Rural Marketing:

Rural marketing is now a two-way marketing process. There is inflow of products into

rural markets for production or consumption and there is also outflow of products to

urban areas. The urban to rural flow consists of agricultural inputs, fast-moving consumer

goods (FMCG) such as soaps, detergents, cosmetics, textiles, and so on. The rural to

urban flow consists of agricultural produce such as rice, wheat, sugar, and cotton. There

is also a movement of rural products within rural areas for consumption.

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 durable such as refrigerators, TV and washing

machines has also grown over the years. Mouth Marketing, Personal Selling. These tools

of communication are collectively called as Marketing Communication Mix

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.

5. Low standard of living:

The standard of living of rural areas is low and rural consumers have diverse socioeconomic
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.

6. Traditional outlook:

The rural consumer values old customs and traditions. They do not prefer changes.

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.

Scope of Rural Marketing

Let us take at some of the points with respect to Rural India as per Census

a. Population density of less than 400 per sq.km.

b. At least 75% of the male working population is engaged in agriculture.

c. No municipality or board.

If we go by statistics, roughly around 70% of the Indian population lives in the rural

areas. That is almost 12 % of the world population. To expand the market by tapping the

countryside, more and more MNCs are foraying into India‟s rural market.

Below are the few points why organizations are looking at rural marketing with a positive

attitude

1. Population

According to 2011 Census rural population is 72% of total population and it is scattered

over a wide range of geographic area. That is 12% of the world population which is not

yet fully utilized.

2. Rising Rural Prosperity

Average income level has unproved due to modern farming practices, contract farming

industrialization, migration to urban areas etc. There has been an overall increase in

economic activities because during the planned rural development heavy outlay of

resources on irrigation, fertilizers, agricultural equipment‟s and agro processing industry

has been made. Saving habits in rural people also has increased. This too contributes in

higher purchasing power

3. Growth in consumption

There is a growth in purchasing power of rural consumers. But, the average per capita

house hold expenditure is still low compared to urban spending

4. Change in life style and Demands

Life style of rural consumer changed considerably. There has been increase in demand

for durables and non-durables like table fans, radios, mopeds, soaps, etc. by rural

consumers. This provides a ready market for the producers. Rural market is expanding

day after day.

5. Market growth rate higher than urban:

The growth rate of fast moving consumer goods [FMCG] market and durable market is

high in rural areas. The rural market share is more than 50% for products like cooking oil,

hair oil etc.

6. Life cycle advantage

The products which have attained the maturity stage in urban market is still in growth

stage in rural market.

7. Decision-making Units

Women in rural areas are beginning to make fast decisions for purchases. Studies reveal

that 72.3% decisions are taken jointly in a family. With education and mass media, role

of children in decision making is also changing.

The 4Ps of Rural Marketing

Most of the companies treat rural market as a dumping ground for the lower end products

designed for an urban audience. But, this scenario is slowly changing and importance is

given to the need of the rural consumer. Hence it is important to understand the 4Ps along

with 4 As of rural marketing with respect to a rural consumer.

4Ps

1. Product

A product is the heart of rural marketing. It is a need satisfying entity to a rural consumer.

NCAER has classified consumer goods into 3 categories. These categories cover most of

the products from Rs. 100 to Rs. 20000 and above.

2. Pricing

A rural customer is price sensitive and shops for value mainly because of his lower

income levels than his urban counterparts. Hence the marketer has to find ways of

making the product affordable to the rural consumer.

For example banks offer loans for tractors, pump sets, television sets and so on to make

the product affordable to a rural consumer.

Smaller unit packs are preferred in the case of FMCG products to offer at lower prices.

3. Placement or Distribution

Distribution of products is one of the biggest challenges of rural marketing.

A three tier rural warehousing setup exists:

 CWC/SWCs (Central/ State Warehousing Corporation)

 Co-operatives
 Rural Godowns
CWC and SWCs reach up to the district levels. The co-operatives are at the mandi level.

The Rural Godowns are at the village level wherein they are owned by panchayat heads.

All these tiers provide warehousing facilities only to their own members. Hence it is a big

problem for a company to store its goods in rural areas.

There are some problems of rural distribution:

 Transportation has not been fully developed.

 Lack of proper channels of communication like telephone, postal services, and so
 on pose a lot of problem to marketer to service the retailer as it is difficult to the
 retailers to place order for goods.
 This problem is on the way to have a solution by the advent of mobile phones
 which are now available at cheaper rates due to tough competition among the
 players.
 Storage of goods in rural areas is also a problem for the marketers.
 Multiple tiers push up the costs and channel management is a major problem for
 marketers due to lot of middlemen in the process.
 Availability of suitable dealers.
 Poor viability of rural outlets.
 Rural outlets need banking support for remittances to principals, get fast
 replenishment of stocks, receive supplies through bank and facilitate credit. This
 gets handicapped due to inadequate bank facilities.
 Retailers in rural markets

There are different kinds of retailers.

 Shops within the village.

 Shops located on the main road and not exactly within the village
 Kasba market or the tahsil market.

Margins are very important to a rural retailer. The pushing by the retailers depends on

margins and the pushing by the wholesalers depends on retailers.

The gap is very wide because the local manufacturers do not undertake investments either

in terms of advertising or anything. Hence they are very fast imitators.

For rural retailers, it‟s the question of simple economics – Am I getting more money if I

invest on these brands? More the margin better choice to stock and sell.

The rural retailer stocks few brands in each category. This may have important

implications for a company and its managers because whoever reaches the market first

gets the share of the market.

4. Promotion

Communication to rural consumer is through organized media. More number of rural

consumer (~70%) listen to radio and many go to cinema.

Rural communication can be through Conventional media or through a nonconventional

media.

 Conventional media: Print, Cinema, Television and Print.

 Non-conventional media: Theatre, Posters, Haats, street plays, Melas and through
 influential person in the area.

The conventional media have excellent reach, less expensive and create a better impact.

But at the same time, it is not customized to each village and also offers unnecessary

coverage at times.

Problems in rural communication:

1. Language

2. Low literacy rates

3. Cultural & traditional differences

4. Rural reach
5. Attitudes and behavior

An effective promotion should plan for a proper mix of media which must take care of all

the problems of communication to rural consumers.

The Indian rural market today accounts for only about Rs 8 billion (53 per cent - FMCG

sector, 59 per cent durables sale, 100 per cent agricultural products) of the total pie of Rs

120 billion, thus claiming 6.6 per cent of the total share. So clearly there seems to be a

long way ahead.

 Hindustan Lever is the first company that comes to mind while thinking of
 rural marketing due to its initiative of project „Shakti‟.
 Amul is another case in point of aggressive rural marketing.
 Other corporate that are slowly making headway in this area are Coca Cola
 India, Colgate, Eveready Batteries, LG Electronics, Philips, BSNL, Life
 Insurance Corporation, Cavin Kare, Britannia and Hero Honda to name a few.

The greatest challenge for advertisers and marketers is to find the right mix that will have

a pan-Indian rural appeal. Coca Cola, with their Aamir Khan Ad campaign succeeded in

providing just that.

Corporates are still apprehensive to "Go Rural." Since, the rural consumers are scattered

and it is difficult to predict the demand in the rural market.

A few agencies are trying to create awareness about the rural market and its importance

are Anugrah Madison, Sampark marketing and Advertising Solutions Pvt Ltd, MART,

Rural Relations, O&M Outreach, Linter land and RC&M, to name a few. Also, the first

Four agencies mentioned above have come together to form The Rural Network. The

Paramount objective of the Network is to get clients who are looking for a national

Strategy in rural marketing and help them in executing it across different regions.
What are rural marketing strategies ?

1. Product Strategies:

This article describes some of the common product strategies that companies have used to
penetrate rural markets. These range from selling small packs, innovative product design, sturdy
products and giving names that are more acceptable in rural India.

i. Small Units:

Keeping affordability in view, products have been made available in small packing in rural India,
which also results in low cost. Offered at a convenient price point, such packs also encourage
trial purchases. However, this strategy also necessitates change in supply chains as retailers have
to be serviced more often and supplied in very small lots—say, six or ten sachets at a time. This
strategy has been used in case of shampoos and biscuits. However, in products not bought in
villages, large packs are preferred as they help in reducing trips to the town to buy them.

ii. Product Design:

Designs need to be modified to suit rural habits and lifestyles. Electric gadgets, for example,
must sustain irregular voltage and long periods of electricity cuts. The Godrej ChotuKool is an
example of complete product redesign for rural areas. Rural consumers show a distinct
preference for bright colours.

iii. Sturdy Products:

Products need to be redesigned for ruggedness, which are more suitable for rural markets. They
must not only be sturdy but also look capable of withstanding rough transportation and usage.
Very often products are required to be transported in carts over bad roads so that they survive the
ordeal. They must also withstand usage by several family members.
iv. Brand Name:

People in rural areas now show brand name awareness. However, companies need to use a name
that strike a chord with rural audiences.

2. Pricing Strategies:

Pricing for rural areas requires innovative approaches. The price points have to be kept in mind
while, at the same time, not compromising with the utility and sturdiness of the product. While it
is true that rural preference for branded products is increasing, companies must avoid the ten-
dency to introduce frills and increase the price. Very often rural consumers prefer basic products
at good prices.

3. Cost Strategies:

Cost is a great deterrent for a rural marketing plan. Marketing managers struggle to control costs
in serving rural markets—large distances, small orders, lack of economical transportation, non-
availability of warehouses, excessive spoilage and damages. Each of these adds to the cost. It
would not be wrong to compare the cost model for rural India to organizing an Indian wedding—
budgets can quickly go out of control and unforeseen expenses may arise suddenly. Rural
marketing also need long-term interventions and their results are difficult to measure in the short
term. Managers used to serving urban markets, find it difficult to anticipate the many costs in
reaching villages.

Identifying consumer clusters calls for heavy expenses as data is not available and has to be
collected personally. Rural India does not have data such as Indian Readership Survey (IRS) or
Broadcast Audience Research Council (BARC), which can provide some basis for a marketing
manager to work with.

Apart from information cost, logistical costs are a major component of rural marketing costs. The
cost of acquiring customers is also high, according to The Economic Times (2015). If the cost of
acquiring an urban consumer is Rs. 100, the acquisition cost comes to Rs. 180-200 in a rural
market, since BTL techniques must be used. This becomes uneconomical if the company is
selling a low-cost stock keeping unit (SKU) since profits do not justify the cost. This is the
reason that most rural marketing plans fail.

4. Distribution Strategies:

Distribution to villages requires new and innovative approaches. Companies have to figure out
how to reach villages—through existing wholesalers or establishing dedicated channels.

5. Promotion Strategies:

Communication is important in marketing. Promotion plays a major role in changing behaviour

and product adoption among rural consumers. However, it is difficult to find communication
channels that are favoured by rural consumers since reach of mass media is limited. Moreover,
messages have to be tailor-made for each region.

A number of issues like illiteracy and socio-cultural values pose challenges in developing
communication strategies for the rural markets. Experience marketing and BTL techniques are
more effective than media in villages but organizing such activities for lakhs of villages is an
arduous and costly task.