RURAL MARKETING

MODULE I
Learning Objectives
You will be able to:
Describe rural market , its size and scope
Explain the emerging profiles of rural market
To assess the problems of rural market
To assess the constraints in rural market
To construct strategies to overcome these constraints

Percentage of marks:15
Defining Rural India
Organisation Definition Limitations
NSSO rural not defined
( Census) Population density < 400 / Sq Km
75 percent of the male working
population is engaged in agriculture
No Municipal corporation / board

Planning Towns upto 15,000 population are Town

Commission considered rural characteristics not
defined
Contd
LG Electronics All places other than the Only clarifies what are
7 metros the cities

NABARD All locations with a Village & town

population upto 10, 000 characteristics not
considered rural defined

Sahara Commercial Population

establishments located characteristics unknown
in areas servicing less
than 1000 population

Source: The Rural Marketing Book- Text & Practice, Kashyap. P and Raut. S ( 2007)
Definition
Rural marketing in simple words, is planning and implementation of
marketing function for rural areas
It is a two way marketing process which encompasses the discharge of
business activities that direct the flow of goods from urban to rural
(manufactured goods) and vice-versa( for agri produce)
(Gopalaswamy, 2005)
Phases in Rural Marketing
Sr. No Time Frame
1 Phase One( Pre 1960s)
Key Events & Trends
Marketing rural
products in rural and
urban areas
Agricultural inputs in
rural areas
Agricultural
marketing
Farming methods were
primitive and
mechanisation was low
Markets unorganised
Contd
2 Phase Two ( 1960s to 1990s) Green Revolution
Companies like
Mahindra and Mahindra,
Sri Ram Fertilisers and
IFFCO emerge
Rural products were
also marketed through
agencies like KVIC

3 Phase Three( 1990s to Present) Demand for

consumables and
durables rise
Companies find growth
in urban markets
stagnating or falling
Emerging Areas in Rural Marketing
Agri-Business Management
NGO Management
Natural resource Management
Rural Infrastructure Management
Micro-finance
Corporate Social Responsibility
Size of Rural Markets
FMCG Rs.65000 crore
Agri-inputs Rs.45000 crore
Durables Rs.5000 crore
Automobiles (2 & 4 Wheelers) Rs.8000 crore
Clothes, footwear etc. Rs.35000 crore
Construction material Rs.15000 crore
Total Rs.173000 crore
Source: CII Report (2008)
Nature of the Rural Market
Large and Scattered Market Consists of
approximately 75 crore rural consumers who live in
approximately 638365 villages spread over 32 lakh
square km area. Covering such a large and widely
scattered geographical market, raises the inventory
and transportation costs.
Heterogeneous Market As many as 20000 ethnic
groups are present in rural India. There are 24
languages and 1624 dialects and the dialect varies
every 100 km, making it extremely difficult to develop
a uniform promotional message. Divisions based on
caste, community and other factors also continue to
exist.
 Income from Agriculture Nearly 55% of rural income
comes from the agriculture sector, hence rural
prosperity is tied with agricultural prosperity to a great
extent.
Standard of Living Over 70% of the rural population
is employed in small-scale agricultural and related
occupations. This dependence on agriculture and
natural factors has led to an acute seasonality and high
chance element in income receipts in rural areas.
Infrastructural Facilities Roads, warehouses,
communication system and financial facilities are
inadequate in rural areas. Roads do not connect nearly
50% villages in the country. Over 50% rural households
have access to electricity as a main source of lighting
but 46% still use kerosene for lighting.
Transitions In Rural India

Non food, cash crops

Food Grain Crops
Livestock & fisheries
On land activities
Manufacturing &
Farm Activities services
Scope / Attractiveness of Rural Market / Why
Companies Go Rural

Large Population: According to 2001 census rural population is

72% of total population and it is scattered over a wide range of
geographical area

Rising Rural Prosperity: Average income level has improved due to

modern farming practices, contract farming, industrialisation,
migration to urban areas and remittance of money by family
members settled abroad.
Growth in Consumption: There is a growth in
purchasing power of or rural consumers.

Changing Lifestyle: Lifestyle of rural consumer

changed considerably.

Life Cycle Advantage: The products, which have

attained the maturity stage in urban market, is still in
growth stage in rural market. E.g. popular soaps, skin
cream, talcum powder, etc.
Market Growth Rate Higher than Urban: As per the survey
made by NCAER the growth rate of FMCG market and durables
market is higher in rural areas.
The rural market share is more than 50% for products like body
talcum powder, toilet soaps cooking oil, hair oil etc.

Rural Marketing is not Expensive

Constraints in Rural Marketing

Uneven development
Fragmented market
Diversity in occupations
Heterogeneity in life styles
Low income
Lack of steady consumption
Lack of marketing skills
Poor access to shops
Limited awareness and acceptance
Bottom of the Pyramid approach
The term Bottom of the Pyramid was coined by C.K. Prahalad in 2005
in his work, The Fortune at the Bottom of the Pyramid .

It refers to the concept of influencing the lives of poor population of

the world through the managerial initiatives and business practices of
multinational companies. This concept has gained wide range
acceptability.
 So far, the multinational companies have designed their offerings and marketing
strategies for upper sections of the economic pyramid.
They have simply disregarded the bottom of the pyramid consumers, taking
them to be unreachable and not beneficial.
They are unexplored with ample opportunities. Companies must adopt a
preemptive approach towards meeting the needs and wants of the lowest strata
of the economic hierarchy.
To suit this market segment they need to design special offerings and strategies.
These strategies should help them sell their products available at affordable
prices.
Serving bottom of the pyramid customers can prove to be a game
changer for the companies as:
It is profitable.
It serves the corporate social responsibility requirements.
Nearly 75 per cent of the world population falls into the bottom of the
pyramid category
https://www.youtube.com/watch?v=IaZUR8xedsU