Problems in rural marketing

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Rural Marketing: 12 Problems Faced in Rural Marketing
1. Deprived people and deprived markets:
The number of people below the poverty line has not decreased in any appreciable
manner. Thus, poor people and consequently underdeveloped markets characterize
rural markets. A vast majority of rural people is tradition bound, and they also face
problems such as inconsistent electrical power, scarce infrastructure and unreliable
telephone system, and politico-business associations that hinder development
efforts.

2. Lack of communication facilities:

Even today, most villages in the country are inaccessible during the monsoons. A
large number of villages in the country have no access to telephones. Other
communication infrastructure is also highly underdeveloped.

3. Transport:
Many rural areas are not connected by rail transport. Many roads have been poorly
surfaced and got severely damaged during monsoons. The use of bullock carts is inevitable
even today. Camel carts are used in Rajasthan and Gujarat in both rural and urban
sectors.
4. Many languages and dialects:
The languages and dialects vary from state to state, region to region and probably
from district to district. Since messages have to be delivered in the local language, it
is difficult for the marketers to design promotional strategies for each of these areas.
Facilities such as phone, telegram and fax are less developed in villages adding to the
communication problems faced by the marketers.

5. Dispersed markets:
Rural population is scattered over a large land area. And it is almost impossible to
ensure the availability of a brand all over the country. District fairs are periodic and
occasional in nature. Manufacturers and retailers prefer such occasions, as they allow
greater visibility and capture the attention of the target audience for larger spans of
time. Advertising in such a highly heterogeneous market is also very expensive.

6. Low per capita Income:

The per capita income of rural people is low as compared to the urban people.
Moreover, demand in rural markets depends on the agricultural situation, which in
turn depends on the monsoons. Therefore, the demand is not stable or regular.
Hence, the per-capita income is low in villages compared with urban areas.

7. Low levels of literacy:

The level of literacy is lower compared with urban areas. This again leads to a
problem of communication in these rural areas. Print medium becomes ineffective
and to an extent irrelevant, since its reach is poor.

8. Prevalence of spurious brands and seasonal demand:

For any branded product, there are a multitude of local variants, which are cheaper
and hence more desirable. Also, due to illiteracy, the consumer can hardly make out
a spurious brand from an original one. Rural consumers are cautious in buying and
their decisions are slow, they generally give a product a trial and only after complete
satisfaction they buy it again.

9. Different way of thinking:

There is a vast difference in the lifestyles of the people. The choice of brands that an
urban customer enjoys is not available to the rural customer, who usually has two to
three choices. As such, the rural customer has a fairly simple thinking and their
decisions are still governed by customs and traditions. It is difficult to make them
adopt new practices.

10. Warehousing problem:

Warehousing facilities in the form of godowns are not available in rural India. The
available godowns are not properly maintained to keep goods in proper conditions.
This is a major problem because of which the warehousing cost increases in rural
India.

11. Problems in sales force management:

Sales force is generally reluctant to work in rural areas. The languages and dialects
vary from state to state, region to region, and probably from district to district. Since
messages have to be delivered in the local language, it is difficult for sales force to
communicate with the rural consumers. Sales force finds it difficult to adjust to the
rural environment and inadequate facilities available in rural areas.

12. Distribution problem:

Effective distribution requires village-level shopkeeper, toluka-level
wholesaler/dealer, district-level stockist/distributor, and company-owned depot at
state level. These many tiers increase the cost of distribution.
13. Inadequate Banking and Credit Facilities
In rural markets, distribution is also handicapped due to lack of adequate banking
and credit facilities. The rural outlets require banking support to enable remittances,
to get replenishment of stocks, to facilitate credit transactions in general, and to
obtain credit support from the bank. Retailers are unable to carry optimum stocks in
the absence of adequate credit facilities. Because of this problem, they are not able to
offer credit to the consumers. All these problems lead to low marketing activities in
rural areas. It is estimated that there is one bank for every 50 villages, showing the
poor banking facilities in rural areas.

14. Market segmentation in rural markets:

Market segmentation is the process of dividing the total market into a number of
sub-markets. The heterogeneous market is broken up into a number of relatively
homogeneous units. Market segmentation is as important in rural marketing as it is
in urban marketing. Most firms assume that rural markets are homogeneous. It is
unwise on the part of these firms to assume that the rural market can be served with
the same product, price and promotion combination.

15. Availability of appropriate media:

It has been estimated that all Organized media in the country put together can reach
only 30 per cent of The rural population of India. The print media covers only 18 per
cent of The rural population. The radio network, in theory, covers 90 per cent. But,
actual listenership is much less. TV is popular, and is an ideal Medium for
communicating with the rural masses. But, it is not available In all interior parts of
the country. It is estimated that TV covers 20 per Cent of the rural population. But,
the actual viewership is meager. The Cinema, however, is a good medium for rural
communication. But, these Opportunities are very low in rural areas.

Profile of Rural Demand:

1. Seasonal demand:

The demand for goods is irregular and seasonal. As agriculture is the predominant
occupation in villages, demand for goods generally depends on the harvest periods.
Their cash flows are better after harvest. The demand is also festival and marriage
linked. For example, the demand for sweets goes up during Durga Pooja in villages of
Bengal.

2. Composition of rural demand:

A large variety of transactions are considered a part of rural demand:

a. Agricultural inputs such as fertilizers, pesticides and farm equipment.

b. Products made in-urban centres and sold to rural areas such as soaps,
toothpastes and electronic items.

c. Products made in rural areas sold to urban centres such as khadi cloth
and handcrafted products.

d. Products made and sold in rural areas such as milk and milk products.
Locally manufactured toothpowder, cloth, and so on.

3.Size of rural demand:

The size of rural market is quite vast in India. The rurai market is growing steadily
over the years. The demand for traditional products such as bicycles, mopeds and
agricultural inputs, and branded products such as toothpaste, tea, soaps and other
FMCG goods, and consumer durables such as refrigerators, TV and washing
machines has also grown over the years.

Why has rural demand slowed in the last few years?

The slowdown in rural demand has seen a gradual aggravation in the last five years
and that has been driven by a variety of reasons.

 In the last five years, only 2016 was a year of above average monsoons. The
remaining years saw average or below- average monsoons. Years like 2019
may have seen adequate rainfall but the onset of monsoons was delayed
impacting the sowing season.

 Demonetization was one of the major reasons for the slowdown in rural
consumption. Rural India is still largely cash driven and that took its toll on
rural business, rural transaction and rural spending power. However, with
currency levels coming back to pre-demonetization levels, that should get
sorted out.

 GST implementation in July 2017 also played its part in slowing rural
consumption. The stringent compliance requirements put tremendous
pressure on small and medium sized businesses putting many of them out of
business. That did impact demand.
Why rural demand matters to Indian economy
In an interesting study conducted by CSFB, it was found that the willingness of
the Indian consumer to postpone purchases of consumer durables had touched a
high of 1 year. Effectively, consumers were willing to put off purchase of durables
like white goods, two wheelers, entry level cars, etc. By up to one year as they
were not confident of the economic conditions. The liquidity crunch in the
aftermath of the NBFC crisis has also created problems for rural demand as
NBFCs and MFIS were virtually acting as the last mile delivery agents for banks.
That has hit fund flows into rural areas in a big way.

There are 3 principal reasons why this rural slowdown impacts

consumption in general.

1. Rural India accounts for 37% of overall FMCG spend and, according to
Nielsen, this is likely to get closer to 50% in the next 5 years. That is a very
large chunk of the consumption market and that explains why
consumption stories are under strain.

2. Rural sector consumption demand for FMCG products has traditionally

grown at 3-5% more than the urban demand growth and that differential
has been the key to creating alpha for the FMCG companies

3. Finally, the high marginally propensity to consume among the rural

population makes it an important and lucrative consumption market.

Rural demand has been slowing and that has hit the economy in multiple ways.
That is what the government really needs to adress!