6th Semester Rural Marketing Final Book With Cover Page 2022

9883034569/8820696761
[6th Semester Marketing Honours & Pass]

Module I: Rural Marketing [40 Marks]
Contents:
S. No. Chapters Page Number
1. Syllabus & Content 01 - 04
2. Unit 1 : Rural Marketing and Environment [Marks 8] 05 - 25
3. Unit 2 : Rural Consumer [Marks 8] 26 - 35
4. Unit 3 : Rural Marketing Strategies [Marks 8] 36 - 52
5. Unit 4 : Promotion & Distribution in Rural Markets [Marks 8] 53 - 69
6. Unit 5 : Marketing of Agricultural Products [Marks 8] 70 - 83
7. Previous year's paper & Mock Test Paper [Set 1 to Set 3] 84 - 90
`
6th Semester Marketing Regular classes @ ₹

5000 for all subjectts by Specialised
faculty.
Classes at Girish Park:

72/B Tarak Pramanick Road,
2nd Floor, Opposite Metro Ice-cream distributor,
kolkata-700006
Rural Marketing Book Price = ₹ 100
i
Expected Question Pattern:
Group A (4 Questions of 4 Marks each) (Out of 6)
1. Rural Marketing and Environment
2. Rural Consumer
3. Rural Marketing Strategies
4. Promotion & Distribution in Rural Markets
6. Marketing of Agricultural Products
Group B (3 Questions of 8 Marks) (Out of 5)

(2 Questions with Alternative):
7. Rural Marketing and Environment
8. Rural Consumer
9. Rural Marketing Strategies
11. Marketing of Agricultural Products
Selected Question Numbers from Study Mat

Consumer Behaviour
Chapter’s Name In order of Importance
For Last Time Revision
Unit 1 : Rural Marketing and Environment [8 Marks]

2 Question of 8 marks 13, 11, 10
1 Question of 4 Marks 5, 1, 15
Unit 2 : Rural Consumer [4 + 4 = 8 Marks]
2 Question of 4 Marks 21, 24, 25
Unit 3 : Rural Marketing Strategies [8 Marks]

1 Question of 8 marks 28, 31, 35, 237
1 Question of 4 Marks 34, 26, 29, 38
Unit 4 : Promotion, Distribution in Rural Markets [8 Marks]
Unit 5 : Marketing of Agricultural Products [4 + 4 = 8 Marks]:

1 Question of 8 marks 54, 56
ii
Bhalotia Classes (9883034569): 6th Semester (Rural Marketing)
6th Semester: Honours & General:

Unit 1 : Rural Marketing and Environment [8 marks]
• Concept
• Importance [Very important]*********
• Rural vs. Urban Marketing [Very important]*********
• Geographic
• Economic
• Socio-Cultural [Very important]*********
• Infrastructural factors
• Their influence on Rural Marketing Operation
Unit 2 : Rural Consumer [8 marks]

• Characteristics [Very important]*********
• Attitudes
• Behaviour [Important]***
• Buying Patterns and Influences [Very important]*********
Unit 3 : Rural Marketing Strategies [8 marks]

• Segmenting Rural markets [Very important]*********
• Product Planning for Rural markets
• Market Size
• Packaging and Branding Decisions [Important]***
• Pricing Decisions
Unit 4 : Promotion and Distribution in Rural Markets [8 marks]

• Promotion in Rural Markets [Very important]*********
• Distribution Channels [Very important]********* and Logistics in Rural Markets
Unit 5 : Marketing of Agricultural Products [8 marks]

• Pricing
• Distribution of Agricultural Products
• Role of Government [Very important]*********
• Other organization in Marketing Agricultural products
• Co-operative Marketing [Very important]*********
• Problems in Agricultural Marketing [Very important]*********
Question Pattern:
4 Questions of 4 Marks each [Out of 6]
3 Questions of 8 Marks each [Out of 5]
– 1 – 6th Semester Admission going on for all subjects. Call for Details.
Unit 1 :
Rural Marketing and Environment [8 Marks]
1. What is Rural Marketing? [Important]***
2. Discuss the Concept of Rural Marketing? [Important]***
3. Discuss the Nature of Rural Markets
4. Discuss the Potential/Scope of Rural Markets
5. Discuss the Importance of Rural Marketing. [Very Important]**************
6. Discuss the features/Characteristics of Rural Market.
7. Write short notes on: Rural Marketing In Indian Economy
8. What is Urban Marketing?
9. What ae the Challenges/Problems in Rural Market
10. Distinguish between Rural vs. Urban Marketing. [Very Important]************
11. Distinguish between Urban Market & Rural Markets. [VVI]**
12. Discuss the Factors which Contributes to the Growth of Rural Markets.
13. Discuss the Socio-Cultural factors which influence Rural Marketing. [Very Important]*******
14. Discuss the Geographic factors that influence Rural Marketing Operations.
15. Discuss the Economic factors that influence Rural Marketing Operations. [Important]***
16. Discuss the Infrastructural factors that influence Rural Marketing Operations.
17. Discuss the Problems and Constraints of Rural Markets.
18. Discuss in brief the Opportunities available in rural market.
Unit 2 :
Rural Consumer [8 Marks]
19. Who is Rural Consumer?
20. Discuss the Characteristics of rural Marketing?
21. Discuss the Characteristics of rural consumer? [Very Important]***********
22. Attitudes play an important Role in Rural Marketing. Discuss.
23. What function does attitude serve to the Rural Consumer?
24. Discuss Rural consumer Behaviour in brief. [Very Important]***********
25. What are the factors that influence buying pattern of Rural Consumer? [Very Important]******
Unit 3 :
Rural Marketing Strategies [8 Marks]
26. What do you mean by Rural market Segmentation? [Important]***
27. What are the characteristics of Rural market Segmentation?
28. Discuss the Main Bases to Identify Rural Market Segments. [Very Important]********
29. Benefits of Rural Market Segmentation. [Important]***
30. Discuss the Different approaches to segmenting a rural market.
31. Discuss in brief the different Product Planning for Rural markets. [Very Important]********
32. Discuss in brief the different Rural markets Strategies in India.
33. Discuss in brief the Market Size of Indian Rural Market.
OR
Discuss the current Scenario of Indian Rural Market
34. Discuss in brief the 4 A's of RURAL MARKETING MIX. [Important]***
35. Discuss the Packaging Strategies in respect of Rural Marketing. [Very Important]********
36. Discuss the Branding Decisions in respect of Rural Marketing.
37. Discuss the Pricing Decisions/Strategies in respect of Rural Marketing. [Very Important]********
38. Discuss the Objectives of Rural Pricing. [Important]***
39. Discuss the Method of pricing for different category of consumer.
Unit 4 :
Promotion and Distribution in Rural
Markets [8 Marks]
40. Discuss the different Promotional strategies adapted in Rural Marketing. [Important]***
41. Discuss the different ways of Sales Promotion in Rural Markets [Important]***
42. Discuss the different types of Personal Selling in Rural Markets.
43. Discuss the different types of Sales Promotion techniques/strategies/Methods in Rural Markets.
[Very Important]********************
44. Write Short notes on: Distribution Channels in Rural Markets
45. Discuss the different Models of Rural Distribution.
46. Discuss the different types/Levels of Distribution Channels of Rural Markets [Important]***
47. What are the factors on which selected of Distribution Channels of Rural Markets depends.
48. What are the Factors Influencing Channels of Distribution in Rural Marketing. [Very Imp]****
49. Discuss the Role/Function/Importance of Logistics Management in Rural Markets.
50. Discuss the types of Logistics activities in Rural Markets.
51. Discuss the Key Activities Involved in Logistics Management of Rural Markets.
Unit 5 :
Marketing of Agricultural Products [8 M]
52. What do you mean by Agricultural Marketing? [Very Important]***
53. Discuss the different types of Agricultural Marketing in India.
54. Discuss the Problems/Defects of Agricultural Marketing in India. [Very Important]***********
55. Discuss the Remedial Measures for Improvement of Agricultural Marketing.
56. What are the Steps Taken by Government for Improvement of Agricultural Marketing in India:
OR
Discuss the Role of Government in Agricultural Marketing in India. [Very Important]**
57. What do you mean by Co-Operative Farming? [Very Important]***
58. Discuss the Features of Co-Operative Farming.
59. Discuss the advantages of Co-Operative Farming: [Very Important]***
60. Discuss the Defects/Problems/Criticisms of Co-Operative Farming in India. [Important]***
61. Discuss the objectives of Agriculture Price Policy in India.
62. Discuss the Features of Agricultural Price Policy.
63. Discuss the Effects of Agricultural Price Policy in India.
64. Give some Suggestions for Rationalisation of Agricultural Price Policy:
65. Discuss in brief the organization in Marketing Agricultural products.
66. Mention the name of some Government organization in Marketing & Distribution of Agricultural
products.
Unit 1 :
Rural Marketing and Environment [8 Marks]
Concept, Importance, Rural vs. Urban Marketing, Geographic, Economic, Socio-Cultural, Infrastructural
factors, Their influence on Rural Marketing Operation
1. What is Rural Marketing? [Important]***

Definition of Rural Marketing:
1. ‘Rural marketing’ is similar to simply ‘marketing.’ Rural marketing differs only in terms of
buyers. Here, target market consists of customers living in rural areas. Thus, rural marketing is
an application of marketing fundamentals (concepts, principles, processes, theories, etc.) to
rural markets.
2. According to G.N. Murthy – “Rural marketing is the study of all the activity, agency and policy
involved in the procurement of farm inputs by the farmers and the movement of rural
products from farmers to consumers”.
3. According to T.P Gopalaswamy – “Rural Marketing is a two-way process which encompasses

the discharge of business activities that direct the flow of goods from urban to rural area
(manufactured goods) and vice versa (agriculture products) as also with in the rural areas”.
4. According to National Commission on Agriculture are – “Rural Marketing is a process which

starts with a decision to produce a saleable farm commodity and it involves all the aspects of
market structure or system, both functional & institutional, based on technical and economic
considerations and includes pre and post-harvest operations, assembling, grading, storage,
transportation and distribution
5. In more specific words: Rural marketing is a process of planning, and executing the
conception, pricing, promotion, and distribution of ideas, goods, and services to create
exchange (for rural segments) that satisfy individual and organizational objectives.
6. Marketing efforts remain same, only important aspect is type of buyers. So, the term can be
defined as: When marketing activities are undertaken for rural segments, it is turned as rural
marketing and the management is called rural marketing management.
7. More specifically, it can be said: Rural Marketing means to produce products (goods and
services) for the rural customers and to make necessary arrangement to supply them.
8. At last, we can say: Rural marketing is the marketing for the customers residing in rural areas.
It involves designing marketing programme (4P’s) to arrive at desired exchange with the rural
customers that satisfies their needs and wants.
2. Discuss the Concept of Rural Marketing? [Important]***

Concept of Rural Marketing:
The concept of Rural Marketing in India Economy has always played an influential role in the lives
of people. In India, leaving out a few metropolitan cities, all the districts and industrial townships
are connected with rural markets. The rural market in India generates bigger revenues in the country
as the rural regions comprise of the maximum consumers in this country. The rural market in Indian
economy generates almost more than half of the country‘s income.
India is a land of diversity and about 70% of the population lives in villages. To a large extent,
villages contribute towards the economic development of the nation through the production of food
grains, vegetables, fruits etc. Export of these agricultural products generate capital and earnings
from foreign exchange.
There are approximately 600,000 big and small villages in India according to rural market
researchers. 25% of villages account for 65% of the total rural population. So we can calculate 65%
of 700 million populations by from only 150,000 villages – which becomes a huge potential of this
market.
If we go by statistics, around 70% of the Indian population lives in the rural areas. This accounts to
almost 12% of the world population.
To expand the market by making inroads into the countryside, more number of MNCs are getting
into India's rural markets. Among those are the big companies like Hindustan Lever, Coca-Cola,
Pepsi, LG Electronics, Britannia, Philips, Colgate Palmolive and the foreign-invested telecom
companies as well.
Rural marketing involves a bunch of processes that includes developing, pricing, promoting,
distributing rural specific product and service which satisfies the consumer demand and also
achieves organizational objectives as expected from the target market.
It is basically a three-way marketing stage where the transactions can be −

1. Urban to Rural − It is a process of selling the products and services by urban marketers in
rural areas. These products mostly include pesticides, FMCG products, consumer durables,
etc.
2. Rural to Urban − It is a process where a rural producer sells his products in urban market.
This may or may not be direct, but mostly there are middlemen, agencies, government co-
operatives etc. who take initiatives in the successful running of the selling process happen
successfully in an appropriate price.
3. Rural to Rural − It is a process which includes selling or exchange of agricultural products,
tools, cattle, carts and others to another village in its proximity.
3. Discuss the Nature of Rural Markets

Nature of Rural Markets
(a) The big question facing marketers entering the rural sector is whether it needs a
transactional or developmental approach. The role of rural marketing is more
developmental than transactional.
(b) It is more process of delivering better standard of living and quality of life to rural
environment taking into consideration the prevailing rural location.
(c) The model of rural marketing represents a combination of transactional and
developmental approaches.
(d) Rural marketing process is both which the outcome of general is and rural development
process.
(e) Initiation and management of social and economic change in the rural sector is core of the
rural marketing process.
(f) Innovation is the real meaning of marketing. It narrows down the rural and urban divide.
(g) The process of change can be evolutionary and not revolutionary.
(h) The exposure of rural ties to variety of marketing transactions puts them in the role of
beneficiaries than just buyers of modern input .
(i) Communication is the vital element of rural marketing. It should serve to reduce conflict,
encourage cooperation and strengthen competitive spirit between rural as well as within
rural areas. Communication is the point of conversion of retaliate from an ―induced
beneficiary to an―autonomous buyer
4. Discuss the Potential/Scope of Rural Markets

Potential/Scope of Rural Markets
1. Large Population: According to 2001 census rural population is 72% of total population and
it is scattered over a wide range of geographical area
2. Rising Rural Prosperity: Average income level has improved due to modern farming
practices, contract farming, industrialization, migration to urban areas and remittance of
money by family members settled abroad.
3. Growth in Consumption: There is a growth in purchasing power of or rural consumers. The
average per capita household expenditure is Rs. 382.
4. Changing Lifestyle: Lifestyle of rural consumer changed considerably.
5. Life Cycle Advantage: The products, which have attained the maturity stage in urban
market, are still in growth stage in rural market. E.g. popular soaps, skin cream, talcum
powder, etc.
6. Market Growth Rate Higher than Urban: As per the survey made by NCAER the growth
rate of FMCG market and durables market is higher in rural areas. The rural market share is
more than 50% for products like body talcum powder, toilet soaps cooking oil, hair oil etc.
7. Rural Marketing is not Expensive: To promote consumer durables inside a state costs Rs
one crore while in urban areas it will costs in millions
5. Discuss the Importance of Rural Marketing. [Very

Important]**************
Rural marketing implies applying marketing theory and directing marketing efforts to create and
satisfy needs and wants of rural market (customers). Rural marketing in simple words is planning
and implementation of marketing function for rural areas.
Importance of Rural marketing are as follows:
1. Reduced Burden on Urban Population:
Rural marketing can contribute to rural infrastructure and prosperity. People can also live
comfortably in villages due to availability of all goods and services in villages, even comparatively
at low price. People, due to growth of marketing activities, can earn their livelihood in rural places.
Population pressure on urban can be reduced.
2. Rapid Economic Growth:

Naturally, marketing acts as catalyst agent for economic growth. There exists more attractive
business opportunities in rural than urban. Rural market is more potential for consumer durables
and services. Rural population largely depends on agriculture and it can contribute nearly 50% to
total national income. Agriculture enjoys significant portion in export business, too. Rural
marketing improves agricultural sector and improved agricultural sector can boost whole economy
of the country.
3. Employment Generation:
At present, nearly 70% of total Indian population feeds on agricultural activities in rural areas.
Rural marketing can generate more attractive employment opportunities to rural and urban people.
Growth of rural marketing leads to increased business operations, professional activities, and
services that can generate a lot of employment opportunities.
4. Improved Living Standard:

Due to rural marketing system, rural buyers can easily access needed standard goods and services at
fair prices. In the same way, rural marketing improves rural infrastructure. Additionally, rural
marketing can also improve their income. These all aspects can directly improve living standard.
5. Development of Agro-based Industries:

Rural marketing leads to set up agro-based processing industries. Fruits, vegetables, cereals, pulses,
etc., are used as raw-materials. Such industries can improve farmers‘ profit margin and employment
opportunities.
6. Optimum Utilization of Rural Untapped Resources:

There are unlimited businesses opportunities exist in rural areas. Untapped and underutilized
resources can be utilized at optimum level and that can further accelerate overall economic growth.
7. Improved Rural Infrastructures:
Rural marketing and basic infrastructures go hand to hand. Growth of rural marketing leads to
improved transportation, insurance, banking, communication, entertainment, and other facilities.
Due to availability of basic infrastructural facilities, business units can easily reach the target rural
buyers.
8. Easy Marketability of Agricultural Produces:

Growth of rural marketing improves whole marketing system. Multiple options are available to
farmers and local producers to market their products. Big domestic corporate houses and
multinational companies prefer to buy agricultural products directly from villages by their own or
through agents and small firms. Rural producers can sell their produces easily at satisfactory prices.
Their improved income level can improve their purchasing power that can further fuel to industrial
demand.
9. Price Stability:
Marketing results into better transportation, warehouses, and communication facilities. Agricultural
products can be systematically marketed throughout the year. Huge gap between demand and
supply can be avoided and, as a result, prices of most of commodities remain more or less stable.
10. Quality of Life and Reduced Crime:

Marketing can refine entire living style and system. Better quality products at reasonable price,
improved income level, availability of facilities, etc., have direct positive impacts on quality of life.
Quality of life improves and level crime reduces.
11. Balanced Industrial Growth:

The gap between rural and urban development can be reduced gradually. Rural development
improves rural life and reduces pressure on urban life.
12. Increase in Per Capita Income:

Country spotted increase in per capita income even in rural sector which resulted in the rising
demand for the various product including consumer durables and even luxuries products.
Rural sector is so attracting the organizations that they are spending millions of rupees for
marketing alone in the rural areas.
13. Improved Banking & Credit Facility:

Organization in banking sectors has realized the opportunities of profitable business in rural areas.
Most of the rural areas are being captured by nationalized as well as small banks. Rural people get
the loans easily from the banks as banking organizations have lower the criteria‘s and most of
farmers put mortgages to get the loan. Getting financial assistance in difficult times or to start new
business ends with profit to both parties, banks & customers.
12. Others:
Apart from these points, there are a number of ways that rural marketing can significantly
contribute to economic and social development.
6. Discuss the features/Characteristics of Rural Market.

In order to focus the rural market and to develop effective strategies for tapping the market potential
of the Rural Market, it is necessary for the companies to know the features of Rural Market, which
are described as follows:
Feature # 1. Large, Diverse and Scattered Market:
Rural market in India is large and scattered into a number of regions. It consists of approximately
75 crores rural consumers who live in 6,38,365 villages spread over 32 lakh square kilometer area.
It is scattered and widespread over 6.30 lakh villages, unlike the urban market confined to a handful
of metros, cosmopolitan cities and towns. Covering, such a large and widely scattered geographical
market, characterized by less population per settlement, raises the inventory and transportation cost
and thus affects the viability of the route schedule operations of the distribution system in rural
areas.
Feature # 2. Major Income of Rural Consumers is from Agriculture:
Rural prosperity is tied with agriculture prosperity. Major part of income of rural people comes
from agriculture. In the event of crop failure, the income of rural masses is directly affected.
However, the recent past has seen a gradual reduction in the sole dependence on agriculture, as
other sectors have started playing significant role in the rural economy.
Feature # 3. Low Standard of Living:
Rural population is employed in small-scale agricultural and related occupations. This unreliability
factor in case of rural income makes the rural consumers extremely conscious in their purchase
behaviour as they are not confident about their future earnings. Majority of the rural population
lives below poverty line and have low literacy rate, low per capita income, social backwardness etc.
Added to this the traditions, religious pressures, cultural values and deep-rooted superstitions are
the hindering factors for an upward social mobility. The prosperity to save for future exigencies
makes rural people spend less to improve their standard of living even when they have good
income.
Feature # 4. Traditional Outlook:
Villages develop slowly and have a traditional outlook. Change is continuous process but most rural
people accept changes gradually. They mostly resist to change. This is gradually changing due to
literacy especially in the youth who have begun to change the outlook in the villages.
Feature # 5. Infrastructure Facilities:
Inadequate infrastructure is the single most important factor that distinguishes urban and rural
markets. The infrastructure facilities like cemented road, warehouses, communication system and
financial facilities are inadequate in rural areas. Promotion and physical distribution thus becomes
very difficult in the rural areas because of inadequate infrastructural facilities, which has increased
the scope of rural marketing.
Feature # 6. Market Growth:
The rural market is growing steadily over the years. Demand for traditional products, such as
bicycles, agricultural inputs, FMCG Products etc. has also grown over the years. The growth has
not been only quantitative but also qualitative.
This was the result of new employment opportunities and new sources of income made available
through rural development programmes which have resulted in green and white revolutions and a
revolution in rising expectations of rural masses. Demand for products such as bicycles, agricultural
inputs, farm products etc., has also grown over the years. This result into the increasing the potential
of rural areas.
Feature # 7. Diverse Socio-Economic Background:

Due to dispersion of geographical areas and uneven land fertility, rural people have separate
socioeconomic background, which ultimately affects the rural market. Villagers belong to different
religions, culture, and social groups. Socio-cultural background influence consumer willingness to
accept innovations and new products in different areas.
The variations in behaviour due to consumer environment geographical, occupation, demographical
and behavioural, influences the lifestyle and create altogether different sets of needs in different
areas. This creates the need to segment the rural market to cater it effectively and profitability.
Feature # 8. Literacy in Rural Area:

The literacy rate is low in rural areas as compared to urban areas and leads to the problem of
communication for promotion purposes. With low literacy rates, print medium become inefficient
and to an extent irrelevant in rural areas since its reach is poor.
The dependence is more on electronic media – cinema, radio and television but the rural literacy
level has improved in the rural past. Rural people have started to go to urban areas for higher
education. Even government has introduced various schemes for rural education. Awareness has
increased and the farmers are well informed about the world around them. They are also educating
themselves on the new technology around them and aspiring for a better lifestyle.
Feature # 9. Purchasing Capacity:
The purchasing power of the people in rural areas in dependent on several direct and indirect factors
related to the rural economy. Marketing agricultural surplus and rural – urban terms of trade are the
main sources of purchasing power for rural consumers. To a large extent, Indian agriculture is
dependent on rainfall.
Therefore, the rural demand for consumer goods is indirectly influenced by the rainfall. This result
into inadequate purchasing power of the rural consumers. But now a day‘s purchasing power of the
rural people is increasing because government spends huge amounts of money on irrigation, flood
control, infrastructure development, antipoverty schemes, subsidies etc.
Therefore, marketers are interested in developing the market in rural area. Media has reached to
rural area, so it becomes easy for marketer to sell product in rural area. Marketers have realized the
potential of rural markets and thus are expanding their operations in Rural India.
7. Write short notes on: Rural Marketing In Indian Economy

Rural Marketing - In Indian Economy
Rural marketing in Indian economy can be classified mostly under the following two categories −
(a) the markets for consumer durables consists of both durable and non-durable goods
(b) the markets for agricultural products which include fertilizers, pesticides, seeds, and so on.
Rural marketing in India is sometimes mistaken by people who think rural marketing is all only
about agricultural marketing. Rural marketing determines the carrier of business activities from
urban sectors to the rural regions as well as the marketing of various products manufactured by the
non-agricultural workers from rural to urban areas.
The following are the characteristics of rural markets −

(a) Here agriculture is first and also the main source of income.
(b) This income is seasonal in nature and fluctuates as it depends on crop production.
(c) Though it is large, the rural market is geographically scattered.
(d) It shows religious, cultural and economic disparities.
(e) The market is not much developed, because the people here exercise adequate purchasing
power.
(f) These markets have their orientation in agriculture, with poor standard of living, low per
capital income and backwardness.
(g) It shows sharper and different regional preferences with distinct predictions, habit patterns
and behavioral aspects.
(h) Rural marketing process is an outcome of the general rural development process initiation
and management of social and economic change in the rural sector is the core of the rural
marketing process.
8. What is Urban Marketing?

Urban marketing would be any marketing strategy that best reaches an urban population, such as
those people who reside in large cities or towns. The urban population is typically more dense and
concentrated, with a lot of products and brands to choose from as well as increased exposure
to marketing messages.
Urban buyers are accustomed to high-pressure sales and advertising strategies because of the
advanced degree of competition inside these markets.
Urban marketing is an indispensable element within the strategies for economic development of the
cities, contributing to the overall vision of the strategy. This helps cities to accomplish many
objectives (attracting new national or international companies, consolidate industrial infrastructure,
developing tourism, diversifying and improving transport and health services), while they have to
maintain a certain level or to cut off public expenses, and to face the harsh competition to attract
new investors.
9. What ae the Challenges/Problems in Rural Market

Challenges in Rural Market
There are various challenges that hinder the progress of rural market. Marketers face a number of
problems like physical distribution, logistics, no proper and effective sales force and no effective
marketing communication when they enter into the business of rural markets.
The following are the major problems faced in the rural markets −
1. Standard of Living
A large part of the population in rural areas lies below poverty line. Thus the rural market is also
underdeveloped and the marketing strategies have to be different from the strategies used in urban
marketing.
2. Low literacy levels

The low literacy levels in rural areas leads to problem in communication with the market and the
print media has less utility as compared to the other media of communication.
3. Low Per Capita Income

In rural market, agriculture is the main source of income and hence expense capacity depends upon
the agricultural produce. Demand may or may not be stable.
4. Transportation and Warehousing

Transportation and supply chain management are the biggest challenges in rural markets. As far as
by road transportation is concerned, about 50% of Indian villages are connected by roads to the
nearest big cities. The rest of the rural markets do not have proper road linkage to other cities which
causes problems in physical distribution.
Many villages are located in hilly remote areas which is difficult to connect with them through
roads. Warehousing is another major problem in rural areas, as there you will hardly get any
organized agency to look after the storage issue. The services given by central warehousing
corporation and state warehousing corporations are limited only to urban and suburban areas.
5. Ineffective Distribution Channels

The distribution chain is not organized and also requires a large number of intermediates, which in
return increases the cost. Due to lack of appropriate infrastructure, manufacturers are giving back
steps to open outlets in these areas. That is why they need to dependent on dealers, who are rarely
available for rural area which increases the challenges for marketers.
6. Many Languages and Diversity in Culture

Factors like different behaviour and language of every respective area increases difficulties to
handle the customers. The sales force is required to match the various requirements of the specific
areas according to their culture.
7. Lack of Communication System
Quick communications facilities like computer, internet and telecommunication systems etc. are the
need of rural market which is a biggest problem due to lack of availability. The literacy level in the
rural areas is quite low and consumer‘s behaviour is kind of traditional, which is a cause of problem
for effective communication.
8. Dummy Brands
Cost is an important factor for rural consumers which determine purchasing decision in rural areas.
A lot of fake brands or products that look similar to the original one are available, providing low
cost options to the rural consumers. Most of the time, the rural consumers may not be aware of the
difference due to illiteracy.
9. Seasonal Demand
Demand may be seasonal in rural market due to dependency on seasonal production of agricultural
products and the income due to those products. Harvest season might see an increase in disposable
income and hence more purchasing power.
10. Distinguish between Rural vs. Urban Marketing. [Very

Important]************
A. Environmental Differences
The urban environment is characterized by:
• Large contiguous settlement units of town or urban agglomerations mostly concentrated.
• High infrastructural level (such as road, electricity).
• High density of population per square kilometer of space.
• Good physical connectivity, high mobility.
The rural environment presents a different picture.

• Small contiguous settlement units of villages widely dispersed.
• Low infrastructural level (such as road, electricity).
• Low density of population per square kilometer of space.
• Poor physical connectivity with other villages and towns, low mobility.
B. Social Relations Peculiarity

In the urban society, social dynamic represent a more liberated system.
• Large number of interactions with persons, less frequent between the same people.
• Individuals are less known and identified between members in the social and settlement system.
• Social norms are less visible.
• Status is achieved.
• Caste influence indirect and of less strength, generally subjected to economic influence.
On the contrary, the outlook of rural society is a mixture of both of traditional and modernisms. The
traditional picture is:
• Less number interpersonal interactions, more frequent interactions between the same people.
• Individual better known, and identified.
• Social norms influencing individuals are more visible.
• Status is ascribed, determined by birth in a family.
• Caste influence direct and strong.
C. Low Exposure to Marketing Stimuli:

Urban markets are in a vantage position. They have better exposure to marketing stimuli.
• High product exposure: high exposure to branded products.
• High ad exposure, high brand awareness.
• High exposure to marketing researchers, multiple sources of information and learning.
• More convenient buying, high rate of retail outlets per 1000 population and high market reach,
availability of wide range of product.
A different and apathetic situation we find in rural markets

• Low product exposure, low exposure to branded products.
• Low as exposure, low comprehension of ads, low brand awareness.
• Low exposure to marketing researchers, limited sources of information and learning.
• Less convenient buying, low rate of retail out lets per 1000 population and low market reach,
availability of limited range of branded products along with imitation products.
D. Dependence on Nature:
In the urban areas, dependence on natural resources is less
• Access is a function of purchasing power
• Most resources to be purchased
• Low dependence on employment and incomes on natural factors
On the other hand, the rural life is dependent on

• Abundance of natural resources and high dependence on them for a large number of house-hold
needs.
• Differential access to resources based on caste, political and money power etc.
• High dependence on livelihoods/employment and income on natural factors.
E. Employment and Incomes Variations:

The urban occupations and incomes are more stable and permanent:
• Occupations mostly include employment in government, business, industry and service
organizations; contract or daily labour in organized and unorganized sector.
• White collar employees and workers a majority.
• Frequency of income receipts predictable and at regular intervals.
On the other hand, rural people work in a less certain environment

• Agrarian base, mostly small land holdings per house hold (two hectares or less) and more than to
70 per cent people in small scale agricultural occupations.
• Acute seasonality in income receipts; high chance element in income receipts (because of the
dependence on agriculture and natural factors)
11. Distinguish between Urban Market & Rural Markets.

[VVI]**
There are many differences between Urban and Rural Markets – some of them are explained as
follows:
S. No: Urban Markets Rural Markets
1. Concentrated Markets Scattered Markets
2. Dense Markets Thin Markets
3. Developed Markets Developing or Underdeveloped Markets
4. More Sellers Small Number of Sellers
5. Well-defined Distinct Segments Overlapping and Small Segments
6. Highly Responsive/Higher Exposure to Low Response/Low Exposure to Marketing

Marketing
7. Higher No. of Products/Brands Limited Products/Brands
8. High Degree of Competition Lower Degree of Competition
9. Strong Infrastructure (Displays, Logistics) Weak Infrastructure
10. Advertisement and Sales Promotion Required Advertisement and Sales Promotion Not
Required/Not Feasible
11. Consumerism Low Consumerism
12. Unit Family Structure Low Consumerism
13. Mall Culture/Buying Convenience Small Shops/Limited Display
14. Higher influence of Social Media Lower influence of Social Media
15. More aware of consumer rights Less aware of consumer rights
16. Buy high package/stock units at once Buy low package/stock unit at once
17. lower brand loyalty higher brand loyalty
18. High penetration of plastic money – credit Low penetration of plastic money – credit/debit
cards/debit cards cards
12. Discuss the Factors which Contributes to the Growth of

Rural Markets.
Eight factors which contributes to the growth of rural markets are as follows:
1. Government initiatives:
The initiatives taken by the Government of India to promote rural markets are as follows:
a. Self sufficiency (Operation Flood, White Revolution, Blue Revolution)
b. Integrated Rural Development Program (IRDP), TRYSEM (Training Rural Youth for Self-
Employment), REP (Rural Electrification Program).
c. PSU and cooperative banks lend farmers (for example, ‗Kisaan‘ credit card by Canara and
Andhra Banks).
d. Contract farming: Companies give high-yielding variety seeds and tied up with farmers to
cultivate crops and sell them back to the company.
2. Rising literacy levels:

As per the 2001 census, about 50 per cent of the rural population is literate. This has contributed to
the increase in rural demand. This has changed the buying behaviour of rural consumers and
lifestyles. An increase in literacy levels has resulted in an increase in demand for consumer goods.
3. Infrastructural facilities:
There is growth of infrastructure facilities and public service projects in rural India, which includes
construction of roads and transportation, communication network, rural electrification and public
distribution system. Because of these factors there is scope for rural marketing.
4. New employment opportunities:

Various socio-economic policies of the government have resulted in the development of rural India,
which has resulted in new employment opportunities; for example, IRDP (Integrated Rural
Development Program).
5. Rising mass media:

Improved penetration of mass media has resulted in the creation of awareness among rural
consumers (Press, TV, hoardings, radio, etc.).
6. Agricultural research:
Research in the field of agriculture has resulted in increased scope for rural marketing. In India,
agricultural research is being conducted by Indian Council of Agricultural Research (ICAR) and
other institutions. Use of new scientific methods has increased the crop yields by manifold. It has
led to Green Revolution.
7. Marketing efforts:
A large number of MNCs have entered rural markets. MNCs such as Hindustan Lever, LG
Electronics, Godrej, Philips and Bajaj have made innovative marketing efforts in the area of
availability, affordability, acceptability and awareness.
8. Urban influence:
The people in rural areas are influenced by the urban people in their buying behaviour and lifestyle.
This may be because of the exposure to mass media and the villagers working in towns and cities
influence the lifestyles and habits of youth in villages.
13. Discuss the Socio-Cultural factors which influence Rural

Marketing. [Very Important]*****************
Socio-cultural Factors
Socio-cultural environment is an important part of environment — culture, traditions, beliefs,
values and lifestyle of the people within a limitation of society constitute the socio-cultural
environment.
The following elements play a big role in the decision making stage to a large extent as to what the
people will buy and how they will consume.
1. Culture
Culture is the combination of factors like religion, language, education and upbringing. Accurate
information on the consumption habits, lifestyle and buying behaviour of the rural people can be
obtained through a survey of the socio-cultural environment.
Cultural shifts carry the marketing opportunity as well as threats and also carry the cultural
dynamics, the needs and feelings of rural people which need to be understood.
2. Social Class
Social class is one of the main concepts in socio-cultural environment. A society consists of
different social classes and all social classes are determined by income, occupation, literacy level
etc. of its members. Each class has its own class values according to lifestyle, behaviour etc. These
values have a strong consumption pattern and paying behaviour of the member of the class.
3. Social and Cultural Environment

The society and polity across the country varies between different religions, castes and linguistic
groups. Common socio-cultural behaviour has been mapped as distinct socio-cultural regions,
which may be spread across political boundaries. The influence of social practices shows itself in
consumer preference for product features, product size, shape and colour.
The source of information also gets influenced by social practices. Along with cultural dynamics,
the needs feelings of rural people also need to be understood. Marketers would first understand this
and then design and launch products accordingly. For example, Cadbury‘s has launched Chocobix,
a chocolate- flavoured biscuit, on the basis of research theory and understanding that rural mothers
will always opt for biscuits instead chocolates for their children.
4. Caste System
Indian Society had a scheme of social gradation, with the Brahmins at the head of the hierarchy,
followed by the Kshatriyas, the Vaishya‘s and the Shudras at the bottom. The castes in themselves
have sub-castes which are claiming social supremacy over the other.
Marketers have to be sensitive towards the caste systems and accordingly products in rural areas.
While developing advertisements, brand communication and promotion plans, marketers should
have to be sensitive to ensure relevance of characters and message which doesn‘t affect any caste
system.
5. Population
India is the largest democracy in the world occupying 2.4 percent of the world‘s geographical
area and supports 16 percent of whole world population. More than 72 per cent of the total
population of our country resides in rural areas.
Though the proportion of rural population to total population of country is showing a slight
decrease over the years, but in absolute numbers rural population is increasing at a higher rate than
the urban population. The increasing rate of population in rural areas provides scope for marketing
of consumer durables goods and services.
6. Occupation
Occupational pattern of rural people also has an impact on the nature of income generation, which
will in turn affect the expenditure pattern. Purchase behaviour of the rural consumers depends upon
the nature of occupation and the consistency in the generation of income.
A major section of the rural population relies on agriculture and allied activities for occupation. So,
the income in the hands of rural people is very much conditioned by the status of agriculture and
other allied activities.
7. Literacy Level
The literacy level of rural people has a considerable impact on the marketing strategies to be
adopted by the marketing team especially in communication with the rural people. Higher the level
of literacy, the easier it becomes for companies to penetrate into rural areas.
8. Land Distribution & Use

One of the main obstacles for marketers to exploit the rural market potential has been the largeness
of rural markets in terms of the areas it covered. It is much easier to divide it according to the needs
of the urban population because of concentration, but it is very difficult in the case of rural market
because of their widespread nature.
14. Discuss the Geographic factors that influence Rural

Marketing Operations.
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 behaviour of
consumers in the respective clusters of villages. 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.
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?
15. Discuss the Economic factors that influence Rural

Marketing Operations. [Important]**
ECONOMIC FACTORS:-
1) Competition:-
A good and healthy competition brings in good and overall improvement in economic
activities. It also brings good quality, good quantity and price. Considering rural marketing,
there exist less or minimal competition. The presence of local brands in the rural markets
has great impact on competition.
2) Consumers:-
Rural lifestyles and behavioral trends are increasingly coming to resemble urban patterns, in
both form and variety. Like urban consumers, the rural middle class is buying more fairness
creams, whereas many of the rural poor are keen to invest in a mobile phone connection.
The consumer today is quite knowledgeable. The rural folks are even choosy than their
urban counter parts because they are ready to spend only when they are assured of getting
value for their money. Therefore their progress and well being should be the aim of any
economic activity.
3) Price:-
Pricing is a delicate issue where it should be market friendly, not too high or too little. The
marketer has to keep in mind to get descent returns on investment and effects of producers
and marketers. But pricing becomes more important when the target segment is rural
population. Even the marketers have to introduce smaller packs for their products to these
rural population owing to their low purchasing power
16. Discuss the Infrastructural factors that influence Rural

Marketing Operations.
Infrastructure is the backbone of any country. It plays a very important role in supporting nation‘s
economic growth and the same is the case with India. If we talk about rural infrastructure in the
country, then it is crucial for agriculture, agro-industries and poverty alleviation in the rural areas.
Typically, rural infrastructure in the country encompasses rural roads, major dams and canal works
for irrigation and drainage, rural housing, rural water supply, rural electrification and rural
telecommunication connectivity.
Importance of rural infrastructure in India
Basically, rural infrastructure has the potential to provide basic amenities to people that can
improve their quality of life. To give an example, development of rural infrastructure can lead to
improved access to market centres for the rural producers, better availability of inputs and raw
materials at reduced prices and improved mobility.
Here is a look at how different sections of rural infrastructure play their role in improving the rural
economy as well as life of the people...
1. Rural road infrastructure: It provides mobility and connectivity to people living in rural areas.
It also provides the much needed boost to agricultural activities by making available water,
seeds and other raw materials to the farmers. By improving connectivity, rural roads also
enhance employment opportunities for the rural people in non-agriculture sector, thereby,
increasing livelihood opportunities. Rural roads also ensure that the rural areas are served
with better public services and all the benefits offered by the state reach the far-flung areas
easily. They can even provide access to education and health services.
2. Rural electrification infrastructure: It basically caters well to the requirements of agriculture

and other activities including irrigation pumpsets, small and medium industries, khadi and
village industries, cold storage chains, healthcare and education
3. Rural water supply system: It can lead to sustainability of systems and sources and tackle the
problem of water quality, thereby, increasing good health of people.
4. Rural housing infrastructure: It has the potential to improve living standard of the people.
Overall and as per various studies, development of rural power, irrigation, water, sanitation and
road infrastructure can increase productivity, savings, income and tourism and result in better jobs
and health of rural people.
17. Discuss the Problems and Constraints of Rural Markets.

Problems and Constraints of Rural Markets
1. Vastness and Uneven Growth: India has about 5 lakhs villages, which are scattered over a
wide range of geographical area, and also they are not uniform in size.
2. Transport Problem: Transportation infrastructure is very poor in rural India. Though India has
the fourth largest railway system in the world, many villages remain outside the railway
network. Many villages have only kaccha roads while many of rural interiors are totally
unconnected by the roads. Because of this the physical distribution is difficult in rural areas.
3. Communication Problems: Communication infrastructure consisting of posts, telegraphs and

telephones are inadequate.
4. Warehousing Problems: Central Warehousing Corporation and State Warehousing

Corporation do not extend their services to the rural parts. The warehouses at mandi level are
managed by co-operative societies who provide services to members only.
5. Market Organization & Staff: Rural marketing needs large marketing organization and staff to
have an effective control, which requires huge investment.
6. Non-Availability of Dealers: It is not possible to have direct outlets in each rural market; firms
need to have service of dealers, which is not easily available.
7. Hierarchy of Market: Rural consumers have identified market places for different items of
their requirements. Thus depending upon the purchase habit of rural people, the distribution
network of different commodities has to be different
8. Heterogeneity in rural consumers – The vast rural population with heterogeneous markets
spread across in different states poses great difficulty for the marketers. Not only this, the
population density is greatly varied in rural regions.
9. Skilled local talent is hard to find in rural regions - Companies also find that their trained,
seasoned staff members are very reluctant to relocate to rural areas. This proves to be one of
the major challenges
10. Buying Decisions – Rural consumers are cautious in buying products and their decisions are
slow and delayed. They like to give a trial and only after being personally satisfied, do they buy
the product.
11. Cultural Factors – Culture is a system of shared values, beliefs and perceptions that influence
the behavior of consumers. There are different groups based on religion, caste, occupation,
income, age, education and politics and each group exerts influence on the behavior of people
in villages.
12. Low literacy Level – One can easily ascertain the fact that most of the people living in rural
parts of India do not have proper access to education, so the literacy level in these regions is
very low. There are not enough opportunities for education in rural areas. The literacy level is
as low (36%) when compared to all- India average of 52%. Again, this is also one of the
important areas to be pondered upon by the marketers. To create awareness among the
people of rural regions regarding the development of new products by the marketers is quite
a big problem. Not only this, the villagers are unaware of the MNC‘s and the brands they are
selling.
13. Seasonal Demand of products – Demand for goods in rural markets depends upon
agricultural situation, as agriculture is the main source of income in most of the rural areas.
Agriculture to a large extent depends upon monsoon and, therefore, the demand or buying
capacity is not stable or regular. This deters the companies from having one single strategy for
rural markets year round
14. Inadequate Media Coverage – The reach of formal media is low in rural households. Media
have lots of problem in rural areas. Television is a good source to communicate the message
to rural people. But due to non availability of power as well as television sets, majority of rural
population cannot get the benefits of various media. So there is a possibility that the rural
customer remains ignorant of the new product being launched in the market. Moreover, the
places where the electricity is yet to reach, adds to the discomfort of the marketers. Therefore
we can say that the reach of media is very limited in rural areas.
15. Language Barrier – As the rural market is heterogeneous, so is the culture of these customers.
The languages spoken by them are different. Hence it becomes very difficult for the marketers
to advertise their products in one universally spoken language. If these marketers go for
advertising their products in the regional language, it adds to the cost of product, which may
prove detrimental for rural marketing.
16. Inadequate purchasing power and lack of bank finance – As the income of rural customer is
very less as compare to their counterparts in the urban areas, there arise great difficulty in
purchasing expensive products like Television, Bikes, Refrigerator, DVD Players, etc for the
rural customers. Adding to their grievances, the banks do not support them by providing them
loans for purchasing these products. Moreover, the dealers located in the rural areas are also
reluctant to give them credit facility owing to their poor financial conditions.
17. Difficulty in distribution – Even though, there is a large chunk of consumers living in these
remote areas waiting to get served but still most of the times, the efforts to serve them in a
proper manner proves futile. An effective distribution system requires village-level
shopkeeper, Mandal/ Taluka- level wholesaler or preferred dealer, distributor or stockiest at
district level and company-owned depot or consignment distribution at state level. The
presence of too many tiers in the distribution system increases the cost of distribution.
18. Discuss in brief the Opportunities available in rural market.

Here are some of the points which the marketers could utilize for marketing their products in rural
areas.
1) Huge untapped Potential – As more than 70% of the total India‘s population dwells in rural
areas, the huge population itself speaks of its potential. The rural market offers a great chance
for different branded goods as well as services for large number of customers. Penetration
levels for many products are low in rural areas. The market has been growing at 3-4% per
annum adding more than one million new consumers every year.
2) Impact of globalization - Globalization had a great impact on target groups like farmers, youth
and women. Farmers, today 'keep in touch' with the latest information and maximize both
ends. On youth its impact is on knowledge and information and while on women it still
depends on the socio-economic aspect. The marketers who understand the rural consumer
and fine tune their strategy are sure to reap benefits.
3) Effectiveness of communication - An important tool to reach out to the rural audience is

through effective communication. The rural audience has matured enough to understand the
communication developed for the urban markets, especially with reference to FMCG
products. Television has been a major effective communication system for rural mass and, as
a result, companies should identify themselves with their advertisements.
4) Rising rural prosperity and purchasing power - The agricultural development programs of the
government have helped to increase income in the agricultural sector. These in turn have
created greater purchasing power in rural markets. Moreover, today rural incomes generate
not only from agricultural section but also from other sections. There is a sizeable salaried
class in rural areas. Rural demand in FMCG products, consumer durables, automobile and
retail is growing at a faster pace than anticipated due to rise in its consumption patterns.
5) Change in rural consumer behaviour – With the economic development of rural areas,
disposable income of rural people has gone up. Moreover, with the presence of internet and
direct-to-home television connectivity in rural areas, these people have started gaining
knowledge about the different brands that are available in urban markets. They are slowly
realizing the importance of established brands and have started purchasing these brands.
Rural people are now purchasing branded soaps, toothpowder, paste, tobacco products,
radio, TV, bicycles, motorcycles, cooking utensils, wrist watch, razor blades, detergents and so
on. The rural consumers have become choosy and they have started weighing better options
in purchasing products, particularly branded ones. It is a boon to the companies that rural
people amidst deficiency spend so lavishly on weddings, ceremonies, rituals and festivals.
Mainly through more exposure to urban products and services due to media, literacy,
migration, etc., demand for urban type products, aspiration for better quality of life as
product become affordable.
6) Improvement in infrastructure and rural connectivity - The governments too have realized
the importance of huge untapped potential and they are now on the path of making huge
investments in rural infrastructure. In India, the eleventh five year plan government has
specific focus on the inclusive growth of the country.
7) I.T. penetration in rural India - Today's rural children and youth grow up in an environment
where they have 'information access' to education opportunities, exam results, career
counseling, job opportunities, government schemes and services, health and legal services,
worldwide news and information, land records, mandi prices, weather forecasts, bank loans,
livelihood options. If television had change the language of brand communication in rural
India, affordable internet connectivity through various types of communication hubs had a
great impact on the minds of the rural youth. As the electronic ethos and IT culture moves
into rural India, the possibilities of change are becoming visible. Alternate use of rural labour
especially the rural youths in service sector and also in production related activities will help
stop rural migration.
8) Favorable government policies – As a part of the process of planned economic development,

the government has been making concerted efforts towards rural development. The massive
investment in the rural India has generated new employment, new income and new
purchasing power. In the recent years, as a part of new farming policies, high support prices
are offered for agricultural products. Various measures like tax exemption in rural areas,
subsidy, concessions, incentives, assistances, literacy drive in rural areas has bought in rapid
development of rural markets.
9) Credit facilities through banks - With co-operative banks taking the lead in the rural areas,
every village has access to short, medium, long-term loans from these banks. The credit
facilities 90 extended by public sector banks through rural financing schemes like Kisaan
Credit Cards help the farmers to buy seeds, fertilizers and consumer durable goods on
installments. The introduction of the micro finance proved to be of great help to the people
living in hinterlands.
10) Intense Competition in urban markets - Intensified competition in urban markets is leading to
increase in costs and thereby reducing market share. The rural markets are therefore
becoming increasingly attractive in comparison to urban markets. The automobile and FMCG
market brings this out clearly. Hero Honda motorcycles, Parle, Britannia, Brooke Bond, Maruti
Cars, HLL products or Wipro products find ready acceptance in rural markets as compared to
urban markets where there is a proliferation of brands.
11) Remittances from family members working in urban areas – Atleast one of the family
members from almost every rural family is works in city. They remit their salaries back home
to their family members residing in rural areas. These remittances are a sizeable contribution
to growing rural income & purchasing power of rural people.
Unit 2 :
Rural Consumer [8 Marks]
Characteristics, Attitudes, Behaviour, Buying Patterns and Influences
19. Who is Rural Consumer?

The rural consumer is an important and integral part of rural market. A consumer is the ultimate
user of a product or service. The overall consumer market consists of all buyers of goods and
services for personal use.
Rural consumers go to their nearest cities when they have to buy products like tractors, televisions,
motorcycles, etc. For most villages, the nearest cities can be as far as 50 kms away. Most of these
cities are district towns. Rural consumers go to the ‗local market‘ which is normally around 5-10
km. from their villages to buy the daily household requirements like sugar, tea, vegetable oil, etc.
Some family member, more likely the eldest male member, may be going to this local market even
daily and buying requirements of the family. Rural families buy their products as they get exhausted
and do not buy all their requirements once a month or fortnight as urban consumers do. There is no
scheduled, periodic purchasing of household requirements in rural markets.
A rural consumer is one who buys any goods and services, by paying its price, either for his own
consumption or for his livelihood. Therefore, everybody is a consumer in one way or other.
Since, agriculture is the main occupation of rural areas, the village population mix, from the
occupational point of view, consisted mainly of farmers, landless, agricultural labourers, artisans
and few salaried people like teachers, constables, etc.
The farmers again can be categorized as big farmers constituting a small fraction who are mostly
like urban consumers and generally purchase the most of consumer goods in nearby towns. As such,
it is the small and marginal farmers, artisans, and agricultural labourers etc., which constitute
mainly a potential target market from the retailers‘ point of view.
Major occupation of the households of consumer can be taken as basis for classifying rural
consumers. There is an intricate combination of class and occupation to represent different
consumers with different socio-economic group
Occupation pattern dictates the pattern of income generation. The occupation and income of the
consumers will affect their needs in various ways. Consumption patterns differ according to income
level. People engaged in physical labour like 155 farmers and agricultural labour need more food
and different clothes from other categories.
20. Discuss the Characteristics of rural Marketing?

The features of Rural Marketing are described as follows:
1. More Prospective:
With the initiation of various rural development programmes, there has been an upsurge of
employment opportunities for the rural poor. One of the biggest cause behind the steady growth of
rural market is that it is not exploited and also yet to be explored.
2. Size:
The rural market in India is vast and scattered, and offers a plethora of opportunities in comparison
to the urban sector. It covers the maximum population and regions, and thereby, the maximum
number of consumers. Rural market is account for about 74% of total Indian population.
3. Nature:
The social status of the rural regions is precarious (uncertain) as the income level and literacy is
extremely low along with the range of traditional values and superstitious beliefs that have always
been a major impediment (obstacle) in the progression of this sector.
4. Response to Products:
Product-related features of rural segment are:
i. Rural markets (buyers) believe in product utility rather than status and prestige. However,
they like novel products with distinctive features.
ii. Most village customers consider tastes rather than usefulness in long run.
iii. They like simple and long-life products. They are interested in immediate results.
Products must offer immediate benefits.
iv. They respond to those products that suit their religious faith, and social norms and
customs.
v. They ask for such products which can assists in their traditional occupations and life style.
vi. They have minimum urge for individuality. They prefer family-used products than
personal- used products.
vii. They strongly prefer such products that can change and improve their life-style.
5. Response to Price:
Price-related features of rural segments include:
i. Rural customers are price-sensitive and highly influenced by level of pricing. Price is the
strongest factor that affects their buying decision.
ii. They buy those products which are low in price and medium in quality.
iii. They are easily attracted by price discounts and rebates.
iv. They prefer credit facility. They normally have strong desire to postpone payment for
certain period.
v. Some middle class rural customers are attracted by instalment and loan facility.
6. Response to Promotion:
Promotion-related features of rural segment include:
i. Rural customers are highly attracted by local and regional promotional efforts.
ii. Their reference groups consist of educated and non-educated family members and
relatives living in urban areas and foreign countries as well.
iii. Personal selling seems more influential to convince rural mass.
iv. They are attracted by such sales promotional tools or articles which are useful in their
routine life such as knife, gas lighter, rings, key-chains, caps, photos of local actors,
calendars and cards with religious impression, etc.
v. They have a strong faith on local religious and spiritual leaders. Such leaders are among
the most influential reference groups.
vi. Publicity efforts related to local vocational and agricultural activities can impress them.
vii. They can be appealed by visual or pictorial advertisements published in local and
regional languages.
7. Response to Distribution:
Distribution-related features of rural segment include:
i. Normally, they buy from familiar retailers and salesmen. They are hesitant to buy from
big shopping malls or departmental stores. However, situation is changing gradually.
ii. Rural customers strongly favour relations. They continue buying from known and
established retailers who maintain close family relations with them.
iii. Mostly they buy from retail outlets situated in rural or sub-urban areas. However, some
rural customers like to buy products from nearby cities also.
iv. Normally they place frequent orders of small in size. They lack storage facilities.
v. They are not interested in home-delivery. They want immediate possession. They lack
patience. They are found eager to possess and use the products immediately.
vi. Caste, religion, political party, relations, etc., play important role in selecting the
retailers.
vii. Online and direct marketing are not much popular in rural areas. Sometimes, a few of
them are interested in network marketing.
8. Predictability:
Unlike urban markets, the rural markets are difficult to predict, and possess special characteristics.
The featured population is predominantly illiterate, have low and irregular income, lack of monthly
income, and flow of income fluctuating with the monsoon winds. They don‘t have a stable pattern
of reacting due to income factors.
9. Role of Government:
Demand of products depends on availability of basic facilities like electricity, transportation,
schools, hospitals, etc. The steps taken by the Government of India to initiate proper irrigation,
infrastructural developments, prevention of flood, grants for fertilizers, and various schemes to cut
down the poverty line have improved the condition of the rural masses. Rural market depends on
government‘s contribution to the rural sector.
10. Rigidity:
Most rural customers are illiterate, backward, and orthodox. It is very difficult to convince them to
buy the products. They believe in the present and lack ambitions.
11. High Level of Heterogeneity:

We find different types of buyers in rural areas. Some are simple, while some are sophisticated;
some are extreme rich, while some are extreme poor; some are highly educated, while some are
complete illiterate; some are dynamic and modern, while some are very rigid and orthodox; some
believe in quality and status, while some believe in availability and price.
Rural customers are gradually transforming into urban, metropolitan, and even cosmopolitan
customers. Improved education, rapid means of transportation, access to advance communication,
raised living standards, craze to follow modern (even ultramodern) life pattern, and many similar
factors have drastically changed rural consumer behaviour. The gap between urban and rural
segments tends to be notably narrow. Sometimes, rural and urban customers exhibit no difference at
all.
21. Discuss the Characteristics of rural consumer? [Very

Important]***********
Rural consumers purchase a product as a result of certain physical, social and economical forces
creating a desire or a want for the products. A producer can be successful in selling his products
only when he identified the need and wants of the consumers. Important characteristics of the rural
consumer denoting his/her peculiar buying behavior include the following.
(a) The rural consumer has a very high involvement in any product purchased.
(b) He purchases products more often (mostly weekly), usually in small quantities.
(c) He is very quality conscious but value for money is of prime importance.
(d) He looks more for functionality of the product rather than frills associated which he cannot
use but for which he will have to pay extra.
(e) He is brand loyal. Once loyalty formed is difficult to dislodge.
(f) He understands symbols and colours better, and looks for endorsement by local leaders or
icons.
(g) The source of information is critical for him, as he is influenced by information received and
opinion formed through various resources in his purchasing decisions.
(h) Purchasing decisions are usually taken by the eldest member of the family.
(i) Brisk buying is done after the harvesting period. Major purchasing is done during the
festivals.
(j) In many cases, the buyer is different from the user.
22. Attitudes play an important Role in Rural Marketing.

Discuss.
Attitudes influence behaviour and have an impact on the perception of objects and people, and also
exposure to information, choice of friends, co-workers etc. Attitude has been comprehended in
different ways by various researchers and defined as both conceptual and operational. It is also
common to define attitude as affect toward an object.
1. Attitude as Set of Readiness
Attitude was first conceived as a tendency to respond to some social object. It was conceived that
all the definitions of attitude had the component of readiness/disposition to act. According to this,
the following is the definition of attitude −
Attitudes are mental states of readiness, organized through experience, exerting a dynamic influence
upon an individual response to all objects and situations with which it is related. This point of view
considers attitude as a response to certain stimuli.
2. Attitude as Effect and Evaluation

Many researchers define attitude in terms of their effects and evaluation. Some of the definitions highlighting
this point of view are −
• Attitude is an enduring operation of motivational, emotional, perceptual and cognitive processes with
respect to some aspect of the individual world.
• Attitude is also a tendency to evaluate an object or symbol of that object in a certain way. That
evaluation consists of attributing desirable and undesirable qualities to an object.
Although these definitions closely relate, but there is a difference between them. While attitude is
often seen as a disposition of act, an opinion is generally considered as an expression of someone‘s
judgment of a particular set of facts and an evaluation of the circumstances presented to him.
In simple words, opinions are expressions of attitudes may be observed that the attitudes are basic
to opinions and can influence them
For a marketer, all three i.e. the opinion, attitude and belief are important because they have a role
in the buying and decision making process.
3. Attitude and Socialization

Consequent to attitude and belief system, certain social classes exhibit a high degree of
participation in social and community life while certain societies are individualistic and have low
community affection. The role of influencers varies in such societies and also can influence the
buying process of individuals.
Marketers study the importance of socialization and relate it with buying processes. Some of the
characteristics in which attitudes shape up the socialization of an individual are his identification
with the reference groups, family, role and status. Each of these identifications has an influence on
one‘s purchase and consumption behaviour.
23. What function does attitude serve to the Rural Consumer?

Attitude occupies a central position in the process of transforming the work needs into efforts and it
has a profound influence on one‘s behaviour. Attitudes serve the following four functions of an
individual −
1. Instrumental Function
Attitudes serve as means to reach a desired goal or to avoid an undesired goal. Instrumental
attitudes are made by the activation of need that are associated with the attitude objects and arouse
favorable or unfavorable feelings.
For example, most traditional Indian people do not think the soft-drinks as very good for health.
Their propensity to cause acidity reinforces the attitude. When the news came that there are
pesticides in the soft-drinks, most people stopped their consumption because they derived their cues
towards such behavior from the unfavorable characteristic of the product.
On the basis of this function of attitude, the marketers should design their communication in the
form of advertisements and make use of the right media and motivate the rural consumers to
showcase a favorable behavior.
For example, Honda motorcycles has a very high penetration in rural markets. It has designed its
message of durability of their bikes, even on bad rural roads and the superstar message. Their
distribution network ensures easy availability of the product. In certain areas, their easy finance has
helped in enabling the consumers to purchase the same.
With the initial penetration, the word-of-mouth communication helped in making a rapid inroad into
the market. The attitude has been highly instrumental in eliciting the desired response from the
consumers. It is the entire marketing strategy, which has worked for achieving the results and not
just a few activities of the company.
2. Ego-defensive Function
The ego-defensive function of attitude shows the importance of psychological thoughts. Attitudes
may be required and maintained to protect the person from facing threats from becoming aware of
his own unacceptable impulses.
Ego-defensive attitudes may be external or internal threats, frustrating events, to build up of the
impulses and suggestions by authorized sources. The attitudes influence one‘s behavior by affecting
one‘s perception of the situation accordingly.
For example, popular cigarette manufacturer ‗Red and White‘ had instituted a bravery award
keeping in consideration the ego-defensive role. By this type of attempt to relate bravery as a
characteristic of the smoker of their brand, they were trying to create a positive attitude.
Rural people are very particular about protecting their ego and any suggestions to this matter can
work against the marketers. It is important to note that rural consumers tend to exhibit a collective
ego, where the role of the group becomes very important.
3. Value Orientation Function
The value orientation function takes into consideration the attitudes, which are held because they
express an individual‘s values and enhance his self-identity. These attitudes arise by conditions that
threaten the self-concept, restart the person‘s self image by the cues that increase the person‘s value
and make them salient to him.
For example, most Indians are not comfortable to purchase contraceptives openly. By the
advertisements, the marketers are trying to project the consumers that there is nothing bad to
purchase them and get the advantages of safety and birth control.
Another example is the marketing of eggs NECC. Traditionally, Indians are not eager to consuming
eggs on certain days or in certain seasons considering their beliefs. By influencing people to eat
eggs daily, they are being motivated to give their value system and adopt a more rational approach
towards such behavior.
As was in the case of ego-defensive function, the rural consumers also influence collective value
systems. The marketers must understand the social satisfaction and segment their markets
accordingly.
4. Knowledge Function
This function is based on a person‘s need to maintain a stable, organized and meaningful structure
of life. Attitudes that provide a standard by which a person evaluates every aspect of the world
around him serve as the knowledge function as well.
For example, despite a massive and lots of campaign by the Government for the caste system, the
Indian psyche is till filled with it. This is because people take the messages with their pre-
dispositions and it might take a long time before these are modified.
These functions of the attitude influence an individual‘s interpretation of the information he has.
Since attitudes intervene between the work needs and the work response, information about how
people feel about their purchase can be quite useful in predicting their response to work.
Thus, knowledge of attitude can help the marketers to devise means to make more compatible
policies for their customers and get more profit out of them.
24. Discuss Rural consumer Behaviour in brief.

[Important]*****
Rural consumer is totally a different consumer in the rural market scenario, being influenced by rationality,
personal experience, and the level of utility that is derived from the consumption, which are being influenced
by the changing tastes and preferences of the younger generation. The clever and gimmicky advertisements
do not work out with rural consumers. Their buying behaviour is very much influenced by ‗experience‘ of
their own and of neighbour – consumers and his own family and involvement of his own members are
exerting maximum influence on his purchases.
Above all, quality of the product and its easy availability are the primary and vital determinants of
his buying behaviour. The technique of bombarding with messages has a limited influence. He is
very much attached to and influenced by ‗touch and feel‘ aspect of any promotional activity. It is
imperative that the marketing experts should understand the mindset of the rural consumers for
every product in a particular region.
Rural consumer buying behaviour:
(a) Majority of people are using national and multinational brands in both categories
(durables & non durables).
(b) People preferred branded products where they perceived that the technology and
price is superior.
(c) TV and Radio/Tape recorder are being used by the maximum people.
(d) An equal number of the people are using coloured and black & white TV.
(e) A particular brand is being used by the people in case of TV, Sewing Machine, Fan, Tea,
Detergent Powder and Cake.
(f) Brand is the main consideration for product selection by the majority.
(g) Age and occupation are the significant variables for product selection.
(h) Personal factors (Shopkeeper, friends,& neighbour) are the main source of information.
(i) Education and occupation are the significant variables which influence the source of
information.
(j) According to majority of the people, the selection of product is primarily decided within
the family.
(k) Education, occupation and income are the variables which have significant influence in
buying decision. People are satisfied with the products being used by them.
(l) Most of the people want to make their future purchase for the same brands.
(m) People are dissatisfied with the quality and price of the products available in the
villages.
(n) Majority of the people prefer to buy their personal care products from near by
town/city.
(o) Majority of the people visit haats and melas and satisfied with the quality and price of
the products.
(p) The distribution network is well organised in the area. Dealers operate in a relatively
smaller territory or at specific locations.
(q) Most of the companies have their own technical experts who look after consumer
complaints.
(r) Majority of the people were aware to consumer rights, but do not complaint.
(s) More than half of the people do not know where to complaint.
(t) Education found relevant in case of knowledge of consumer forums.
(u) Majority of the people enjoy seeing the advertisement and feels that it make the
decision making process easy.
(v) Majority also considered that advertisement increased the cost of the product.
(w) People do not appreciate advertisement endorsed by the celebrities.
(x) Most of the people were in disfavour of sales promotion activities and hold the view
that the companies whose sale is low offer the gifts.
(y) There is no significant attitudinal difference on the basis of gender, age and occupation
regarding advertisement whereas it was significant in case of education and income.
(z) Similarly, in case of sales promotion there was no significant attitudinal difference on
the basis of gender, age, education and occupation, except income.
25. What are the factors that influence buying pattern of Rural
Consumer? [Important]*****
To understand the buying behaviour of rural consumers, we must go to the factors that influence
their buying behaviour. 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 behaviour. For example, the preference in
respect of colour, 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 behaviour is also influenced by the geographic location of the consumers. For
example, nearness to feeder towns and industrial projects influence the buying behaviour 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 behaviour, 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 behaviour. 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 behaviour
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 behaviour 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 behaviour 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 behaviour 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.
Other factors
Age & Income: It was found that factors effect on rural consumer vary with age and income and
found increasing with age and income. Importance of all factors in buying behaviour of rural
consumer found increasing trend with increase in their age and income. The effect of price and
quality on buying behaviour of rural consumer increases significantly with increase in age and
income.
Advertisement & Brand: Advertisement and brand of products found significantly very important
to high income rural consumers than lower income consumers.
Friends and family members: Friends and family members‘ recommendations had significantly
more impact on buying decisions of lower income consumers than high income consumers.
Packaging: Packaging had significantly more impact on buying decision of lower income
consumers than high income consumers.
All the above factors influence the buying behaviour of rural consumer and hence their responses to
the marketing mix variables, and the reference points they use for purchase decisions.
Unit 3 :
Rural Marketing Strategies [8 Marks]
Segmenting Rural markets, Product Planning for Rural markets, Market Size, Packaging and Branding
Decisions, Pricing Decisions
26. What do you mean by Rural market Segmentation?

[Important]****
Rural market segmentation is the process of dividing a potential rural market into distinct sub-
markets of consumers with common needs and characteristics.
Rural market segmentation is the starting step in applying the rural marketing strategy. Once,
segmentation takes place, the marketer targets the identified customer groups with proper
marketing mix, so as to position the product/brand of company as perceived by the target
segments.
Market segmentation is a method for achieving maximum market response from limited marketing
resources by recognizing differences in the response characteristics of various parts of the market. It
is one of the most interesting and an effective tool in the hands of marketer. Marketer segmentation
is the sub-division of a market into homogeneous subset of customers where any subset may
conceivably be selected as a target market to be reached with a distinct market mix.
Market segmentation is based on the fact that markets are heterogeneous and not homogeneous.
Homogenous market means a market where the prospective buyers of any product are found to be
uniform in their needs, habits, choice, nature etc. Heterogeneous market refers to a market where
the prospective buyers of any product are not found similar or homogeneous in their needs, habits,
choice, nature etc.
The basic problem in segmenting the rural market is the heterogeneous nature of the market. In
spite of there being heterogeneous market, the buyer of any product can be divided into
homogeneous groups of segments on the basis of their common needs, habits, preferences etc
According to American Marketing Association, ―Market segmentation refers to dividing the

heterogeneous markets into smaller customer groups having certain homogeneous characteristics
that can be satisfied by the firm.‖
According to Philip Kotler, ―Market segmentation is the sub dividing of a market into homogeneous
subsets of consumers, where any subset may conceivably be selected as a market target to be
reached with a distinct marketing mix.‖
27. What are the characteristics of Rural market

Segmentation?
Segmentation of market must exhibit some characteristics that are as follows:
1. Measurable:
The market segment must be measureable in order to calculate the market potential. The segment
variables must be distinct, clear and measurable. The size, profit and other relevant characteristics
of the segment must be measurable and obtainable in terms of data. If the information is not
obtainable, no segmentation can be carried out.
Companies are unable to reach rural markets effectively due to lack of comprehensive data related
to markets and consumers. In the absence of information related to size, purchasing power and
profiles of rural consumers, these were considered similar to urban cities. Today rural markets are
being studied by various companies to obtain valuable data that can be used for segmentation.
2. Accessible:
The segment should be accessible through existing network of people at a cost that is affordable.
Reach is important to serve the segment. Now, while segmenting rural markets, it is important to
ensure that the segmented market is conveniently reachable to the marketer to deliver products.
Till recently, marketers preferred urban markets to rural one because of the inaccessibility of the
rural markets. But due to improvement in infrastructure and in connectivity of villages and other
new channels of distribution, rural markets are becoming increasingly accessible. Rural consumers
can be reached through vans and through village retailers visiting nearby town distributors and retail
outlets.
3. Differentiable:
The market segments have to be diverse that they show different reactions to different marketing
maps, if not then there would have been no use to break them up in segments. Segments attract the
consideration of marketers only when they have distinguishing features. Rural consumers are
identified as different segments as their responses may be different from urban consumers at least
for some products.
For Example – While buying a motorbike, rural consumers give more importance to sturdiness,
mileage and carrying capacity of bike, whereas urban consumers look for style, power and
aesthetics.
4. Substantial:
The segment should be large enough to be profitable. The segment should comprise either a large
number of light users or a small number of heavy users so that marketing becomes beneficial to the
company. It should consist of people, who are similar in perceptions, learning, attitude, preferences
and actions. As such, covering them will be easy.
Rural areas are not homogenous. Region-wise differences are found in language, mind set and
behaviour. So, it is difficult to design separate promotional programmes as the size of consumers is
not large enough to make the effort viable.
5. Actionable or Feasible:
It has to be possible to approach each segment with a particular marketing programme and to
draw advantages from that. The segments that a company wishes to peruse must be actionable in
the sense that there should be sufficient finance, personnel and capability to take them. Hence,
depending upon the reach of the company, the segments should be selected.
6. General Considerations:
Apart from the above requisites, the segment must have growth potential, be profitable, carries
no unusual risk and has competitors, who do not fight directly with the product or brand. The
firm must possess enough resources for market segmentation. The segment criteria should follow
the instructions and guidelines issued by the government regarding distribution of a particular
product.
The segment should be relatively stable over a period of time. The segment that emerge rapidly
and disappear just as quickly will not be a good segment. So segment must be suitable,
practicable and attractive to the firm.
28. Discuss the Main Bases to Identify Rural Market

Segments. [Very Important]*********
Broadly speaking, we have two main bases to identify market segments as given below:
I. People-Oriented (Customer Personal Characteristics):
We can classify the customers by customer dimensions such as geographic location,
demography, socio-economic characteristics and psychographic characteristics. These are
variables and they are independent of any product or service and the particular situation
encountered by the buyer in making buying decisions.
We try to find out the type of customer who will buy our products:
1. Geographic Location:
The region, city size, its density whether urban, semi urban or rural and the climate matters a lot
in segmenting the market on the basis of geographical segmentation. The main advantages of this
segmentation base are that it reflect the physical location of the market and it‘s climatic
conditions.
Rural consumers can be segmented according to geographical factors like:
i. Region,
ii. State,
iii. District,
iv. Village and
v. Climate
2. Demographic Segmentation:
Demographic is also an important, most purposeful and commonly used basis. Demographic
basis has various advantages. These are easy to recognize and easy to measure. Demographic
data can be easily made available. Rural consumers can be segmented on the basis of
demographic factors like age, income, family structure, landownership etc.
3. Socio-Economic Segmentation:
Major income still comes from agriculture though the share of non-farm income has gone up in
recent years. Based on occupation, there are four important groups, who form the target
population for consumer durables like colour TV, refrigerator and two-wheelers.
(a) Farmers:
(b) Traders:
(c) Service Class:
(d) Rural Youth:
4. Psychographic Segmentation:
The psychographic segmentation is at the mind level. It is a recent approach to market
segmentation which has emerged as a major alternative to the traditional approach. It segment
the market on the basis that how people act.
Psychographics include factors such as:
(a) Personality traits,
(b) Lifestyle and value system,
(c) Social class,
(d) Culture.
5. Behavioural Segmentation:
Behaviour of consumers is a better guide to segment the markets. Behavioural segmentation
involves various parameters like occasions, benefits sought, user status, loyalty status etc.
Behavioural segmentation is based on the consumer response to his requirements.
(a) Occasions:
(b) Benefits Sought:
(c) User Status:
(d) Usage Rate:
(e) Loyalty Status:
(f) Place of Purchase:
II. Product-Oriented (Customer Response Behaviour):

The customer response or buyer behaviour may be considered in relation to product benefits,
product usage, store patronage and brand loyalty. We want to know why consumer buys a certain
product. Example- Bullet Motor Cycle is considered as a sturdy vehicle (product benefits) and
creates a ‗Macho Image‘.
1. Use Pattern:
A buyer may be classified as heavy, medium, light user and non-user. The use of consumer
products such as shampoo, hair oil, toothpaste, talcum powder is low in rural areas due to poor
affordability and many marketers have introduced small unit packs of these products to meet the
requirements of lower and middle class rural consumers. In agriculture, cotton farmers are heavy
users of pesticides and the marketers have come out with large packs (20/25 liters) of the
products to meet their special requirements.
2. Benefits Pattern:
Consumers buy products primarily to secure expected benefits. Rural buyers look for value for
money while purchasing products. They look for quality but cannot afford high prices. They are
concerned with utility of the products rather than mere good looks and frills. The rural
consumers particularly the lower/middle income group are budget- conscious unlike, urban
consumers who are comparatively more status-seeking.
Examples-
1. Bullet motor cycle is popular in villages due to its ruggedness.
3. Brand Loyalty:
A rural consumer is price sensitive due to low purchasing power and lack of awareness about the
quality of products available in the market. However, they will continue to patronise a brand
once they are satisfied with the product.
Example – A few of the popular brands are Lifebuoy, Parle, Ponds, Nirma, Tata Salt, Colgate,
Philips, etc.
4. Store Patronage:
It has been observed that rural consumer buys from the same shop. The retailer extends credit to
the consumers and many have running credit account with the same retailer. He influences
buying decisions of the consumers. Therefore, the marketers have to identify key retailers in
rural markets and ensure product availability for success of business.
5. Predispositions towards Products and Brands:

The attitudes, perceptions, values, beliefs, intentions and preferences are the constituents of
predisposition, indicating the consumers‘ state of mind, predisposing the consumer to behave in
a particular way towards a product, brand, dealer and the company. Segmentation studies based
on buying motives, attitudes, perceptions and preferences give much better results regarding
buyer behaviour than those obtained by demographic, socio-economic variables or determinants.
While age, gender, usage, income can be measured objectively, personality traits, lifestyles,
motives, attitudes, values and beliefs have to be inferred as they are subjective phenomena and
cannot be objectively measured.
29. Benefits of Rural Market Segmentation. [Important]****

The benefits of rural market segmentation are:
1. Customer – Oriented Philosophy:
Market segmentation improves a company‘s understanding of why customers do or do not buy
certain product or services. It also provides an understanding that how a company can make
adjustment to meet the changing market demands. Market segmentation results in many wars with in
the segment such as Coke vs. Pepsi, Tata Salt vs. Captain Cook etc.
Each time a war goes on, customer is the winner. Consumer gains in terms of added quantity and
variety. As the marketing mix will be determined on the basis of the homogeneous market segments,
it helps in serving the needs of customers in an optimum manner.
2. Enables Development of Strong Position of Brand:
By segmentation in an effective manner, a marketer can increase the company‘s sales volume. Each
segment has different demand pattern and when the manufacturers satisfy the demand of different
segments by changing their products, the total sales of the company increases. As the organization is
serving the consumer needs in a highly customer oriented manner, it establishes a strong image of the
organization in the target market.
3. Enable Tailoring of Marketing Programme:

When customer needs are fully understood, marketer is able to formulate and implement different
marketing programmes which suits to the markets. In the absence of segmentation, a strong
marketing programme will not be framed and which will not be effective for all consumer groups.
Marketer can make better adjustments of his products and marketing appeals by segmenting the
markets.
As the marketer is aware of the consumer needs, he can develop a customized and tailored marketing
programme that can delight the consumer with benefits and the experience.
4. Help in Cutting of Wasteful Expenditure on Unwanted Consumers:

Rural market segmentation helps in cutting the wasteful expenditure on unwanted consumers. A
marketer can focus and make expenditure on a particular customer segment which will be profitable
for them.
Under market segmentation, marketers are in a better position to locate the target customers and
compare marketing opportunities. In the market area where response of the customers seems to be
poor, the strategy of company can be readjusted so that the sales can be pushed up.
5. Matches Needs and Wants of Specific Groups of Buyers to Firm’s Setting:

Market segmentation help the marketer to match the needs and wants of specific group of buyers
with firm‘s setting. All marketing activities are directed towards the satisfaction of consumers and
with the help of segmentation it become easy to measure the level of segmentation in each segments
and also to make improvements in the segmentation level. The company can fulfill the specific
customer group‘s needs by considering their resources and overall objectives.
6. Stimulates Demands through Multi-Product for Multi-Segments:

Rural marketing segmentation also helps in stimulating demand through multi products for multi-
segments. In practical life, the marketer does not use single variable for market segmentation, rather
it uses multi attribute segmentation.
7. Helps in Knowing Company Capability and Assessment of the Competitors

By looking at a particular segment company can carry SWOT analysis. SWOT analysis details out
the strength and weakness within the company and opportunities and threat outside the company.
Thus it keeps the marketer to adopt different strategies for different markets, especially in rural
markets. It helps to know the level of competition in each segment. By knowing the strength and
opportunities and controlling weakness and threat a company can enhance its capabilities for
marketing its products in a particular segment in rural areas.
8. Provides Opportunities to Expand Market and Hence Enhances Marketing Efficiency:
By segmenting the market, a marketer is able to create new markets for their products It enhances
marketing efficiency by offering specific pricing, sales promotion and distribution channel as per the
requirement of different segments. Marketers get benefits in focusing the relevant segment more
closely and look for changes in the market requirements. This all increases the marketing efficiency
of the firm.
30. Discuss the Different approaches to segmenting a rural

market.
The marketer adopts several approaches to segmenting a rural market. These approaches are also
known as degrees of rural market segmentation which are as follows:
1. Mass Marketing:
Mass marketing is a philosophy which offers the same product and applies the same marketing mix
to all consumers assuming that there is no significant difference among consumers in terms of needs
and wants. Initially, a majority of companies that entered the rural market, related it an extension of
the urban market.
This is the first step of marketing where marketers do not have much knowledge of the market.
For Example – Colgate, Palmolive successfully marketed the same Colgate toothpaste to all
consumers in urban and rural markets till recently. However, the rural markets started to evolve and
consumers become more demanding, Colgate introduced Cibaca.
In this approach company feels that no segmentation is necessary. This is undifferentiated marketing
strategy.
2. Segment Marketing:
Segment marketing is still in its early stages in rural markets. It is only in recent years that marketers
have realized the potential of different consumers segments that are substantial enough to target and
have designed and launched low priced, innovative products for rural markets.
Hindustan Unilever uses two different approaches to market its two different brands – Hamam and
Lifebuoy. On the one hand it tries to reach the whole market in one go by using the mass marketing
approach for its brand Hamam. On the other, it has introduced four variants of its brand Lifebuoy –
Active Red, Active Orange, Plus and Gold – to reach four different segments of the Indian market.
3. Niche Marketing:
A Niche is a very small group with a distinctive set of traits who seek a special combination of
benefits. Niche is a narrowly defined group of customers that have a distinct and complex set of
needs. In cycle industry, there might be segments like cycle for regular users, sports, racing, kids,
girls etc.
Niche is created when cycle is required for physique club, physically handicapped with left and right
hand working etc. In the niches, there are few or no competitors and the product might command a
premium price. Niche marketing identified special sub groups within larger segments and offer
different products and services.
4. Micro Marketing:
Micro marketing refers to the tailoring of products and programmes to satisfy a particular taste or
need. Micro marketing occurs when target market is further bifurcated and the needs of the smaller
customer groups are addressed on a local basis. Some specific models/styles, features products are
made available at selected places on a local basis. One of the examples of micro marketing is
Dabur‘s Anmol Hair Oil, a mustard amla bases oil launched for northern Indian markets at INR 10
for a 50-ml pack, targeted at rural consumers using loose mustard oil. It includes local marketing and
individual marketing.
(a) Local Marketing:
Local marketing involves designing brands and promotions to suit the needs and wants of local
customer group on a geographical basis. As rural people do not have much exposure, local marketing
has relevance in many cases. It helps in effective marketing in the face of differences in
demographics and the lifestyles of communities in different regions. Regional and local brands are
very good at local marketing since they operate in a limited geography, which helps them to develop
a good understanding of local consumers and their specific needs.
(b) Individual Marketing:
Individual marketing is customized marketing or one to one marketing. The focus of rural marketer is
further shifting from local basis to Individual customer basis. With the advancement in
manufacturing because of breakthrough in information technology for example, use of computer-
aided design and computer aided manufacturing, it has now become possible to manufacture a
product as per the individual customer needs or of a buying organization.
Tailoring, forging and carpentry are the examples of individual marketing in rural set-up. In this
approach an individual can get a product according to his specific needs. To address great diversity
of rural markets different segmentation approaches have been attempted by marketer to reach rural
consumers effectively.
5. Target Marketing:
The modern marketing concept starts with the definition of target markets. The target marketing has
its roots in the marketing age. Target marketing helps the marketer to correctly identify the markets-
the group of customers for whom the product is designed. There are two approaches that can be
followed despite the fact that different customers have different needs.
First is to treat the target market as a single unit-one aggregate market and draft one marketing mix
for them. This is known as shortgun approach.
Second, total market is viewed as consisting of small segments and the consumer differenced
necessitates different marketing mixes for each of them. Based on the capabilities of a company, the
selection of each segment take place. This is known as Riffle approach. Thus, there might be no
market segmentation or complete market segmentation depending upon shortgun approach or riffle
approach.
31. Discuss in brief the different Product Planning for Rural

markets. [Very Important]********
A prime need for any firm to emerge as a strong player in the rural market is by carefully identifying
gaps in the rural market and crafting the right product offering for consumers. Chalking out a product
strategy for rural market differs in many aspects when compared to urban counter parts. Needs and
demand of rural consumer might be contrasting to that of urban consumer and therefore its necessary
to hit the right chord when entering the rural market. The prime objective is to design products to suit
rural requirements.
Though marketers are still trying and experimenting ways to successfully tap the rural arena, below
are few product strategies which have been widely adopted and have proved themselves to work in
the rural landscape:
(a) Small unit packing: This method has been tested by products life shampoos, pickles, biscuits,
Vicks cough drops in single tablets, tooth paste, etc. Small packings stand a good chance of
acceptance in rural markets. The advantage is that the price is low and the rural consumer can
easily afford it. The small unit packings will definitely attract a large number of rural
consumers.
(b) New product designs: Keeping in view the rural life style the manufacturer and the marketing
men can think in terms of new product designs. For e.g. PVC shoes and chappals can be
considered sited ideally for rural consumers due to the adverse working conditions. The price
of P.V.C items is also low and affordable.
(c) Sturdy products: Sturdiness of a product is an important factor for rural consumers. The
experience of torch light dry battery cell manufacturers support this because the rural
consumers preferred dry battery cells which are heavier than the lighter ones. For them, heavier
weight meant that it has more over and durability. Sturdiness of a product either or appearance
is an important for the rural consumers.
(d) Utility oriented products: The rural consumers are more concerned with utility of the product
and its appearance Philips India Ltd. Developed and introduced a low cost medium wave
receiver named BAHADUR during the early seventies. Initially the sales were good but
declined subsequently. On consumer research, it was found that the rural consumer bought
radios not only for information and news but also for entertainment.
(e) Brand name: For identification, the rural consumers do give their own brand name on the
name of an item. The fertilizers companies normally use a logo on the fertilizer bags though
fertilizers have to be sold only on generic names. A brand name or a logo is very important for
a rural consumer for it can be easily remembered.
Many times rural consumers ask for ‗peeli tikki‘ (Yellow Bar) in case of conventional and
detergent washing soap. Nirma made a ‗peeli tikki‘ (Yellow Bar) specially for those peeli
tikki users who might have experienced better cleanliness with the yellow coloured bar as
compared to the blue one although the actual difference is only of the colour.
(f) Refill Packs: The concept of refill packs of toothpowder, tea, talcum powder and other
FMCGs are promoted by the marketer as the money saving options. Consumers once purchase
the product which is packed in bottle of either plastic or glass and then they need not purchase
a whole new bottle for their next use. They can just refill the bottle with refill packs which
comes in poly packets. The price of such refill packs is lower than the price of the products that
are available in bottles. Such strategy works well in case of toothpaste, powder, spices, health
drinks etc.
(g) Storage of the Products: Because of interrupted power supply in rural areas; it is also a point
to work on for marketers to make proper arrangements for storage of products which require
special storage like ice creams and cold drinks etc.
Companies now provide ice boxes to retailers of remote areas for storage of cold drinks, ice
creams etc. Those ice boxes are usually made of thick thermocol and keep the products always
cool and also increases their shelf life.
(h) Consumer Durables: Most rural families don‘t yet have consumer durable products like
televisions, washing machines, gas stoves, refrigerators, etc. So there is a big potential market
waiting to be served. But this all huge market will not accept existing models of these
consumer durable products because of the following reasons:
• Supply of Electricity: In India, most of the villages do not have reliable supply of
electricity. Many villages may be connected to the grid but the supply is very erratic.
• Reluctance: Most rural families are reluctant to buy consumer durable items because
they have the mindset that they will not be able to use them. These products have to be
built to run on batteries which last for long periods and get charged without being taken
to cities.
• Different Uses of Consumer Durables: Rural life is completely different from urban
life and hence the consumer durable products will be used differently. For some
instance, rural consumers will not use refrigerators for storing fruits and vegetables
because they pluck these from their farms when they require, but they may have
surplus milk that they may need to preserve.
Refrigerators with special cooling mechanisms for preservation of milk products will
be more attractive to rural consumers than the basic all-purpose refrigerators. Simple
products like fans also have to be different for rural peoples.
• Variation in Product Requirement: People in villages don‘t like sleeping in closed
rooms, because they prefer to sleep in the open or in verandas which are open at least
from one side. Fans which may work well in closed rooms may not be effective in open
areas. The idea is that different types of products have to be designed for rural
consumers because they will use these products differently.
• Pricing Strategy for Consumer Durables: Rural people have been managing their
lives with or without these consumer durable products and most of the rural people
consider such products to be for luxury. To make them buy these products, these
products have to be priced low. The best way to enter rural markets is by offering them
simple, functional and less price products.
32. Discuss in brief the different Rural markets Strategies in

India.
Rural marketing strategies
Rural markets and rural marketing involves a number of strategies which includes:
(a) Seller and Location specific promotion involves a strategy designed to be suitable to the
location and the seller.
(b) Joint and co-operative promotion strategy involves participation between the marketing
agencies and the client.
(c) Bundling of inputs denote a marketing strategy, in which several related items are sold to
the target client, including arrangements of credit, after-sale service.
(d) Management of demand involves continuous market research of buyer‘s needs and
problems at various levels so that continuous improvement and innovations can be
undertaken for a suitable market performance.
(e) Developmental marketing refers to taking up marketing programmes keeping the¬

development objectives in mind and using various managerial and other inputs of marketing
to achieve these objectives.
(f) Media both traditional as well as modern media, is used as a marketing strategy.
(g) Unique selling propositions (USP) involve presenting a theme with the product to attract¬
the client to buy that particular product. For example, some of the famous Indian Farm
equipments manufacturers have coined catchy themes, which they display along with the
products, to attract the target client that is the farmers. Some of such themes would read like:
• Gaon ke dil ki dhadkan – The heartbeats of rural India.
• Khushali aur tarak ke liye- For the sake of progress and prosperity.
(h) Extension services denote, a system of attending to the missing links and providing the
required know-how.
(i) Ethics in business form an important plan for rural markets and rural marketing.
(j) Partnership for sustainability involves laying and building a foundation for continuous¬
and long lasting relationship
33. Discuss in brief the Market Size of Indian Rural Market.

OR
Discuss the current Scenario of Indian Rural Market
With growing progress in rural India, more and more companies belonging to FMCG, telecom,
automobiles, insurance, banking and financial services sectors as well as advertising companies and
organization engaged in selling agricultural products are expanding their marketing and sales
activities in rural India. This is a significant trend since the opening of mass markets in the rural
sector is vital to the country‘s growth and development.
Expanding sales to the rural sector will increase production of different industries and more
importantly, it will help to channelize the savings of farmers in the right direction. Prior to their entry
in the rural market, companies should fully understand the distinctive features that make the people
and markets in rural India unique. Research must be made for properly understanding mindset of
rural market and people and guide its marketing department to work out marketing mix accordingly.
In communicating with rural India, both traditional and modern media have to be taken into account.
While influence of modern media is growing non-conventional media seems to be particularly
effective in creating both awareness of products and services available and favourable disposition
towards them in the minds of rural consumers.
Finally, another daunting challenge facing marketing firms is that of reaching their products and
services to India‘s 604 lakh villages scattered over a vast area marked by considerable geophysical
diversity. To address this task, firms have devised several innovative methods of distribution,
including direct selling with the assistance of self-help groups.
All in all, there is no doubt whatsoever that for those who understand the dynamics of rural markets,
there is huge opportunity for marketing a wide variety of products and services waiting to be
grabbed.
Market Size of Indian Rural Market:
(a) 75% of population lives in 6,38,365 villages.
(b) 90% is concentrated in the village having population less than 2000.
(c) Rural segment comprises 13.5 crore households which constitute 72% of total households in
India.
(d) But the rural market is not homogeneous across the country.
(e) The consumer willingness to accept innovation also varies among the rural market.
(f) India is a predominantly agrarian society.
(g) Western Marketing has no experience to manage it.
(h) Urban markets are saturating in India.
(i) There are immense opportunities at the bottom of the pyramid.
(j) Rural Marketing can change rural business.
(k) Retail boom will also expedite the growth of rural marketing.
Rural Market is the prominent area for progress and growth and must not be neglected in the future.
34. What are the 4 A's in rural marketing mix. [Important]****

The dimensions in rural marketing mix are availability, affordability, acceptability and
awareness as compared to the 4 P‗s of traditional marketing. Marketing mix indicates an
appropriate combination of 4 P‗s from the marketer‗s point of view. Considering dynamics of
rural market and the challenges in exploring the rural markets, a practical approach would only
be to use the model based on 4 A‗s
1. Availability
Availability is the first A is about making the product reach the consumers. This is to ensure
availability of the product or service. Rural people are more concerned with the utility of the
products rather than their appearance. This is why the firms have designed sturdy and utility
based products for the rural consumers. For example Philips free power radio, Nokia‗s mobile
phone with an in built torch, LG‗s Sampoorna television, Hero Honda motorcycles are still
popular in rural areas due to the aforesaid reasons.
2. Affordability
The next challenge in rural marketing is to ensure affordability of the product or service. While
rural income level has gone up in recent years, the lower income group constitutes about 65 % of
th rural population. The major source of income for the people of rural regions is still by and
large, agriculture and agriculture related activities. The cost component needs to be tailored
according to the needs of rural masses. The availability of disposable income in rural areas is
cyclical relate to agricultural cycles. Some companies have addressed the affordability problem
by introducing small unit packs. Most of the shampoos are available in smaller packs.
3. Acceptability
The third challenge is to gain acceptability for the product or service. Therefore, there is a need
to offer products that suit the rural market. Acceptability includes issues needed to be addressed
to improve the willingness to consume, distribute or sell a product. It also includes how the
product or service could be made more acceptable to the rural consumers by incorporating
features which would make it attractive to them. One company which has reaped rich dividends
by doing so is LG Electronics. In 1998, it developed a customized TV for the rural market and
christened it Sampoorna. It was a runway hit selling 100,000 sets in the very first year..
4. Awareness
Brand awareness is another challenge. Fortunately, however, the rural consumer has the same
likes as the urban consumer — movies and music — and for both the urban and rural consumer,
the family is the key unit of identity. However, the rural consumer expressions differ from his
urban counterpart. Awareness is also linked to the issues of promotion in rural areas. The
promotion of the services also needs to be adapted to the village environment; the language and
means of communication used should be in the local language. The best places to promote the
services could be the local haats and melas which is frequented by the villagers, the local
festivals should also be included in the promotional plan, so should be the agricultural cycles.
35. Discuss the Packaging Strategies in respect of Rural

Marketing. [Important]****
Packaging:
As far as packaging is concerned, as a general rule, smaller packages are more popular in the
rural areas. The following are the different packaging strategies:
1. Small Units
This packaging strategy is now widely adopted by every FMCG company is successful not only
in rural area but also in urban area especially among the middle and lower income groups. Large
packs are out of reach for rural consumers because rural people have very less cash reserve with
them. Rural people make purchases in small lots to meet their day to day requirements. Now
many companies sell their products in quantities; products such as hair oil, biscuits, and fairness
creams. These companies have joined the race of Low Unit Packs (LUP) not only to penetrate
into the rural market but also to motivate people to try the new brand.
2. Refill Packs
The concept of refill packs of toothpowder, tea, talcum powder and other FMCGs are promoted
by the marketer as the money saving options. Consumers once purchase the product which is
packed in bottle of either plastic or glass and then they need not purchase a whole new bottle for
their next use. They can just refill the bottle with refill packs which comes in poly packets. The
price of such refill packs is lower than the price of the products that are available in bottles. Such
strategy works well in case of toothpaste, powder, spices, health drinks etc.
3. Storage of the Products

Because of interrupted power supply in rural areas; it is also a point to work on for marketers to
make proper arrangements for storage of products which require special storage like ice creams
and cold drinks etc. Companies now provide ice boxes to retailers of remote areas for storage of
cold drinks, ice creams etc. Those ice boxes are usually made of thick thermocol and keep the
products always cool and also increases their shelf life
Most rural families don‘t yet have consumer durable products like televisions, washing
machines, gas stoves, refrigerators, etc. So there is a big potential market waiting to be served.
But this all huge market will not accept existing models of these consumer durable products.
4. Supply of Electricity
In India, most of the villages do not have reliable supply of electricity. Many villages may be
connected to the grid but the supply is very erratic.
5. Reluctance
Most rural families are reluctant to buy consumer durable items because they have the mindset
that they will not be able to use them. These products have to be built to run on batteries which
last for long periods and get charged without being taken to cities.
6. Different Uses of Consumer Durables:
Rural life is completely different from urban life and hence the consumer durable products will
be used differently. For some instance, rural consumers will not use refrigerators for storing
fruits and vegetables because they pluck these from their farms when they require, but they may
have surplus milk that they may need to preserve. Refrigerators with special cooling mechanisms
for preservation of milk products will be more attractive to rural consumers than the basic all-
purpose refrigerators. Simple products like fans also have to be different for rural peoples.
7. Variation in Product
Requirement People in villages don‘t like sleeping in closed rooms, because they prefer to sleep
in the open or in verandas which are open at least from one side. Fans which may work well in
closed rooms may not be effective in open areas. The idea is that different types of products have
to be designed for rural consumers because they will use these products differently
8. Pricing Strategy for Consumer Durables

Rural people have been managing their lives with or without these consumer durable products
and most of the rural people consider such products to be for luxury. To make them buy these
products, these products have to be priced low. The best way to enter rural markets is by offering
them simple, functional and less price products.
36. Discuss the Branding Decisions in respect of Rural

Marketing.
Branding:
The brand is the surest means of conveying quality to rural consumers. Day by day, though
national brands are getting popular, local brands are also playing a significant role in rural areas.
This may be due to illiteracy, ignorance and low purchasing power of rural consumers. It has
been observed that there is greater dissatisfaction among the rural consumers with regard to
selling of low quality duplicate brands, particularly soaps, creams, clothes, etc. whose prices are
often half of those of national brands, but sold at prices on par or slightly less than the prices of
national brands. Therefore, national and international brands should focus more on satisfying the
needs of the rural consumer by providing the same branded products, which these rural folks lure
for
In rural India, the branding rules are distinctly different from urban markets. Not only does the
cultural landscape differ, the factors that influence purchasing decisions differ too.
Price and value for money are high on their list. Rural branding calls for a greater component of
local media and less of the mass media. Since these markets have specialized forums of their
own like temple festivals, melas, cinema halls, these can be leveraged to promote brands. Direct
Marketing and events like road shows, film shows, melas, and street theatre can also be used to
promote brands.
37. Discuss the Pricing Decisions/Strategies in respect of

Rural Marketing. [Important]****
Pricing strategies are very much linked to product strategies. With low disposable incomes,
products need to be affordable to the rural consumer, most of which are on daily wages. Some
companies have addressed the affordability problem by introducing small unit packs. Some of
these pricing strategies are mentioned below –
1. Income variability:
India‗s wide income distribution implies that there exist multiple segments with very different
levels of purchasing power. The challenge for consumer goods companies is to develop more
rural specific products that are able to capture bigger share of the rural markets.
2. Focusing on volume not margins:

A significant portion of the rural population is paid daily wages. Daily wage earners tend to have
little stock of money, and, therefore, tend to make purchases only to meet their daily needs.
Therefore, the marketing strategies in rural India must be to concentrate on large volumes over
low margins and thus the overall profitability can be maintained.
3. Lower prices:
Low Cost Products Rural customer is price conscious manly because of low income. The price
can be kept low, by low unit packaging. This is a common strategy adopted by many companies
marketing in rural areas. Example –same as of small unit packs
4. Credit facility:
This holds true for marketing of consumer durable and automobiles. As the purchasing power of
the rural customer is quite low, they tend to purchase high ended products on credit. The
companies should make use of this opportunity to sell products.
5. Application of Value Engineering

The aim of value engineering is to reduce the value of the product so that a larger segment of
population can afford it to buy. Example: Soya protein can be used instead of milk protein,
nutrition content of both is same but the soya protein is cheaper then milk protein.
6. Refill/Reusable Packaging
Refill packs benefits the rural consumers in terms of price and also the packaging material
should be reusable in rural areas. Example– Many farmers demand for fertilizers packed in
LDPE or HDPE sacks. They feel that they get sacks free of cost by purchasing fertilizers
7. Discounts
In order to motivate the rural retailer to sell more, a discount of 5-10 % is given on the MRP
particularly in case of FMC goods.
Promotional Schemes:
Rural consumer normally buys household articles during festivals like Eid, Diwali, and Pongola
etc. special promotional schemes could be introduced on such occasions like exchange offers,
special discounts, etc
38. Discuss the Objectives of Rural Pricing. [Important]****

RURAL PRICING OBJECTIVES
1. Deeper penetration of market: Basically rural markets are adopted for deeper penetration
and expansion because of its size. Hence the pricing objectives are different for rural and
urban markets. E.g. VIM washing bar is Rs. 15 (400 gm) in the urban market but it is offered
for Rs. 4(200 gm) in rural markets.
2. Long run profit maximization: A company enters in rural market should wait for success
in long run. Hence penetration-pricing strategy is the best option.
1. Recover distribution cost: The pricing objective of a rural marketer should recover the
costs involved in distribution along with production cost and dealer margin.
3. Competing pricing: Rural marketer should study the pricing strategy of its competitors and
accordingly fix its prices.
4. Increased sales and market share: The pricing objectives should be such that it boosts the
sales in rural markets. E.g. Anchor white toothpaste launched with much lower price than
the leading brands and captured the market
39. Discuss the Method of pricing for different category of

consumer.
CONSUMER CATEGORIES
1. Quality Conscious Consumers–
They are very rich and are mainly concerned with quality of the products and services
Pricing Methods: (A) Discriminatory Pricing – charging different customer groups differently
(B) Skimming pricing – Charging high prices at initial level, E.g. P&G launched Tide detergent
at high price and then reduced it lower than other brands
2. Value Conscious Customers –

They are of middle class and are mainly concerned with functional benefits and value for money
Pricing Methods: (A) Penetration Pricing – Charging low prices at initial level then increases
gradually when brand name has been established E.g. Maggie noodles, Vicks, Rin detergent.
(B)Value Pricing – Setting the price reasonably lower than the competitor‗s price.
3. Price Conscious Customers–

They are climbers, aspirants and destitute. They watch for promotional offers and purchase
cheap or fake products.
Pricing Methods (A) Psychological Pricing – Psychological pricing is one that ends in an odd
number e.g. Rs. 99.95. It conveys two notions to consumer that there is a discount or bargain and
it belongs to lower price category. (B) Promotional Pricing – It includes mini packs, price-off,
special discounts, credit facilities etc.
Unit 4 :
Promotion and Distribution in Rural
Markets [8 Marks]
Promotion in Rural Markets, Distribution Channels and Logistics in Rural Markets
40. Discuss the different Promotional strategies adapted in

Rural Marketing. [Important]***
Promotional Strategies
The rural market has changed drastically in the past one decade. A decade ago, the rural market
was more unstructured and was not a prioritized target location for corporate. Marketers must be
very careful while choosing the mediums to be used for communication. Only 16% of the rural
population has access to a vernacular newspaper. So, the audio visuals must be planned to
convey a right message to the rural folk. The rich, traditional media forms like folk dances,
puppet shows, etc., with which the rural consumers are familiar and comfortable, can be used for
high impact product campaigns. Radio is also very popular source of information and
Entertainment, Adds on radio can also be a helpful tool for marketers
Some other Strategies to be followed in Indian Rural Market-
1. Decentralizing rural markets
Decentralizing rural markets by detaching them from the urban bases. A give-and-take two-way
approach should replace the present one-way exploitation.
2. The salesman
The salesman in rural markets should be selected from the educated unemployed villagers,
trained well and appointed as salesmen. The town-to-villages shuttling salesmen are to be
replaced by stationary salesman in villages.
3. Concentrate on educating the villagers

Companies should also adequately concentrate on educating the villagers to save them from
spurious goods and services. Rural markets are laggards in picking up new services. This will
help the companies to phase their marketing efforts.
4. Best Promotion and Quality Perception

Companies with new technology are properly capable to communicating its products and
services to their customer. There is a trade-off between quality a customer perceives and a
company wants to communicate. Thus, this positioning of technology is very crucial..
5. Easy-Way Communication especially for Rural Market

The companies have realized the importance of proper communication in local language for
promoting their services especially in rural market. They have started selling the concept of
quality with proper communication and easily understandable way of communications. Their
main focus is to change the Indian customer outlook about quality.
6. Changing Pattern of Rural Customers:
Now-a-days, villagers are constantly looking forward for new branded products and good
services. Indian customer in rural market was never price sensitive, but they want value for
money. They are ready to pay premium for the product if the service is offering some extra
utility for the premium. Cultural values play major role in deciding what to buy. Furthermore,
rural people are emotional and sensitive. Thus, to promote products and services we should
regard their social and cultural values.
7. Focus on Customer Requirement

Every customers want value for their money. They do not see any value additional associated
with the services. They aim for the basic functionality. However, if the sellers provide frills free
of cost, they are happy with that. They are happy with such a high technology that can fulfill
their need. Promoting products and services with right person in case of celebrity endorsement
companies are picking up Indian models, actors for advertisements as this helps them to show
themselves as an Indian company.
8. Promoting Indian Sports Team

Companies are promoting Indian sports teams so that they can associate themselves with India.
With this, they can influence Indian mindset like during Cricket World Cup.
9. Product/Services Campaign like “Be Indian”

Companies are now talking about Be Indian. It is a normal tendency of an Indian to try to
associate him/her with the product. If he/she can visualize himself/herself with the product, he
/she become loyal to it.
10. Developing Specific Products for Specific Segment

Many companies are developing rural-specific products. Keeping into consideration the
requirements, a firm develops these products. Electrolux is working on a made-for India fridge
designed to serve basic purposes.
11. Effective Media Modes of communication

Traditional media or the modern media used for rural marketing is being used by companies. The
traditional media include melas, puppetry, folk theatre etc. while the modern media includes TV,
radio, e-chaupal. LIC uses puppets to educate rural masses about its insurance policies.
12. Adopting Best localized way of Distributing Channels

Proper distribution channels are recognized by companies. The distribution channel could be big
scale Super markets and they thought that a similar system can be grown in India. However, they
were wrong. It was soon they realized that to succeed in India, they have to reach the nook and
the corner of the country. They have to reach the "local Paanwala, Local Baniya or Kirana Shop
Owners" to succeed. Big Multinational companies in India capture the rural market share in India
if they have to go the local market shoe sellers and with the low priced products and services.
41. Discuss the different ways of Sales Promotion in Rural

Markets [Important]***
Various types of promotion methods work as integrative systems between producers and
consumers. In case of consumer goods, this is done on large scale whereas for rural products, it is
on small scale or specific target wise done. The producers and processors think in terms of
―How to reach our customers‖ and ―How our customer can reach us. Due to technological
innovations people can now communicate through both traditional and newer methods of media.
Both mass communication and / or target communications can be used as per requirements. Very
commonly used media of communication are newspapers; magazines, radio, TV, telephone,
computers, fax, pagers and mobile phones. These usage proportions differ from product to
product.
For five marketing related functions like (1) Advertising (2) Sales promotion (3) Public
Relations (4) Personal selling and (5) Direct marketing, there is a different way of approach in
urban and rural markets.
Since the literary level of rural population is low, it pays to do promotions through mass media
like TV, cinema and radio advertisements. In print media, mostly hoardings and wall paintings
will help more. These promotional strategies are covered as under:
1. Cinema:
For the last 60 years, cinema continues to be influencing factors in style, tastes, dress materials
and total Indian culture.
Despite TV being parallel popular, the hold of cinema on rural sector and urban middle class and
labour class continues. Product advertisements before a movie and during intervals get good
publicity. All the theaters do this with the help of slides and 1 or 2 minutes movie type
advertisements to highlight the product performance and utility. This method will continue to be
popular as many villagers like to see movies in theatres than on TV.
2. Television :
Since the last two decades, TV viewing has been a regular past time for all Indian public. The
TV serials like Mahabharat, Ramayan, Humlog and cricket matches have made TV very popular.
In fact, Doordarshan covers 85 % of India and private channels have started operating at
continental, national and regional levels. The advertisers have choice of segment to be touched.
For all India coverage, important and popular serial intervals are best to advertise on TV.
3. Radio
Listening to Radio for a long time has been for news, commentary (sports) and category songs. It
has been a recent trend since two-three various last decades to use radio programmes for
advertisements.
Film songs are popular and playing advertisements in between to attract attention by the
listeners. Coverage of radio stations is wide and serves the purpose. Rural people have the habit
of carrying transistor radio sets and hence they play the radio wherever they go. About 75 % of
the rural population listens occasionally.
4. Print Media
Due to low literacy rate and poor reading habits, this is not a popular promotion strategy.
However, some advertisements are made through the local language low priced dailies. Rural
people normally read newspapers on Fridays and Sundays when there is more coverage about the
movies being shown and the forth coming movies. So the promotion of cinema viewing is best
done by the newspapers as far as rural people are concerned.
5. Hoardings
Hoardings on village entry junctions, writing and painting on walls of public buildings in
villages, compound walls of private people will be more appealing and readable. The rural inputs
like fertilizers and pesticides are advertised like this. The picture of product and catchy slogans
are considered to be the best promoters.
6. Village Congregations/ Gatherings

Certain places have specific market days which can be used for mass communication to speed
awareness of products. Similarly particular places have local deities and Jathra or fairs along the
festival type celebrations. These occasions help to promote sales, explanation or product
awareness. If some promotional schemes are kept in those occasions, it will be a more appealing
effort. On these occasions, audio visual shows can be made for better explanations.
42. Discuss the different types of Personal Selling in Rural

Markets.
Personal Selling
It is a process of face to face interaction between the salesperson and the prospective customer.
Through a proper training and guide, a salesman can be a valuable medium between the marketer
and the prospective customer.
A good salesperson is the one who has thorough knowledge about the product he is about to sell
and tries to strike a common point of link between the product and the customer needs.
Personal Selling in Rural Region

Most of the marketers think personal selling is not feasible in rural areas because of various
reasons ranging from scattered population to a large number of villages to be covered.
Though still not a prevalent practice adopted by the national level marketers, personal selling is
widely done by the local manufacturers of utensils, garments, edible good etc
For the marketer to adopt personal selling as a tool of promotion in rural area, following are few
of the basic requirements that need to be present in their salesperson −
1. Familiarity with the Rural Area − It is difficult for the salesperson to be familiar with
rural area. As the population of rural region is scattered, it becomes a lot more important
for the salesperson to have sufficient knowledge about rural area which he is supposed to
cover.
2. Proficiency in Local Language − Fluency in the local language is another key skill that
must be present in the salesperson. It acts as a major communication point in converting
prospective customer into an actual one.
3. Acquaintance with the Rural Folks − It is a common tendency among rural people that
they only pay attention to those people whom they can consider as a part of their social
group. Thus, if the salesperson belongs to the particular rural district, in that case his job
not only becomes easy but also chances of success in achieving his sales target increase
strongly.
4. Be Persuasive but not Pushy − A good salesperson is one who is persuasive but not
pushy in nature. Rural people are always sceptical in nature about the new product and
strongly hesitate to purchase it due to lack of faith
5. Here a salesperson needs to remove the doubts of the prospective customer and make him
believe to purchase the product. But being too pushy in his approach can ruin the chances
of sale of the product.
6. Public Relations − Public relations in case of marketing promotions in case of rural areas
are highly important so as to create the formal relationship with the newly acquired
customers. Also, dissemination of information concerning the rural folk is possible only
through effective public relations
Educating rural people about the importance of administering polio drops to children,
vaccination to mother and child, sanitation, hygiene etc. has become possible only
through the publicity health campaigns.
43. Discuss the different types of Sales Promotion

techniques/strategies/Methods in Rural Markets. [Very
Important]********************
Sales Promotion
It is a short term tool adopted by the marketer to increase the sales of the particular product /
service in a particular area for a particular period of time.
According to marketers, sales promotion includes those sales activities that supplement both
personal selling and advertising, and coordinating. It also involves making the advertisements
effective, such as displays, shows and exhibitions and demonstrations.
Types of Sales Promotion

The following are the different types of sales promotion −
1. Push-up Sales Promotion
It is the technique where marketers persuade third parties i.e. intermediaries like dealers, retailers
etc. to stock the products of the respective company and push them towards the ultimate
customers.
Marketers started providing various incentives, pop material etc. to the intermediaries which
encourage them to sell the products to the customers. To increase product sales ratio push-up
sales promotion is the important part of promotion efforts taken up by the companies.
In case of rural marketing the companies also follow push-up sales promotion strategies. The
commonly followed push-up sales promotion strategies include −
(a) Free display materials − Free display materials like banners, sign boards, neon lights etc.
are distributed among dealers to attract and inform the customers about the products.
(b) Storage materials − Storage materials like racks, shelves, refrigerators etc. are distributed
among shopkeepers who help in visual merchandising and also aid in storing the product.
(c) Demonstrations − Important technique of push-up sales promotion, free demos at dealers‘
shops inform the consumers about the handling of the product.
(d) Incentives to dealers − Under the push-up sales promotion special incentives are provided
to dealers on the number of units sold to the ultimate consumers.
(e) Lucky draw contest − It is to motivate dealers to stock the company‘s products and
promote sales, and lucky draw contest are organized among dealers.
(f) Free gifts − It is a common strategy adopted by the companies and free gifts are often
distributed among dealers during festive seasons to increase the consumer base.
2. Pull-up sales promotion −

As the name suggests, pull-up sales promotion is the tool where marketer pulls the customers
towards their product through various promotional strategies and advertising.
Customers come through schemes like Buy 1-Get 1 Free, discounts, exchange offers etc. These
schemes attract customers towards the product and the customers end up purchasing the
products. In context of rural marketing, the following pull-up sales promotional strategies can
work well :
(a) Free Distribution of Samples: Distributing free samples among rural people not only
popularize the product but also gain huge acceptance among them. When the company
decides to enter into new market and launch the new product, in such cases free
distribution of samples is an effective pull-up sales promotional activity. As compared to
urban consumers, the tendency to try the new product is low in case of rural consumers
because they have lack of faith about the new products. Free samples encourage trial
purchase among consumers.
(b) With-pack Premiums: Here, a free product is given either inside the pack or outside the
pack. This attracts the rural customers to purchase the product. This is successful only
when the free product is either complementary or useful to the consumers. For example, a
free toothbrush that comes complementary with toothpaste.
(c) Price-off Premiums: This refers to the cut-price technique for a product. This is useful
not only in case of FMCGs but also in case of consumer durables if the discount is
appropriate.
(d) Money Refund Premiums: It refers to the price of the product, which is partially
refunded to the consumers on the repurchase of same product by showing of proof of
previous purchase like cash memo, empty wrapper, poly packs etc.
(e) Exchange Premiums: It is quite similar to the above strategy, under which instead of
refund of money a new product is given to consumers on showing of proof of previous
purchase.
(f) Interactive Games: Innovative fun-filled games generate interest among the rural crowd.
The winner of the game can be rewarded with the product of the company which
sponsored such games. Sometimes such games ensure high customer involvement and
also increase the interaction between the marketer and target customers.
(g) Fairs and Exhibitions: Fairs are a part of rural people‘s life. For the rural people, they
are the source of entertainment and a good opportunity to launch their products for the
marketers in the rural market. It has mass appeal as several villagers come to fairs.
Customers may be attracted by using the mass media like organizing folk songs
competition, folk dances, magic shows, puppetry shows, street theatre, acrobatic skills,
juggler, etc.
Another important thing is the use of vibrant colours in the company‘s stalls. This pulls
the crowd towards buying the product.
(h) Village Haats: Haats are the weekly markets from where rural people buy the items of
daily necessities, garments, farm inputs etc. They are the source for rural people and a
place of social get together. The existence of haats can be traced back to ancient times —
the times of Chandragupta Maurya.
Haats provide to the marketers an opportunity to display their products. Consumers are
ready to try the product by overcoming all inhibitions and can get the touch and feel of
the product and this will further generate sales as most of the people come to the haats
with an intention to buy.
(i) Melas: Melas are again the essential element of India‘s culture and pull masses. In a
trade mela, one can find variety of products. Melas are held usually in festive seasons like
Dussehra, Diwali, Holi, Eid etc.
During melas, marketers get to interact with a large number of consumers and encourage
for trial purchase. These melas help the marketers target large audience.
(j) Mandis: Mandis are the place for agricultural produce and inputs. Mandis can be a good
platform for manufacturers of agri-inputs ─ both durables and non-durables. Durable are
tractors, pump sets, threshers etc. Non-durable includes seeds, fertilizers etc.
44. Write Short notes on: Distribution Channels in Rural

Markets
Distribution channel:
A distribution channel (also called a marketing channel) is the path or route decided by the
company to deliver its good or service to the customers. The route can be as short as a direct
interaction between the company and the customer or can include several interconnected
intermediaries like wholesalers, distributors, retailers, etc.
Hence, a distribution channel can also be referred to as a set of interdependent intermediaries that
help make a product available to the end customer.
Functions of a distribution channel

In order to understand the importance of distribution channels, you need to understand that it
doesn‘t just bridge the gap between the producer of a product and its user.
Distribution channels provide time, place, and ownership utility. They make the product
available when, where, and in which quantities the customer wants. But other than
these transactional functions, marketing channels are also responsible to carry out the following
functions:
(a) Logistics and Physical Distribution: Marketing channels are responsible for assembly,
storage, sorting, and transportation of goods from manufacturers to customers.
(b) Facilitation: Channels of distribution even provide pre-sale and post-purchase services
like financing, maintenance, information dissemination and channel coordination.
(c) Creating Efficiencies: This is done in two ways: bulk breaking and creating assortments.
Wholesalers and retailers purchase large quantities of goods from manufacturers but break
the bulk by selling few at a time to many other channels or customers. They also offer
different types of products at a single place which is a huge benefit to customers as they
don‘t have to visit different retailers for different products.
(d) Sharing Risks: Since most of the channels buy the products beforehand, they also share
the risk with the manufacturers and do everything possible to sell it.
(e) Marketing: Distribution channels are also called marketing channels because they are
among the core touch points where many marketing strategies are executed. They are in
direct contact with the end customers and help the manufacturers in propagating the brand
message and product benefits and other benefits to the customers.
Obstacles to reach the rural consumers:-

1. The distribution chain requires a large number of intermediaries and this increase the cost
of distribution.
2. Non-availability of dealers.
3. Poor viability of retail outlets due to low business volume.
4. Inadequate banking facilities.
5. Only about 80% of the markets are connected by roads.
6. Interior village roads get flooded during monsoon.
7. Transport and communication facilities are generally poor in villages.
8. Credit requirement of channel members.
45. Discuss the different Models of Rural Distribution.

The following points highlight the top eleven models of rural distribution.
Model # 1. Public Distribution System:
The PDS was started in India before independence with the objective of providing food security
to the poor. Under the system, food-grains were sold from fair price shops at lower prices than
the market rate.
Model # 2. Distribution through Wholesalers:

This is the most common method of reaching rural areas. It entails no extra cost for the company
since existing channels are used. Wholesalers load the goods in a small vehicle and send them to
nearby villages. The driver delivers goods to village retailers and collects payments.
Model # 3. Distribution through Sub-Dealers:

In this model, the wholesaler or the company appoints sub-dealers in villages. Wholesaler
commission is shared with these sub-dealers, who take up the task of supplying to rural retailers
through their own salesmen. Sub-dealers are convenient because the wholesaler is assured of
regular business and payment collections.
Model # 4. Distribution through Local Dealers/Partners (Hub-and-Spoke Model):

In this case, the company bypasses the town wholesaler and directly appoints local dealers or
partners who are served through company depots in a nearby town. This resembles the hub-and-
spoke model, where the company depot serves as a hub serving surrounding villages.
Either the company builds its own logistics to supply goods or it requires the dealers to collect
goods from the depot. This model is more expensive than working through wholesalers as the
company has to maintain many depots in towns. However, the company gains full control of its
rural marketing and distribution and is not dependent on dealers.
Model # 5. Sales through Rural Sales Force (Direct Channel):

Some companies appoint rural sales force to visit dealers and retailers in villages. Goods are then
supplied through the company depot in the town. Small companies follow this route and are able
to achieve deep penetration in their areas of operation. Wholesaler commissions are avoided but
the company bears the cost of distribution. This is an expensive option since the company has to
add a large number of sales people on its payroll. The advantage is that the company can serve
the areas it wants to cover and is not dependent on the wholesaler or the sub-dealer. The
company is also able to establish direct relationship with the rural customers.
Model # 6. Company Outreach Programmes:

Outreach programmes are an effective way to reach villages, especially when demos or
consumer education are required. The company uses BTL techniques to involve communities in
their brands. Excitement is built by multimedia devices and direct customer experience.
Consumers can experience products directly through this method, and brand loyalty can be
achieved.
Model # 7. Village Entrepreneurs („Feet on the Ground‟):
This approach is called ‗feet on the ground‘ approach, in which the company trains and develops
entrepreneurs in villages who act as distributors and brand ambassadors. Case studies of Essilor
and Project Shakti, are examples of this approach. The advantage of this model is that the
company can reach the remotest of the villages. The village entrepreneur creates customers for
the company and works for mutual benefit.
Model # 8. Local Influencers:

In this case, the company works through people who can influence others. Well-known or
respected people in the village arrange community meetings and product demos to influence
consumers and inculcate brand loyalty.
Model # 9. Rural Retail Chains:

Companies can work with retail chains established to serve rural areas. Chains such as Hariyali,
Aadhaar and Choupal, or tying up with petrol pumps, are easy ways to reach villages. However,
many of these initiatives have failed.
Model # 10. NGOs and Other Networks:

Another way of reaching villages is to piggyback on existing networks of NGOs, microcredit
groups or SHGs. Companies work with these groups to tap their existing members. This
initiative was used by Tata Tea, which started its ‗Gaon Chalo‘ initiative with NGOs and SHGs.
This is a beneficial model as the company gets access to a set of people who are connected by a
common cause. Building trust becomes much easier.
Model # 11. Rural Value Chains:

Supply chains are created not only to provide goods to villages but farmers can sell their produce
through the same channel. Such chains help solve farmers‘ problems and help them increase
their income, which, in turn, is used to buy products from the supply chain. The approach,
however, calls for huge investments to cover villages. ITC‘s e-choupal and Jain Irrigation show
that rural distribution is facilitated by helping deliver value to farmers, while at the same time
solving a problem for village folk.
46. Discuss the different types/Levels of Distribution Channels

of Rural Markets [Important]***
Types of Distribution Channels
Channels of distribution can be divided into the direct channel and the indirect channels. Indirect
channels can further be divided into one-level, two-level, and three-level channels based on the
number of intermediaries between manufacturers and customers.
1. Direct Channel or Zero-level Channel (Manufacturer to Customer)
Direct selling is one of the oldest forms of selling products. It doesn‘t involve the inclusion of an
intermediary and the manufacturer gets in direct contact with the customer at the point of sale.
Some examples of direct channels are peddling, brand retail stores, taking orders on the
company‘s website, etc. Direct channels are usually used by manufacturers selling perishable
goods, expensive goods, and whose target audience is geographically concentrated. For example,
bakers, jewellers, etc.
2. Indirect Channels (Selling Through Intermediaries)

When a manufacturer involves a middleman/intermediary to sell its product to the end customer,
it is said to be using an indirect channel. Indirect channels can be classified into three types:
(a) One-level Channel (Manufacturer to Retailer to Customer): Retailers buy the product
from the manufacturer and then sell it to the customers. One level channel of distribution
works best for manufacturers dealing in shopping goods like clothes, shoes, furniture,
toys, etc.
(b) Two-Level Channel (Manufacturer to Wholesaler to Retailer to
Customer): Wholesalers buy the bulk from the manufacturers, breaks it down into small
packages and sells them to retailers who eventually sell it to the end customers. Goods
which are durable, standardised and somewhat inexpensive and whose target audience
isn‘t limited to a confined area use two-level channel of distribution.
(c) Three-Level Channel (Manufacturer to Agent to Wholesaler to Retailer to

Customer): Three level channel of distribution involves an agent besides the wholesaler
and retailer who assists in selling goods. These agents come handy when goods need to
move quickly into the market soon after the order is placed.
These are the middlemen that ensure smooth and effective distribution of goods over your
chosen geographical market. Middlemen are a very important factor in the distribution process.
let us take a look at the types of middlemen we usually find.
47. What are the factors on which selection of Distribution

Channels of Rural Markets depends.
Distribution
Distribution means the process by which we make the goods or the service available to the end
consumer. Generally, the place of production is not the same as the place of consumption. So the
goods have to be distributed to overcome the barrier of place.
Now the distribution of the products can be done by the organisation itself which is direct
distribution. Or it can hire intermediaries and form distributions channel i.e. indirect
distributions.
The plan will depend on several factors, some of which are
1. Product: Whether the product is perishable or durable will be a factor in deciding its
distributions model.
2. Market: The size of the market will be a factor. In a large market, the direct distribution
may not be a perfect choice. Also if the markets are scattered indirect channel will be more
suitable
3. Company: The size of the company and its product-mix are also deciding factors in the
decision about distributions.
4. Marketing Environment: In a slow economy or depression a shorter distributions chain is
preferable. In a healthy economy, there is a wider choice for alternatives.
5. Cost: The cost of the channel like transportation, warehousing and storage, tolls etc are
obviously a factor in this decision.
48. What are the Factors Affecting/Influencing Channels of

Distribution in Rural Marketing. [Very Important]****
Every producer, in order to pass on the product to the consumer, is required to select a channel
for distribution. The selection of the suitable channel of distribution is one of the important
factors of the distribution decisions.
The following factors influencing the selection of the channel of distribution:
1. Factors Pertaining to the Product:
The following factors concerning the product, affect the selection of the channel of
distribution:
i. Price of the Product – The products of a lower price have a long chain of distributors.
As against it, the products having higher price have a smaller chain. Very often, the
producer himself has to sell the products to the consumers directly.
ii. Perishability – The products which are of a perishable nature need lesser number of the
intermediaries or agents for their sale. Most of the eatables (food items), and the bakery
items are distributed only by the retail sellers.
iii. Size and Weight – The size and weight of the products too affect the selection of the
middlemen. Generally, heavy industrial goods are distributed by the producers
themselves to the industrial consumers.
iv. Technical Nature – Some products are of the nature that prior to their selling, the
consumer is required to be given proper instructions with regard to its consumption. In
such a case less of the middlemen are required to be used.
v. Goods Made to Order – The products that are manufactured as per the orders of the
customers could be sold directly and the standardized items could be sold off only by
the middlemen.
vi. After-Sales Service – The products regarding which the after-sales service is to be
provided could be sold off either personally or through the authorized agents.
2. Factors Pertaining to the Consumer or Market:

i. Number of Customers – If the number of customers is large, definitely the services of
the middlemen will have to be sought for. As against it, the products whose customers
are less in number are distributed by the manufacturer himself.
ii. Expansion of the Consumers – The span over which are the customers of any
commodity spread over, also affects the selection of the channel of distribution. When
the consumers are spread through a small or limited sphere, the product is distributed by
the producer himself or his agent. As against it, the goods whose distributors are spread
throughout the whole country, for such distributors, services of wholesaler and the
retailer are sought.
iii. Size of the Order – When bulk supply orders are received from the consumers, the
producer himself takes up the responsibility for the supply of these goods. If the orders
are received piece-meal or in smaller quantities, for it the services of the wholesaler
could be sought. In this way, the size of the order also influences the selection of the
channel of the distribution.
iv. Objective of Purchase – If the product is being purchased for the industrial use; its
direct sale is proper or justified. As against it, if the products are being purchased for the
general consumption, the products reach the consumers after passing innumerable
hands.
v. Need of the Credit Facilities – If, for the sale of any product, it becomes necessary to
grant credit to any customer, it shall he helpful for the producer that for its distribution,
the services of the wholesaler and retailer businessmen be sought. In this way, the need
of the credit facilities too influences the selection of the channel of distribution.
3. Factors Pertaining to the Middlemen:

The following are the main factors concerned with the middlemen:
i. Services Provided by Middlemen – The selection of the middlemen is made keeping
in view their services. If some product is quite new and there is the need of its
publicity and promotion of sales, then instead of adopting the agency system, the
work must be entrusted to the representatives.
ii. Scope or Possibilities of Quantity of Sales – The same channel should be selected
by means of which there is the possibility of more sales.
iii. Attitude of Agents towards the Producers‟ Policies – The producers generally
prefer to select such middlemen who go by their policies. Very often when the
distribution and supply policies of the producers are being disliked by the middlemen,
the selection of middlemen becomes quite limited.
iv. Cost of Channel of Distribution – While selecting the channel of distribution, the
cost of distribution and the services provided by the middlemen or agents too must be
kept into consideration. The producers generally select the most economical channel.
4. Factors Pertaining to the Producer or Company:

The following factors, concerning the producer, affect the selection of the channel of
distribution:
i. Level of Production – The manufacturers who are financially sound and are of a larger
category, are able to appoint the sales representatives in a larger number and thus could
distribute the commodities (products) in larger quantities. As against it, for the smaller
manufacturers, it becomes necessary to procure the services of the wholesalers and the
retail traders.
ii. Financial Resources of the Company – From the financial point of view, the stronger
company needs fewer middlemen.
iii. Managerial Competence and Experience – If some producer lacks in the necessary
managerial experience or proficiency, he will depend more upon the middlemen. The new
manufacturers in the beginning remain more dependent upon the middlemen.
49. Discuss the Role/Function/Importance of Logistics

Management in Rural Markets.
Logistics management consists of the process of planning, implementing and controlling the
efficient flow of raw-materials, work-in-progress and finished goods and related information-
from point of origin to point of consumption; with a view to providing satisfaction to the
customer.
According to Phillip Kotler, ―Market logistics involve planning, implementing and controlling
physical flow of material and final (finished) goods from the point of origin to the point of use to
meet customer requirements, at a profit.
Logistics management is significant for the following reasons:

(i) Cost Reduction and Profit Maximization:
Logistics management results in cost reduction and profit maximization, primarily due to:
• Improved material handling
• Safe, speedy and economical transportation
• Optimum number and convenient location of warehouses etc.
(ii) Efficient Flow of Manufacturing Operations:

Inbound logistics helps in the efficient flow of manufacturing operations, due to on-time delivery
of materials, proper utilisation of materials and semi-finished goods in the production process
and so on.
(iii) Competitive Edge:

Logistics provide, maintain and sharpen the competitive edge of an enterprise by:
• Increasing sales through providing better customer service
• Arranging for rapid and reliable delivery
• Avoiding errors in order processing; and so on.
(iv) Effective Communication System:

An efficient information system is a must for sound logistics management. As such, logistics
management helps in developing effective communication system for continuous interface with
suppliers and rapid response to customer enquiries.
(v) Sound Inventory Management:
Sound inventory management is a by-product of logistics management. A major headache of
production management, financial management etc. is how to ensure sound inventory
management; which headache is cured by logistics management.
50. Discuss the types of Logistics activities in Rural Markets.

Logistics (or Logistical Activities) may be Broadly Classified into Two Categories:
I. Inbound logistics; which is concerned with the smooth and cost effective inflow of materials
and other inputs (that are needed in the manufacturing process) from suppliers to the plant. For
proper management of inbound logistics, the management has to maintain a continuous interface
with suppliers (vendors).
II. Outbound logistics (also called physical distribution management or supply chain
management); is concerned with the flow of finished goods and other related information from
the firm to the customer. For proper management of outbound logistics, the management has to
maintain a continuous interface with transport operators and channels of distribution.
51. Discuss the Key Activities Involved in Logistics

Management of Rural Markets.
Following is a brief account of key activities involved in logistics management:
(i) Network Design:
Network design is one of the prime responsibilities of logistics management. This network is
required to determine the number and location of manufacturing plants, warehouses, material
handling equipment‘s etc. on which logistical efficiency depends.
(ii) Order Processing:

Customers‘ orders are very important in logistics management. Order processing includes
activities for receiving, handling, filing, recording of orders. Herein, management has to ensure
that order processing is accurate, reliable and fast.
(iii) Procurement:
It is related to obtaining materials from outside suppliers. It includes supply sourcing,
negotiation, order placement, inbound transportation, receiving and inspection, storage and
handling etc. Its main objective is to support manufacturing, by providing timely supplies of
qualitative materials, at the lowest possible cost.
(iv) Material Handling:

It involves the activities of handling raw-materials, parts, semi-finished and finished goods into
and out of plant, warehouses and transportation terminals. Management has to ensure that the
raw-materials, parts, semi-finished and finished goods are handled properly to minimize losses
due to breakage, spoilage etc. Further, the management has to minimize the handling costs and
the time involved in material handling.
(v) Inventory Management:

The basic objective of inventory management is to minimize the amount of working capital
blocked in inventories; and at the same time to provide a continuous flow of materials to match
production requirements; and to provide timely supplies of goods to meet customers‘ demands.
Management has to maintain inventories of:
• Raw-materials and parts
• Semi-finished goods
• Finished goods
(vi) Packaging and Labeling:
Packaging and labelling are an important aspect of logistics management. Packaging implies
enclosing or encasing a product into suitable packets or containers, for easy and convenient
handling of the product by both, the seller and specially the buyer.
Packaging facilities the sale of a product. It acts as a silent salesman. For example, a fancy and
decorative packaging of sweets, biscuits etc. on the eve of Diwali, makes for a good sale of such
items.
Labelling means putting identification marks on the package of the product. A label provides
information about – date of packing and expiry, weight or size of product, ingredients used in the
manufacture of the product, instructions for sale handling of the product, price payable by the
buyer etc.
(vii) Warehousing:
Storage or warehousing is that logistical activity which creates time utility by storing goods from
the time of production till the time these are needed by ultimate consumers.
(viii) Transportation:
Transportation is that logistical activity which creates place utility.
Transportation is needed for:
1. Movement of raw-materials from suppliers to the manufacturing unit.
2. Movement of work-in-progress within the plant.
3. Movement of finished goods from plant to the final consumers.
Unit 5 :
Marketing of Agricultural Products [8 M]
Pricing, Distribution of Agricultural Products, Role of Government, Other organization in Marketing
Agricultural products, Co-operative Marketing, Problems in Agricultural Marketing
52. What do you mean by Agricultural Marketing?

[Important]***
Agricultural marketing covers the services involved in moving an agricultural product from the
farm to the consumer. These services involve the planning, organizing, directing and handling
of agricultural produce in such a way as to satisfy farmers, intermediaries and consumers.
Agricultural marketing system is an efficient way by which the farmers can dispose their surplus
produce at a fair and reasonable price. Improvement in the condition of farmers and their
agriculture depends to a large extent on the elaborate arrangements of agricultural marketing.
The term agricultural marketing include all those activities which are mostly related to the
procurement, grading, storing, transporting and selling of the agricultural produce.
Thus, Prof. Faruque has rightly observed: ―Agricultural marketing comprises all operations
involved in the movement of farm produce from the producer to the ultimate consumer. Thus,
agricultural marketing includes the operations like collecting, grading, processing, preserving,
transportation and financing.‖
53. Discuss the different types of Agricultural Marketing in

India.
The important types of agricultural markets in India are as follows:
Type # 1. Primary or Local Markets:
Primary markets, known as Hatts or Shandies are held once or twice a week in the
neighbourhood of a group of villages. There are more than 22,000 such markets in India. Most of
the agriculturists sell their farm products in these markets. More than 50% of the total marketed
surplus is sold in these markets. These markets are organized by village Panchayats who charge
some rent from shopkeepers for the space occupied. Haggling and bargaining is a common
feature of these markets. The village bania acts as a middleman in these markets.
Type # 2. Secondary Markets:

These are also known as ‗wholesale‘ or ‗assembling‘ markets and are called ‗mandis‘ or ‗gungs‘.
There are about 4145 such markets. These markets are permanent in nature; business in the
markets is transacted regularly throughout the year.
The produce is handled in large quantities and specialized operators become necessary for the
performance of different services. The markets provide facilities of storage, handling and
banking services and are well-served by roads and railways. A number of middlemen operate in
these markets.
Type # 3. Terminal Markets:
These markets perform the function of carrying goods to consumers, final buyers or to places of
processing. Such markets are to be found in big cities or at ports. The area of their operation
extends over a state.
Type # 4. Fairs:
Fairs held on religious occasions at pilgrim centres are important sources of marketing of
agricultural produce in India. Such fairs are held annually and are organized by district officers,
local bodies or private agencies. These fairs are very popular in Bihar, W. Bengal, UP, Orissa,
Maharashtra, Gujarat and Rajasthan.
Type # 5. Regulated Markets:
These have been set up by the Government with the purpose of checking fraudulent practices
which are generally practiced by traders in the primary and secondary markets. In these markets,
the rules and regulations are prescribed by the Government marketing practices.
Type # 6. Co-Operative Marketing:

These markets function on the basis of principles of cooperation. A cooperative marketing
society carry the agricultural produce direct to the consumers thus eliminating a large army of
middlemen and intermediaries.
Type # 7. State Trading:

State trading in agricultural produce has become an important element of agricultural marketing
in India. State agencies like, Food Corporation of India, set up their exclusive centres in and
around villages and mandis at harvest time to procure produce from peasants to Government at
fixed prices.
54. Discuss the Problems/Defects of Agricultural Marketing in

India. [Very Important]***********
Accordingly, the Royal Commission on Agriculture has rightly observed, ―So long as the farmer
does not learn the system of marketing himself or in co-operation with others, he can never
bargain better with the buyers of his produce who are very shrewd and well informed.‖
Following are some of the main defects of the agricultural marketing in India:
(i) Lack of Storage Facility:
There is no proper storage or warehousing facilities for farmers in the villages where they can
store their agriculture produce. Every year 15 to 30 per cent of the agricultural produce are
damaged either by rats or rains due to the absence of proper storage facilities. Thus, the farmers
are forced to sell their surplus produce just after harvests at a very low and un-remunerative
price.
(ii) Distress Sale:

Most of the Indian farmers are very poor and thus have no capacity to wait for better price of his
produce in the absence of proper credit facilities. Farmers often have to go for even distress sale
of their output to the village moneylenders-cum-traders at a very poor price.
(iii) Lack of Transportation:
In the absence of proper road transportation facilities in the rural areas, Indian farmers cannot
reach nearby mandis to sell their produce at a fair price. Thus, they prefer to sell their produce at
the village markets itself.
(iv) Unfavourable Mandis:

The condition of the mandis is also not at all favourable to the farmers. In the mandis, the
farmers have to wait for disposing their produce for which there is no storage facilities. Thus, the
farmers will have to take help of the middleman or dalal who take away a major share of the
profit, and finalizes the deal either in his favour or in favour of arhatiya or wholesalers.
(v) Intermediaries:
A large number of intermediaries exist between the cultivator and the consumer. All these
middlemen and dalals claim a good amount of margin and thus reduce the returns of the
cultivators.
(vi) Unregulated Markets:

There are huge numbers of unregulated markets which adopt various malpractices. Prevalence of
false weights and measures and lack of grading and standardization of products in village
markets in India are always going against the interest of ignorant, small and poor farmers.
(vii) Lack of Market Intelligence:

There is absence of market intelligence or information system in India. Indian farmers are not
aware of the ruling prices of their produce prevailing in big markets. Thus, they have to accept
any un-remunerative price for their produce as offered by traders or middlemen.
(viii) Lack of Organisation:

There is lack of collective organisation on the part of Indian farmers. A very small amount of
marketable surplus is being brought to the markets by a huge number of small farmers leading to
a high transportation cost.
(ix) Lack of Grading:

Indian farmers do not give importance to grading of their produce. They hesitate to separate the
qualitatively good crops from bad crops. Therefore, they fail to fetch a good price of their quality
product.
(x) Lack of Institutional Finance:

In the absence of adequate institutional finance, Indian farmers have to come under the clutches
of traders and moneylenders for taking loan. After harvest they have to sell their produce to those
moneylenders at unfavourable terms.
(xi) Unfavourable Conditions:

Farmers are marketing their product under adverse circumstances. A huge number of small and
marginal farmers are forced by the rich farmers, traders and moneylenders to fall into their trap
to go for distress sale of their produce by involving them into a vicious circle of indebtedness.
All these worsen the income distribution pattern of the village economy of the country.
55. Discuss the Remedial Measures for Improvement of

Agricultural Marketing.
Improvement of the agricultural marketing in India is utmost need of the hour.
Following are some of the measures to be followed for improving the existing system of
agricultural marketing in the country:
(i) Eliminating Middlemen:
In order to ensure a fair and satisfactory market for agricultural produce, elimination of
middlemen is very much required. Such middlemen between the farmers and the ultimate
consumers usually disturb the normal functioning of the market.
(ii) Freedom from Moneylenders:

Easy finance facility should be developed so as to set free the farmers from the clutches of
moneylenders who often force them to go for distress sale of their output.
(iii) Storage Facility:

Suitable agricultural marketing structure needs an improved and adequate storage capacity in the
form of modern warehouses and cold storages. Such facilities can raise the holding capacity of
farmers for getting a remunerative price of their product.
(iv) Bargaining Capacity:

The poor bargaining capacity of the farmers arising out of poor holding capacity should he
improved for getting price of their produce in the market.
(v) Regulated Markets:

A good number of regulated markets should be set up throughout the country for removing the
practice of exploitation of farmers by the middlemen. Weights and measures are also to be
modernized.
(vi) Adequate Transport Facility:

For developing satisfactory agricultural marketing cheaper and adequate means of transport must
be developed so that farmer can take their produce in urban market or mandis.
(vii) Agricultural Marketing Societies:

Agricultural marketing co-operative societies should be formed throughout the country for
developing a better marketing structure.
(viii) Market Intelligence:

Proper arrangement should be made through mass media coverage to pass correct and updated
information to the farmers about ruling prices and marketing operations.
56. What are the Steps Taken by Government for Improvement

of Agricultural Marketing in India:
OR
Discuss the Role of Government in Improvement of
Agricultural Marketing in India:
the Government has taken following important steps for the improvement of agricultural
marketing in India:
(i) Warehouses:
For constructing the network of warehouses in the town and mandis, All India Warehousing
Corporation has already been set up. The Central Warehousing Corporation (CMC) owned and
managed nearly 465 warehouses with its total storage capacity of 6.4 million tonnes.
Moreover, State Warehousing Corporations (SWCs) also owned and managed about 1300
warehouses with its total storage capacity of about 8.5 million tonnes. Besides, the Co-operative
Societies have also been provided with necessary financial and technical help to promote
warehousing facilities in the rural areas of the country.
(ii) Development of Marketing Societies and Regulated Markets:

Moreover, the Co-operative Credit Societies are also re-vitalised for providing more credit to the
farmers. Again about 2633 general purpose primary co-operative marketing and processing
societies have also been formed for assuring reasonable prices to the farmers and also to remove
all existing intermediaries from the market.
(iii) Infrastructure Facilities:

The central Government is also providing assistance for the creation of infrastructural facilities
in the markets and also for setting up godowns in rural areas.
These schemes have been transferred to different States and Union Territories with effect from
April 1992 In order to facilitate grading; standards have been laid down for 143 agricultural and
allied commodities under the Agricultural Produce (Grading and Marketing) Act, 1937.
In order to set up cold storage under co-operative sector, the National Co-operative Development
Corporation has advanced a sum of Rs 75 crore for installing 248 cold storages having an
installed capacity of 7.39 lakh tonne. Moreover, agricultural marketing is also suitably attended
by a network of co-operatives at primary level, state level and national level.
(iv) NAFED:
NAFED is a central nodal agency for undertaking price support operations for pulses and
oilseeds and market intervention operation for horticultural items like Kinnu/Malta, onion,
potato, grapes, black pepper, red chilies etc.
A few other organisations in the co-operative sector are the National Cooperative Tobacco
Growers Federation Ltd., the National Consumers‘ Co-operative Federation and the Tribal Co-
operative Marketing Development Federation of India Ltd. (TRIFED) which attends specifically
to the marketing problems of the tribal areas.
(v) Commodity Boards:
Moreover, specialised Commodity Boards continue to operate for rubber, coffee, tea, tobacco,
spices, coconut, oilseed and vegetable oils, horticulture etc. The National Dairy Development
Board is also engaged in the marketing of agricultural commodities.
Separate Directorates have been functioning for the development of agro-raw materials like
sugarcane, jute, tobacco, oilseeds, rice, millets, cotton, pulses, cashew-nuts, cocoa, areca-nut,
spices etc.
Moreover, there are various organisations active in the field of agricultural commodity exports
such as the State Trading Corporation, the Cashew-nuts Export Promotion Council, the Shellac
Export Promotion Council and the Agricultural and Processed Food Development Authority,
which also accomplish the task of promoting/boosting agriculture exports.
The role of Co-operatives in the marketing of agricultural produce has also been expanding
progressively.
(vi) Standardisation and Grading:

Finally, promotion of standardisation and grading of agricultural products is the main function
under institutionalised agricultural marketing. In order to improve the marketability of products
within and outside the country, an effective quality control mechanism is essential.
Accordingly, the Agricultural Produce (Grading and Marking) Act, 1937 was the first legislation
enacted by the Central Government to formulate standards and carry out grading and marking of
agricultural and allied commodities.
57. What do you mean by Co-Operative Farming? [Very

Important]****
By the term ‗Co-operative farming‘, we mean a kind of farming operations where agricultural
practices were conducted by individuals on their own holdings jointly with certain common
agencies formed on their behalf for the collection and purchase of agricultural inputs like seeds,
fertilisers, equipment‘s etc. and also for the sale of their agricultural produce.
This is a kind of co-operative farming societies available in India. It refers to ―Co-operative

holding of the land with cultivation on individual holding as before. The individuals hold their
plots of land on payment of rent to their own co-operative society.
But in real sense, Co-operative farming refers to farming practices where farming operations are
conducted co-operatively. In this type of farming, small individual holdings are merged into a
common unit and accordingly such farm is managed– on co-operative basis.
In respect of co-operative joint farming, individuals retain their ownership of respective plots of
land and distribute the income of the farm among the members on the basis of the size and value
of the plot along with their other contributions.
58. Discuss the Features of Co-Operative Farming.

In a co-operative farming the following features are relevant:
(a) Joining of the farmers in this system is voluntary;
(b) Farmers retain their right to land;
(c) Farmers pool their land, livestock and other implements;
(d) The entire farm is managed as a single unit and the management is elected by all the
members; and
(e) Each and every member earns a share of the total produce in accordance with their land
contribution and labour performed
.
59. Discuss the advantages of Co-Operative Farming:

[Important]****
Co-operative farming has various advantages as given below:
(i) Economies of Scale:
Co-operative farming can solve all the problems of small and uneconomic holdings.
By pooling all the small and marginal farms, members of cooperative farming can reap all the
benefits of large-scale farming. While purchasing agricultural inputs like seeds, fertilisers etc. the
society can purchase in bulk quantity and thus it costs less. Big machineries like tractors,
harvesting machines can now be purchased by the society and the agricultural operations can
now be managed in a more scientific basis.
(ii) Marketable Surplus:

The marketable surplus of food grain and industrial raw materials can be transported and
marketed on a bulk basis suitably by the society and also can fetch remunerative prices.
(iii) Release of Workers:

Higher productivity in co-operative farming will pave the way for release of workers from
agricultural to non-agricultural operations, whose scope expands considerably with economic
progress.
(iv) Administrative Convenience:

Co-operative farming is advantageous for the government on administrative point of view so as
to collect taxes, distributing subsidies and also for introducing improved methods of production.
(v) Creditworthiness:
Co-operative farming can attain higher creditworthiness as compared to that of individual
farming as such large scale farming can attract greater amount of finance for its productive
activities.
(vi) Social Arguments:

Co-operative framings are having some social and political arguments in its favour as it can
inculcate the spirit of co-operation among the various members of the society. Moreover, co-
operative farming can create mutual confidence, feeling of fraternity and friendship among the
members and thus it facilitates collective thinking and collective action among the members of
the society.
Thus, the very foundation of modern democracy depends on the very spirit of co-operation.
60. Discuss the Defects/Problems/Criticisms of Co-Operative

Farming in India.
Co-operative farming was very much popular at initial part of the economic planning in India. In
order to develop co-operative farming various facilities and incentives in the form of financial
assistance, technical assistance, subsidies, additional facilities to supply high yielding seeds,
fertilisers and other inputs were advanced by the Government.
But the progress of co-operative farming was very much disappointing. It is also revealed that
the co-operative farming is still being practiced as a convenient method to by-pass land reforms
and thus it is helping the privileged classes to maintain status quo and also for getting better
facilities in terms of grants and loans from government agencies.
The following are some of the important points of criticism in respect of co-operative farming in
India:
(i) Inequality:
Co-operative farming failed to make a frontal attack on the prevailing inequality in the economic
structure as the traditional status distinction of land owners, landless labourers and share
croppers are still being maintained.
(ii) Improper Work Style:

Co-operative farming societies are following the work style of joint-stock farming and thus
helping to develop capitalist farming in India. Co-operative farming in India has not favoured
any redistribution of income in favour of landless cultivators.
(iii) Poor Support:

Indian bureaucracy has no faith and support in favour of co-operative farming, community
developments etc.
(iv) Lack of Professional Skills:

The management of co-operative farming societies are lacking professional skills. There is
absence of work culture in these societies. Moreover, lack of proper administration and corrupt
practices have been eroding the confidence of the members towards co-operative farming.
(v) Unemployment:
Mechanisation of agriculture through co-operative farming will squeeze the scope of
employment and is likely to make workers redundant in the rural areas.
(vi) Better Alternatives:

Co-operative farming is not the only method to raise agricultural productivity. There is the
availability of better alternatives like adoption of HYV seeds, fertilisers, implements etc. for
raising the productivity of agriculture.
(vii) Loss of Independence:

Under co-operative farming, farmers face loss of independence in their farming operation which
the farmers find it difficult to accept.
61. Discuss the objectives of Agriculture Price Policy in India.

Agricultural price policy in India was introduced since independence. But the agricultural price
policy formulated in India has varied widely for different years and also for different crops. This
policy put much emphasis on the prices of foodgrains like wheat, rice and coarse cereals such as
jowar, bajra, maize etc.
The agricultural price policy of the country like India should have the following objectives:
(a) To protect or insure the producer through guaranteed minimum support price, which as a
stabilisation measure reduces the variability in product prices and therefore price risk of
the farmers. The impact of the risk reduction is expected to induce farmers to undertake
large investments and to adopt improved production technology.
(b) To induce the desired outputs of different crops according to growth targets.
(c) To induce an increase in aggregate agricultural output through large input use and
adoption of high yielding seed, fertilizer and water responsive technology.
(d) To induce farmers to part with a large proportion of foodgrains production as a marketed
surplus.
(e) To protect the consumer against the excessive rise in prices, especially to protect the low
income consumers in periods when supplies lag behind demand and market prices rise
continuously‖.
62. Discuss the Features of Agricultural Price Policy.

Following are some of the important features of agricultural price policy followed by the
Government of India since independence:
(i) Setting up Institutions:
The Government of India has set up some institutions for the implementation of agricultural
price policy in the country. Accordingly, the Agricultural Price Commission was set up in 1965
which announced the minimum support prices and procurement prices for the agricultural
products.
In 1985, the name of this institution was changed into Agricultural Cost and Prices Commission.
Moreover, the foodgrains Policy Committee was appointed by the Government in 1966 which
also recommended various measures of price support.
FCI:
The Food Corporation of India was set up in 1965 for making necessary procurement, storage
and distribution of food grains. In 1989-90, total capital employed in FCI was to the extent of Rs
5138 crore with its total storage capacity at 18 million tonnes. The corporation organises the
price of food grains at government determined prices and sale these food stocks through the
network distribution system.
(ii) Minimum Support Price:
The government fixes the minimum support prices of agricultural products like wheat, rice,
maize, cotton, sugarcane, pulses etc., regularly for safeguarding the interest of farmers. The FCI
also make their purchases of food grains at the procurement prices so as to maintain a rational
price of foodgrains in the interest of farmers.
(iii) Protecting the Consumers:

In order to safeguard the interest of the consumers, the agricultural price policy has made
provision for buffer stock of foodgrains for its distribution among the consumers through public
distribution system.
(iv) Fixation of Maximum Prices:

In order to have a control over the prices of essential commodities the government usually
determines the maximum price of agricultural products so as to protect the general people from
exorbitant rise in prices.
63. Discuss the Effects of Agricultural Price Policy in India.

Important effects of Agricultural Price Policy are as follows:
(i) Incentive to Increase Production:
Agricultural price policy has been providing necessary incentive to the farmers for raising their
agricultural output through modernisation of the sector. The minimum support price should be
determined effectively by the government which will safeguard the interest of the farmers.
(ii) Increase in the Level of Income of Farmers:

The agricultural price policy has provided necessary benefit to the farmers by providing
necessary encouragement and incentives to raise their output and also by supporting its prices.
All these have resulted in an increase in the level of income of farmers as well as their living
standards.
(iii) Change in Cropping Pattern:

The agricultural price policy has resulted in a considerable change in cropping pattern of Indian
agriculture. The production of wheat and rice has increased considerably through the adoption of
modern techniques by getting necessary support from the Governments. But the production of
pulses and oilseeds could not achieve any considerable change in the absence of such price
support.
(iv) Benefit to Industries:

The agricultural price policy has also benefitted the agro industries of the country, like sugar,
cotton textile, vegetable oil etc. By stabilising the prices of agricultural commodities, the policy
has made provision for adequate quantity of raw materials for the agro industries of the country
at reasonable prices.
(v) Benefit to Consumers:
The policy has also resulted in considerable benefit to the consumers by supplying the essential
agricultural commodities at reasonable price regularly.
(vi) Price Stability:

The agricultural price policy has stabilised the prices of agricultural products to a large extent. It
has become successful to contain the undue fluctuation of prices of agricultural products. This
has created a favourable impact on both the consumers and producers of the country
64. Give some Suggestions for Rationalisation of Agricultural

Price Policy:
Following are some of important suggestions which can be advanced for the rationalisation of
agricultural price policy of the country:
(i) Establishment of Some More Agencies:
Apart from Food Corporation of India, some more agencies should be set up for ensuring rational
prices of other agricultural products and also for procuring other agricultural products. In the
meantime the government has already set up Cotton Corporation and Jute Corporation, which
needs to be further strengthened.
Moreover, the government should set up a separate agency for providing necessary minimum
price support to perishable commodities like potato and other vegetables, fruit, etc., considering
its growing potential market both for internal consumption and exports. The operational
efficiency of existing agencies like FCI should be improved.
(ii) Extension of the Price Policy:

The agricultural price policy should be extended to cover more commodities over and above the
15 commodities covered at present. The commodities like pulses, potato, onion and other
important vegetables and fruits may also be covered.
(iii) Rationalisation of Price Fixation:

The prices of agricultural commodities should be fixed in the most rational manner so that it
could cover the entire costs of production. While fixing the prices, the increasing cost of
agricultural input should be taken into consideration.
(iv) Protection of Consumers:

The agricultural prices should be so determined that it can also protect the interest of the general
consumers.
(v) Modernisation:
The agricultural price policy should be framed in such a manner so that it can induce the farmers
to go for modernisation of their agricultural practices.
(vi) Improvement in Agricultural Marketing:
In order to ensure the success of the agricultural price policy, the improvement of the agricultural
marketing system is very important. The farmers should be set free from the clutches of
middlemen and all intermediaries.
(vii) Improvement of PDS:

The public distribution system should be improved so as to ensure a success in the operation of
agricultural price policy. The operation of fair price shops should be streamlined and be made
more efficient and transparent.
65. Discuss in brief the organization in Marketing Agricultural

products.
Agencies Involved in Agricultural Marketing
The peculiar characteristics of agricultural produce such as small and scattered production,
seasonality and perishability of products, transportation and communication etc. requires a large
number of intermediaries between the producer and the ultimate consumer. All the agencies
more or less participate in assembling and distribution of agricultural products.
Sometimes, agricultural commodities directly pass from producers to consumers. But in indirect
marketing agricultural commodities generally move from producers to consumers through
intermediaries or middlemen. The number of intermediaries may vary from one to many.
Following are the agencies involved in Marketing of Products:
1. Producers
Most farmers or producers, perform one or more marketing functions. They sell the surplus
either in the village or in the market. Some farmers, especially the large ones, assemble the
produce of small farmers, transport it to the nearby market, sell it here and make a profit.
2. Middlemen
Middlemen are those individuals or business concerns which specialize in performing the various
marketing functions and rendering such services as are involved in the marketing of goods.
3. Wholesalers
Wholeselling is the one ion of goods is the wholesale dealers. Wholeselling is the one that covers
activities of all individuals or businessmen, which sell to or negotiate sales with customers, who
buy for resale or industrial use. His position is that of an intermediary between manufacturer and
retailer.
4. Retailers
He is the last link in chain of middleman, who sells directly to consumer. He takes title to goods,
sells and sets up business usually amidst the consumer's groups. He buys his requirement usually
from the wholesalers. Retailers in producing areas may have direct contact with producers and
buys goods from them for resale.
5. Co-operative Marketing Societies
Main function is that of commission agency i.e.
(a) Selling the produce of member's.
(b) They also undertake outright purchases.
(c) Provide storage facilities for storage and grading and
(d) Save cultivators from exploitation by traders and help farmers in getting fair price for
their produce.
(e) Performing functions of processing of raw produce.
6. Pucca Arhatias:
He is the real purchase in the wholesale market on his own behalf of acting for some
businessmen, firms in consuming markets. Big mills (rice, oils, cotton etc.) play as their agent
and order him to purchase certain quantity within a given range of price. When pucca arhatia
trades on his own, he dispose of his produce brought by him through dealers in different parts of
country.
7. Katcha Arhatia
He also advances money to the cultivators and village banias on the condition that the produce
will be disposed off through him alone and hence charges a very nominal rate of interest on the
money advanced. Katcha arhatia charges commission for services rendered by him. Important
link between the village cultivator or traders on the one hand.
8. Village Merchants
He is an important agency in the collection of produce and more so when the mando is situated at
a considerable distance from the village. He advances from his shop either on credit or for
exchange of foodgrain or so price given for cultivator's produce. The quantities of agril. Produce
so collected are either disposed off in the mandi or retained for resale in the village in the
processed forms, such as rice, flour, oil etc.
9. Communication Agency
It gives information about the prices prevailing, and quantity available and transactions e.g. post,
telephone, telegraph, newspapers, radio.
10. Advertising Agency

It enables prospective buyers to know the quality of the product and decide about the purchase of
commodities e.g. newspapers, radio, television, cinema slides.
11. Auctioners
They put produce for auction and bidding by the buyers.
12. Government Agencies / Institutions

In addition to individuals, corporate, co-operative and government institutions are operating in
the field of agricultural marketing.
66. Mention the name of some Government organization in

Marketing & Distribution of Agricultural products.
Government Agencies / Institutions
In addition to individuals, corporate, co-operative and government institutions are operating
inthe field of agricultural marketing. Some important institutions are :-
1. The State Trading Corporation (STC)
(a) To make available supplies of essential commodities to consumers at reasonable
priceson a regular basis;
(b) To ensure a fair prices of the produce to the farmers so that there may be an
adequateincentive to increase production;
(c) To minimize violent price fluctuations occurring as a result of seasonal variations
insupply and demand;
(d) To arrange for the supply of such inputs as fertilizers and insecticides so that the tempo
ofincreased production is maintained;
(e) To undertake the procurement and maintenance of buffer stock, and their
distribution,whenever and wherever necessary;
(f) To arrange for storage, transportation, packaging and processing;
(g) To check hoarding, black-marketing and profiteering.
2. The Food Corporation of India (FCI)

(a) To procure a sizable portion of marketable surplus of foodgrains and other agricultural
commodities at incentive prices from the farmers on behalf of the Central and State
Governments;
(b) To make timely releases of the stocks through the public distribution system (fair price
shops and controlled items shops)
(c) To minimize seasonal price fluctuations and inter-regional price variations in
agricultural commodities
(d) To build up a sizable buffer stock of foodgrains.
3. The National Agricultural Co-Operative Marketing Federation (NAFED)

4. Cotton Corporation India (CCI)
5. Jute corporation of India (JCI)
6. National dairy development board (NDDB)
7. National oilseeds and vegetable oils development (NOVOD) board
8. Agricultural processed products and export development agency (APEDA)
9. Marine products export development agency (MPEDA)
10. State and lower level co-operative marketing societies
11. Fair price shops
12. Consumers co-operative stores, milk unions
2021
RURAL MARKETING AND INTERNATIONAL MARKETING — HONOURS
Paper : DSE-6.2M
Full Marks : 80
The figures in the margin indicate full marks.

Candidates are required to give their answers in their own words
as far as practicable.
Module – I (Rural Marketing)

Answer any four questions. 10×4
1. What is the importance of Rural Marketing in India?
2. Discuss the characteristics of Rural Consumer.
3. State Product Planning for Rural Market.
4. Discuss Distribution Channels and Logistics in Rural Market.
5. What are the problems of Agricultural Marketing in India?
6. Distinguish between Rural Marketing and Urban Marketing.
7. State Pricing Strategies for Rural Market.
8. Discuss role of Government for marketing of Agricultural Products.
2020
RURAL MARKETING AND INTERNATIONAL MARKETING — HONOURS
Paper : DSE-6.2M
Full Marks : 80


Group - A
Answer any two questions : 10×2
1. Explain the importance of Rural Marketing.
2. State the characteristics of Rural Consumer.
3. Elucidate the price fixing mechanism in Rural Market.
4. Discuss promotional strategies in Rural Marketing.
5. Write short note on Co-operative Marketing.
6. Distinguish between Rural and Urban Marketing.
Group - B
Answer any one question : 20×1
7. Discuss Product Planning for Rural Markets.
8. State distribution channels and logistics in Rural Marketing.
2020
RURAL MARKETING AND INTERNATIONAL MARKETING — GENERAL
Paper : DSE-6.2M
Full Marks : 80


Group - A
Answer any two questions. 10×2
1. Explain the importance of Rural Marketing.
2. State the behaviour of Rural Consumers.
3. What will be your packaging strategies in Rural Marketing?
4. Distinguish between Rural Marketing and Urban Marketing.
5. Write a short note on Co-operative Marketing.
6. What will be promotional strategies in Rural Marketing?
Group - B
Answer any one question. 20×1
7. Discuss the influence of Economic factors in Rural Marketing.
8. State the role of Government for marketing of agricultural products.

Mock Test Paper (Set A)
Group A:
(4 Questions of 4 Marks each) (Out of 6)
1. Discuss the Importance of Rural Marketing. [Question 5]
2. Discuss the Characteristics of rural consumer? [Question 21]
3. What do you mean by Co-Operative Farming? Discuss the advantages. [Question 57 + 59]
4. Discuss the different Levels of Distribution Channels of Rural Markets [Question 46]
5. Discuss in brief the different Product Planning for Rural markets. [Question 31]
6. Discuss the Packaging Strategies in respect of Rural Marketing. [Question 35]
Group B:
(3 Questions of 8 Marks) (Out of 5)
7. Distinguish between Rural Marketing and Urban Marketing. [Question 11]
8. Discuss the Socio-Cultural factors which influence Rural Marketing. [Question 13]
9. Discuss the different Bases of Rural Market Segmentation. [Question 28]
10. Discuss the different types of Sales Promotion strategies of Rural Markets. [Question 43]
11. Discuss the Defects of Agricultural Marketing in India. [Question 54]

Mock Test Paper (Set B)
Group A:
1. What is Rural Marketing? [Question 1]
2. What is Rural consumer Behaviour ? [Question 24]
3. What do you mean by Rural market Segmentation? [Question 26]
4. Discuss in brief the 4 A's of rural marketing mix. [Question 34]
5. What do you mean by Agricultural Marketing? [Question 52]
6. What do you mean by Co-Operative Farming? [Question 57]
Group B:
8. Discuss the Economic factors that influence Rural Marketing Operations. [Question 15]
9. What are the factors that influence buying pattern of Rural Consumer? [Question 25]
10. What are the Factors Influencing Channels of Distribution in Rural Marketing. [Question 48]
11. Discuss in brief the Role of Government in Marketing Agricultural products. [Question 56]

Mock Test Paper (Set C)
Group A:
1. Discuss the Importance of Rural Marketing. [Question 5]
2. Discuss the Characteristics of rural consumer? [Question 21]
3. What are the benefits of Rural Market Segmentation. [Question 29]
4. Discuss the Objectives of Rural Pricing. [Question 38]
5. What do you mean by Co-Operative Farming? [Question 57]
6. Discuss the of Importance of Logistics Management in Rural Markets. [Question 49]
Group B:
8. Discuss the Socio-Cultural factors which influence Rural Marketing. [Question 13]
9. Discuss the different Bases of Rural Market Segmentation. [Question 28]
10. Discuss the different Promotional strategies adapted in Rural Marketing [Question 40]
11. Discuss the Defects of Agricultural Marketing in India. [Question 54]

Mock Test Paper (Set C)
Group A:
6th Semester Syllabus:

6th Semester: Honours & General
Code Subject's Name Marks Faculty Complete Course fees
DSE 6.1 M Retail Marketing and 100 Rhythm Sir 2500
(Hons/Pass) Marketing of Services
(RMMOS) {Non-MCQ}
DSE 6.2 M Rural Marketing and 100 Rhythm Sir 2500
(Hons/Pass) International Marketing
(RMIM)
{Non-MCQ}
SEC 6.1Chg Computerised Accounting 100 Ready 1500
(Hons/Pass) and e-Filing of Tax Returns accountant (May do offline classes
(CAET) (Computer at computer academy)
(Project submission & Viva) academy)
CC 6.1 Ch Project Work 100 Ravi ₹ 500
(Hons only) (Project submission & Viva) Bhalotia
 RMMOS + RMIM= ₹ 5, 000 (On one time payment), Else : 2000 x 3 = ₹ 6,000

6th Semester Rural Marketing Final Book With Cover Page 2022

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6th Semester Rural Marketing Final Book With Cover Page 2022

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9883034569/8820696761

[6th Semester Marketing Honours & Pass]

6th Semester Marketing Regular classes @ ₹

Classes at Girish Park:

Rural Marketing Book Price = ₹ 100

Group B (3 Questions of 8 Marks) (Out of 5)

Selected Question Numbers from Study Mat

Unit 1 : Rural Marketing and Environment [8 Marks]

Unit 3 : Rural Marketing Strategies [8 Marks]

Unit 5 : Marketing of Agricultural Products [4 + 4 = 8 Marks]:

6th Semester: Honours & General:

Unit 2 : Rural Consumer [8 marks]

Unit 3 : Rural Marketing Strategies [8 marks]

Unit 4 : Promotion and Distribution in Rural Markets [8 marks]

Unit 5 : Marketing of Agricultural Products [8 marks]

1. What is Rural Marketing? [Important]***

3. According to T.P Gopalaswamy – “Rural Marketing is a two-way process which encompasses

4. According to National Commission on Agriculture are – “Rural Marketing is a process which

2. Discuss the Concept of Rural Marketing? [Important]***

It is basically a three-way marketing stage where the transactions can be −

3. Discuss the Nature of Rural Markets

4. Discuss the Potential/Scope of Rural Markets

5. Discuss the Importance of Rural Marketing. [Very

2. Rapid Economic Growth:

4. Improved Living Standard:

5. Development of Agro-based Industries:

6. Optimum Utilization of Rural Untapped Resources:

8. Easy Marketability of Agricultural Produces:

10. Quality of Life and Reduced Crime:

11. Balanced Industrial Growth:

12. Increase in Per Capita Income:

13. Improved Banking & Credit Facility:

6. Discuss the features/Characteristics of Rural Market.

Feature # 7. Diverse Socio-Economic Background:

Feature # 8. Literacy in Rural Area:

7. Write short notes on: Rural Marketing In Indian Economy

The following are the characteristics of rural markets −

8. What is Urban Marketing?

9. What ae the Challenges/Problems in Rural Market

2. Low literacy levels

3. Low Per Capita Income

4. Transportation and Warehousing

5. Ineffective Distribution Channels

6. Many Languages and Diversity in Culture

10. Distinguish between Rural vs. Urban Marketing. [Very

The rural environment presents a different picture.

B. Social Relations Peculiarity

C. Low Exposure to Marketing Stimuli:

A different and apathetic situation we find in rural markets

On the other hand, the rural life is dependent on

E. Employment and Incomes Variations:

On the other hand, rural people work in a less certain environment

11. Distinguish between Urban Market & Rural Markets.

2. Dense Markets Thin Markets

3. Developed Markets Developing or Underdeveloped Markets

4. More Sellers Small Number of Sellers

5. Well-defined Distinct Segments Overlapping and Small Segments

6. Highly Responsive/Higher Exposure to Low Response/Low Exposure to Marketing

7. Higher No. of Products/Brands Limited Products/Brands

8. High Degree of Competition Lower Degree of Competition

9. Strong Infrastructure (Displays, Logistics) Weak Infrastructure

12. Unit Family Structure Low Consumerism

13. Mall Culture/Buying Convenience Small Shops/Limited Display

14. Higher influence of Social Media Lower influence of Social Media