Chapter 1

The Call of Rural India

 Learning Objectives

• Define rural India and rural markets

• Identify common rural myths

• Understand the rural marketing myths and the challenges

related to it

• Understand the characteristics of the evolving rural

consumer

• Describe the emerging rural India

 Definition of Rural
Organization Definition of Rural Limitation
• Several hamlets demarcated by
physical boundaries
The term “rural”
• Towns are urban areas that satisfy:
is not defined,
 Minimum population 5,000
nor is the upper
Census  Population density > 400 per sq.
limit of
Km.
population for
 75% of the male population
villages
engaged in non-agricultural
activities
Widening of
• Similar to Census except that the definition allows
IRDA percentage for male population in a larger market
towns is 25% and not 75% to be considered
as rural
Rural: All locations with a population
of up to 10,000 Distinction
RBI Semi-urban: All locations with a defined only by
population between 10,000 and population
100,000
 Definition of Rural

Organization Definition of Rural Limitation

Town
Planning Towns with population up to
characteristics
Commission 15,000 are considered rural
not defined

Locations with shops/commercial Town or village

Sahara establishments up to 10,000 characteristics
population. not defined

All population centres other than Population

LG Electronics the 7 metros are considered rural criteria is not
or semi-urban considered
 Definition
• The Census of India defines rural as:
– Any habitation with a population density of less
than 400 per sq. Kms.
– Where at least 75% of the male population is
engaged in agriculture
– Where there exists no municipality or board
• Most FMCG companies define rural with a
population of up to 20,000 population
• Most durable companies keep the limit at
50,000
5
 Rural Marketing Mix

The 4 Ps of marketing – price, product, place and promotion

– replaced by 4 As in rural markets

Affordabilit
Availability
y

Acceptabilit
Awareness y
 Rural Marketing Mix

Affordability • Rural consumers are driven by value proposition and not

by cost

Availability
• Single largest challenge for marketers in rural markets
• Paucity of data for villages and small towns is a hindrance

• Media reach is increasing

Awareness • Need for specific messages aimed at the rural psyche
• Use of alternative rural means of communication

• Rural consumers look for productive assets

Acceptability • Specific needs should be looked into while designing
products for rural consumers
 The Evolving Rural Consumer
• Value driven and looks for products that add to earning
capabilities or to status

• Increasing literacy and exposure to mass media, increasing

aspiration levels

• Better road infrastructure leading to increased mobility

• Highest change amongst children and youth, increasing

their role as influencers
 The Evolving Rural Consumer
• Changing cultural and social norms

• Rise in nuclear families creating new roles for women

• High use of self-help groups (SHGs), especially for women

• Marketers need to focus on creating awareness and

excitement amongst women and youth
 Rural India: The Exploding
Middle Class
• 164 million households accounting for 56% of India’s total
income, 64% of expenditure and 33% of savings

• 67% road connectivity, 30% tele-density, 60%

electrification

• 377 million mobile users

• 14 million DTH subscribers

• 96 million Kisan Credit Cards

• Higher growth in durables as well as FMCGs as compared to

 Rural India: The Exploding Middle
Class
2020
• Pyramid transforming into a diamond
 Rural India: The Exploding
Middle Class
• Lowercost of living leads to higher proportion of disposable
income

• Government rural thrust boosting bottom of pyramid (BoP)

incomes

• Rural infrastructure being developed in the areas of roads,

electrification, education and health

• Increasein agricultural productivity and shift to cash crops

increasing agricultural income
 Successful Mantra for Entering
Rural Markets

Think like a businessman with the

feelings of a social worker