UNIT 3

The Rural Marketing refers to the activities undertaken by the marketers to encourage the people, living in rural areas to
convert their purchasing power into an effective demand for the goods and services and making these available in the rural
areas, with the intention to improve their standard of living and achieving the company’s objective, as a whole.

The Rural Marketing is a two-way process, i.e.,

 Urban to Rural: FMCG Goods, Agricultural fertilizers, automobiles, etc. are offered by the urban market to the
rural market.
 Rural to Urban: The agricultural supplies viz. Fruits, vegetables, flowers, milk, etc. is offered from the rural market
to the urban market.
  Potential of Rural Marketing

The marketers are following the strategy to “Go Rural” because of the following attractions in the rural market:

1. Large Population: Still, the majority of the population in India resides in Villages and therefore, the marketers find
more potential in the rural areas and direct their efforts to penetrate the rural market.
2. Increased Income: The income and the purchasing power of the rural people have increased. With the use of
modern agricultural equipment and technology, the farmers can produce more and can get better returns for their
agricultural produce. The increased income motivates a farmer to improve his livelihood by purchasing a good quality
product and thus, the marketer gets an opportunity to enter into the rural market.

3. Competition in Urban Market: There is a lot of competition in the Urban market, where people are well aware of
the goods and services and have created a brand loyalty. Therefore, the marketers move to the rural market to escape the
intense completion and generate revenues from the untapped areas.
4. Improved Infrastructure facilities: Today, many villages are well connected with the roads and transportation
facilities that enables the marketer to access the rural market and promote his goods and services.With the growth in
telecom services, the rural people can be reached easily via mobile phones.

5. Saturated Urban Market: Also, the marketers may move to the rural markets, when the urban market has reached
the saturation point, the i.e. market is well stuffed with the products, and the consumers are not likely to make a frequent
purchase due to the varied options available in the market.

6. Support of Financial Institutions: Several Co-operative banks and public sector banks offer the loan facility to
the rural people at low-interest rates. With the loan, the purchasing power of an individual increases, thus resulting in a
better standard of living.

7. New Employment Opportunities: The Government is running several employment opportunity programmes, with
the intention to engage people in other activities apart from the agriculture occupation.The Integrated Rural Development
Programme (IRDP), Jawahar Rozgar Yojana (JRY), Training Rural Youth for self-Employment are the certain programmes,
designed to increase the livelihood of rural people.

Due to so much potential in the rural areas, the companies are focussing more on the needs and desires of people living in
here and are taking every possible step to stimulate people to buy products and services and improve their livelihood.

Marketing mix of Rural Management

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.

Category I – These products are of immediate use to the family e.g  Pressure Cookers, Mono Cassette Recorders , pressure
Pans and Wrist watches (mechanical).

Category II- These products reduce the strain of the households and also act as a source of entertainment. e.g · 2-in-1
(stereo) ,  B and W TV (S), Instant Geyser, Sewing Machines , Storage Geysers and Vacuum Cleaners.

Category III- These are combination of means to supplement income .e.g   Scooters , Mopeds , Motor
Cycles ,  Refrigerators ,Washing Machines , Mixer/grinders

The hierarchy depends on the needs of the rural consumers.

The following have to be kept in mind while the marketer makes a decision on the product.

1.      The product for the rural markets has to be simple, easy to use and provide after sales service or maintenance.

2.      The product has to be packed for low price and convenient usage.

3.      The pack has to be easily understood by the rural consumer. The information on the pack is preferred in local language
communicating the functional benefit of the product not technical advantages.

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.

 Availability of suitable dealers.

 Poor viability of rural outlets.

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.

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 are  Language , Low literacy rates , Cultural & traditional differences ,
Rural reach and  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.
ü  Hindustan Lever is the first company that comes to mind while thinking of rural marketing due to its initiative of
project ‘Shakti’.
ü  Amul is another case in point of aggressive rural marketing.

The principals or 4As of Rural Marketing

For rural market 4Ps alone are not sufficient. The 4As also has to be considered and keep in mind while formulating the
plan to enter the rural market because these are also critically important.

1. Availability

The first challenge in rural marketing is to ensure availability of the product or service. India’s

7, 00,000 villages are spread over 3.2 million sq km; 700 million Indians may live in rural areas, finding them is not easy.
They are highly dispersed.

Given the poor infrastructure, it is a greater challenge to regularly reach products to the far-flung villages. Marketer should
plan accordingly and strive to reach these markets on a regular basis. Marketers must trade off the distribution cost with
incremental market penetration.
ü  India's largest MNC, Hindustan Lever has built a strong distribution system which helps its brands reach the interiors
of the rural market.
ü  LG Electronics has set up 45 area offices and 59 rural/remote area offices to cater to these potential markets.

2. Affordability

The second major challenge is to ensure affordability of the product or service. With low disposable incomes, products
need to be affordable to the rural consumer, most of who are on daily wages. A part of it has been mentioned in product
(first P).

A solution to this has been introduction of unit packs by some companies. Most of the shampoos are available in smaller
packs.
ü  Fair and lovely was launched in a smaller pack.
ü  Coca-Cola has addressed the affordability issue by introducing the smaller bottle priced at Rs 5. The initiative has
paid off: Eighty per cent of new drinkers now come from the rural markets.
Some product also can be made affordable by making available the loan facility by having alliance with banks.

3. Acceptability

The next challenge is to gain acceptability for the product or service. Therefore, there is a need to offer products that suit
the rural market.
ü  LG Electronics have developed a customized TV for the rural market named Sampoorna. It was a runway hit selling
100,000 sets in the very first year.
ü  HDFC Standard LIFE topped private insurers by selling policies in rural sector. The company tied up with non-
governmental organizations and offered reasonably-priced policies in the nature of group insurance covers.

4. Awareness

Building awareness is another challenge in rural marketing. A large part of rural India is inaccessible to conventional
advertising media. The media penetration in rural areas is only about 57%.It has been seen that, two out of five Indians are
unreached by any media - TV, Press, Radio and Cinema put together. Haats, mandis and melas are opportunities. Family is
the key unit of identity for both the urban and rural consumer. However, the rural consumer expressions differ from his
urban counterpart. For a rural consumer, outing is confined to local fairs and festivals and TV viewing is confined to the
state-owned Doordarshan. Consumption of branded products is treated as a special treat or indulgence. Haats, mandis and
melas are the place of opportunities to promote awareness about the product.
ü  Hindustan Lever has its own company-organized media. These are promotional events organized by stockiest.
ü  LG Electronics uses vans and road shows to reach rural customers. The company uses local language advertising.
ü  Philips India uses wall writing and radio advertising to drive its growth in rural areas.

Rural marketing for Seeds, Fertilizer , Pesticides machinery and other inputs of rural
industry.
1. Rural marketing for Pesticides/ Insecticides
The chemicals used for control of pests, diseases, rodents, virus, etc.are broadly termed 'agricultural chemicals'. The
agricultural chemicals market can be classified as follows :
(a) Insecticides
(b) Fungicides
(c) Rodenticides
(d) Herbicides and
(e) Fumigants
The agricultural chemicals market comprises insecticides that account for about 80 per cent, Fungicides 15 percent and the
rest 5 per cent, of the total market. The manufacturers of agricultural chemicals are of two kinds
- manufacturers of technical grade material and formulators. The formulators buy the technical grade materials and
prepared various formulations buy the technical users in different concentrations for different crops and also for different
types of pests and diseases.
All the manufacturers and formulators have to register themselves with the Central Insecticides Board under the
Insecticides Act of 1968. The banned insecticides should not be manufactured or sold, e.g. DDT was banned in the country
in October 1999. Apart from this, the formulators
are free to adopt any trade or brand name for the products manufactured Hence the same chemicals are sold on several
trade or brand names by different companies.
The elements of marketing mix are very much under the control of the manufacturers and marketing men of agrochemicals.
Product
The formulators are free to manufacture and market any combination or concentration of insecticides or pesticides from the
basic chemicals. They are also fee to use any trade or brand name for their products. In other words, flexibility available to
the manufacturing or marketing men is very immense. These products need an applicator - the insecticides/pesticides in
power form require dusters for application. Even though these applicators are not very expensive, most farmers do not
possess them. They either borrow from their neighbours or hire it from agro input vendors. Most cooperative societies at
village level and the departments of agriculture of
various state governments keep these applicators for custom hiring to farmers. This is a case of providing product-related
services without which the product cannot be used effectively.
Price
The prices of agro-chemicals are not controlled by the government. The manufacturers are free to fix the prices. The main
consideration in pricing is the strategy of the competitors and the nature of insecticides/pesticides.
Distribution
This is the most crucial aspect in the marketing of agrochemicals. Appropriate chemicals have to be made available at the
time of pest/disease attack. This requires a reliable method of forecasting the seasons of attack of different pests and
diseases depending on the crop growing seasons. In addition most chemicals have a definite shelf life. The marketing men
should be able to forecast and move the required chemicals quickly to places where the pest/disease attack is noticed.
Fortunately, the chemicals are low volume and high value products unlike fertilizers, which are high value products. This
enables quick movement. This is one of the reasons why there are a number of small formulators to supply the products in
time than a company having centralised units which may require transportation over long distances. The distribution
arrangements for agro-chemicals appear fairly adequate with about 75,000 retail selling outlets. Since most of the
chemicals are poisonous and hazardous, packing requirements are of utmost importance along with instructions for the use
of products in the field.
Promotion
The promotion measures adopted by agricultural manufacturers and marketing men are nearly the same as for fertilizers. In
addition, the agrochemical manufacturers maintain contacts with the Departments of Agriculture and Agricultural Research
Stations, since they recommend the farmers the specific names of pesticides/insecticides to be used for different types of
pests and diseases. This is highly productive promotion measure adopted by the agrochemical manufacturers.

2. Rural marketing for Fertilizers

The expansion efforts of the Government and fertilizer companies have ensured a phenomenal growth. Today about 13 to
14 million tonnes of fertilizer nutrients valued at about Rs. 75,000 million are absorbed.
The fertilizer consumption depends upon several factors like :
• Profitability of farming
• Availability of irrigation facilities
• Introduction on new technology
• Availability of fertilizers
• Prices of fertilizers
Fertilizers are classified into three different groups depending upon the nutrients they supply to the crop like Nitrogenous
(N), Phosphate (P) and Potassic (K).
 The fertilizers which supply only a single nutrient like N or P or K are called straight fertilizers. Examples of such
fertilizers are ammonium sulphate, urea.
 The fertilizers which contain more than one nutrient are called Compound and Complex Fertilizers. For example,
Di-Ammonium Phosphate (DAP which is quite popular now) =is a complex fertilizer which supplied both Nitrogen
and Phosphate.
Marketing of fertilizers is highly controlled by Government regulation. Fertilizers are governed by both Essential
Commodities Act (ECA) and Fertilizer Control Order (FCO). Under these Acts, fertilizers have to be marketed only on
generic name and not by any trade or brand name. What the companies normally do is to add their company name to the
generic name like Mangala Urea (Manglore Chemicals and Fertilizers Ltd.)
Product
Not much manoeuvrability is possible for the manufacturers and marketing men in product designing. At the most they can
manufacture and market fertilizer mixtures which supply the three nutrients in as is required by certain types of soils or
crops or regions. These are called Paddy mixture or Sugarcane mixture but the bags should clearly indicate the proportions
of the three nutrients, e.g. there could be a mixture as 20:20:20 which means the mixture contains N, P and K in that
proportion. Some of the manufacturers add to this mixture certain amount of trace
elements like Sulphur. In addition, some of them manufacturer granulated fertilizers, or fertilizers coated with neem which
release the nutrients slowly for long lasting action. Thus the product manoeuvrability is very limited in the case of
fertilizers. The basic purpose of any product under fertilizer category is to supply N, P and K nutrients.
Price
Prices are totally controlled by the Government including the margins for channel members and the companies may offer to
their dealers volume discounts or offer to their dealers volume discounts or off-season discounts at the most. This is very
closely watched by the Government and any such rebates have to be borne by the company as the subsidy will not cover
such discounts.
Distribution
Here again, the Government policies dictate the type, quantum and the area for distribution for each manufacturer.
Therefore, the manufacturers do not have much say in distribution.
Most fertilizer manufacturers use distribution networks to reach the fertilizers to end users. Traditionally, the Cooperatives
and Agro Industries Corporations played a significant role, but of late private trade has also taken to the fertilizer
distribution in a big way because of attractive margins.
Earlier the proportion of fertilizer distributed between the cooperatives and private trade was in the ratio of 60 : 40.
Presently the trend is reversed and private trade accounts for 60 per cent, while Cooperatives and Agro Industries
Corporations for only 40 per cent. So mostly the fertilizer marketing is through a dealer network which consists of
cooperatives, agro industries corporations and private trade. A few manufacturers have their own retail outlets also -
Fertilizers and Chemicals of Tranvancore (FACT)in Kerla, and GSFC in Gujrat. Sometimes the retailers pass on fractions
of their margins to actual users.
Promotion
In the case of fertilizers, the one element of marketing mix 'promotion' allows the manufacturers to use their ingenuity not
only to sell the quantity allocated to them but also create a brand image. Various promotional measures are adopted by
different fertilizer manufacturers and
marketing men.
1. Inter-Personal and Group Contacts
Right from house to house contact campaigns, to discussions with small farmer groups are adopted by fertilizer
manufacturers. This is also combined with training programmes for the farmers.
2. Mass Media
Mass media has also been extensively used by fertilizer manufacturers to promote their product. Advertisements in
vernacular press and journals, literature on crops and products in the form of pamphlets, and folders are quite popular.
Radio has been very extensively used, especially before and after farm programmes like Krishi Darshan and Farm and
Home programmes. Other measures include, visuals like hoardings, posters, paintings on the bullock carts in rural areas
and point of purchase materials.
They also take part in exhibitions and fairs. In additional many manufacturers use their own Audio-Visual vans through
which they screen films interspersed with fertilizer advertisements, slide shows, puppet shows and other forms of
entertainment like film music and the like.
Of late, advertising through Television is also used by some manufacturers, especially when farm programmes are telecast.
This appears to be important in as much as Television is supposed to cover about 90 percent of the population.
3. Special promotion Measures
Many fertilizer manufacturers resort to special promotion drives.These could be Result and Method Demonstrations in the
farmers' fields, arranging for field visits of farmers to research centres and progressive farmers' fields, free soil testing
services through mobile soil testing laboratories, literature on agro-techniques for specific crops, farmers service centres,
organizing farmers clubs for exchange of information on cultivation practices, visits to fertilizer factories and dealers'
training programmes. Some manufacturers even institute awards for farmers getting highest yields in specific crops on the
lines of Krishi Pandit awards. The latest promotion measure is 'Village Adoption Programmes'. The manufacturers adopt
villages with an aim to promote an all round development.

3. Rural marketing for Seeds

Seeds. Marketing of seed is the most important as well as a challenging aspect of seed industry, because of the nature of the
product. Seed being a living organism, its quality deteriorates faster. Thus, its shelf life is limited and it must be marketed
within the season. Another peculiar feature of seeds is that it requires two to three years lead-time to meet the specific
requirements, i.e., to meet the demand for a particular seed, its production has to be organised at least two years in advance.
The changes in the weather, price of the crop, and prices of the competing crop, may change the prospects of demand for
seed of a particular crop variety at the commencement of sowing season. In times of increase in demand for seed, its supply
cannot be organised immediately, whereas a fall in demand would result in carry-over of stocks.
In fact, seed marketing requires working within a whole chain of seed business. It includes not only seed production and
processing subsectors, but also many other agencies like research, quality control and other input services as in any other
agribusiness chain.
Product : Production of quality seeds is carried out in a decentralised manner on individual farms. The certified/truthfully
labelled seeds are produced by the contract growers. Here two alternative approaches are in vogue. Firstly, growers are
selected from a number of villages scattered over a large area which is the case with many small seed companies and seed
corporations.
Secondly, a few villages are selected for intensive coverage of farmers as is the case with Advanta India Ltd (formerly ITC
Zoneca). The contract growers, either produce seeds for the enterprise or lease out land to the enterprise.
Price : The uncertainties in demand for seed and making its price estimate is a complicated exercise. Seeds grown by
contract growers for seed corporations and the private sector which meet specified standards attract a premium price over
and above the commercial grain price, for the crop which varies anywhere between 25 per cent for self-pollinated crops like
cereals to over 100 per cent for hybrid crops.
In the public sector, the NSC is usually the retail price setter. There is government intervention in pricing of seed produced
by public sector corporations with the degree of intervention varying from state to state.
In some crops like sunflower, retail prices which the farmer pays are double or three times that of the price at which the
seed company procures from contract growers. The pricing strategies of the private sector are also influenced by the pricing
structure followed by the public sector.
The final marketing price of the certified seed is the result of number of components as follows:
Input Costs:
a. Basic seed price.
b. Price paid to the seed growers for the raw seed.
c. Processing and storage costs.
d. Transportation distribution, and marketing costs.

Distribution System:
The private seed companies as well as public sector corporations, market seed through a network of distributors and dealers
At present, public sector markets its product through the following distribution channels:
a. Dealers in Private Sector.
b. Dealers in co-operative Sector.
c. Sale Points and Depots.
d. Departmental Sales.
The major sales of public sector come from the private dealers followed by dealers in co-operative sector and departmental
sales respectively. The distributors are appointed for district, which inturn appoint dealers within the district. These
distributors and dealers handle other agricultural inputs like fertilisers, pesticides and agricultural machinery.
A distributor/stockist is generally appointed for a region that may consist of one or more states. However, in some areas,
the company reserves the right to appoint more than one distributor, depending upon the potential of the state.
There may be more than one dealer depending upon the potential of the district and marketing strategy of the seed agency.
Generally, they are appointed on non-exclusive basis, which means the dealers, can deal in products of other companies or
even in other commodities.
The different channels used for the distribution of seeds are as follows:
All the above mentioned distribution channels are used for selling all kinds of seeds including food grains, oilseeds, spices,
vegetables and, fodder crops. Departmental sales include sales to the Department of Agriculture under various heads
namely, minikits, field demonstration, DPAP and other drives being made for popularisation of modem agricultural
practises.

Promotional Media:
Seeds form a critical input to ensure higher yield of the crop. Therefore, the farmers involvement is very high at the time of
the purchase of the seeds. Here, the advertisements should influence the behaviour of the farmers by encouraging trial,
leading to loyalty for the product, and further leading to learn about it.
In seeds, the promotion activities include free samples of the seeds being distributed to the farmers. This is being practiced
by both MNCs as well as by local seed companies.
1) Video shows, exhibition, krishi mela, mobile vans, and wall trolley painting are the most commonly used promotional
tools by the seed marketing firms; which give identity and help the farmers in knowing that a particular seed is
available.
2) The advertisements in the various media like T.V , radio is used to inform, remind and persuade the consumers and
further positively influence the purchase behaviour of the farmers.
3) Newspaper ads can briefly give the advantages of good seed, price, location of the dealer and variety name. Cinema
slides can be developed for local conditions and should emphasise local dealers and seasonal crops. Hoardings are
effective for year round publicity and should be placed in important locations like bazaars, bus stands etc.
4) The organisation of “Kisan Melas” by various agricultural universities is effective in reaching the target population in
an effective manner.
5) At the retail point level, the effectiveness of glow signboard, danglers, calendars and stickers can also be explored.

4. Rural marketing for Tractors

Tractors
The country produces about 1.5 lakh tractors per annum, which are sold without much difficulty. These tractors of different
horsepower – 25 HP, 35 HP and above 35 HP are manufactured and marketed be major companies like HMT, Escorts,
Eicher, Massey Ferguson etc.
The most important criteria which count in tractor purchase are :
1. Area of land holding 2. Nature of land holding (irrigated/dry) 3. Types of crops grown and number of crops grown in a
year 4. Availability of loan 5. Possibility of hiring out the service of the tractor to others 6. Requirement of tractor for
transport of produce to market and inputs
to the farm.
From the marketing point of view the factors which count for successful sale are :
1. Loan availability from banks 2. Personal selling : identification of potential tractor users and
approaching them 3. Trouble free service - less number of breakdowns 4. Availability of spares for easy repairs 5. After
sales service 6. Resale value of tractors 7. Training on how to use tractors 8. Fuel efficiency
Most manufacturers and marketing men get themselves registered with the lending agencies as approved suppliers. As and
when the farmer is sanctioned loans, the approved suppliers compete among themselves to supply the tractor. The farmer in
addition to his investment in tractor (which is only a prime mover) has to invest in implements which can be hitched to
the tractor like disc ploughs, levellers, tailors, power spayer, etc.

5. . Rural marketing for Irrigation Equipments

Compared to tractors, irrigation equipments are fairly low cost capital equipments. These include a prime mover, either
electrical motor or oil engine, pump set and accessories like pipe, couplings, etc. Here again the loan availability is an
important factor. Most of the lending agencies prepare a list of approved suppliers of irrigation equipments and once the
loan is sanctioned and well is dug, orders are placed with the suppliers by the lending agencies to install the pumps set on
the firm. This also requires training in operation and efficient after-sales service. Numerous manufacturers of irrigation
equipments are in fray and competition is tough.
The opportunities available in marketing of irrigation equipments are enormous.
The tapping of underground water has become necessary for commercial agriculture. In addition, sophisticated irrigation
systems like sprinklers and drip irrigation have come into vogue. These sophisticated systems economics on the water
usage, so that the available water can be used to irrigate more area and also wastage can avoided. Even though morecostly,
these new sophisticated irrigation systems, are bound to prove popular because of economic usage of water which is fast
becoming a scarce input.
6. Rural marketing for other farm machinary
There is other farm machinery like mould board ploughs, seed drills,winnowers, threshers, harrows etc. These are locally
manufactured and marketed. They may be either power-driven or bullock-driven. Many of these are used by farmers
regularly in their farming operations. These are readily available, easy to maintain and operate. There are a number of small
manufacturers spread out in the country making such machinery, e.g. ELCT Industries, Coimbatore, who make bullock cart
mounted thrashers which can be easily moved to the field where harvest is taking place. Since these are locally
manufactured and marketed, employment of marketing knowledge is somewhat minimal. Apart from the above, there are
simple farm tools like plough share,hand hoe, sickle, pavada, etc. which are also locally manufactured by the village
artisans and blacksmith and sold. These tools have a short life. Hence there is not much quality consciousness among the
farmers.
Another important farm machinery which came into being during early sixties is the power tiller. Several firms were
licensed to manufacture power tiller and the demand forecast by the Planning Commission communicated great promise.
The technology for power tillers was imported from Japan.
Somehow this did not succeed much. As of today barring two manufacturers, the rest have ceased to exist. The two
manufacturers who are still operating are Kerla Agro Machinery Corporation, and V.S.T. Tillers, Banglore, who produce
'Kubora' and Mitsubishi' tillers respectively.
The marketing mix, marketing organization and marketing strategies are decided based on three important factors in the
case of agricultural inputs. These are :
1. Product characteristics, 2. User characteristics, and 3. Use characteristics.
The product characteristics in the case of agricultural inputs can be as follows : a. Consumable input or Capital input.b.
High value of Low volume. c. High volume or Low volume. d. High cost or Low cost. e. Manufactured or Locally
produced.f. High shelf like or Low shelf life.
The user characteristics are :
a. Planters and big farmers.
b. General farmers.
c. Dealers.
d. Blenders.
The use characteristics are :
a. Irrigated farms or Dry or Rainfed farms.
b. Cash crop farms or Food crop farms.
c. Progressive farms or Traditional farms.
d. Market oriented or Subsistence farms.
The characteristics play an important role in deciding upon the elements of marketing mix, the size of the marketing
organization and appropriate marketing strategies.

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Rural Marketing Strategies in India: Product, Pricing, Place and Promotion
Rural Marketing Strategy # 1. Product:
In simple terms, a product is anything that satisfies human want (customers) and includes product quality, features,
benefits, design, style, colour, brand, services, and warranties. Product is something like the heart in the human body.
Product is the most important element of marketing-mix.
The product strategies used by companies in rural markets are as follows:
(a) Sturdy Products:
Most of the rural consumers believe that heavier the item, higher the power and durability. Examples- (1) Bullet motor
cycle continues to be popular in villages due its ruggedness. Royal Infield sells about 65 per cent of two wheelers in semi-
urban and rural areas. (2) Ambassador car continues to be popular in rural areas due to sturdiness, roomier rear seat and
luggage space.
(b) Designing Products:
The companies can come out with new products or promote existing products to suit field conditions in rural areas.
Examples- (1) LG Electronics came out with a unique product for rural market. It launched ‘Sampoorna’, India’s first TV
with a Devanagari script on screen display. The word Sampoorna meaning ‘Wholesome’ cuts across all linguistic barrier in
our country. It is affordable and aimed at semi-urban and rural areas. It can withstand power fluctuations and has sold over
one lakh 20″ TV in towns with a population of over 10,000. (2) Godrej has introduced a refrigerator Chotukool for rural
areas
(d) Utility Products:
The rural people are concerned with the utility of the items rather than appearance/show. Examples- (a) Philips has
introduced Free Power Radio priced at Rs.995/- for the first time in India. The radio requires no external batteries or
electricity for operation. A one-minute winding of the lever runs the radio for about 30 minutes, (b) HMT watches are
popular for utility value
(e) Branding:
Brand is a name, word, symbol, design or a picture or a combination of them used to identify the product and distinguish it
from that of the competitions. A brand name not only represents the product but also conveys the quality of the product.
Examples:
(1) Tata Steel has branded its galvanised corrugated sheets as Tata Shakthi, a sign of power. Similarly the galvanised
corrugated sheet produced by Ispat Industries has been named as Ispat Kavach .The brand name conveys strength,
durability and toughness.
(2) Some of the brands that have created a lasting impact on rural consumers are Billy wali cell (Eveready batteries- battery
with cat as symbol), Lal saboon (Lifebuoy), Nirma girl (Nirma detergent), Rishi (Dabur Chawanaprash), Parle baby (Parle
biscuits) and Coconut tree (Parachute), Amul (From Sanskrit word ‘Amoolya’ Meaning Priceless)ETC.
Rural Marketing Strategy # 2. Pricing:
Price refers to exchange value of the product and includes- (a) Maximum retail price, (b) Discounts, (c) Credit, (d) Terms
of delivery and (e) Maintenance charges. Rural retailers generally require credit and, therefore, product pricing has to be
adjusted to meet their requirements.
(a) Low Price:
A rural customer is price-sensitive mainly because of his relatively low level of income and unit price of a product will
have an impact on sales. Pricing the product at a lower price really attracts rural population for trying the products. Though
rural incomes have grown in the past decade, the money earned by the average rural consumer is still much lower than that
of his urban counterpart.
A large part of the income is spent on the basic necessities, leaving a smaller portion for other consumer goods. Examples-
(1) Bharath Petroleum has introduced five kg gas cylinders to reduce initial deposit and refill cost for rural consumers. The
deposit for 5 kg cylinder is Rs.350/- against Rs.700/- for 14 kg cylinder and refill cost is Rs.90/- against Rs.250/- for 14 kg
cylinders. (2) Small unit packs of shampoo, hair oil, toothpaste, biscuits and bathing soap.
(b) No-Frills Product:
The production cost can be lowered by using less sophistication and rather concentrating on sturdiness and utility of the
product. Examples- 1. Maharaja Appliances Ltd., sells a sturdy Bonus washing machine, without a drier for rural market at
Rs.2,990/-.
(c) Refill/Reusable Packaging:
By giving refill packaging marketers can add value to the pricing of the product. Examples- Bourn vita available in refill
pack and detergents made available in reusable packaging.
(d) Credit Facilities:
Success or failure of crop depends upon climatic conditions. Favourable conditions give bumper yields and unfavourable
conditions result in very low yields, and, therefore, rural income is seasonal in nature. The farmer requires credit for
meeting cultivation expenses as well as running the family between marketing of produce and the harvest of next crop.
He avails credit facilities from the village merchant for buying household necessities. The rural retailer in turn requires
credit facilities from the distributors of consumer goods. Many companies extend credit to the village retailers to persuade
them to stock the company’s products and push it in the market.
The decision to extend credit is based on the volume of business and credit worthiness of the retailers. The credit period
varies between 15-30 days in the case of fast-moving consumer goods.
(e) Discounts:
Discounts are offered to motivate the retailers to sell more of the companies’ products. A discount of about 10 per cent is
given on the maximum retail price in the case of fast-moving consumer goods. Many Companies offer attractive additional
discounts to motivate the retailer to stock the products during off-season.
(f) Promotional Schemes:
Normally farmers purchase consumer durable items after the harvest of crops. Similarly, Diwali, Pongal, Onam, Dassera, Id
and Christmas are the festivals for buying household articles. Special promotion schemes such as new product introduction
scheme, festival offer by way of special discounts, exchange offer i.e., taking back used consumer durables are aggressively
promoted during harvesting and festival seasons in rural areas for increasing sales of the products.
(g) Value Engineering:
This is an internationally used technique, which helps organisations not only lower costs but enhance value to customer.
The concept has been implemented by a few firms in tapping the rural markets. Example- Nirma detergent powder, over a
period of ten years has become the largest selling brand in rural India. The success of Nirma is due to affordable price,
medium quality, availability at village shops and use of rural specific mass media.
Rural Marketing Strategy # 3. Place (Distribution):
Place refers to distribution of the product and includes distribution channel, area coverage, channel remuneration,
warehousing, inventories, banking and transportation.
Major obstacles to reach the rural customers are as follows:
(a) The distribution chain requires a large number of intermediaries and this increases the cost of distribution
(b) Non-availability of dealers
(c) Poor viability of retail outlets due to low business volume
(d) Inadequate banking facilities.
(e) Interior villages get flooded during monsoon and only about 70 per cent of the markets are connected by road and
(f) Transport and communication facilities are poor in villages.
Penetrating Interior Markets:
Many companies are making use of innovative as well as traditional channels to reach interior markets and a few
examples are given below:
Channel # (a) Satellite Distribution:
In this system, the company appoints stockists in important towns. These stockists are responsible for placing orders with
the company, receiving the stocks, sorting of stocks and supply the goods in small lots to the retailers and merchants
situated in rural areas and in and around the towns.
The stockist is given 15-30 days’ credit by the company. Over a period of time, along with increase in business, some of
the good retailers will be elevated as stockists. Therefore, many retailers hover around a particular stockist. The advantage
of this system is it enables the organisation to penetrate interior markets. Example- Companies like Nestle, Marico,
Eveready batteries have appointed stockists to service the village merchants and the merchants are met at
fortnightly/monthly intervals through van operations.
(b) The Hub and Spokes Method:
In the rural areas, Coca-cola has developed Hub and Spokes method of distribution. In this method, the manufacturer in the
area appoints main distributors (Hub) in important markets. These distributors, in turn, appoint sub-distributors (spokes) to
handle smaller markets within the territory. The sub-distributor supplies to the retailers and these retailers finally deliver it
to consumers.
(c) Syndicate Distribution:
Companies selling non-competitive goods can join together and distribute the products through a common distribution
channel. Example- P&G has made use of the distribution channel of Marico for selling their product.
(d) Project Shakti:
HLL has come out with a new distribution model with main objective to develop income-creating capabilities of
underprivileged rural women by providing a sustainable enterprise opportunity and to improve rural living standards
through health and hygiene awareness.
Typically, a woman from the Self Help Group is selected as a Shakti entrepreneur and receives stocks Lifebuoy, Wheel,
Pepsodent, Annapurna salt, Clinic Plus, Ponds, LUX, Nihar, 3 Roses tea, etc. at her doorstep from the HLL rural
distributor. She sells directly to consumers as well as to small merchants in the village.
Each Shakti entrepreneur services 6-10 villages in the population range of 1000-2000 people. With training and hand-
holding by the company for the first three months, she begins her journey selling the products door-to-door. Normally the
entrepreneur has a turnover of Rs.10,000 to Rs.25,000 per month and earns a profit of Rs.800 to Rs.2,000 a month.
(e) Melas:
Our country is a land of melas and we have religious (Kumbh Mela), cattle and commodity fairs which are held for a day or
even a week. Many companies have come out with creative ideas for participating in such melas. The company can put up
a stall and decorate the same with posters, cut-outs and banners. A trained salesperson answers queries about products and
services.
Lucky draws, surprise gifts and scratch cards can be organised to attract the people to the stall and sell the products.
Examples- (a) Kisan Mela in Ludhiana is an annual feature and companies like Maruti have been able to book orders for
cars by participating in this Mela, (b) Display and sale of consumer goods.
(f) The Haats:
By participating in haats and melas, the company can not only promote and sell the products but also understand the shared
values, beliefs and perceptions of rural customers that influence his buying behaviour. Weekly markets i.e., Haats are held
regularly in all rural areas. The sellers arrive in the morning in the haat and remain till late in the evening. Next day, they
move to another haat.
The reason being that in villages the wages are paid on weekly basis and haat is conducted on the day when the villagers
get their wages. For the marketer, the haat can be an ideal platform for advertising and selling of goods. Example- Tata salt,
Parachute oil are promoted through Haats. The wholesalers buy from urban markets and sells to retailers who sell it in
Haats.
(g) Mobile Traders:
Known as Pheriwaalas, they are able to service interior markets, which conventional distribution channels do not touch.
They are also able to reach rural households especially women who do not leave their homes. They move from house to
house on bicycle or on foot, selling a variety of goods like bangles, artificial jewellery, perfumes, toothpowder, face cream,
vessels, clothes etc. These traders have been calling on the same home for years and their association with rural customers
is a good example for relationship marketing.
Physical Distribution:
Considering the constraints in physical distribution of stocks in rural areas, many companies have come out with innovative
solutions.
(a) Physical Distribution of Stocks through Delivery Vans:
The delivery van takes the product to the retail shops in villages. The sales person travels in the van and delivers the stocks
to the retailer and collects the money, too.
Examples:
(1) Bharat Petroleum has introduced Rural Marketing vehicle (RMV) way back in 7 999 in Punjab. The vehicle moves
from village to village and fills LPC Cylinders on the spot to rural customers.
(b) Syndicate Van Distribution:
There are cases wherein companies do not have resources for running exclusive vans for delivery of goods to the rural
market. In this case, the firms/ distributors selling non-competitive consumer goods come together and operate delivery van
to service the rural retailers.
(c) Bullock Carts or Camels:
Bullock carts or camels are used for covering remote villages with no motorable road. Boats are also used to cover villages
that are not connected by road. Example- Villages in certain parts of Kerala, A.P., and West Bengal.
Rural Retailing:
A few corporates have entered the field of organised retailing in rural markets and examples are given below:
(1) Choupal Sagar promoted by ITC is the first organised retail outlet in the rural market. The rural mall serves as a
shopping and information centre. Spread over an area of six acres at Sehore in MP, the mall sells everything – sarees,
footwear, groceries, cosmetics, television, agricultural inputs, motorcycles, scooters and even tractors.
Banking, ATM, restaurant, Post Office, fuel pump, health care centre are the other facilities offered by Choupal Sagar. The
farmers can log on to Internet and find out modern methods of cultivation of crops and prices of agricultural commodities.
The company has 20 Chaupal Sagars and has plans to increase the same in coming years.
(2) Haryali Kisan Bazaar:
Each complex spread over two acres caters to farmers’ requirements such as agricultural inputs, sprayers, animal feed, farm
implements, irrigation equipments. Further an experienced agricultural graduate provides free advice to farmers on modern
cultivation practices through personal interaction or through mobile.
(3) Godrej Agrovet:
Godrej Agrovet has launched rural retail outlets known as Godrej Aadhaar in Maharashtra. The stores offer agricultural
inputs, consumer goods, banking, postal and pharmacy services.
Development of Retailers in Rural Markets:
One of the important challenges faced by the marketer is the development of a chain of retailers in rural markets. The
problems are non-availability of retailers and poor viability of retail outlets due to low business volumes. The marketer
could consider some of the existing retail outlets in rural areas.
1. Co-Operative Societies:
There are about four lakh cooperative societies operating in rural areas. Many of these societies distribute consumer goods
and low-value consumer durables.
2. Public Distribution System:
Essential commodities such as sugar, kerosene, edible oils are made available to the consumers at reasonable prices through
fair-price shops. Such shops are run by State Civil Supplies Department, co-operatives or by private parties. There are
about 3.80 lakh public distribution shops and marketers could explore the possibility of selling goods.
3. Agricultural Input Dealers:
There are about two lakh dealers selling fertilisers. Since the demand for fertilisers, seeds and pesticides is highly seasonal,
many of these dealers deal in consumer goods also. The marketers could approach these dealers and find out the possibility
of selling consumer products in rural areas.
4. Feeder Markets/Mandis:
The rural consumers visit nearby towns for selling agricultural produce and buying consumer durables. 90 per cent of the
durables purchased by rural people are from class 11 & 111 towns as shown in Table 24.7 and stockists could be appointed
in such feeder towns to service the villagers.
5. Post Offices and Bank Branches:
There are 1,40,000 post offices and 38,000 bank branches and marketers could consider using their services for promoting
insurance policies and other financial services.
Rural Marketing Strategy # 4. Promotion:
Considering the dynamics of rural market, uniqueness of rural customer and the distribution of infrastructure, the marketer
has to formulate an appropriate promotional strategy to reach the rural population. The promotion media and methods could
be broadly classified into Formal media and Informal/Rural Specific media.
(A) Formal Media:
Reach of formal media is low in rural households (Print- 14 per cent, TV- 36 per cent, Cinema- 16 per cent, and Radio- 18
per cent) and, therefore, the marketer has to consider the following-
(1) Local Language Newspapers and Magazines:
Local language newspapers and magazines are becoming popular among educated families in rural areas. Examples-
Newspapers- Eenadu (A.P.), Dina Thanthi (Tamil Nadu), Dainik Bhaskar (North), Anand Bazaar Patrica (West Bengal)
and Loksatta (Maharashtra) are very popular in rural areas.
(2) Television:
Television has made a great impact and large audience has been exposed to this medium. Regional TV channels like Alpha
Punjabi, Alpha Marathi, Surya, Eenadu and Sun have become very populat in rural areas. Example- Dabur promotes Vatika
brand of shampoo through local TV channels such as Alpha Marathi, Surya TV
(3) Radio:
Radio reaches large population in rural areas at a relatively low cost. The farmers have a habit of listening to Regional
news/Agricultural news in the morning and late evening. The advertisement has to be released during this time to get
maximum coverage in rural areas.
(4) Film:
Viewing habit is high in certain states like Tamil Nadu, Karnataka and Andhra Pradesh. Village theatres do roaring
business during festivals by having four shows per day. Examples- (a) Advertisement films on Lifebuoy soap and Colgate
toothpaste are regularly shown in rural cinema theatres, (b) A telegu film “Nee Premakai” has been shown in rural theatres
to ensure top of the mind salience of Bata in the minds of people
(5)Direct-Mail :
Direct-mail Advertising is a way of passing on information relating to goods or services for sale, directly to potential
customers through the medium of post. It is a medium employed by the advertiser to bring in a personal touch. In cities, lot
of junk mail is received by all of us and very often such mails are thrown into the dustbin whereas a villager gets very few
letters and he is receptive to such mails.
Example- Mails in Regional Languages for promoting Insurance, Seeds and Pesticides.
(6) Wall Painting:
Wall painting is an effective and economical medium for communication in rural areas, since it stays there for a long time
depending upon the weather conditions. The company need not have to pay any rent for the same in rural areas. The matter
should be in the form of pictures, slogans for catching the attention of people.
The local distributor could be involved in the selection of places for wall painting. Example- Companies marketing TV,
fans, branded coffee/tea, toothpaste, pesticides, fertilisers, etc. use wall painting as a promotional medium in rural areas.
(B) Informal/Rural Specific Media:
These media with effective reach and personalised communication will help in realising the promotional objectives.
(1) Farm-to-Farm/House-to-House:
Rural people prefer face-to-face communication and farm visits facilitate two-way communication. The salesperson meets
the villager and highlights product benefits and persuades him to use the product. Very often, the local dealer makes
follow-up visits for securing orders. Examples- (a) Many LIC agents and Bank managers have tried this approach with
success in rich rural areas, (b) Farm-to-Farm has been found to be effective for promoting seeds, pesticides, and fertilizers.
(2) Group Meeting of Rural Customers:
Group meeting of rural customers as well as prospects is an important part of interpersonal media. The company is able to
pass on the message regarding benefits of the products to a large number of consumers through such meetings.
Early morning and late evening hours are ideal for conducting meetings. Opinion leaders could be requested to share their
experiences with the participants. Question-and- answer session will make the programme very interactive.
Examples- (a) Banks, agricultural input and machinery companies conduct group meetings of key customers, (b) MRF
Tyres conduct Tractor Owners’ Meet in villages to discuss repairs and maintenance of tractors, (c) Croup meetings could
be organised in prosperous villages for promoting consumer durables, two wheelers and LPG cylinders.
(3) Opinion Leader:
Opinion leader is a person who is considered to be knowledgeable and is consulted by others and his advice is normally
followed. Examples- (a) Paint companies such as Asian Paints, Goodlass Nerolac conduct painters’ meet. They invite the
painters from 2-3 villages to a common place, detail their products and give small demonstrations. They distribute free
samples and give small gifts such as T-shirts, wallets and key chains, (b) Mahindra Tractors use bankers as opinion leaders.
(4) Rural entertainment programmes:
Rural entertainment programmes Fold dances, dramas, puppetry shows, magic shows, Tamasha and Keertana are some of
the well-appreciated forms of entertainment available to the rural people. Many companies are promoting their products
through such programmes.
Examples-
(a) Brook Bond/Lipton India Limited have started an All-India campaign to promote its Kadak Chhap tea through magic
shows and skits. A local magician delivers the message under the garb of a skit. One of the boys plays the role of Nathoo
who kills the evil guys after he had a strong cup of Kadak Chhap. At the end of the show everybody is given a sample pack,
(b) Marico have used folk theatre groups to promote Parachute in rural areas in West Bengal,
(c) Lavnis, the folk dance form of Maharastra is as old as 700 years. This is an important form of entertainment in rural
areas. This powerful medium has been chosen by Coca-Cola to penetrate rural markets
(5) Audio Visual Publicity Vans (AVP Vans):
Audio Visual Publicity Vans (AVP Vans) is one of the effective tools for rural communication. The van is a mobile
promotion station having facilities for screening films and mike publicity. Portable exhibition kit can be carried in the van
and an exhibition of the products could be put up as and when required. During day time, the van is used for mike publicity
and poster pasting.
Film shows are organised in the villages after sunset. Examples- (a) Colgate van screens a 20-minute film on oral hygiene
that explains how to use the products and offers samples to the villagers during such programmes, (b) Cavin Care organises
Audio visual unit programmes in rural markets by showing popular films interspersed with Chik commercials to develop
awareness among villagers, (c) Mahindra hires trucks and these trucks contain tents, chairs, loud speakers, mike sets, etc.
They also display their tractors. The trucks go from village to village showing films. The dealers help in collecting the
audience. Leaflets are distributed to villagers. The truck covers on an average 2-3 villages in a day.
(6) Product Demonstration:
Product demonstration is based on the extension principle “seeing is believing” and is one of the most effective methods to
show the superiority of the company’s products to the customers. Examples- (a) Sales promotion of detergents, vacuum
cleaners, pressure cookers, and Shampoos, through demonstrations, (b) Demonstrating the use of tractor/ implements for
different agricultural operations, (c) Application of Urea fertilizer in Paddy fields to show the luxurious growth of the crop.
(7)Jeep campaign :
Jeep Campaign is normally organised for promoting the use of fertilisers, pesticides and seeds. The programme starts in the
morning and about 4-6 trained agricultural field assistant’s travel in a Jeep. As soon as the Jeep reaches the village, all the
field assistants get down and move in different directions in the village.
They meet the farmers, talk to them about the products, hand over the leaflets and move to another village. Depending upon
the size of the village, crops grown, number of villagers to be contacted and the distance between villages, the group covers
about 4-6 villages per day. By organising Jeep campaign, the company is able to pass on the messages about
products/services to a large number of farmers during a short period.
(8) Life-Style Marketing:
Life-style reflects as to how a person lives and spends time and money. Life-style can be determined by the product a
person consumes, his activities (shopping, hobbies), interests (food, recreation, fashion) and opinion (about business,
society and the Government. Each rural market segment has certain special features i.e., they share common life-style traits.
They include village sports, religious events, prominent personalities and role models. Example- over 100 rural sports
festivals are held in Punjab every year. Bullock cart races, camel races, races of horses are some of the attractions of the
rural sports festivals in Punjab. Products like Parle and Glucon ‘D’ are promoted during sport festivals.