MKT514

Rural Marketing
Dr. Rajesh Verma

#Session 3
Learning Outcomes
• Analyze what is rural marketing and how it is defined in the
empowerment and developmental context.
• Understand Potential of Rural Markets.
Define Rural
• According to the Planning Commission of India, a town with a maximum population of 15,000 is
considered rural in nature.
• The National Sample Survey Office (NSSO) defines ‘rural’ as follows: An area with a population
density of up to 400 per sq. km. Villages with clear surveyed boundaries but no municipal board.
A minimum of 75 per cent of male, working population involved in agriculture and allied activities.
• The Census of India 2001 defines urban India, and it is implied that rural means the areas which
are not urban. Urban India is defined as:
• All statutory places with municipality, corporation, cantonment board or notified town area
committee.
• Minimum population of 5,000.
• Density of population of at least 400 per sq. km. (1,000 per sq. mile).
• At least 75 per cent of male, working population engaged in non-agricultural activities.
• Reserve Bank of India (RBI) defines rural areas as those areas which have a population of less
than 49,000 (Tier-3 to Tier-6 cities).
Phases in the evolution of Rural Marketing
 Phase I (pre-1960): Rural marketing was thought of as agriculture marketing, that is, of
supplying rural produce to urban areas and agricultural inputs to rural markets.
 Phase II (1960s–1990): The focus was on agricultural inputs. Marketing of non-farm rural
produce was considered as rural marketing. Green Revolution was underway and
scientific farming practices were adopted.
 Phase III (1991–present): Focus on consumer goods. Due to saturation in cities,
companies faced lack of growth in urban areas and they turned their attention to rural
areas.
Rural Marketing Defined
Dogra and Ghuman (2008) define rural marketing as “planning and implementation of marketing
function for the rural areas.” - - - Limited Scope Definition, why?
 Distribution: Small packets over large distances where transportation are irregular or non-existent?
 Promotion: How to promote goods in areas which are media dark, lacking regular communication channels?
 Pricing: How to keep prices low when the costs in remote areas are extremely high?
 Feudal outlook: How to promote modern products in areas which see modernization as a threat to culture?
 Intermediaries: How to find warehouses & intermediaries to support the activities.
 Purchasing power: People are desperately poor and farmers are committing suicide.
 Sachet marketing: How to achieve volumes and a high penetration rate to make low-priced sachet
marketing profitable?
 Selling effort: How to deploy, train and retain the sales force in geographically diverse areas?
Rural Marketing - Definition
Rural marketing is a process that consists of developing and
empowering people in rural communities through capability
enhancement and social innovation, to facilitate a two-way
marketing of economic and social goods between rural and
urban areas.
Rural Marketing - Definition Components
• Developing and Empowering People - HUL Project Shakti (Video)
• Capability Enhancement - ITC, AMUL
• Social Innovation - Grameen Bank, AMUL
• Two Way Marketing - Godrej
Rural Marketing - 4A Approach
Rural Marketing - 4A Approach Examples

Acceptability Affordability

Availability Awareness
Rural Potential - Internet
Digital India’ still a far-fetched dream for hinterland; not even 30% of rural India
has internet.
• Broadband Urban-Rural Divide: urban penetration 93% per cent and Rural penetration
29.2% (as on 31 March 2020).
• Bihar (21.69), Uttar Pradesh (21.64), Jammu & Kashmir (16.58), Madhya Pradesh (23.88),
and West Bengal (25) are states with least number of internet subscribers per 100 persons.
• Delhi registered the highest internet penetration followed Kerala, Haryana, Himachal
Pradesh, and Punjab
• Challenges: Lower level of infrastructure, low population density, and the consequent lack
of a viable business case.
• Government BharatNet Project - broadband connectivity to all the Gram Panchayats (nearly
2.5 lakh) in the country. 
Rural Potential - Internet
Rural Potential - Cell Phone
• What about Cell Phone penetration?
 Rural Potential - Cell Phone
• 90% of India will own a mobile phone
by 2022, and 60% will use a
smartphone by 2025 - IMOBI
Research
• Millennial population of India - 450
million, out of which 300 million
millennials (67% of the total
population & 36% of the Indian rural
population) live in Rural India.

The smartphone penetration in rural and semi-urban demographics increased

to 40-50 % from 29 % five years ago.
Rural Potential - FMCG
• FMCG is the 4th largest sector in the Indian economy
where the rural segment contributes about 45% to
the overall revenue generated by the sector.
• FMCG products are reported to account for 50% of
the total rural spending which is proof of the rapid
growth in the semi-urban and rural consumers in the
industry.
• The rural FMCG market expected to grow from US$
23.6 billion in FY18 to US$ 220 billion by 2025
• HUL’s rural revenue accounts for about 45 per cent of
its overall sales; Dabur generates over 40% to 45% of
the domestic revenue from sales in the rural market.
Thank You

Any Questions?
LPU Live Q2E35 - MKT514