UNIT I

Introduction
I N T R O D U C T I O N T O R U R A L M A R K E T
 DEFINITION, SCOPE OF RURAL MARKETING
R U R A L M A R K E T I N I N D I A – S I Z E , S C O P E
 RURAL DEVELOPMENT AS A CORE AREA,
EFFORT FOR RURAL DEVELOPMENT BY
GOVT.
 EMERGING PROFILE OF RURAL MARKETS
IN INDIA
 PROBLEMS OF RURAL MARKET
C O N S T R A I N T S I N R U R A L M A R K E T I N G A N D
STRATEGIES TO OVERCOME
 Introduction to Rural Market

 Till recently – focus of marketer – urban consumer

 Increasing competition, saturated urban markets,
more and more new products, demanding urban
consumers
 Rural market – caught attention – many companies,
advertisers, MNCs
 Rural people – purchasing power improved – better
price for agricultural products
 Companies – HL, Colgate Palmolive, LG, Philips etc.
eying rural markets
 Rural Marketing

 Reaching the rural customers

 Understanding their needs and wants
 Supply of goods and services to meet their
requirements
 Carrying out after sales services
 That will lead to customer satisfaction and repeat
purchases/sales
 Definition
 “Rural Marketing is the process of developing,
pricing, promoting, distributing rural-specific goods
and services leading to exchange between urban and
rural markets, which satisfies consumer demands and
also achieves organisational objectives”.
 “Rural Marketing is a two way marketing process. It
encompasses inflow of products into rural areas for
production or consumption purposes and also outflow
of products to urban areas”
a) Urban products in rural areas
b) Rural products in urban areas
c) Marketing within the rural area itself
 Scope of Rural Marketing

1) Large population – 2011 – 68.84% - 2019 – 68.86%

2) Rising rural prosperity – Contract farming,
industrialization, migration to urban areas and
remittance of money, modern family practices etc.
3) Growth in consumption – growth in purchasing
power
4) Changing lifestyle – brand awareness increased
5) Life cycle advantage – Product – attained maturity
stage(urban area) – growth stage(rural)
 Scope of Rural Marketing
6) Market growth rate higher than urban – Growth rate of FMCG market
and durables is higher in rural market – rural market share is more
than 50%
7) Rural marketing is not expensive – to promote – durables – inside
state- cost one crore- urban areas-millions
8) Infrastructure – Marketing(Mandis, agricultural co operatives, melas,
shops etc. )
commercial (RRB, Sch. Commercial banks, co op. banks)
financial inclusion- more and more villages shall be covered
Every Panchayat village has – internet connectivity
70% village homes – have electricity – almost every home – mobile
phone
9) Govt. policies – pumping millions of rupees In rural areas for
upliftment – unemployment – health taken care by different policies
 Rural Development

 Means the aggregate development of the rural areas

and development of people living in rural areas.
 Strategy designed to improve the economic, social and
cultural life of rural people
Objectives:
 To increase income
 Higher productivity
 Expansion of productive employment
 Equity in distribution of the benefits of growth
 Minimum acceptable level of food, clothing, shelter,
education, health etc.
 Emerging profile of Rural Market
1) Vast and scattered market: 625 million consumers
– value crosses 40,000 crore – 22,000 crore is for
non-food – 18,000 for food items – scattered over
5,76,500 villages
2) Seasonal Demand: demand for G&S – depends
heavily on agriculture - seasonal nature of agrl.
3) Low standard of living – low purchasing power –
low per capita income- low literacy rate – so low
standard of living – social backwardness(due to
traditions, religious pressures, cultural values, deep
rooted superstitions
 Emerging profile of Rural Market

4) Unity in diversity – religion, languages, culture, sub

culture, customs, traditions etc.
5) Steady growing market – steady and encouraging change
– last three decade (consumer durable and non durables) –
due to new employment income through rural devp. –
planning & implementation of green and white revolutions
6) Major income of rural consumers is from agriculture
7) Rising disposable income of rural consumers – new tax
structure, govt. regulation, awareness etc.
8) Traditional outlook – change not accepted easily – literacy
among the youth – changing outlook
 Emerging profile of Rural Market
9) Rising literacy trends – nearly half of rural
population is literate now – rising literacy level –
increasing awareness – educating about new
technology – aspiring for better lifestyle
10) Diverse socio-economic background – dispersion
of geographical areas – uneven land fertility
11) Infrastructure – roads, warehouses,
communication system, financial facilities are not in
good shape
 Problems of Rural Market
1) Underdeveloped people & Market(small land holding,
people below poverty line)
2) Lack of proper distribution facilities(roads inaccessible
in monsoon)
3) Media for rural communication(radio, Cinema, T.V –
less coverage of print media)
4) Many language and dialects
5) Vastness and uneven spread
6) Low per capita incomes (30% GDP generated in rural
areas – shared by 72% population – per capita income is
low – low purchasing power)
7) Product positioning(heterogeneous market – large
product range – will give rise to distribution problems)
 Problems of Rural Market
8) Hierarchy of markets(depending upon purchasing habits
– distribution network for different commodities – needs
to be different)
9) Low level of literacy(Radio, Cinema, T.V – print media
not much effective)
10) Seasonal demand (because of agriculture)
11) Logistics, storage, handling and transport(widespread
nature & scattered population- kaccha road etc.)
12) Lack of transportation and roads(poor road connectivity)
13) Indebtedness of village producers
14) Lack of market information(consumer do not have
updated information)
 Constraints in Rural Marketing
1) Need for selective approach:
 Wide regional variation – need to analyze and
understand sectorally – to decide method to approach
them
2) Problem in reaching the rural consumer:
 576000 villages – 79% of them has population less
than 1000
 80% villages – not have all weather roads
 Direct delivery – to top 1% villages – cost twice as
much as servicing urban market
 20% farmer visit – nearest town- sell their produce-
purchase their requirements
 Constraints in Rural Marketing

3) Literacy and Mass media:

 Last 10 years literacy improved
 Radio, TV, cinema – print media
4) Constraints in developing rural market
 High distribution cost
 High initial market devp expenditure
 Small retailer – not able to carry stock- without
adequate credit
 Inadequate infrastructural facilities
 Constraints in Rural Marketing

5) Devp of rural market will involve additional cost –

promotion and distribution
6) In rural marketing – not promotion of a brand is
crucial – creating awareness about particular
product is essential
7) Inadequate warehousing – delay in replenishment
of stock urgently needed
Strategies to overcome constraints in Rural Marketing

1) Marketing research:
a) Opportunity research – what type of product,
packaging, what price, where and when, what
quantity is required
b) Effort research :
what type of effort needed – advertising,
promotion and distribution
2) Product development: (to suit rural areas)
- New product devp – product innovations –
marketing innovation – product life cycle –
product mix – product diversification
Strategies to overcome constraints in Rural Marketing

3) Distribution management:
 Channels to serve rural market
 Ration shops, mandi, national-state-individual
consumer co operative society, retailers can be given
incentives – to bring it from wholesalers nearby town
5) Marketing communication:
- advertising, TV, radio, painted walls, stalls in fairs,
hoarding, vernacular newspapers, personal selling,
demonstration at trade fairs, spot selling, but stands,
distributors etc.
 Effort by Govt. – Rural Development
1) Changing rural infrastructure: PMGY – 2001 – 02 budget –
5000 crore – for village infrastructure devp. – central govt. -
40,000 crore – rural drinking water supply
2) Employment : PMRY – promoting self employment – among
educated unemployed rural youth
Integrated Rural Devp. – to provide skill based training and
access to bank credit (subsidized)
3) Sampoorna Grameen Rojgar Yojana – Employment
Assurance Scheme – Jawahar Gram Samridhi Yojana – to
create additional employment- during period of acute
shortage of wage employment – for people living below
poverty line
(2002-03 – 3,100 lakh people – 2300 crore disbursed as
wages)
 Effort by Govt. – Rural Development

4) Rural Housing:
 Central govt. – National housing policy & Habitat policy
– 1998 (to provide housing for all)
 Construction of 20 lakh housing units
 2002-03 – 93 lakh houses- 16000 crore- Indira Awas
Yojana
 Construction assistance – 20000 per unit for plain area
 22000 per unit – hilly areas
 Gram sabha – select beneficiaries
 Allotment of unit – in the name of female
 Effort by Govt. – Rural Development
5) Swarnajayanti Gram Swarozgar Yojana:
 Self employment programme – rural poor-1999
 Training for rural youth, devp of women & children
 Supply of toolkits in rural areas
 Access to institutional finance upto – 1.7 crore
households
 Opportunities for initiating small scale income
activities
6) District Rural Development Agency:
- DRDA – principal organ- district level- for
implementation of anti poverty programme
 Effort by Govt. – Rural Development

-DRDA- various wings (self employment, women’s wing, wage

employment wing, engineering wings, accounts wing,
monitoring and evaluation wing, general administration wing )
7) Land reforms:
 Distribute land among landless
 Provide security to tenants- tenure, rent payable etc.
 Protect tribal landownership – against encroachment
 Consolidation of land holding
 Public land-poor- for fuel, wood & fodder
 Make Land & productive assets accessible to women
 Provide house sites- to construct their own houses
 Effort by Govt. – Rural Development

8) Providing institutional finance in Rural India:

 NABARD – refinances- for farm mechanization,
 Agricultural credit – Kisan Credit Card Scheme
 Refinance scheme – financing famers service center
 Schemes for setting up- Agri clinic & Agribusiness
centers
 Questions UNIT I

1) What are the problems of rural market?

2) Explain the scope of rural marketing.
3) Explain emerging profile of rural market in India.
4) What are the constraints in rural marketing?
5) Discuss the efforts taken by government for the
rural development.
6) Explain the strategies to overcome constraints in
rural marketing.