Rural marketing

Unit- 2

Nature of rural markets

The rural market has been growing constantly over the years, and more than
about 800 million people live in villages in India. Today, Indian companies, as
well as multinationals like Colgate, Godrej, and Hindustan Lever, are focusing
on rural markets. Opportunities in rural markets are very promising for those
who can fathom the kinetics of rural markets and squeeze them to their best
advantage.

Unlike urban markets, rural markets are extremely unpredictable and possess
special features. The highlighted population is predominantly illiterate, have
lower and irregular income levels. They don’t possess a stable or a predictable
reaction pattern due to inconsistent income. Demand for a product depends
on the availability of necessities like power, transportation, schools, and
hospitals. Rural markets largely depend on the government’s contribution in
the rural sector.
LARGE SCATTERED MARKET
▪ The rural market in India is large and scattered which means that it
consists of approximately around 63 crore customers across 5, 70, 000
villages throughout the country.
▪ The rural population has increased by 125 in the last decade and accounts
for over 40% of the Indian economy.
▪ The market offers great opportunities in comparison with the urban sector.
It blankets the maximum population and regions, hence consists of the
maximum number of consumers. Rural market accounts for almost 70% of
the total Indian population.
DIVERSE AND HETEROGENEOUS
▪ Rural Market is unbelievably diverse and heterogeneous, which furnishes a
market for all categories of products and services.
▪ It consists of as many as 20,000 ethnic groups, which pronounces a hard
challenge to the marketer.
▪ There exist over 24 languages and 1,642 dialects or so, which makes it
tremendously difficult to come up with a single promotional message.
▪ We find various types of buyers in rural areas; few are simple while few are
sophisticated, some are rich and the other poor, some might be educated
while the others could be illiterates, few of them could be extremely
dynamic and modern while some are rigid and conservative, some rely on
quality while a few might compromise on quality responding to availability
and pricing. So, it exhibits an extremely diverse and a heterogeneous
market.
LOW STANDARD OF LIVING
▪ Consumers in rural areas have a relatively low standard of living, and rural
customers have diverse socio-economic backwardness.
▪ Low standard of living is a result of lower literacy rates, low per capita
income hence, low purchasing power, social backwardness and because of
low or no savings.
PRICING
▪ Price is the most crucial factor that influences the buying decision of a
customer in a rural market.
▪ They can compromise on quality for a lower price and magnet towards
discounts and sales.
▪ The payment mostly functions on a credit basis. They are accustomed to
postponing payments.
PROMOTION
▪ Personal selling works well for rural masses. Rural customer’s magnet to
local and regional promotional efforts.
▪ Their reference group is a combination of educated and illiterate family
members residing in urban areas. They strongly believe their religious or
spiritual readers who are a dominant part of their reference groups.
▪ Articles like knives, rings, bangles, key-chains, caps, gas lighters, portraits,
lamps calendars, and cards with religious impression are favourable
promotional articles in a rural market.
▪ Visual advertisements published in local magazines and newspapers in
their regional language might work wonders.
PRODUCTS
▪ Customers in your rural markets bank on the utility of a product compared
to status and prestige. They believe in simple and effective products that
serve them in the long run.
▪ They reciprocate to products that equate with their religious beliefs and
social norms.
▪ They favour products that can be used and that benefit all family members
rather than the personal-use ones.
▪ Branding, packaging, and labelling have minimal influence on this market
segment.
▪ They are less concerned or unaware of the after sales services associated
with products like the guarantee, warranty, services, and so on.
DISTRIBUTION
▪ Purchases are mostly made from known retailers and salesmen. Rural
markets don’t believe in mall culture or the bigger departmental stores.
▪ Purchase mostly happens from retail outlets situated in rural or suburban
areas.
▪ They are not keen on home delivery. They seek instant possession. Since
they lack patience, they are found eager to possess and use products
immediately.
▪ Caste, religion, political parties, religious and spiritual leaders play a
significant role in choosing retailers.
▪ Online marketing has not yet secured its place in rural areas. They normally
place frequent small orders with their retailers and lack storage facilities.

Rural attractiveness

1. Population Growth:
Increased in population and, hence, increase in demand. At present rural
population is account for nearly 72 crores of total Indian population, three
times more than urban population. More population means more demand.

2. Agriculture Prosperity:
Market increases due to agrarian prosperity. Profitable farming and better
marketing options in some states have made a large number of villagers the
potential consumers for FMCG (Fast Moving Consumer Goods) companies. The
greater the agriculture development in an area, the greater the rural market.

3. Rural Development Programme

Large inflow of investment in rural development programme from government
and other sources contributed to improved life style of rural segments.

4. Intensive Interaction with Urban Population:

Increased contacts of rural people with urban counterpart due to rapid
development of transportation and telecommunication.

5. Increased Population Mobility:

Mobility of rural population to urban areas, metro cities and foreign countries
intensified incomes and, hence, purchasing power of rural people.

6. Increased Rural Attraction:

Increasing attraction of rich people to stay temporary or permanently in rural
areas for better and peaceful life. Agricultural land is being converted into
luxurious farm-houses. Such move is leading to tremendous development of
rural market.

7. Improved Literacy Rate:

Increased literacy rate and education level among rural folks, and growth of
academic and training institutes in rural places have accelerated growth of
rural market. Literacy level 25% before independence – is now more than 67%.

8. Improved Rural Infrastructure:

Improved infrastructure has positive impacts on rural market in several ways.
Availability of electricity, education, health, transportation, communication
and entertainment, and so on contributed to rural development and, hence,
rural market.

9. Growth of Agro-processing Industry:

Establishment and growth of agro-processing industries, and active
involvement of the giant business units (For example, Reliance Fresh) in
distribution of agro-products like fruits, vegetables, serials, etc., have changed
income and life style of rural people.

10. Political Influence of Rural Population:

Improved and increased political influence of rural people can significantly
contribute to rural development.

11. Foreign Income:

Inflow of foreign remittance (transfer funds) and foreign-made products into
rural areas significant fueled to rural market boom.

12. Reforms in Land Tenure System:

Significant changes in land tenure system causing a structural change in
ownership pattern affected positively the life of farmers.

13. Rural Development Priority:

Liberal assistance from national and international financial institutions and
agencies for rural development has changed rural lifestyle. World Bank has
granted billions of rupee for rural infrastructure.

14. Role of Giant Business Tycoons:

Increased corporate business interest in rural areas resulted into rapid rural
development and, consequently, has fueled to growth of rural market.
Corporate tycoons are liberally donating for improving rural infrastructures.

15. Rapid Socio-economic Changes:

Socio-economic changes (e.g., lifestyle, habits and tastes, economic status,
etc.) resulted into drastic changes in living pattern of rural people resulted into
greater potential for cosmetics and durable products along with automobiles.
After the basic needs of food, cloth and shelter, they are looking at how to live
better.

Characteristics of rural consumer

Education

Consumers are less literate due to fewer educational facilities.

The marketers need such strategies which generate product awareness

considering this characteristic. They can incorporate an audio-visual medium of
communication in their marketing campaign.

Low-Income Levels

The income of the rural consumer has grown over the years. But still, their
disposable income is spent on basic necessities. They prefer affordable
products and purchase only the required quantity of goods.

The marketers must launch their products in small packaging and at lower
rates.

Occupation

The consumption pattern of rural consumers largely depends upon their

income and occupation. It is observed that the occupation of a rural consumer
is framing in general.

There exist other professions as well, like service providers, technical workers,
etc.
The companies must launch such products in markets that satisfy all consumer
groups.

Impact of Reference Groups

In rural areas, the consumer is often influenced by a few people. Consequently,

there is a significant change in their buying behaviour.

The rural marketers must plan their strategies that positively impact these
influencers.

The people who may influence rural consumers may include:

1. Local Vendors
2. Teachers
3. Bank ManagersLocal Leaders
4. Health Workers, etc
5. Media Habits
People residing in rural areas are less literate, as discussed above. Thus, print
media does not have much impact on rural consumers.
The companies must use those communication channels that reach consumers
quickly.

Brand Loyalty

Rural consumers tend to be loyal to brands. With the development, rural

consumers are well aware of the available brands.

Some brands have successfully created a strong consumer base in the rural
markets.

Value for Money

It is the main characteristic of rural consumers. Consumers look for quality

products at justified prices.
Rural marketers should try to create a sense of trust in the mind of the
consumers. And offer products that deliver maximum benefits as per their
value.

Rural vs Urban Mindsets

Human settlements are classified as rural or urban depending on the density of

human-created structures and resident people in a particular area. Urban
areas can include town and cities while rural areas include villages and
hamlets.

While rural areas may develop randomly on the basis of natural vegetation and
fauna available in a region, urban settlements are proper, planned settlements
built up according to a process called urbanization. Many times, rural areas are
focused upon by governments and development agencies and turned into
urban areas.

Unlike rural areas, urban settlements are defined by their advanced civic
amenities, opportunities for education, facilities for transport, business and
social interaction and overall better standard of living. Socio-cultural statistics
are usually based on an urban population

While rural settlements are based more on natural resources and events, the
urban population receives the benefits of man’s advancements in the areas of
science and technology and is not nature-dependent for its day to day
functions. Businesses stay open late into the evenings in urban areas while,
sunset in rural areas means the day is virtually over goods/ service for some
value in return such as Money" . So the Market is same everywhere .But, the
difference is in the consumer behaviour. There will be different buyers in each
market. This is because of different factors which Influence them. So the same
way there is a difference between Rural and Urban Market. The factors are so
many to define. There is a difference in all the marketing Variables. That is
where most of the companies approach with different Marketing Mix and
Strategies to Rural Market. The strategies differs from the urban to rural
market. The companies which have understood the phenomena of rural
market have succeeded in the market, For Ex: HUL, ITC, Colgate, Rajdoot
Motorcycle. These companies have done a perfect homework and
Implemented in terms of effort and Operations. These companies approach
shows that there is a difference between Rural and Urban Market.

Infrastructure: The facilities like Electricity, Internet, Roads and Buildings,

Educational Institutions, Financial Institutions, Communication and Organized
Market, Other Facilities differs in urban and rural market. In urban everything
gets implemented soon and Availability is also there. Where as in rural market
everything takes a good amount of time.

Economy: Here the Economy means, the earning Capacity in a rural Market.
The cost of Living always depends upon their way of earning. So, the Income
levels are unreliable, as Most of them are depended upon the seasons and
Agriculture. So the Income levels cannot be a fixed one.

Lifestyle: The Lifestyle, that is living pattern of both the markets differ a lot.
This can be important factor which influences the companies to think of when
they approach rural market.

Socio- Cultural Background: Due to the illiteracy level, and Culture adaptability
from long time the rural market always gets differ than the urban market. The
superstition and other belief as well as the way of thinking towards products
and goods differ in these two markets.
Availability or Reach: Due to the areas which are diverted geographically and
Heterogeneous market the reach is very difficult. The logistics for rural market
is a tough task than to reach the Urban Market.

Habits: The daily routine of the people makes them to cultivate different
habits. Apart from due to the awareness is low in Media terms there will be a
difference in the habits.

Competition: The competition in the market for brands and Companies always
differ. As in rural markets it is always the channel Partner and Retailer plays a
vital role. But where as in Urban Market Brand plays a great role.

Rural market environment

Rural marketing environment means all those factors like demographic –

Physical, Economic, Social etc. which affect the rural marketing. When
marketing activities are done in the rural areas, it is necessary to know the
conditions of rural markets in terms of environment which is ever changing.
Rural marketing requires an understanding of the rural environment in which
companies have to operate to deliver product and services.

Rural marketing is basically a focused marketing activity of an organization. The

environment gives the complete picture of threats and opportunities of the
markets.

Environment means external conditions or surroundings, those in which

people live or work and it includes all elements, factors, conditions that have
some impact on growth and development of certain organism.

Marketing cannot take place in isolation. Marketing being a dynamic activity is

always affected by its environment. A successful marketing is customer-
centric; it starts from understanding the customers. Consumer decisions and
actions can be properly understood only when the force field in which they are
operating is understood.
Features of rural marketing environment

1. Affected by External Factors – Main feature of rural marketing

environment is that it is greatly affected by external factors like
demographic, economical, political, socio culture etc. It is
necessary to study these external factors from the point of view of
rural markets because these factors are different in rural markets
as compared to urban markets.

▪ 2. Flexibility – Rural marketing environment is not static or rigid. It is

highly dynamic and keep changing as compared to last few decades.
Rural markets have shown a greater change now a days in terms of
various factors like income, birth rate, housing pattern etc.

▪ 3. Complexity – Another feature of rural marketing environment is

complexity. There is not only one or two factor which affect rural
markets but there are various factors. So, it is not easy to study all
factors and hence, it is complex in nature.

▪ 4. Relativity – Impact of rural marketing environment may differ from

company to company or country to country. Some environmental
factors may affect some company a lot while these factors may have less
effect on other company.

▪ 5. Uncertainty – It is very difficult to predict the changes of marketing

environment. As environment is changing very fast. For example, rural
markets have great change in term of IT, fashion revolution etc.

Importance of rural market environment

1. To Study the Developments and Complexities of Rural Environment:

Complexities of environment refer to those factors which influence the
business. These factors affect the business in different ways. Marketing
environment is studied for measuring these complexities because in
environment, changes occurs regularly like change in interest of consumers,
income profile of rural consumers, size, qualities, availability of goods,
occupation etc.
In short, these complexities and changes can be ascertained easily through the
study of marketing environment. Study of rural marketing environmental is
also important for marketers in order to realize the developments and trends
in rural markets rather than to know the static picture of rural market
environment.

2. To Make Company Policy:

In order to prepare the company policy, it is responsibility of marketing
manager to change the company’s policy along with change in environment.
Company’s policy will be different in rural markets as compared to urban
markets. Moreover, he should make timely changes in these policies and
strategies according to changes occurring in the environment. Success of any
business depend on the fact that how fast it can make changes in the policies
and strategies on the basis of change in environment.

3. Help in Taking Various Marketing Decision:

A marketing manager has to take various decisions regarding marketing at
different times. Appropriate decisions can be taken only if marketing manager
has integrated knowledge of marketing environment. On the basis of these
decisions, he can establish proper coordination among marketing
departments.

Understanding of rural marketing environment help in taking various

marketing decisions like product decision, price decision, demand estimate
decision etc. Demographic, socio cultural, economic factors in rural areas help
in preparing marketing plan for the marketer.

4. To Recognize New Market Opportunities:

Opportunities are the favourable situations of the business. If a marketing
manager has adequate strength, then he can take benefit of these
opportunities. Through environment analysis, timely knowledge of available
opportunities for business is received.

Thus, marketing manager can take benefit of these opportunities by making

plans in suitable time period. Marketing opportunity is an area of buyer need
or potential interests in which a company can perform profitably.
Opportunities can be in many forms and marketers must have an ability of
spotting them. For this, it is necessary to study rural marketing environment to
tap the potential of rural markets.
5. To Understand Rural Market Conditions:
A marketing manager has to sell his product in the market for which he should
have knowledge about the customers, competitive units, suppliers, etc.
Information about market conditions like change in demand and supply of
goods, fashion, taste, competition, boom, recession in market, etc. is beneficial
for the business. A marketing manager gets all this information through the
study of marketing environment.

6. Helpful in Providing Information Regarding Threats:

Threats refer to adverse situations which increase the risk of business. This risk
can be due to technical changes, increase in competition, change in fashion,
economic changes and lack of material. Thus knowledge of marketing
environment is necessary for getting the timely information regarding
problems, challenges and possible threats of marketing

7. Helpful in Facing the Competition and to Get Information Regarding New

Challenges and Problems:
Study of marketing environment is necessary for keeping the products of the
organization in existence for long period. For this, marketing manager has to
regularly study the products of competitive units, their cost, marketing
strategies, promotion plans, etc. A marketer can get the information about
new challenges and problems with the help of marketing environment.

8. Importance in Studying Rural Consumer Behaviour::

Rural consumers are very different from urban consumers in terms of thinking,
lifestyle, culture, behaviour etc. Consumer decisions and actions of rural
consumers can be properly comprehend only when the factors in which they
are operating is understood.

9. To Protect Themselves from the Effect of External Factors:

External factors like, economic, demographic, socio-cultural etc., keeps
changing. These factors are uncontrollable and their effect is unbearable.
These factors provide threat as well as opportunities. So, in order to protect
themselves and to exploit opportunities, it is important for the marketers to
study these external environment factors.

Rural marketing environment- internal and external factors

These environmental factors are majorly divided into two parts like internal
and external:
(i) Internal Environment:
It refers to those elements which influence the internal activities of an
organization such as – Money, Material, Machine and Labour.
(ii) External Environment:
It refers to those elements which influence the outside activities of an
organization like – Demographic, Physical, Socio-Cultural, Technological,
Political and Legal influences.
So, an organization has its own internal strength and weaknesses as well as
common external opportunities and threats. They have to play effectively to
convert their hurdles into suitable aid which can be controlled by them. In the
following sessions, we will discuss about the major external factors which
influence the organization’s activity.
Rural Marketing Environment means the opportunities and threats available in
front of the marketers while promoting their sales very particularly in the rural
areas. If the marketers are concentrating both in rural as well as urban
markets, they can mutually tackle rural and urban environmental threats in a
positive manner. For example, while paying tax, Government is giving tax
benefits or sometimes tax holidays (i.e., exempted to pay tax) to the corporate
that are starting their production unit in rural areas.
This is just because to improve rural employment opportunities, their income
and overall rural prosperity. If a manufacturer constructs or shifts their
production place to rural area, he/she can avail the tax benefit. In this way,
one of the major environmental threats (i.e., liability to pay huge corporate
tax) can be overcome and will reflect in the reduced production cost. At the
same time, rural environmental threat such as – low literacy level, reach of
media, etc., can be tackled by targeting urban consumers.
In real situation, it is very difficult to conduct Strength, Weaknesses,
Opportunities and Threats (SWOT) analysis in this environment because of the
frequent occurrences of changes. Marketers, who are ready to take effective
steps to change their marketing plans and strategies, will prosper in this
changing environment.
STRUCTURE OF RURAL MARKETING ENVIRONMENT

Rural marketing structure includes the various types of environments which

are very important and to be understood by the marketers who want to sell
their products in the rural areas.
Demographic Environment:
Growing population is not a sign for growing market unless they have
considerable purchasing power. Generally, people between the age group of
15-35 are the largest consumption group for many goods. More particularly,
consumers who falls in the age group of 20-35, accounts almost 25% of India’s
total consumption. If the corporate gear up their marketing policies to attract
the people below the age group of 35, they can easily tap nearly 70% of rural
potential.
Education and Literacy Level of Rural Women and Youth:
Fortunately, here also, the change is taking place and the rural literacy rate is
risen nearly 25% over the last two decades. The improved literacy rate
naturally leads to the growth of demand for education oriented products like –
pen, pencil, notebooks and electronic goods such as – digital diaries,
calculators, etc. It also increases the rural employment opportunities,
disposable income and finally rural purchasing power for several products in
the sectors of consumer durables as well as FMCG. So, the growth in rural
literacy level, results in noticeable change for the improvement of rural
people’s socio-economic status.
Although the Central and State Governments have implemented many
schemes, severe punishments etc., to stop childhood marriage, keep away
from education to girls, killing female child at the stage of birth itself, etc.,
unfortunately, these customs are still exist in many states of India such as –
Bihar, Haryana, Rajasthan, Tamil Nadu, Uttar Pradesh and so on. These are all
just because of higher illiteracy level among rural people and particularly lack
of literacy level among rural women.
But the rural youth education and literacy level shows a good progress and
prosperous rural India. Here, the contribution given by both State and Central
Governments to improve rural youth literacy rate is noticeable one. This
growth in youth literacy level increases the demand for modern, fashionable,
current trend products among the younger generation.
Also it increases the brand awareness of rural consumers for various products
(national and international level). Marketers can make serious efforts to
capture these adults group (falls in the age group of 20-35), for their products
such as perfumes, two- wheelers, western outfits, etc., which accounts nearly
25% of India’s consumption.
Density of Population:
Although the rural population has come down over the years, there has been
considerable increase in real terms of total number of rural population. If we
compare the rural proportion to total population in the past three decades, it
is slightly decreasing. But still the total number of rural population is increasing
in a considerable manner.
Rural Housing:
One can easily assess the economic status and growth of any sector with the
help of housing pattern they have. Over the decades, there has been
spectacular change in the trend of housing pattern. People are showing
interest to shift from less permanent (semi-pucca) type of houses to more
permanent (pucca) type of houses.
In the decade of 1980s, kuccha and semi-pucca houses were more when
compared with the more permanent houses. Just 22% of houses only felt in
the category of pucca houses. In 1990s, 31% of houses were in the type of
pucca and the remaining were in the type of semi-pucca and kuchha.
In the millennium decade, the more permanent natured pucca houses hits
more than 40 % of rural houses (approximately 50 million houses) and the rest
60% of housing type cumulates both semi-pucca and kuchha.
In this also, kuchha type of houses accounts only 23% (when compared with
past decades, these type of houses are following down) and the balance 36% is
a little bit improved semi-pucca. Various state governments are putting more
efforts to increase semi-pucca and pucca houses and to reduce kuccha houses.
Rural Household Pattern:
Rural household pattern consists of family structure and housing pattern. In
rural areas also, Indian tradition joint family system is slowly goes down and
the nuclear family culture is spreading alike in the urban areas.
Family Structure:
Different types of family structures are existing in the demographic India.
These can broadly be classified based on the number of households in a family
under two groups namely; Joint family and Nuclear family.
Again following the same classification pattern, nuclear family can be divided
into two types such as – nuclear family with elders and without elders.
Joint Family:
Group of people (grand-parents, parents, their brothers and sisters, their
children) living together and using common property and dwelling house.
Generally, the elder person is the head of the family and he is responsible to
make decisions in all issues.
Nuclear with Elders:
It is a shrieked form of big joint family. It consists of grand-parents, parents and
their children alone (not living with parent’s brothers and sisters’ family). Here,
also final decision is taken by the senior person. This lack of individual decision
making capacity is one of the major marketing hurdles for the marketers while
promoting their products in villages.
Nuclear without Elders:
This is the exact nuclear family which is commonly seen in urban sector Father,
mother and their children (nowadays, not even children only with single child)
is the total family members and they can take individual decisions in all
matters.
Recently, one more different type of nuclear family system is emerging in
India. In this system, all are living in a big common house but, having separate
kitchens, savings, assets/properties, etc.
Occupational Patterns:
Agricultural and allied activities are the main occupation for the rural people.
An allied activity includes Horticulture, Forestry, Fishery, Animal Husbandry
(dairy, poultry, and goat), Floriculture etc., the everyday needs of the villagers
are also met by many other types of occupations. In rural sector, agri-based
occupation can be different types.
The occupations which can be generally seen in the villages are:
1. Farm laborer
2. Milkman
3. Washer man
4. Pot maker
5. Blacksmith
6. Barber
7. Carpenter
8. Cobbler
9. Priest
10. Weaver.
Other rural occupation which are non-agricultural and support agricultural
requirements and the rural people in their daily life are:
1. Village doctor
2. Policemen
3. Traditional village nurse
4. Anganwadi workers
5. Teacher
6. Peon
7. Grocer
8. Mechanic
9. Cyber cafe owner
10. Venders
11. Agricultural experts
12. Electricians etc.
Census of 2001 reports that, this agri-based occupational trend is slowly
changing and a gradual shift towards non-agri based work has been taken
place. As per the NSSO Rounds Survey, for the year of 1999-2000, rural India’s
Primary sector workforce accounts for 76.1%, Secondary sector 11.3%, Tertiary
sector 12.5% and finally non-farm sector hits 23.8%, which is next to the
Primary sector.

Economic Environment:
There is a tremendous growth in rural Indian economy. The higher income
class in the rural sector has almost grown six times. There is an increase in the
rural per capita income also. Let’s understand the progress.
Income Generation:
The occupation pattern reveals the income generation pattern also. From the
Table 3.7, we can find out more than 40% of rural people are engaged in
agricultural and allied activities. Next followed by the wage earners, salary
earners, and small shop keepers and so on. If we compare with urban sector,
rural sector hits very little percentage of professionals and businessman.
In contrast, nearly 40% of urban people are earning regular salaries and just
3.45% of people alone engaged in agriculture and related activities. Wage
earners and small shop keepers comes in the second and third place
respectively which is similar in the rural sector and followed by the artisan,
businessman etc.
Expenditure Pattern:
If we compare the availability of disposable income in the hands of rural and
urban population, generally less is with the rural people. This is reflected in
their expenditure pattern also which is evidenced from Table 3.8.
From Table 3.8, it is clear that the rural population is spending more than half
of their income on food items. If we particularly analyze their proportion of
expenditure on food items, nearly 33% is spended on cereals and the rest
alone is spended on all other food items such as – milk and milk based
products, vegetables, edible oil, beverages and others, etc.
If we compare with the expenditure pattern on non-food items of urban
people, approximately 41% alone accounts in the rural sector. Here, the major
proportion of rural people spending on fuel and light is nearly 21% of total
expenditure on non-food items.
Saving Pattern:
As the time is changing the earning, consumption and saving pattern of the
Indian consumers are also changing. The research made by Centre for Macro
Consumer Research (CMCR) of the National Council of Applied Economic
Research (NCAER) reports that there will be rapid shift of 42% in the income
level of the rural households by 2015. This would become possible due to the
development in agriculture, and other activities like construction, retail,
trading, etc.
There is a huge dramatic change in the rural sector with a change with the shift
in the income earnings and the consumption patterns of the rural consumers.
But there is a huge disparity between the income generation and consumption
pattern among the various states of rural India. Bridging this gap is a big
challenge for the marketers and government.
The study further reveals that the top 44% of the households in the country
currently have 93% of the country’s surplus income. Further it states that even
the bottom 60% of households have 40% of total household expenditure. This
shows the consumption power of the rural consumers who are at the bottom
of the pyramid. Hence, for any marketer it is inevitable to ignore the rural
consumers who are at the bottom of the pyramid.
Poor education is another factor that affects the size of the rural work force.
Only 14% of the rural population have a graduate and above as a chief bread
winner accounting for over 28% of the total household income. Thus, the
education factor directly links to the growth of the income level of rural
households.
Rural people are also becoming aware of saving their income during the crisis
situation. Based on some research it has been reported that around 81% of the
rural households save a portion of their disposable income for the future.
Because of their savings for the future more than 50% of the rural households
are very confident about their steady and bright future.
Physical Environment:
Indian land is a mixture of both domestic land as well as cultivation land. But
unfortunately, urban side cultivation land also slowly utilized for household
purpose such as constructing factories, apartments, buildings, multiplexes and
so on. In contrast with the urban side, the rural cultivation land is still used for
the agriculture purpose.
Distinguishing Features:
Rural land is a combination of cultivation land and farm houses. Farmers
normally live in their own farm houses and those houses falls in the category of
kuchha in general.
If we observe Indian villages, construction of houses are majorly based on
Religious, Caste and Relationship. Some examples are – Agraharam – colony of
Brahmins, Vysiyar Street – Vaishyas residing place and separate colony for
Scheduled Caste and Scheduled Tribes.
Scattered and Clustered Settlement:
Rural India is inevitably connected with towns and villages. Most of the towns
are nothing but the developed villages and they have Municipalities instead of
Panchayats. But still, other attributes such as dependency on weekly haats,
mandis and melas for buying and selling of goods in towns are as same as in
the villages.
People in towns are involved in various jobs, such as – teachers, officers,
professionals, businessmen, farmers and so on. All though they have different
occupations, we can simply group them under two categories like, stable salary
earners and unstable or irregular income earners.
Other Major Macro Environments:
As India is growing and has more opportunities for the lower-income group. If
we take the data from the past ten years, the lower-income group shifted to
higher-income group.
Land Distribution:
It has been clear that nearly 75% of income from rural area is generated
through agriculture and allied activities. Land is the basic resource for all
agriculture based activities. Land which is an unrecognized asset has changed
the living style and attitude of farmers. Rural people enjoy the closeness with
nature, soil, animals and other natural things.
Land can be classified in many ways such as:
Land Based on Topography:
i. Plains
ii. Plateaus
iii. Hills
iv. Mountains.
Land Based on Use:
i. Cultivable land
ii. Uncultivable land
iii. Land for public infrastructure
iv. Forest land.
Land management is becoming very important due to increase in demand for
land because of growth in Indian population.
So, land distribution plays a vital role in the distribution of rural income.
Proportion of households and cultivated area under different land holding
patterns in rural area.
If we observe, approximately 80% of holdings accounts for 39% total land
cultivated and the balance 20% of holdings accounts for 61% of land. It shows
the uneven distribution of land and ultimately leads to the uneven income
distribution. In rural areas, less number of families only falls in the higher
income groups when compared with the larger lower income groups’ category.
From the marketer’s point of view, this is very important situation who are
dealing with agricultural inputs. Because unlike the common demand for agro-
inputs (such as – fertilizers, pesticides etc.) irrespective of income level or
streams, durable inputs like tractors, power tillers, etc., may have more
demand from higher income groups only.
One more thing to be noticed here is the number of holdings is increasing. If
we compare the land holdings pattern with the past three to four decades,
nearly 70% of increase is affected due to the fact of subdivision and
fragmentation system which is widely spread in rural areas.
Even though the total consumption of rural sector exceeds urban sector,
individual family consumption is comparatively less. Marketing efforts should
be geared up to cater nearly 100 million rural families. Thus, the rural market is
characterized by ample disparities in consumption levels.
Land Use Pattern:
If we observe our land use pattern, from the total cultivation area,
approximately 74% is occupied by food crops and only 26% is occupied by non-
food crops. This situation clearly exhibits the excessive dependence on food
crops rather than non-food commercial crops. It is because of the farmer’s
attitude towards food security i.e., they used to retain sufficient quantities of
production for their own consumption and the rest alone goes – to the market.
Take the food crops such as rice, wheat, vegetables etc., as example whose
retention quantity is estimated nearly 50%. In contrast, the entire production
of non-food crops goes to the market without noticeable proportion of
retention like food crops. For example, almost the entire production of cotton,
sugarcane, groundnut, etc., are marketed. This has an implication in generation
of disposable income.
In general, large farmers are able to generate adequate disposable incomes
because they can grow food as well as non-food, commercial crops with the
help of sufficient land holding pattern. But the small farmers are in a position
to grow only food crops that too in a little quantity and are able to generate
small disposable income.
So, the marketers surely show interest to target the large rural farmers.
Anyway this situation is slowly changing due to the introduction of latest
technologies in the agricultural sector for the result of high yield such as, high
yield seeds, cross-cultured seeds, pesticides, etc.
Irrigation:
Irrigation plays a vital role while increasing the potentiality of rural market.
Actually, in agricultural sector, many new technologies were implemented in
irrigation only such as energized pump sets and so on to improve the overall
yield and economy. To improve the irrigated area, many kinds of investment
schemes like minor, medium and major are continuously framed and
implemented by the Government.
For example, states like Gujarat, Madhya Pradesh and Maharashtra are
expected to irrigate about 19 lakh hectares of land from the project Sardar
Sarofar Project across river Narmada. We can imagine the prosperity of
farmers in these beneficiary states.
The major source of irrigation is wells followed by canals. Nearly about 40% of
gross cropped area is from approximately 80 million hectares of gross irrigated
area. The important point to be noted here is, still nearly 60% of rural India is
dependent on rainfall for their agricultural activities.
Anyway, many steps have been taken and major and medium level irrigation
projects also initiated to improve the rural irrigation potential. One more
important scheme launched by the Government in the year of 2005 was
‘National Project for Repair, Renovation and Restoration of Water Bodies’.
It mainly focuses on the restoration and augmentation of water bodies storage
capacities and recovering and extending their lost potential. ‘Drip Irrigation’
programme was launched to cover more areas under irrigation. Currently,
about three lakh hectares are under drip irrigation in various states of India
and a great scope to extend this method under the context of shrinking ground
water supply.
So, it is very clear that the availability of irrigation facilities leads to the higher
technology development and finally results in the increased productivity,
income and improved rural purchasing power.
Socio-Cultural Environment:
It is very difficult to define a definite boundary for the identification of socio-
cultural differences in a country. Because every country has different society
and polity and that too varies from region to region. It also varies between sub-
regions, different religious, caste and community groups. So, some common
factors have been grouped together to form socio-cultural regions.
The major factors which are used to construct different socio-cultural regions
in an environment are:
i. Sociological factors – It cumulates the habits, tastes, lifestyle and preferences
of different consumers. The social constitution and changes in the
constitutions influences these in a big way.
ii. Anthropological factors – Existence of regional cultures and sub-cultures
plays a predominant role here.
iii. Psychological factors – It includes the consumer’s attitude, interest,
personality and mind set. These psychological factors influence more in the
overall buying behaviour of consumers.
Sales promotional schemes, selling and distribution strategies, advertising are
all influenced more by the above mentioned factors. So, the marketers are
using these socio-cultural regions as a yardstick for their market segmentation
and targeting purpose.
In a nutshell, we can conclude that the urban environment shows degrees of
homogeneity across the socio-cultural regions, whereas the rural environment
entirely differs.
Values and Beliefs:
Values are nothing but genetic traits and simplicity is the main ingredient. It is
customary to respect elders and touch their feet as to seek their blessings.
Occasions or festivals demand a lot of participation in terms of rangoli drawing,
diyas and an array of yummy treats made in the authentic variety as per the
caste and geography.
Hindu rituals are a lot about song and dance and each family has a natural way
to adjust to these formats. It is a ritual to pray to the Goddess of learning Maa
Saraswathi to achieve success. Similarly, business people always insist on
drawing the Swastika which marks prosperity and worship the Goddess of
wealth.
The values in India are about living life with an enthusiasm and observing the
belief that there is one God existing despite so many religions. Respecting
elders, understanding cross culture traditions, free mingling to accommodate
tolerance, staying interested in rural welfare are the values of India. The
historical object, cuisine handicrafts, attire and lifestyle of the rural folks is still
followed and preserved by Indians.
Even though India is a country of various religions and caste, our culture tells
us just one thing ‘phir bhi dil hai Hindustani’.
Existence of Sub-Cultures:
Before we understand about the sub-culture, let us know about the culture.
Culture is defined as a complex of values, ideas, attitudes and other
meaningful symbols created by man to shape human behaviour and the
artifacts of that behaviour as they are transmitted from one generation to
next.
We are all aware that India is the place for existence of a number of sub-
cultures. It is easy to identify people through their sub-culture, which is
reflected by the race, religion, region, nationality, etc. It varies from state to
state and even district to district.
People are likely to behave in the same manner, follow same religious
practices and even represent the same race when they come from the same
state or nation. For example – An Indian will behave like an Indian whichever
country she/he goes. Similarly, a Kannadiga or a Bihari will always present
herself/ himself as belonging to her/his state. Even he/she will be more
comfortable in the company of people from his/her state.
Rural people follow their culture very rigidly. A marketer has to understand the
culture very deeply before launching the product in a particular region or state
of India. The symbol or language used to give message about the product and
even people selected (brand Ambassadors) to communicate the message also
have to be selected carefully depending upon the region, religion, etc.
Caste System:
The Indian caste system is a system of social stratification and social restriction
in India in which communities are defined by thousands of hereditary groups
called Jatis.
Indian society stands strongly on four pillars, such as, Brahmins, Kshatriyas,
Vaishyas and Shudras. Other sub-castes and cults are constructed on these
pillars only.
The Brahmins got first priority and supremacy position among the others. They
have separate colony (popularly called as Agraharam) for themselves and
others are prohibited even to enter in that colony.
The next priority was given to Kshatriyas (i.e., warriors), followed by Vaishyas
who belongs to business or trade group. And finally, Shudras were given lowest
priority among the four classes and were suffered by lot of social and
economic disadvantages such as restricted to enter into temple, use common
well, roads, school, hospitals and other facilities.
They were supposed to live in the prescribed boundaries only. For example, for
the survival of those people, separate area is allotted which is far away to
reach in general. If they entered in the common place or use any resources,
severe punishment are given by the supreme community people. After some
decades, fortunately, these caste based priorities were wiped out, and all are
treated in equal manner.
Basic human rights got supreme priority instead of all other things because of
the continuous effort taken by our Government and other social service
volunteers.
Even though, the old Zamindari system and untouchability were removed, still
some sort of social imbalances exist in many remote villages of India. Some
people in village who are in the decision making capacity, are more sensitive
towards the caste based feelings and too rigid to even approach.
Their values and beliefs should be honored; otherwise, reach and survival will
be more difficult to the corporate. So, the marketers should be very conscious
while drafting their promotional policies, advertising schemes to spread
messages about products.
Caste system is very strong in rural India. People cannot do things against their
caste. Rural people have to marry themselves or their children within their
caste. If they don’t do so, they may have to pay heavy penalty such as – out
casting them from the village and community or even sometimes parents kill
their own daughters and sons if they try to marry outside their caste or within
their caste (Honor Killing).
Rural Recreation:
Recreation is a vital part of rural social life. For retaining the physical and
mental health the recreation plays a major role. There are several centres
available in the towns providing recreating facilities as this is one of the ways
to recreate people out of dull and monotonous life. The rural recreations are
not polished, home grown and less costly.
There are several characteristics of rural recreation that are given below:
i. Part of a rural life – It has become a routine work for the villagers to recreate
after a day of hectic work as a part of their social life.
ii. Collective participation – Musical shows and dramas are the best recreating
activities that the villagers perform. These are practised and performed in
groups. The villagers contribute together and also offer several prizes in order
to enjoy collectively.
iii. Family influence – During some festivals or any other auspicious occasions
the family members actively participate and arrange several recreational
programmes.
iv. Religious Recreation – Religion is a part of socio-cultural and recreation of
rural India. Various religious stories are narrated or enacted in a particular
fashion with music through dramas and puppet shows etc.
v. Simple – Rural recreation activities are very simple in nature. There is no
element of commercialization in it.
vi. Universal – The biggest advantage in the rural recreation activities is that
the whole village population takes part and enjoys every bit of life with their
kith and kin.
However, nowadays there is a slight change taking place in the rural
recreational activities. The new technologies involved in recreation in the
urban areas have also influenced the rural recreation programmes such as –
now the rural programmes are for a shorter time as compared to earlier which
was slow and time consuming. Some evil elements of urban recreation such as
– smoking and drinking have also damaged spirit of rural traditional recreation
enjoyment.
Administrative and Legal Structures:
Panchayat Raj is a south Asian political system mainly in India, Pakistan and
Nepal. In India, it has a four way administrative structure namely; Gram Sabha,
Gram Panchayat, Panchayat Samiti, and Zilla Parishad. Traditionally, it is an
assembly of villagers under the head of five respective elders to settle their
disputes. Later on, its functions are stream lined. The top level and bottom
level of Panchayat Raj are explained here.
1. Panchayat Raj Institutions (PRIs):
PRIs ensure the direct participation of people from the grass root level itself.
The salient features of panchayat raj under the 73rd amendment of the
constitutional act, 1992, are:
i. To provide 3-tier system of Panchayati Raj for all states having population of
over 2 million.
The 3-tier system of panchayati raj consists of the following:
a. Zila Parishad at the District Level;
b. Panchayat Samitis at the Block Level; and
c. Gram Panchayat at the Village Level.
ii. To hold Panchayat elections regularly after every 5 years.
iii. To provide reservation of seats for Scheduled Castes, Scheduled Tribes and
Women (not less than 33%).
iv. To appoint State Finance Commission to make recommendations as regards
the financial powers of the Panchayats.
v. To constitute District Planning Committee to prepare draft development
plans for the district as a whole.
Powers and responsibilities delegated to panchayats are:
i. Preparation of plan for economic development and social justice.
ii. Implementation of the schemes for economic development and social
justice in relation to 29 subjects given in Eleventh Schedule of the Constitution.
iii. To levy, collect and appropriate taxes, duties, tolls and fees.
The panchayats receive funds from three main sources such as:
i. Local body grants, as recommended by the Central Finance Commission;
ii. Funds for implementation of centrally-sponsored schemes; and
iii. Funds released by the State Governments on the recommendations of the
State Finance Commissions.
2. Gram Sabha:
Gram Sabha constitutes the lowest level of Panchayati Raj. A common Gram
Sabha exists for very small group villages with a population of 200 or more and
it should meet at least once in each quarter for making decisions which affects
their day-to-day life such as –
i. Levying and collecting local taxes.
ii. Construction and maintenance of resources like – roads, school buildings,
water tanks and drainage etc., and
iii. To execute government schemes with respect to generation of employment
opportunities in villages and so on.
iv. The main eligible criteria to be a member in Gram Sabha is-a person should
attained the age of 18 and have the voting right.
v. Its main function is preventing the Panchayats from misusing money and/or
favouring a particular group or religious or individual person. It also keeps an
eye on the elected representatives to monitor their services and to make them
responsible to the people who elected them.
vi. Gram Sabha receives funds from the following three main sources for their
development programs –
a. Amount collected from house taxes, market places etc.
b. Fund received from various Government department schemes.
c. Donations received for community works etc.
Technological Environment:
The major three revolutions, Green Revolution in the agriculture sector, White
Revolution in the dairy sector, Fibre Revolution in the textile sector and the
role of Non-Government Organizations were geared up many changes in the
technological environment.
1. Green Revolution:
From the year 1967 to 1978, is termed as Green Revolution period. The main
motive of the government to initiate this program is to improve food grain
production in India by using advanced equipments and to attain self-sufficiency
in the area of food production.
Some notable economic results which were generated by this revolution are:
i. Crop areas under high-yield varieties required fertilizers, pesticides,
fungicides and other inputs. Farm equipments like tractors with farm
implements; diesel pump sets, etc., introduced mechanization into the farm
sector for the first time.
ii. The increase in farm production also introduced mechanized processing,
spurring growth of the local manufacturing sector.
iii. The modernization and mechanization of the farm sector boosted farm
productivity, triggered industrial growth, created jobs and initiated a change in
the quality of life in villages.
2. White Revolution:
With the successful implementation of Green Revolution, the Government
initiated White Revolution to achieve self-sufficiency in the area of milk
production. The main motive of this policy was, the producer cooperative
society (producer cooperatives) should try to match urban demand with the
supply of rural produce.
It means, the producer cooperatives acts as a middleman in rural area for
selling the rural produce among the urban consumers. At the same time, the
demand for dairy products like – ice cream, flavoured milk, yoghurt, butter,
cheese etc., also grown in a considerable manner.
Urbanization, changing lifestyle and food habits of people also played a
significant role for this increased demand. This resulted in a big way of success
in the area of milk production and processing.
In India, most successful states in dairy development through producers’
cooperative societies are – Gujarat, Punjab, Haryana, western Utter Pradesh
and Andhra Pradesh. If we compare the results, nearly 80% of increase is
affected in the field of milk production from all over the country.
3. Yellow Revolution:
To improve the production of oil seeds and its output (edible oil), Government
initiated Yellow Revolution. This recorded a spectacular increase in both areas.
The production was doubled from 11 million tonnes in the year of 1986-87 to
22 million tonnes in 1994-95.
4. Blue Revolution:
Before 50 years, Indian fisheries sector produced 6, 00,000 tons of fish only. To
increase the overall quantity, India introduced Blue Revolution. Its main focus
was to increase fish production in small ponds and water bodies.
5. Some Other Major Revolutions:
Nearly, 12 more revolutions also took place in India to improve production in
various sectors, such as – petroleum, leather, cocoa, jute, cotton, honey,
tomato, potato, egg and so on.
Revolutions:
i. Black Revolution – Petroleum Production
ii. Brown Revolution – Leather/Cocoa Production
iii. Golden Revolution – Overall Horticulture or Honey Production
iv. Golden Fibre Revolution – Jute Production
v. Grey Revolution – Fertilizer Production
vi. Pink Revolution – Onion/Pharmaceutical (India)/Prawn Production
vii. Red Revolution – Meat and Tomato Production
viii. Round Revolution – Potato Production
ix. Silver Fibre Revolution – Cotton Production
x. Silver Revolution – Egg/Poultry Production.
6. The Non-Government Organization (NGO) Movement:
Non-Government Organizations (popularly known as NGOs) and other
voluntary agencies play a vital role in creating awareness, developing skills and
introducing new technologies, etc., in the rural areas.
They identify the grassroots in those areas and introduce latest technologies in
the fields of food processing, natural resource management, leather
processing, low-cost spindles, weaving machinery, etc., to bring change in the
life of the rural people. Many Government programs were implemented
through NABARD, CAPART, KVIC and so on are fine-tuned with the help of
these organizations.
Some other assistance provided by NGOs are:
i. Basic health care services
ii. Child care services
iii. Education and training
They also provide assistance to create awareness and develop skills and
introduce technology etc.
Top 10 NGOs-lndia:
i. Help Age India-Rank 1
ii. Sangram Sanstha-Rank 3
iii. Lepra Society
iv. Deepalaya
v. Karmayog