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Rural Marketing

SM6318

Rural Banking-Meaning
•Rural marketing is defined as managing all the activities involved
in assessing, stimulating and converting the purchasing power of
the rural consumers into effective demand for specific products
and services and moving them to the people in rural areas to create
satisfaction and a better standard of living and thus achieving
organizational objectives.
•‘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.

etc. fertilizers.Major part of rural marketing. forest produce. . tractors.Two-way marketing process Urban to rural . etc. bicycles.Basically falls under agricultural marketing. A rural producer seeks to sell his produce in urban market like seeds. consumer durables. spices. milk and related products. Rural to urban . fruits and vegetables. Includes transactions of urban marketers who sell their goods and services in rural areas pesticides. FMCG products.

000 population are Town characteristics considered rural not defined  .Defining Rural India Organisation NSSO ( Census) Definition Limitations  rural not defined Population density < 400 / Sq Km  75 percent of the male working population is engaged in agriculture No Municipal corporation / board  Planning Commission Towns upto 15.

P and Raut. Kashyap.Defining Rural India-Cont’d LG Electronics All places other than the 7 metros Only clarifies what are the cities NABARD All locations with a population upto 10. 000 considered “ rural” Village & town characteristics not defined Sahara Commercial Population establishments located in characteristics unknown areas servicing less than 1000 population Source: The Rural Marketing Book.Text & Practice. S ( 2007) .

based on technical & economic considerations and includes the pre & post harvest operations.Defining Rural Marketing National Commission on Agriculture NGOs Corporate Rural Marketing Definition Decisions to produce saleable farm commodities involving all the aspects of the market system or structure. Marketing products produced in rural areas to urban areas Function that manages all activities involved in assessing. stimulating and converting the purchasing power of rural consumers into effective demand for specific products and services to create satisfaction & a better standard of living for achieving organisational goals. Marketing products produced in rural areas in rural markets . both functional and institutional.

EVOLUTION OF RURAL MARKETING PHASE ORIGIN FUNCTION MAJOR PRODUCT SOURCE DESTINATION MARKET MARKET Phase I Before mid1960(From independence to Green revolution) Agricultural marketing Agricultural produce Rural Urban Phase II Mid sixties (Green revolution to Preliberalization period) Marketing of Agricultural agricultural inputs inputs Urban Rural Phase III Mid nineties(Postliberalization period in 20th century) Rural marketing Urban and rural Rural Phase IV 21st century Development All products al marketing and services Urban and rural Urban and rural Consumables and durables for consumption and production .

according to the World Bank.63% in 2014. the income of the rural masses is directly affected. More than 60% of rural income is from agriculture. Rural population refers to people living in rural areas as defined by national statistical offices. 2.Features of Rural Marketing 1. The rural population is highly scattered. •It is calculated as the difference between total population and urban population. •The rural population is scattered in over 6 lakhs villages. .Large and scattered population •Rural population in India was last measured at 67. In the event of crop failure. but holds a big promise for the marketers.Occupation pattern Agriculture and related activities are the major source of income for majority of the rural population.

About 14% have income greater than 50000 rupees. • About 700 million Indians live in 6 38 365 villages across India. 5-Low literacy level It is estimated that rural India has a literacy level of 36% as compared to 62% in the urban areas. linguistic.. diverse and scattered market • Though large. More than 60% have income less than 25000 rupees.Features of Rural Marketing-Cont. There may be less number of shops available to market products. • Diverse and heterogeneous market in terms of religious. social and cultural factors. Low disposable income. . 4-Socio-economic position • • • • Majority of rural people have low purchasing power and per capita income. the rural market is geographically scattered. 3-Large.

Gradually. . 6-Low standard of living Low income. They do not prefer changes.Features of Rural Marketing-Cont. 8-Marketing mix The urban products cannot be dumped on rural population. overall social and economic backwardness lead to low standard of living. In general a rural consumer spends less on non-food items. the rural population is changing its demand pattern. and there is demand for branded products in villages. separate sets of products are designed for rural consumers to suit the rural demands. The marketing mix elements are to be adjusted according to the requirements of the rural consumers. 7-Traditional outlook The rural consumer values old customs and traditions.. low purchasing power.

warehouses. 10-Distance • Villages nearer to towns have elements of the urban life. 9-Traditional outlook • Villages develop slowly and have a traditional outlook. . and communication system are inadequate in rural areas. • About 20% of the six lakh villages are without telephone facility even today. • They accept changes gradually. 8-Inadequate infrastructure facilities • Infrastructure facilities like cemented roads.. Interior villages are more traditional. • About 50% of the markets are not connected by road. Most of the roads are kachha and become unusable during rainy season.Features of Rural Marketing-Cont.

rural people have diverse socio-economic background. followed by TV 31%.. culture. Radio 32% and Cinema 36%. 13-Media reach • The media reach in rural household is low. 11-Diverse socio-economic background Due to dispersion of geographical areas and uneven land fertility. 12-Conservative lifestyle Lifestyle bounded by tradition. 14-Medical facilities Medical facilities are quite inadequate and the villagers have to travel long distances for getting medical treatment. religion and community.Features of Rural Marketing-Cont. . • Statistics indicates that the reach of Print media is 10%.

• Very few in number. • Wheat farmers in Punjab and rice merchants of Andhra Pradesh fall in this category. • They have affordability but do not form a demand base large enough for marketing firms to depend on.Rural Consumer Classification The rural consumers are classified into the following groups based on their economic status: 1-The Affluent Group • They are cash rich farmers. .

3-The Poor • This constitutes a huge segment. • The farmers of Bihar and Orissa fall under this category.2-The Middle Class • One of the largest segments for manufactured goods. but strength is more. . • Farmers cultivating sugar cane in UP and Karnataka fall in this category. • Purchasing power is less. • They receive grants from the government and reap the benefits of many such schemes and may move towards the middle class. • It is fast expanding.

viewpoints and actual needs of the rural people. 2-Low per capita income • India is the fourth largest economy in the world due to a strong economic growth but still has a low per capita income of Rs. • It results in low consumption pattern as compared to the urban population.Challenges 1-Understanding the rural consumer The biggest challenge is to understand the perceptions. 53331. . which is dramatically different from urban people.

 The literacy level is as low (36%) when compared to all-India average of 52%. Agriculture to a large extent depends upon monsoon and. therefore. as agriculture is the main source of income. the demand or buying capacity is not stable or regular. SEX 1971 1981 1991 2001 2011 Males 34 46 58 75 82 Females 13 18 31 54 65 All 24 30 45 65 74 4-Seasonal Demand Demand for goods in rural markets depend upon agricultural situation. .Challenges-Continuing 3-Low literacy levels  There are not enough opportunities for education in rural areas.

Kachha roads become unserviceable during the monsoon and interior villages get isolated. most villages in eastern part of the country are inaccessible during monsoon season. . Facilities such as telephone. fax and telegram are rather poor in rural areas. • Many rural areas are not connected by rail transport.Challenges-Continuing 5-Lack of proper infrastructure and other physical facilities • Nearly 50 percent of the villages do not have all weather roads. Physical communication to these villages is highly expensive. Even today. • About 20% of the six lakh villages are without telephone facility even today.

Challenges-Continuing 6-Underdeveloped markets people and underdeveloped • Unfortunately. • Inadequate banking and credit facilities. • Except some districts in Punjab. • In addition. . the impact of the technology is not experienced uniformly throughout the nation. Haryana and Western Uttar Pradesh. the farmers with small agricultural land holdings have also been unable to take advantage of the new technology. large areas and groups of people have remained beyond the technological breakthrough.

• Life in rural areas is still governed by customs and traditions and people do not easily adapt new practices. • Hindi only has more than ten variations. There is a lack of desire of new things and styles. . • The Indian constitution recognizes 18 official languages. 8-Many language and Dialects • The number of languages and dialects vary from state to state and region to region. • For example. even rich and educated class of farmers does not wear jeans or branded shoes. Hindi spoken in Rajasthan is different from Hindi spoken in Bihar or Hindi of Himachal Pradesh.Challenges-Continuing 7-Traditional outlook • Due to the traditional outlook of rural consumers. they are resistant to change.

10-Inadequate Media coverage for Promotions • Television has made a great impact and large audience has been exposed to this medium. • Reach of formal media is low in rural households. • Radio reaches large population in rural areas at a relatively low cost. .Challenges-Continuing 9-Barter system • It means exchange of goods for goods. even today. • This is a major obstacle in the way of development of rural marketing. • This system is practiced In the developing country like India.

Retailers pushing imitation or fake products in place of branded ones for better commission. 12-Slow purchasing decision • Rural consumers are cautious in buying and decisions are slow and delayed. 13-Problems related to distribution and channel management • The presence of too many tiers in the distribution system increases the cost of distribution.Challenges-Continuing 11-Availability of duplicate and cheap brands. • They like to give a trial and only after being personally satisfied. do they buy the product. • Non availability of dealers and poor viability of outlets add to the challenges. .

Challenges-Continuing 14-Cultural Factors • Culture is a system of shared values. income. age. occupation. 15-Vast and scattered market • It is not easy to enter the market and take a sizeable share of the market because of its size. beliefs and perceptions that influence the behavior of consumers. • The markets are unorganized and dispersed. . variation and it being very scattered. caste. • There are different groups based on religion. education and politics and each group exerts influence on the behavior of people in villages.

Acceptability  Offers products and services that suit the rural market  Easy to understand 4.Affordability Introduce small unit packs 3.  Educate and try to induce trial.Strategies of Rural Marketing Rural marketing strategy is based on their A’s – Availability Affordability and Acceptability 4 A’s Approach 1. .Awareness  One on one contact programs are extremely efficient. 2.Availability Strive to reach at least 13 113 villages with a population market penetration.

 Distribution strategy Using company delivery vans. folk dances. .Other strategies  Marketing strategy • Marketers need to understand the psyche of the rural consumers.  Promotional strategy • • Rich traditional media forms like puppetry. haats. audio visuals etc. • Utilizing various rural folk media to reach them in their own language. melas. • Firms should refrain from designing products for the urban markets and then pushing them in the rural areas. and mandis/ agri markets. should be used to convey the right message to the rural folk. Forms with which the rural consumers are highly comfortable with should be used.

Various factors which have made rule markets viable • • • • • • • • Large population Raising prosperity Growth in consumption Life-style changes Life-cycle advantages Market growth rates higher than urban Rural marketing is not expensive Remoteness is no longer a problem .

Factors which Contributes to the Growth of Rural Markets • • • • • • • Government initiatives Rising literacy levels Infrastructural facilities New employment opportunities Rising mass media Agricultural research Marketing efforts Urban influence .

Problems Faced in Rural Marketing • • • • • • • • • • • • Deprived people and deprived markets Lack of communication facilities Transport Many languages and dialects Dispersed markets Low per capita Income Low levels of literacy Prevalence of spurious brands and seasonal demand Different way of thinking Warehousing problem Problems in sales force management Distribution problem .