CHAPTER 43

Rural Marketing in
India: The Changing
Picture

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 Chapter 43: Rural Marketing in India

At the end of this chapter, you should be able to:

⮚ Appreciate the Importance of India’s Rural Market

⮚ Comprehend the constituents of the Rural Market
• The Rural Consumer
• The Rural Demand
⮚ Size up the Rural Market/Demand
⮚ Grasp why Rural Market Becomes Attractive and Precious to Corporates
⮚ Comprehend the Challenges/Solutions in Delivering Value and Doing
Business in the Rural Market
⮚ Grasp the Tasks that Need Unique Handling
• Segmentation
• Product Strategy in the Rural Context
• Pricing Strategy
• Physical Distribution
• Channel Management
• Sales Force Management
• Marketing Communications
⮚ Appreciate that Rural Marketing is Developmental Marketing
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 Chapter 43: Rural Marketing in India

▪ More than 70% of country’s consumers are in the rural market

▪ More than half of national income is generated here
■ Should All Firms Go Rural?
▪ For several products there is now enough demand in urban markets
▪ But firms with huge ambitions have to necessarily tap rural markets

The Rural Marketing Environment It can be studied under 2 heads,

the Rural Consumer and the Rural Demand
1. The Rural Consumer
■ ‘Many Rural Indias’ within ‘Rural India’ and No Such Thing as a
‘Typical Rural Consumer’

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 Chapter 43: Rural Marketing in India
Rural Consumer (…contd)
⮚ A scattered lot, living in villages that vary widely in population size
⮚A heterogeneous lot as well
⮚ Mixed picture in income and socio-economic position

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 Chapter 43: Rural Marketing in India

Rural Consumer (…contd)

⮚ Highly stratified
● In Age-mix. Nearly half of rural consumers is below 20 years of age
● Region to region and state to state variation in economic position
● Occupation is now ‘beyond agriculture’ for over 1/3 rd of the workforce
● Diversification of the rural economy brings new income sources
● New income is generated from agriculture as well as other sectors
● Heterogeneity in literacy rate too
◻ There is a huge literate population in rural India
● In lifestyle too, rural consumers do not fall into a single bracket

■ The Expectation Revolution

▪ Rising expectations; the aspirations of the rural people growing ahead
of their income

■ The Idea of a Stereotype does Not Fit

⮚ Heterogeneity gives rise to variations in buying behaviour of the
consumers
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 Chapter 43: Rural Marketing in India
Rural Consumer (…contd)
■ Other Notable Influences on the Buying Behaviour of Rural Consumer
• Location and extent of exposure to urban lifestyles
• The situation in which the consumers use the products
• Availability of electricity
• The place of purchase
• The Influencers’ role
• Influence by youngsters in the family, like bahus
• Influence of the village community
• Marketers’ efforts to reach out to the rural market

■ Size of the Rural Population More than 81 crore consumers; 73% of

India’s population is rural

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 Chapter 43: Rural Marketing in India
2. Rural Demand: Size and Composition of Rural Market
⮚ Aggregate size of the rural market/demand
• Projected to reach Rs. 16,700 bn in 2015
• A large market, larger than the urban

⮚ Steady growth and welcome shift in composition

• Several non-food products established in rural consumer basket

Ex 43.5 Rural Consumer Basket Consists of Several Non-Food Products (Pg 814)

⮚ For many products, market is large despite low penetration rate

• ‘The great India number trick’, says Rama Bijapurkar

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 Chapter 43: Rural Marketing in India
Rural Demand (…contd)
⮚ In many products, rural consumption accounts for a larger share
than urban:
● Washing soaps, popular bath soaps, package tea, hair oils, batteries
● Sewing machines, radio, transistor, tape recorder, watches, B&W TV,
bicycles, table fan, pressure cookers
⮚ In growth rate too, rural market overtake urban in many products:
● Packaged tea, analgesics, washing soap, detergents, motorcycles

Ex 43.7 Projections by
■ The Rural Market, Projections by McKinsey McKinsey (Pg 815)

Rural Market Becomes Attractive, Precious to Corporates

● Many have entered anew; those already present intensify activities
● For HUL and Colgate half of their income come from rural market
● For Godrej, Reckitt, Marico, SmithKline, rural market gives 25- 30% of sales
● Kinetic sells 30% of scooters and Hero Honda 40% of its bikes in rural India
■ The Drivers
▪ The enlarging opportunity in the market, the prime driver
© Macmillan
▪ Competition Publishers
in and saturation India
of the urban market, a stronger driver
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 Chapter 43: Rural Marketing in India

Delivering Value and Doing Business in the Rural

Market – Challenges and Solutions

“Reach is not the main challenge, the real challenge is to engage with and
understand the rural consumer and to develop a strategy that connects
with them..” MS Banga

“Corporates must acquire an understanding of the unique needs of rural

consumers, design products to meet those needs, and then create sales and
distribution models to reach out..” McKinsey

■ Tapping the Rural Markets – Tasks Needing Unique Handling:

• Segmentation • Product Strategy • Pricing • Physical Distribution

• Channel Management • Sales force Strategy • Marketing Communications

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 Chapter 43: Rural Marketing in India
Segmentation
⮚ Geographic segmentation
● Several bases possible
● Climate/irrigation level
● Nearness to a town

⮚ Demographic segmentation
● Population concentration
● Age
● The SEC classification
● Income

⮚ Micro mapping the market will reveal under-served pockets

⮚ Sources of data on rural consumers/markets

● Segmentation needs data, several data sources now available
● Thompson Rural Market Index
● MICA rural market ratings
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Ruralscan
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 Chapter 43: Rural Marketing in India
Product Strategy in the Rural Context
⮚ Specifically-designed products needed, like:
● The tractor-trailer
● Philips hand wound radio
● Philips smokeless chulhas
● Several possibilities are there
● Need for satisfying the unique colour preferences
⮚ Package to be appropriate
● Package helps illiterate consumers to identify brands
● Logos, symbols and mnemonics help brand identification/ recall
Nirma girl, Dettol sword and Mortein genie, fine examples
● Smaller packs more welcome due to low purchasing power
5 gm Vicks tin and small size Lifebuoy
⮚ Brand decisions
● Sell value brands, not cheap brands
Ruff and Tuff jeans, Tiger biscuits, Sonata watches
⮚ Product Differentiation
Exhibit 43.8 Pre-Conceived Notions do
⮚ Positioning decisions Not Help – Example of CTVs (Pg 821)
© Macmillan
⮚ Pre-conceived Publishers
notions have no placeIndia
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 Chapter 43: Rural Marketing in India

Pricing Strategy

⮚ Two views on Pricing for rural market

● One view is that affordability and low price is the key; Sachet pricing is
the outcome of this view
● Other view is that common prices for both rural and urban consumers
is enough. Samsung and LG have given up rural specific pricing

⮚ Analysis, however, shows that it does help to design specific

products at specific price points for rural consumers
● Titan’s Sonata

⮚ Innovation in pricing
● Special occasion pricing
Festivals and marriage seasons
● Special payment terms
Seasonality of Income favours ‘harvest repayment’ schemes

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 Chapter 43: Rural Marketing in India

Physical Distribution
■ The Problems in Transportation and Warehousing
⮚ Nearly 50% of the 6 lakh villages still not connected by roads

⮚ Cost-service dilemma gets more acute

● The delivery van has a key role
HUL and ITC have a fleet of delivery vans for rural distribution
Eveready operates a fleet of over thousand company owned vans to
service 4000 distributors and 6 lakh retail outlets

Channel Management
● Multiple tiers add to the costs
● Non-availability of outlets
● Poor viability of the outlets
● Inadequate banking and credit facilities
■ Village Shop, the Key to a Full-Fledged Rural Distribution
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 Chapter 43: Rural Marketing in India
Channel Management (…contd)
⮚ Chain stores in rural market
● Retail chains are coming up
● DCM Kisan Bazaar
● The rural hypermarket chain – ITC Choupal Sagar
● Aadhaar from Godrej
⮚ Mandis, haats and melas Ex 43.10 Mandis, Haats and Melas (Pg 825)

⮚ Non-conventional delivery mechanisms Ex 43.9 New Delivery Mechanism

for Marketing Insurance – ICICI
Prudential (Pg 824)
Sales Force Management
● Rural Marketing involves more intensive personal selling effort
compared to urban
■ Rural Salesmen Must Posses Certain Special Traits
● Willingness to be located in rural areas
● Cultural congruence
● Attitude factor
● Ability and willingness for handling several product lines
⮚ Managing rural sales force involves added responsibilities
●
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The AP Rural Retail Academy
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 Chapter 43: Rural Marketing in India
Marketing Communications
■ Constraints in Marketing Communications in the Rural Context
● Low literacy of consumers, tradition bound nature, cultural taboos
● Low media penetration

■ Selecting the Media Mix

⮚ A combination of formal and non formal media required
● Radio
● Cinema
Chart 43.1 Possible Media Mix
● Print media too has reasonable scope in the Rural Context (Pg 826)
● Outdoor
● PoPs
● Audio-visual units/publicity vans
● Syndicated AV vans
● Puppet shows, folk theatre, Harikatha
● Music cassettes/CDs
⮚ Communication should be uniquely assembled and delivered
● Demos
● HUL’s rural specific communication for Surf
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 Chapter 43: Rural Marketing in India
Marketing Communications (…contd)
⮚ Role of word-of-mouth promotion and opinion leaders
● Interpersonal and rural specific media
▪ Face to face interactive communication needed
Lifebuoy Swasthya Chetna of HUL

Exhibit 43.11 Rural Communication – Fair & Lovely (Page828 )

Exhibit 43.12 HUL’s Rural Thrust with Special Projects (Pg 829)

⮚ Role of IT in Rural Marketing

Exhibit 43.13 Role of IT in Developing Rural Markets (Pg 829)
● e-Kiosks of GOI

■ Rural Marketing is Developmental Marketing

⮚ Rural marketing programmes should contain features helping
the rural community’s socio-economic development

Exhibit 43.14 Development Marketing – HPCL’s Rasoi Ghars and

© Macmillan Publishers India
43.15 Developmental Marketing – Project Shakti of HUL (Pg 830)

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