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.

Two-way marketing process

Urban to rural - Major part of rural marketing. Includes
transactions of urban marketers who sell their goods and services
in rural areas pesticides, fertilizers, FMCG products, tractors,
bicycles, consumer durables, etc.

Rural to urban - Basically falls under agricultural marketing.

A rural producer seeks to sell his produce in urban market like
seeds, fruits and vegetables, forest produce, spices, milk and
related products, etc.

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 15,000 population are Town characteristics

considered rural
not defined

Defining Rural India-Contd

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, Kashyap. P and
Raut. S ( 2007)

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, both
functional and
institutional, based on
technical & economic
considerations and
includes the pre & post
harvest operations.

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

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

Features of Rural Marketing

1- Large and scattered population
Rural population in India was last measured at 67.63% in 2014, according to
the World Bank. Rural population refers to people living in rural areas as
defined by national statistical offices.
It is calculated as the difference between total population and urban
population.
The rural population is scattered in over 6 lakhs villages. The rural population
is highly scattered, but holds a big promise for the marketers.

2- Occupation pattern
Agriculture and related activities are the major source of income for majority of
the rural population.
More than 60% of rural income is from agriculture.
In the event of crop failure, the income of the rural masses is directly affected.

Features of Rural Marketing-Cont..

3-Large, diverse and scattered market
Though large, the rural market is geographically scattered. There may be less number
of shops available to market products.
Diverse and heterogeneous market in terms of religious, linguistic, social and cultural
factors.
About 700 million Indians live in 6 38 365 villages across India.

4-Socio-economic position

Majority of rural people have low purchasing power and per capita income.
More than 60% have income less than 25000 rupees.
About 14% have income greater than 50000 rupees.
Low disposable income.

5-Low literacy level

It is estimated that rural India has a literacy level of 36% as compared to 62% in the
urban areas.

Features of Rural Marketing-Cont..

6-Low standard of living
Low income, low purchasing power, overall social and economic
backwardness lead to low standard of living. In general a rural
consumer spends less on non-food items.
7-Traditional outlook
The rural consumer values old customs and traditions. They do not prefer
changes. Gradually, the rural population is changing its demand
pattern, and there is demand for branded products in villages.
8-Marketing mix
The urban products cannot be dumped on rural population; 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.

Features of Rural Marketing-Cont..

8-Inadequate infrastructure facilities
Infrastructure facilities like cemented roads, warehouses, and communication
system are inadequate in rural areas.
About 20% of the six lakh villages are without telephone facility even today.
About 50% of the markets are not connected by road. Most of the roads are
kachha and become unusable during rainy season.

9-Traditional outlook
Villages develop slowly and have a traditional outlook.
They accept changes gradually.

10-Distance
Villages nearer to towns have elements of the urban life. Interior villages are
more traditional.

Features of Rural Marketing-Cont..

11-Diverse socio-economic background
Due to dispersion of geographical areas and uneven land fertility, rural
people have diverse socio-economic background.

12-Conservative lifestyle
Lifestyle bounded by tradition, culture, religion and community.

13-Media reach
The media reach in rural household is low.
Statistics indicates that the reach of Print media is 10%, followed by TV
31%, Radio 32% and Cinema 36%.

14-Medical facilities
Medical facilities are quite inadequate and the villagers have to travel long
distances for getting medical treatment.

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.
Very few in number.
They have affordability but do not form a demand base large
enough for marketing firms to depend on.
Wheat farmers in Punjab and rice merchants of Andhra
Pradesh fall in this category.

2-The Middle Class

One of the largest segments for manufactured goods.
It is fast expanding.
Farmers cultivating sugar cane in UP and Karnataka fall in this
category.

3-The Poor
This constitutes a huge segment.
Purchasing power is less, but strength
is more.
They receive grants from the government
and reap the benefits of many such schemes and may move towards
the middle class.
The farmers of Bihar and Orissa fall under this category.

Challenges
1-Understanding the rural consumer
The biggest challenge is to understand the perceptions,
viewpoints and actual needs of the rural people, which is
dramatically different from urban 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.
53331.
It results in low consumption pattern as compared to the
urban population.

Challenges-Continuing
3-Low literacy levels
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%.
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, as agriculture is the main source of income.
Agriculture to a large extent depends upon monsoon and,
therefore, the demand or buying capacity is not stable or regular.

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, most villages in eastern part of the country are
inaccessible during monsoon season.
Many rural areas are not connected by rail transport. Kachha
roads become unserviceable during the monsoon and interior
villages get isolated. Facilities such as telephone, fax and
telegram are rather poor in rural areas.
About 20% of the six lakh villages are without telephone facility
even today.

Challenges-Continuing
6-Underdeveloped
markets

people

and

underdeveloped

Unfortunately, the impact of the

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

Challenges-Continuing
7-Traditional outlook
Due to the traditional outlook of rural consumers, they are resistant to
change.
Life in rural areas is still governed by customs and traditions and
people do not easily adapt new practices.
For example, even rich and educated class of farmers does not wear
jeans or branded shoes. There is a lack of desire of new things and
styles.

8-Many language and Dialects

The number of languages and dialects vary from state to state and
region to region.
The Indian constitution recognizes 18 official languages.
Hindi only has more than ten variations. Hindi spoken in Rajasthan is
different from Hindi spoken in Bihar or Hindi of Himachal Pradesh.

Challenges-Continuing
9-Barter system
It means exchange of goods for goods.
This system is practiced In the developing country like India,
even today.
This is a major obstacle in the way of development of rural
marketing.

10-Inadequate Media coverage for Promotions

Television has made a great impact and large audience has
been exposed to this medium.
Radio reaches large population in rural areas at a relatively
low cost.
Reach of formal media is low in rural households.

Challenges-Continuing
11-Availability of duplicate and cheap brands.
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.
They like to give a trial and only after being personally satisfied, do they buy
the product.

13-Problems related to distribution and channel management

The presence of too many tiers in the distribution system increases the cost of
distribution.
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, 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.

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, variation and it being very
scattered.
The markets are unorganized and dispersed.

Strategies of Rural Marketing

Rural marketing strategy is based on their As Availability
Affordability and Acceptability 4 As Approach
1.Availability
Strive to reach at least 13 113 villages with a population market
penetration.

2.Affordability
Introduce small unit packs

3.Acceptability
Offers products and services that suit the rural market
Easy to understand

4.Awareness
One on one contact programs are extremely efficient.
Educate and try to induce trial.

Other strategies
Marketing strategy
Marketers need to understand the psyche of the rural consumers.
Firms should refrain from designing products for the urban
markets and then pushing them in the rural areas.
Utilizing various rural folk media to reach them in their own
language.

Distribution strategy
Using company delivery vans, melas, haats, and mandis/ agri
markets.

Promotional strategy

Rich traditional media forms like puppetry, folk dances, audio

visuals etc. 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