urban. First time users in rural. Not competing in the rural market will keep them out of
about half of country’s market Rural Market Becomes Attractive To Corporates

Many cos. Have already taken to the rural market in a big way

Tapping the Rural Market :Tapping the Rural Market Segmentation & Targeting
Product Management Physical Distribution Channel Management Sales Force
Management Marketing Communications

Segmentation and Targeting :Segmentation and Targeting Geographic segmentation

Climate & level of irrigation Nearness to a feeder town/industrial project Demographic
segmentation Population concentration Age Literacy level Income – regular income &
seasonal income Buying behaviour segmentation Sources of data on rural consumers –
CMIE (Centre For Monitoring India Economy) Thompson rural index

Product Strategy :Product Strategy Whether the product that is sold in the urban market
can be supplied as it is or need any modification. Economic and income realities should
be considered. Lower priced versions do succeed in many cases but not in all cases.

Specifically designed products The Tractor/trailer Eveready’s Jeevan Saathi Torch Model
Variants - bikes Colour Variants – Asian Paints Different products/models, brands,
packing, pricing & positioning Package design & pack size Logos symbols & mnemonics
Brand decisions Sell value brands, not cheap brands Preconceived notions have no place

Physical distribution :Physical distribution PROBLEMS: Transportation & warehousing

Cost – service dilemma becomes more acute – transportation & warehousing costs r high
The delivery van – ITC & HUL have their own vans. High costs can be covered if
business is good

Channel management :Channel management Problems: multiple tiers add to the costs
Non-availability of dealers Poor viability of outlets – manufacturer- additional expenses
& shopkeeper- no returns Inadequate banking and credit facilities – 50 villages & 1 bank
branch The village shop is the key to rural distribution Improving the viability of the
outlets – deal in no. of product lines.

Sales force management :Sales force management What a salesman requires to be in

rural market Willingness to be located in rural areas Cultural congruence – guide in
choosing the right product and not forcing to buy everything or anything Attitude factors
– salesman should be patient & should have perseverance. Knowledge of local language
Ability to handle several product lines Creativity – create consumption pioneers &
opinion leaders Managing rural sales force – practical training to rural sales force

Marketing communications :Marketing communications Selecting the media mix TV

Cinema Radio Print media Outdoor POPs Audio-visual/publicity vans Syndicated AV
vans Puppet shows, Harikatha Music cassettes Communication should be uniquely
assembled & delivered Need for creativity – buyers are time consuming HUL’s rural
communication for surf