Nmims Bba RM

RURAL
MARKETING
By,
Mukti Prakash Behera
1
INTRODUCTION TO RURAL
MARKETING
The Power of Rural Marketing
More than half a century ago Mahatma Gandhi said
“India is not Calcutta and Bombay but India is
seven hundred thousand villages.”
This statement is still relevant as it was then.
WHY ?
TOTAL VILLAGES POPULATION

664,369 (2019) 64.61 % in 2021
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Products for Rural India
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The villages in India have always remained neglected and never
tried to market their products to the urban consumers.
A shift from an agricultural economy to a service economy resulted

in the growth of job opportunities and creating a demand for goods
and services by the consumers.
Till now the rural market was dependent on the urban marketers
for their requirements like seeds, fertilizers, pesticides, cattle feed
and agricultural machinery.
But the scenario has changed now the rural products have been
largely accepted by the urban consumers also.
5
According to NCAER report 70% of bicycles, mechanical watches
and transistors and 60% of batteries, sewing machines & table fans
are sold in rural India.
The rural producers have undergone a complete transformation in

the last 15 years; they have now become more conscious about
marketing their products to urban consumers.
While rural products offer tremendous opportunities for marketers,

it is not easy to enter the urban markets due to competition in the
urban markets.
Therefore understanding the purchase behaviour of the consumers

become important for the marketer and market research is
indispensable for effective formulation of marketing strategies.
6
Late C.K. Prahalad, in his book

“The Fortune at the Bottom of the Pyramid”, has rightly pointed
out that, “The real source of market promise is not the wealthy
few in the developing world but it is the billions of aspiring poor
who are joining the market economy for the first time."
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Opportunities
Vast Base of Consumers:
The Indian rural market has a total population of around 895 million people
spread over 664,000 villages, and this population is said to increase by
1.7% by 2022.
Increase in use of Mobile Phones and Internet: Currently, around 227 million
people in rural India make use of internet as compared to around 205 million in
urban India. This figure is estimated to increase with a good percentage in the
coming few years.
Increase in Employment Opportunities: Rural development due to government

initiatives in the past years has led to financial growth in rural areas. This has
increased the employment opportunities for the rural habitants and thus an
increase in the income level.
Improvement in Literacy Rates: People in rural India are getting more and more
aware of the importance of education. As of 2015, the literacy rate of rural India is
71%.
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Challenges
9
Thanda Matlab…?
Rural Marketing Strategy by Coca-Cola
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Consumer Buying Decision Process
DECISION MAKING STAGES WHAT THE CUSTOMER’S DO

Problem Recognition Recognizes the need for a service or product
Information Search Gathers information
Alternatives Evaluation Weighs choices against comparable
alternatives
Purchase Decision Makes actual purchase
Post-Purchase Evaluation Reflects on the purchase they made
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Factors affecting Consumer Behavior
Psychological
Factors
Personal
Factors
Social
Factors
Cultural
Factors
Economic
Factors
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Psychological Factors
In daily life, consumers are being affected by many issues that are unique to
their thought process.
Psychological factors can include perception of a need or situation, the person's
ability to learn or understand information, and an individual's attitude.
Each person will respond to a marketing message based on their perceptions
and attitudes.
Therefore, marketers must take these psychological factors into account when
creating campaigns, ensuring that their campaign will appeal to their target
audience.
13
Personal Factors
Personal factors are characteristics that are specific to a person and may not
relate to other people within the same group.
These characteristics may include how a person makes decisions, their unique
habits and interests, and opinions.
When considering personal factors, decisions are also influenced by age, gender,
background, culture, and other personal issues.
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Social Factors
The third factor that has a significant impact on consumer behaviour is social
characteristics.
Social influencers are quite diverse and can include a person's family, social
interaction, work or school communities, or any group of people a person affiliates
with.
It can also include a person's social class, which involves income, living
conditions, and education level.
The social factors are very diverse and can be difficult to analyze when
developing marketing plans.
The sub-factors are:
Family
Reference Group
Roles and Status 15
Cultural Factors
Culture represents, a group of people associated with a set of values and ideologies that belong
to a particular community. When a person comes from a particular community, his/her
behaviour is highly influenced by the culture relating to that particular community. Some of the
cultural factors are:
Culture
Cultural Factors have a strong influence on consumer buying behaviour. Cultural Factors include
the basic values, needs, wants, preferences, perceptions, and behaviors that are observed and
learned by a consumer from their near family members and other important people around
them.
Subculture
Within a cultural group, there exist many subcultures. These sub-cultural groups share the same
set of beliefs and values. Sub-cultures can consist of people from different religion, caste,
geographies and nationalities. These subcultures by itself form a customer segment.
Social Class
Each and every society across the globe has the form of social class. The social class is not just
determined by the income, but also other factors such as the occupation, family background 16 and
education. Social class is important to predict the consumer behaviour.
Economic Factors
The consumer buying habits and decisions greatly depend on the economic situation of a country or a
market. When a nation is prosperous, the economy is strong, which leads to the greater money supply in the
market and higher purchasing power for consumers. When consumers experience a positive economic
environment, they are more confident to spend on buying products. Economic factors have a significant
influence on the buying decision of a consumer. Some of the important economic factors are:
Personal Income
When a person has a higher disposable income, the purchasing power increases simultaneously. Disposable
income refers to the money that is left after spending towards the basic needs of a person. When there is an
increase in disposable income, it leads to higher expenditure on various items. But when the disposable
income reduces, concurrently the spending on multiple items also reduced.
Family Income
Family income is the total income from all the members of a family. When more people are earning in the
family, there is more income available for shopping basic needs and luxuries. Higher family income
influences the people in the family to buy more. When there is a surplus income available for the family, the
tendency is to buy more luxury items which otherwise a person might not have been able to buy.
Availability of Consumer Credit

When a consumer is offered easy credit to purchase goods, it promotes higher spending. Sellers are making
it easy for the consumers to avail credit in the form of credit cards, easy instalments, bank loans, hire
purchase, and many such other credit options. When there is higher credit available to consumers, 17 the
purchase of comfort and luxury items increases.
Rural vs Urban Markets
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19
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Rural Marketing Types
1. Rural to Urban Market

It includes the outflow of products for production or consumption from the rural
market to the urban market. Further, agricultural products such as sugar, rice, wheat,
and cotton are transported from rural to urban areas.
2. Rural to Rural Market

It includes the exchange of products or services from one rural market to another rural
market. Cattles, agricultural products, carts, and other such things fall under this
category.
3. Urban to Rural Market

Urban to rural marketing refers to the sale of goods and services in rural areas by urban
marketers. Agricultural inputs, as well as fast-moving consumer goods (FMCG) such as
detergents, soaps, cosmetics, textiles, and other items, commute from the urban to the
rural.
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Scope of Rural Marketing
• The Indian rural market has grown in prominence in recent decades as

the rural population's purchasing power has grown.
• As rural areas consume a huge number of products produced in cities.

Therefore, the rural market is becoming more important than the
urban market.
• Marketers are now attempting to expand into the rural market. Also,
Rural India offers a big marketing opportunity because the great
majority of Indians reside in rural areas.
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Factors Contributing to growth of Rural Markets
Urbanization
The rural population is migrating to urban regions for a variety of reasons. It includes
work, education, and the sale of agricultural and rural products in metropolitan areas,
necessitating a faster growth of agricultural marketing.
Communication and Transportation

The most significant tool for expanding the scale of rural marketing is modern
transportation and communication. Moreover, the market for farm products has
broadened as transportation and communication infrastructure have improved.
However, the transfer of products from one place to another was constrained in the
absence of this infrastructure. And a product's consumption was limited to the areas of
production or, at most, surrounding locations.
Professionalization
In the early 1950s, marketing was recognized as a career. People in particular jobs have
become more efficient as a result of the trend toward growing specialization. Increased
output has resulted from specialization, which is the foundation for marketing's growth.
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Factors Contributing to growth of Rural Markets
Technological Advancements
A significant rise in farm production has resulted from technological advancements in
agriculture. As a result, the agricultural produce market surplus has increased. The
marketing system has grown as a result of this.
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Types of Rural Marketing
CONSUMER SERVICE INDUSTRIAL

MARKET MARKET MARKET
Components: It primarily
Components: Individuals Components: Individuals,
includes agricultural-related
and households are the residences, offices, and
and other elements such as
constituents. Consumables, production enterprises are
animal husbandry, poultry
food, toiletries, cosmetics, the constituents.
farming, fishing, cottage
textiles and apparel,
industries, health centers,
footwear, and so on.
co-operatives.
Products: Commodities,
Products: Bicycles, Repairs, transportation, seeds, fertilizers, pesticides,
Watches, kitchen banking credit, insurance, animal feed, fishnet
appliances, furniture, healthcare, education, stockings, medicines, petrol
sewing machines, Radios, communications, power, fuel, and other products are
televisions, two-wheelers, and other services are available. Also includes—
and other durables. available. Tractors, Boats, Pump Sets,
Generators, Tillers,
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Harvesters, and more.
EXAMPLE
HDFC: ‘Har Gaon Humara’ and ‘Festive
Treats’
• HDFC Bank has launched a financial services campaign called "Festive Treats." It was
part of its rural marketing strategy to provide incentives to rural consumers.
• This further resulted in specific offers for rural residents on various financial products. It
includes savings accounts, loans, and other deposits, among others.
• Likewise, HDFC Bank launched "Har Gaon Hamara," a rural marketing campaign.
Further, it aimed at raising rural people's understanding of financial goods, digital services,
and social welfare activities.
• In addition, HDFC Bank has introduced the toll-free 'Har Gaon Hamara' IVR (Interactive
Voice Response) service. It was launched to assist this project and connect out to rural
markets, making it easier for farmers to access and use financial services.
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Problems in Rural Marketing
1. Deprived people and deprived markets
2. Lack of communication facilities
3. Transport
4. Many languages and dialects
5. Dispersed markets
6. Low per capita Income
7. Low levels of literacy
8. Prevalence of spurious brands and seasonal demand
9. Different way of thinking
10.Warehousing problem
11.Problems in sales force management
12.Distribution problem.
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1. Deprived people and deprived markets:
A vast majority of rural people is tradition bound, and they also face problems
such as inconsistent electrical power, scarce infrastructure and unreliable
telephone system, and politico-business associations that hinder development
efforts.
2. Lack of communication facilities:

Even today, most villages in the country are inaccessible during the monsoons.
A large number of villages in the country have no access to telephones. Other
communication infrastructure is also highly underdeveloped.
3. Transport
Many rural areas are not connected by rail transport. Many roads have been
poorly surfaced and got severely damaged during monsoons. The use of bullock
carts is inevitable even today. Camel carts are used in Rajasthan and Gujarat in
both rural and urban sectors.
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4. Many languages and dialects:
The languages and dialects vary from state to state, region to region and
probably from district to district. Since messages have to be delivered in the
local language, it is difficult for the marketers to design promotional strategies
for each of these areas.
5. Dispersed markets:
Rural population is scattered over a large land area. And it is almost impossible
to ensure the availability of a brand all over the country. District fairs are
periodic and occasional in nature. Manufacturers and retailers prefer such
occasions, as they allow greater visibility and capture the attention of the target
audience for larger spans of time.
6. Low per capita Income:

The per capita income of rural people is low as compared to the urban people.
Moreover, demand in rural markets depends on the agricultural situation,
which in turn depends on the monsoons. Therefore, the demand is not stable or
regular. Hence, the per-capita income is low in villages compared with urban
areas. 29
7. Low levels of literacy:
The level of literacy is lower compared with urban areas. This again leads to a
problem of communication in these rural areas. Print medium becomes
ineffective and to an extent irrelevant, since its reach is poor.
8. Prevalence of spurious brands and seasonal demand:

For any branded product, there are a multitude of local variants, which are
cheaper and hence more desirable. Also, due to illiteracy, the consumer can
hardly make out a spurious brand from an original one. Rural consumers are
cautious in buying and their decisions are slow, they generally give a product a
trial and only after complete satisfaction they buy it again.
9. Different way of thinking:

There is a vast difference in the lifestyles of the people. The choice of brands
that an urban customer enjoys is not available to the rural customer, who
usually has two to three choices. As such, the rural customer has a fairly simple
thinking and their decisions are still governed by customs and traditions. It is
difficult to make them adopt new practices. 30
10. Warehousing problem:
Warehousing facilities in the form of godowns are not available in rural India.
The available godowns are not properly maintained to keep goods in proper
conditions. This is a major problem because of which the warehousing cost
increases in rural India.
11. Problems in sales force management:

Sales force is generally reluctant to work in rural areas. The languages and
dialects vary from state to state, region to region, and probably from district to
district. Since messages have to be delivered in the local language, it is difficult
for sales force to communicate with the rural consumers. Sales force finds it
difficult to adjust to the rural environment and inadequate facilities available in
rural areas.
12. Distribution problem:

Effective distribution requires village-level shopkeeper, toluka-level
wholesaler/dealer, district-level stockist/distributor, and company-owned
depot at state level. These many tiers increase the cost of distribution.
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Rural Marketing Models
• When a company decides to enter the rural market, its marketing methods must be
restructured to meet the demands and requirements of rural customers.
• Therefore, businesses must adjust their marketing strategy according to the four
pillars of rural marketing. It will ultimately help to meet the unique needs of rural
customers.
The four A’s components of the rural marketing mix are:
AFFORDABILITY AVAILABILITY
ACCEPTABILITY AWARENESS
https://www.deskera.com/blog/rural-marketing/
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AVAILABILITY
• The biggest challenge is to ensure availability of goods and services in the
markets.
• Rural markets do not have a proper physical distribution system like those
in urban markets. India’s 664,369 villages are scattered all over the country
and each village would have particular distribution problems.
• Village areas do not even have a well-developed roadways system.
• Many of the roads are not even pucca, and are rendered useless during the
monsoons.
• The mountainous villages become inaccessible during landslides and snow
storms.
Companies have built a strong distribution system to

reach the remotest of the villages.
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AFFORDABILITY
• Key to successful rural marketing lies in selling goods and services that can
be afforded by villagers.
• Most of the rural population depends upon agriculture for livelihood and as
such their income is irregular.
• Also the per capita income of the rural areas is lower.
• It is estimated that more than two-thirds of Indian villagers belong to low
income group, and thus they are very much price-sensitive.
• A villager will purchase a particular product only if he feels that he is getting
enough value for it.
• In the year 1998, Lg electronics introduced its “Sampoorna” television range
targeted at rural buyers. Procter and gamble brought out tide naturals, a
comparatively cheaper detergent powder. Most brands of shampoo are
available in sachets priced at Rs. 1-2-3.
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AWARENESS
 It is significant to create awareness about the product in the minds of the
customers.
 The mass media for reaching rural people should be chosen carefully.
 It should be kept in mind that even today the media reach is lower in
villages.
 Television ownership is very low in villages and viewership is limited to
“Doordarshan” channels even for those who watch television.
 Print media will be ineffective because of low literacy rates.
 Among electronic media, radio and cinema have a comparatively wider
coverage in villages.
 Advertisements in regional languages broadcast on local radio stations will
influence consumer thinking.
 Outdoor advertising options like banners, billboards, wall paintings and
posters, can be used successfully in rural areas. Advertisements should be in
local languages so that people can easily understand them. Hindustan
unsilver makes use of street performers like magicians, singers and dancers
to promote its products. 35
ACCEPTABILITY
 The most important issue in rural marketing is to make the customers accept
the product.
 Rural Population are more likely to resist change and are slower in adopting
newer products.
 So it is vital to assure them about the benefits and value they can get by
purchasing a particular product.
 Since rural people would not spend their precious money on wasteful
products, producers should offer goods that suit the villagers’ needs.
 People in a rural Chinese province used washing machines to wash not just
clothes, but also vegetables.
 Chinese appliance maker Haier group leveraged this opportunity and
modified their washing machine to enable washing farm produce safely.
 The villagers happily purchased this machine, giving Haier group a
competitive advantage over rivals.
36
Haier – The Chinese Company that Innovates!!
Customer Complaint #1:
“My washing machine won’t work after I use it to rinse the morning’s
harvest.”
About 10 years ago, a rural farmer dialed into Haier’s call center complaining
that his washing machine was full of dirt and not functioning properly. When
the technician visited the customer’s home, he discovered the dirt was not from
the clothes the farmer wore in the field to harvest his potatoes, but rather from
the harvest itself.
The man had been using his washing machine to wash both clothes and
potatoes. Instead of educating the farmer on how to properly use a washing
machine, the technician returned to headquarters with the man’s feedback.
Haier subsequently released a washing machine capable of washing

both clothes and potatoes, the 2009 upgraded version of which led Haier to
become the number one provider of laundry equipment in the entire world.
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Haier – The Chinese Company that Innovates!!
Customer Complaint #2:

“My refrigerator is out of food because rodents ate it all.”
Haier’s customer service center later began to receive complaints that

rodents were getting into their refrigerators. Apparently, when
customers plugged the appliance into the wall and the compressor
turned on, rodents couldn’t resist finding a new home inside.
Again, recognizing that the needs of its rural customers differed from
those in urban residences, Haier came up with a second
innovation: the rodent-proof fridge.
The specially designed refrigerator features metal plates to cover holes in

the fridge and uses thicker “bite-proof” wiring.
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EXAMPLES
https://ruralmarketing.in/stories/hyundai-
aims-to-tap-growing-demand-for-high-value-
cars-in-rural-markets/
https://ruralmarketing.in/stories/hyundai-
partners-with-itc-abd-to-go-deeper-into-rural-
markets/
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RURAL MARKETING
ENVIRONMENT & ECONOMY
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RURAL MARKET STRUCTURE
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Quadrant I − It explains a situation in which both the buyer

and seller are from rural area. This is a constant economy
system in which all rural produce is consumed within the
system.
Quadrant II − It explains that the majority of people

concentrate on Quadrant II situation, which unsustainably is
tried by marketers to sell urban products in rural markets.
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Quadrant III − It is necessary to develop an urban-rural marketing

linkage, so that both urban and rural products can freely move
across both the markets. Marketing should work as a process of
motivation to deliver and improve standards of living of rural
people and consumption rural products by urban people.
Quadrant IV − It explains a situation in which both the buyer and

seller are from urban area. This is a constant economy system in
which all urban produce is consumed within the system.
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Rural Livelihood (Occupation)
 India's rapid economic expansion has tried to include the rural population, which
is concentrated in places where rain-fed agriculture is the primary source of
income.
 Poverty remains, however, because of restricted and inequitable access to

productive resources such as land, water, improved inputs and technologies, and
microfinance, as well as drought and other natural calamities.
 Low literacy and skills conspire to keep people in poverty, prohibiting them from
claiming their basic rights or engaging in extra activities that would earn them
money or help them create assets.
 It's not just about poverty alleviation. It's most important for people to stand on
their feet and develop on their own.
 A lot of times, people in rural communities have the knowledge, but there are not
enough opportunities for them to apply their knowledge.
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Livelihood Opportunities in Rural Areas
Farming
This is the major source of livelihood in rural India, but not the only one.
Poultry or Dairy Business

People also conduct these businesses in rural areas as they usually keep livestock
etc.
Agricultural Laborers
These are those people who do not own agricultural land, and they used to work on
other farmers' lands during the specific season. They comprise two-fifth of the rural
population in India. They do not own permanent jobs, but seasonal jobs like during
sowing or harvesting season.
Money Lending
There are rich farmers as well in the villages who own larger pieces of land and hire
many people to work or sometimes own mills or industries as well. These rich
farmers lend money to other people as well and do exploitation of the weaker
society by charging a large sum of interest.
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Fishing
Fishing is also the major source of income for those who live along with the coastal
areas. It is done for domestic and commercial purposes. Some fishermen also do
exports as well.
Handicrafts
India has a huge heritage and culture with immense talent in every corner of the
country. Handicrafts are also a significant source of income in rural areas, which are
made by hand such as pottery making, basket making, weaving, printing, painting,
etc.
Small and Cottage Industries

These are the industries that are run in the houses and family members contribute
to that business, such as pottery or basket making, furniture, shawls, mats, caps,
woolen or crochet work, etc.
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Challenges Faced by Rural Livelihoods
 Some challenges affecting rural livelihoods include natural disasters and disease
outbreaks.
 These have brought serious threats to their livelihoods, and the rural poor are
the most affected. Some natural disasters include floods, earthquakes, storms,
fires, landslides, and so on.
 Natural disasters cause loss of life, property, and livelihoods. Among rural
populations whose livelihoods depend on the land and other natural resources,
natural disasters deprive these communities of human capital. People lose crops,
livestock, and sources of income, which leads to the loss of their financial capital.
In addition, people have lost their homes; the community has nothing and is
trying to recover from the disaster.
 Because of the loss of income and income-generating resources, natural

disasters can lead to poverty. The emergence of diseases after natural disasters
further complicates the situation. Apart from these problems; also the road,
electricity, telecommunications, and transportation facilities are in poor
condition. 47
Other Sources of Income

There are a lot of other sources of income as well in rural areas, such as
•Silk production of wool production by keeping silkworms and sheep, etc.
•Teaching opportunities for educated people.
•Educated youth also go to cities for work.
•Have small general or grocery shops.
•Woodcutting or selling wood.
•Jute bags making or handmade clothes.
•Barber, doctor, nurse, painter, electrician, etc. Jobs profiles are also present there in
rural areas.
•Brick making on a larger scale.
48
Family Structure
1. The Rural Family is Patriarchal in Nature:
Father is head of the family. He shoulders the responsibility towards,
government, societies etc. He possesses some authority and take all the
decisions.
2. Rural Family is Orthodox in Nature:

They generally do not want to change their ways of behavior because of
limited education, limited sources, and their occupation depending upon
nature. They cannot afford to take risk and hence they follow the old ways of
living.
3. Family Works as the Unit of Production and Unit of Consumption:

All the members of the family members work as a team. The adult family
members carry out heavy and major operations in the field like ploughing,
sowing, transplanting etc. while children help than in to field operations like
watching crops, looking after cattle, picking of fruits, harvesting of
vegetables etc. Ladies also helps by carrying the meals to fields. Whatever
produces family gets from farm is kept for his own consumption.
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Family Structure
4. Rural Family is Joint Family:
This joint pattern is showing sends of breaking still however it is a common
form in rural area.
5. Rural Family is Based on Peasant Households:

The family has also peasant neighborhood. All the neighbors of rural family
are farmers. They always meet and the talk is generally centered around the
agriculture and allied subject.
6. Rural family is more homogenous, stable, integrated and organically

functioning than urban family. The ties, bindings of the members of rural
families for instance the husbands and wife parent and children are stronger
and last longer than.
7. There is greater discipline and interdependence in the rural families.
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Rural & Urban Life
51
Economic Environment
 There is a tremendous growth in rural Indian economy.
 The higher income class in the rural sector has almost grown six times.
 There is an increase in the rural per capita income.
INCOME GENERATION
52
 The occupation pattern reveals the income generation pattern as well.

 The Table in the previous slide indicates that more than 40% of rural people
are engaged in agricultural and allied activities.
 Next followed by the wage earners, salary earners, and small shop keepers and
so on.
 If we compare with urban sector, rural sector has very little percentage of
professionals and businessman.
 In contrast, nearly 40% of urban people are earning regular salaries and just
3.45% of people alone engaged in agriculture and related activities.
 Wage earners and small shop keepers comes in the second and third place
respectively which is similar in the rural sector and followed by the artisan,
businessman
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EXPENDITURE PATTERN
54
EXPENDITURE PATTERN
55
EXPENDITURE PATTERN
 If we compare the availability of disposable income in the hands of rural and

urban population, generally less is with the rural people.
 This is reflected in their expenditure pattern also which is evidenced from the
Table in the previous slide.
 The rural population is spending more than half of their income on food items.
 If we particularly analyze their proportion of expenditure on food items, nearly
33% is spent on cereals and the rest alone is spent on all other food items such as
– milk and milk-based products, vegetables, edible oil, beverages and others, etc.
 If we compare with the expenditure pattern on non-food items of urban people,
approximately 41% alone accounts in the rural sector.
 Here, the major proportion of rural people spending on fuel is nearly 21% of total
expenditure on non-food items.
56
SAVINGS PATTERN
 As the time is changing the earning, consumption and saving pattern of the
Indian consumers are also changing.
 The research made by Centre for Macro Consumer Research (CMCR) of the
National Council of Applied Economic Research (NCAER) reports that there
will be rapid shift of 42% in the income level of the rural households by 2020.
 This would become possible due to the development in agriculture, and other
activities like construction, retail, trading, etc.
 There is a huge dramatic change in the rural sector with a change with the
shift in the income earnings and the consumption patterns of the rural
consumers.
 But there is a huge disparity between the income generation and
consumption pattern among the various states of rural India.
 Bridging this gap is a big challenge for the marketers and
government.
 Rural people are also becoming aware of saving their income
during the crisis situation.
57
Socio-Cultural Environment
SAVINGS PATTERN
 It is very difficult to define a definite boundary for the identification of socio-

cultural differences in a country.
 Because every state has different society and community and that too varies from
region to region.
 It also varies between sub-regions, different religious, caste and community
groups. So, some common factors have been grouped together to form socio-
cultural regions.
The major factors which are used to construct different socio-cultural

regions in an environment are:
SOCIOLOGICAL
FACTORS
ANTHROPOLOGICAL
FACTORS
PSYCHOLOGICAL
FACTORS 58
SOCIOLOGICAL
FACTORS
It cumulates the habits, tastes, lifestyle and preferences of
different consumers. The social constitution and changes in
the constitutions influences these in a big way.
ANTHROPOLOGICAL
FACTORS
Existence of regional cultures and sub-cultures plays a
predominant role here.
PSYCHOLOGICAL
FACTORS
It includes the consumer’s attitude, interest, personality and
mind set. These psychological factors influence more in the
overall buying behavior of consumers.
59
 Sales promotional schemes, selling and distribution strategies,

advertising are all influenced more by the mentioned factors.
 So, the marketers are using these socio-cultural regions as a yardstick for
their market segmentation and targeting purpose.
In a nutshell, we can conclude that the urban

environment shows degrees of homogeneity across the
socio-cultural regions, whereas the rural environment
entirely differs.
Community and Caste System
 Rural communities form the backbone of India- adhering to the adage

that India lives in its villages.
 Village life is much talked about in terms of its serenity, idyllic
surrounding, free from conflict and having a beautiful relationship with
nature.
 But there is much more to understand about the rural communities in the
vast terrain of India.
 The geographical and cultural variability brings with it social
arrangements that rural people adapt to.
 A rural society is better understood through certain key aspects like size,
populations, physical structure and their social and economic way of life.
 Within the village there are bounded societies that clearly demarcate
between various social groups.
 This is seen in the restrictions and taboo on rituals and customs and
interactions with others
 It is the caste settlement in terms of its power that a particular

village is identified in a region.
 They maintain the village system.
 In some villages other castes are also found but they are only subordinate
castes.
 In such a situation the structure of a village is known by the caste groups
inhabiting it.
 It is, therefore, that we call caste as the mirror of a village.
 There is a concept of dominant caste.

 This is a caste which has a numerical strength in the village; it owns
major portion of village land and takes major decisions which maintain
the village system.
 It is the dominant caste which rules over the village.
 The concept of dominant caste very clearly shows that there are few
castes which exercise their hold on the village.
 Despite changes in villages the dominant castes occupy a pivotal status in
rural society.
 In the former princely states and also in the jamindari villages, though
there has been abolition of intermediaries, there are few castes that wield
their influence on the village.
 They are the big caste peasants who control the behaviour of the low
caste members.
 Social interactions in the village are guided by caste status. Caste, in fact,
is a system of hierarchical relations.
 It is a pyramid of hierarchy, where at the top is Brahmin, followed by
Rajput and Bania.
Kantara is a film that narrates the story of a

tribal community weaved around their beliefs,
rights, and conflicts with the state.
Political Environment
 Political power centered in cities controls villages.
 The conflicts between different people pertain mainly to the matters of land
disputes, traditional power arrangements, sharing of common resources
such as the community pastures, water and forest resources and
transgressing caste boundaries.
 Panchayats are usually the forums for dispute resolution.
 There are two types, one the Village Panchayat and the other Jati Panchayat.
 The former deals with the welfare of the families living in that village
undertaking collective tasks of the village such as performing rituals for the
welfare of the entire village or organizing programs for the collective
welfare such as building tanks, roads, granary.
 A traditional caste council called Panch or five, comprises of a small but
always an odd number, deals with issues related to caste matters and inter-
caste relations.
 A particular caste is dominant implying either a numerical predominance,
or control over economic resources, political power or having a high ritual
status, or first ones to take advantage of the Western Education system.
Technological Environment
 Technological advancements can lower trade expenses, allowing rural
areas to tap into new markets.
 Rural goods and services are likely to reach more distant markets at a
lesser cost and faster than they are now, thanks to new technologies.
 Besides employment creation, the digital revolution has created

opportunities for economic activities in rural India by making them an
integral part of the market value chain for products and services, both as
suppliers and consumers.
 Rural technology is widely recognized as one of the major determinants

of socioeconomic development, and the idea that transfer of technology
from “lab to land” will result in growth and thereby poverty alleviation.
 Technology has become an integral part of entrepreneurship. It helps to

reduce cost and enhance quality.
 However, rural enterprises use labor-based or obsolete technology. The
rural entrepreneurs also lack proper knowledge about technology to be
used.
Examples - Use of Technology
Idea Celluar discovered its subscribers in rural communities of Madhya Pradesh and
Chhattisgarh were only using the voice function on GPRS enabled feature phones. This
was mainly because they were unaware of mobile internet, assumed it to be complicated
and only meant for the well educated or people with high income. To address this, Idea
launched an initiative called 'Har Mobile Par Internet' which was an extension to its
popular 'No ullu banaoing' campaign.
This service provided step-by-step digital literacy lessons via IVR (Interactive Voice
Response); a tutorial designed to teach consumers how to access and use the net on
feature phones. The brand also helped users open Gmail and Facebook accounts, check
train schedules and seat availability and search on Google.
Examples - Use of Technology
HUL gave a technology boost to rural marketing. Its

Project Shakti enhanced its direct rural reach and created
livelihood opportunities for underprivileged women by
making them hyper localised distributors of its products
selling directly to villagers and retailers. In 2012, as part of
this program, 40,000 women were equipped with a basic
smartphone with software which enabled them to take and
bill orders, manage inventory and receive updates on
promotional schemes..
UNIT 9
CONSUMER BEHAVIOR IN RURAL MARKET

Consumer Buying Behavior Model
THE LEARNING MODEL
Psychologist Abraham categorized the needs of humans and ranked them in a pyramid. At
the bottom are the most basic and essential physiological needs. Then, they gradually shift
to psychological needs as you go up. Here's a look at his hierarchy:
Consumer Buying Behavior Model
 Self-actualization (top): achieving your full potential and exploring creative
activities
 Esteem needs: psychological needs involving prestige and feeling accomplished
 Belongingness and love needs: a psychological need for intimate relationships
and friends
 Safety needs: a mix of a basic and psychological need to feel safe and secure
 Physiological needs (bottom): What our body requires to stay alive — rest,
warmth, water, and food.
The Learning Model of consumer behavior As a marketer understanding these drives

theorizes that consumer purchases are can help you to better serve your
dictated by this pyramid. customers.
Wal-Mart was once a store that sold many

How can we align the
items but did not have a full grocery section. model to rural
Now, it does offer groceries and attracts
shoppers to buy their basic essentials in- marketing ?
store.
UNIT 9
THE PSYCHOANALYTICAL MODEL
The next model stems from the father of psychoanalysis, Sigmund Freud.
The model states that individual consumers have various motives driving them to make
purchases that are both conscious and unconscious.
For example, motives may lie in suppressed desires or hidden fears. Being that some of these
motives are unconscious, consumers may not know why something appeals to them, but
they feel like they need it.
As a marketer, it's important to understand what underlying motives drive your consumers to
buy.
Luxury bag brands like Louis Vuitton appeal to an audience that wants
to elevate their status through expensive bags. The primary driver is
not utility, but prestige.
How can we align the model to rural

marketing ?
UNIT 9
THE SOCIOLOGICAL MODEL
The Sociological consumer behavior model states that consumers buy based on their places
in societal groups. These societal groups can range from a person's family and friends to their
work circles, generation group, and hobbies.
For example, you are into rock climbing and join an indoor rock-climbing gym. Everyone at
the gym has certain brands of clothes, climbing shoes, and gear like harnesses, bags, devices,
and even water bottles. The Sociological model says that you would buy similar products in
order to secure and retain your position in the group.
As a marketer, we can design products or services for societal groups, and those groups will
help to reinforce the demand for our offerings.
How can we align the model to rural

marketing ?
UNIT 9
THE ECONOMIC MODEL
The Economic Model of consumer behavior focuses on price alone. It says that consumers
want to meet their needs for the lowest price possible and enables companies to predict
sales based on a product's price and their customer's income.
However, this model doesn't always favour marketers as some consumers care
more about factors besides price.
Is it viable for Rural Marketing, always…?

UNIT 9
THE ENGEL-KOLLAT-BLACKWELL MODEL
The EKB model sums up the consumer's buying journey into five steps that follow a
rational thought process. It states that when making a purchase, the consumer will
start in the stage of awareness and continue to the outcome analysis.
 AWARENESS: Consumers become aware of a need or want for a product or

service (often through ads)
 INFORMATION PROCESSING: Consumers think about the product or
service and how it could fit into their lives
 EVALUATION: Consumers shop around to find the best deal on the product or
service
 PURCHASING DECISION: Consumers decide on the best deal and make the
purchase or decide not to
 OUTCOME ANALYSIS: The consumer reflects on their purchase to see if it
met their expectations, and they may become a repeat customer or may begin to
look for another solution
UNIT 9
UNIT 9
THE ENGEL-KOLLAT-BLACKWELL MODEL
 EXAMPLE
By understanding the process that the customers go through, marketers can create
content that meets customer requirements at each step of the process.
For example, if you want to bring more people into the buyer's journey with your
company, you need to raise awareness. You can do that through content marketing
that involves search engine optimization, ads, social media campaigns, and email
sequences.
Then, you can publish guides, comparative blogs, case studies, testimonials, and
customer reviews to help guide prospects through the information processing and
evaluation stages. Once a customer makes a purchase, you should also have support
available for them to ensure they're satisfied and encourage future purchase.
UNIT 9
THE BLACK-BOX MODEL
The Black Box Model, also known as the stimulus-response model, theorizes that
each consumer's mind is like a "black box."
When CUSTOMERS come into contact with external stimuli from your business (like
a marketing message), they relate it to their existing knowledge and then make a
decision on whether they will buy or not.
But what all

exists in the
A combination of internal influences such as their beliefs,
buyer's mind
values, motives, perception, and lifestyle. By understanding
(black box) that
these things about your customer, you can speak to them in
factors into the
a way that helps the right customers find your products.
decision-making
process?
For Rural Marketing…?

UNIT 9
THE HOWARD SHETH MODEL
UNIT 9
The Howard Sheth Model of Consumer Behavior was put forward by John Howard
and Jagadish Sheth in the year 1969.
It focuses on explaining consumer behavior in terms of cognitive functioning
(intellectual activity (such as thinking, reasoning, or remembering) and observed testable
depiction of such behavior and its outcomes.
The model is an integrated form of factors like social, psychological, cultural

influences on consumer choices into a coherent sequence.
THE MAIN CONCEPT OF THE MODEL

 The inputs are in the form of Stimuli.
 The outputs are reaction with attention to a given stimulus and ending with
purchase.
 In between the inputs and the outputs, there are variables affecting perception
and learning.
 These variables are termed ‘hypothetical’ since they cannot be directly
measured at the time of occurrence.
UNIT 9
The model defines decision making in three levels:
 EXTENSIVE PROBLEM SOLVING: This is the stage in which consumer

doesn’t have any preferences about the products and seeks
information about all the brand options available in the market.
 LIMITED PROBLEM SOLVING: This is the stage where the

consumers know what they want to purchase and also have partial
knowledge about the market.
 HABITUAL RESPONSE BEHAVIOR: In this stage, the consumer has a

definite choice about the brands and products, and he decides by
looking in at the characteristics of each product in the market.
UNIT 9
The variables in the Howard Sheth Model are:
Inputs: The input variables consist of information sources in the buyer’s environment.
The marketer in the form of product or brand information furnishes physical brand
characteristics (significative stimuli) and verbal or visual product characteristics
(symbolic stimuli).
Perpetual and learning constructs: The model’s central part deals with the psychological
variables involved when the consumer is in the process of making a decision. Some of
the influencing factors are perceptual in nature and are linked with how the consumer
receives and understands the information from the various aspects of the model.
 Outputs: The outputs are basically the reactions of the consumers depending on how
they react to the perceptual and learning variables.
 Exogenous variables: These are the external factors affecting consumer buying
behavior and are directly not a part of the model. However, sometimes these factors
are of great importance and include factors like consumer personality traits, religion,
and time pressure.
UNIT 9
THE NICOSIA MODEL
The Nicosia Model was created by Nicosia, an expert in consumer behavior and
motivation. It focuses on the relationship between consumers and businesses. He
breaks the model into four major "fields" which are like stages.
1. The first is a combination of the business's marketing and the target audience.
During this stage, consumers come into contact with a business's messaging and
form an opinion or attitude about it.
2. Next, if interested, the consumer begins to perform research about the
business and compares it to competitors.
3. If successful, a brand motivates the seller to buy from it which results in a
purchase.
4. Then, the firm and customer review their satisfaction with the transaction to
decide on future steps.
Consumer Decision Making Process
PROCESS STEPS WHAT CUSTOMERS DO ? OUR APPROACH (Home Loan)

Realizes the Problem or Need for a Understand the need of a home loan. Share
Awareness of Need Home benefits of a home loan. Thank Them.
Wide Product Range

Customers find out options
Information Search Internal or External
(Regular, Flex pay, NRI, Privilege) 24,000+
branches
Comparing options to make the best Why SBI is preferred?

Identify alternatives choice Trust, Transparency, Integrity
Seamless Documentation, No Processing Fee.

Purchase Decision Buying behaviour turns into action
Service Experience (Take Ownership)
Feedback on the loan processed. Constant

engagement by the branch/official. Mail/Call on
Post Purchase Dissonance Are they satisfied with purchase ?
B’days/Anniversaries.
Felicitation for successful repayment of loan…!!!
Product Adoption Process
 Product adoption is a step-by-step process to make users comfortable and
habitual with a new product.
 The product adoption curve is a distribution curve with five essential segments
for the product adoption process. They include innovators, early adopters, early
majority, late majority, and laggards.
1. Awareness. Becoming aware of the product’s existence through branding and

marketing campaigns.
2. Interest. Searching for more information to see if it fits user needs.
3. Evaluation. Considering the pros and cons of the product before trying it.
4. Trial. Limited usage of the product as a test.
5. Activation. Experiencing the value of the product and engaging with a core
feature.
6. Adoption. The decision to keep using it or abandon it.
CLASS READING ASSIGNMENT AND

https://feriors.com/product-adoption-process/
DISCUSSION
Diffusion of Innovation
 Diffusion of Innovation (DOI) Theory, developed by E.M. Rogers in 1962, is one of the
oldest social science theories.
 It originated in communication to explain how, over time, an idea or product gains

momentum and diffuses (or spreads) through a specific population or social system.
 The end result of this diffusion is that people, as part of a social system, adopt a new idea,
behavior, or product.
1.Innovators - These are people who want to be the first to try the innovation. They are
venturesome and interested in new ideas. These people are very willing to take risks,
and are often the first to develop new ideas. Very little, if anything, needs to be done to
appeal to this population.
2.Early Adopters - These are people who represent opinion leaders. They enjoy
leadership roles, and embrace change opportunities. They are already aware of the
need to change and so are very comfortable adopting new ideas. Strategies to appeal to
this population include how-to manuals and information sheets on implementation. They
do not need information to convince them to change.
3.Early Majority - These people are rarely leaders, but they do adopt new ideas before
the average person. That said, they typically need to see evidence that the innovation
works before they are willing to adopt it. Strategies to appeal to this population include
success stories and evidence of the innovation's effectiveness.
4.Late Majority - These people are skeptical of change, and will only adopt an
innovation after it has been tried by the majority. Strategies to appeal to this population
include information on how many other people have tried the innovation and have
adopted it successfully.
5.Laggards - These people are bound by tradition and very conservative. They are very
skeptical of change and are the hardest group to bring on board. Strategies to appeal to
this population include statistics, fear appeals, and pressure from people in the other
adopter groups. https://sphweb.bumc.bu.edu/otlt/mph-modules/sb/
behavioralchangetheories/behavioralchangetheories4.html
UNIT 10
RURAL MARKET RESEARCH

UNIT 10 – SIGNIFICANCE OF RURAL MARKETING RESEARCH
Rural marketing research involves the careful and objective

study of product design, markets and transfer activities such as
physical distribution and warehousing, advertising and sales
management in rural areas.
Rural marketing research helps to know the demographics,

psychographic and behavioural characteristics of the target
market in rural areas.
Rural Marketing Research is the systematic design, collection,

analysis and reporting of data and findings relevant to a
specific marketing situation facing by the company in the rural
market.
UNIT 10 – WHY RURAL MARKETING RESEARCH
Identify Potential Customers and Segments
Identifying rural customers and finding prosperous segments within the rural population
is a major task of rural market research. This calls for gathering granular data.
Finding Motivation to Use Products
An important question to be answered is – why do people buy certain products? Rural

market research provides unique insights to marketers to re-design/augment products
and services (Washing machines used to clean vegetables in China – Haier)
Understand Existing Customers
 Companies need to understand customers - what makes them buy and what they
value.
 They can discover who influences buying decisions and what role models are popular
among the rural folk.
 Further, companies find out which products are purchased for functionality and which
ones for aspiration in villages.
UNIT 10 – WHY RURAL MARKETING RESEARCH
Identifying Purchase Habits
 Purchase habits or from where people like to buy, in what quantities and at what
times are some of the important parameters.
 It results in designing specific distribution channels to serve rural areas.
Develop Marketing Strategy
 Decisions such as product design, pricing, packaging, distribution and making

communication strategies are guided by market research.
 Research also gives information about competitors so that companies can develop
their counter offers.
UNIT 10 –MARKETING RESEARCH : URBAN VS RURAL
ASPECT URBAN RURAL
1. Respondents: Literate, brand aware, individuals respond individually. Semiliterate or illiterate, brand
knowledge low. Difficult to get
individual responses. Generally group
response.
2. Time: Willing to respond. Have time pressures. Spare little or Willing to respond. Have time pressures.
virtually no time to field staff. Spare little or virtually no time to field
staff.-Hesitant initially, but once opens
up, devotes time.
3. Accessibility: Easy to access, though many suffer from research Tough to access; geographical distances
fatigue. and psychological apprehensions are
barriers. Do not speak easily to
outsiders.
4. Secondary Data Source: Internal data, syndicated research, published media. Very few sources and less data.
Many sources and large data.
5. Primary Data Source: Large no. of middlemen, experts, sales force, Less no. of all categories.
consumers and opinion leaders.
6. Sampling: Respondents form relatively homogeneous group. Heterogeneous groups. Income and
Income can be criteria land holding to be carefully applied.
7. Data Collection: Use of sophisticated instrument, style and Requires simplified instruments.
administration. Respondents, comfortable with Respondents comfortable with colours,
numbers, ratings and timelines. picture and stories.
UNIT 10 – HISTORY OF RURAL MARKETING RESEARCH
READING AND DISCUSSION
Microsoft Word
Document
UNIT 10 – SCOPE OF RURAL MARKETING RESEARCH
PRODUCT RESEARCH CUSTOMER RESEARCH
PROMOTIONAL
SALES RESEARCH
RESEARCH
PRODUCT RESEARCH
 Product research is associated with the conversion of rural customer needs into
tangible product offer.
 This includes development and testing of new products, improving the existing
products and a tab on the changing customer preferences, habits, tastes etc.
 Product research also includes product packaging, branding and labeling decisions
ACTIVITIES INCLUDE
 Determining customer acceptance of proposed new products.
 Evaluating new products concepts.
 Determining current and new uses of existing products.
 Market testing of proposed new products or services.
 Simplifying product lines.
 Making packaging and design studies.
 Brand preference etc.
CUSTOMER RESEARCH
This research includes investigation of rural customer buying behaviour.

Rural marketing research also study the economic, social, cultural, personal and
psychological influences on rural consumer buying behaviour.
ACTIVITIES INCLUDE
 To know the demographic, psychological and behavioural aspect of rural consumers.

 To study the preferences and taste of the customers.
 Estimating demand for the product.
 Determining sources of customer dissatisfaction with product
SALES RESEARCH
Sales research involves decision regarding selection of store location, channels,

territories, sales force motivation, compensation etc. The purpose is to reach the target
customer more effectively, efficiently and timely.
ACTIVITIES INCLUDE
 Establishing sales territories.

 Evaluating present and proposed sales methods.
 Analysing salesman’s effectiveness.
 Setting sales quotas and developing salesman’s standards.
PROMOTIONAL RESEARCH
It includes all efforts by the marketers to communicate the company’s offer to the
rural customers. This includes advertising, public relations, publicity, sales
promotion.
ACTIVITIES INCLUDE
 Evaluating advertising effectiveness.

 Analysis of competitive advertising and selling practices.
 Selecting advertising media.
UNIT 10 –RURAL MARKETING RESEARCH PROCESS
Step # 1. Defining a Research Problem and Objectives:

Step # 2. Determining the Research Budget:
Step # 3. Designing the Marketing Research Design:
Step # 4. Selection of Research Methods:
Step # 5. Selection of Sample Design:
Step # 6. Designing the Research Instrument:
Step # 7. Organising the Field and Collecting the Data:
Step # 8. Data Analysis:
Step # 9. Interpretation of Findings:
Step # 10. Reporting the Findings:

Step # 1. Defining a Research Problem and Objectives:
 The starting point for rural marketing research is the recognition of a management
problem and defining business and research objectives.
 Problem can also be studied in terms of business objectives and research objectives.
BUSINESS OBJECTIVE RESEARCH OBJECTIVE
 Business objectives state the purpose It state the expected research output,
for which the marketer is conducting which help in taking decisions to
the research. achieve business objectives.
 Normally it is stated in terms of a
tangible benefit. For Example – To map the buying
For Example – “To design a new product behaviour of rural consumers for sub-
catering to rural consumers.” 35hp tractors”,
“To design a new distribution channel for a “To identify and profile the segments
specific product for rural markets of India” existing among rural consumer mass”
Step # 2. Determining the Research Budget:
 Most marketing research project involves a certain amount of cost incurred for
collecting information and analysis data.
 Budget decisions depend on the research approach to be used for a particular study.
Taking a budget decisions involves two major steps:

 Specifying the approximate value of the information to be collected.
 Determining the maximum amount that can be spent on the study.
 Once the budget is finalized, the research is designed accordingly.
 This stage involves developing an effective design for gathering the required
information which includes a decision on the research approach.
 The problem discovery and the consequent marketing problem definition is an
incomplete process if it is done without looking at the broad dimensions of the
marketing research design.
Using these three criteria, research can be classified as:

1. Purpose – Exploratory, descriptive and casual.
2. Nature of data – Quantitative and qualitative.
3. Sources of data – Primary and secondary.
FOR EXAMPLE:
If a FMCG company is interested in marketing its DETERGENT products in the

rural market for the first time and the marketing manager is interested in
knowing whether rural markets are attractive, they prefer a small-scale survey
– a sort of pilot study to assess the attractiveness of the rural market.
If the results are positive, they will go for descriptive research – a large scale
survey to assess the market potential and identify strategic options. In the final
stage, they may undertake experimental research to test – market the product
in a few select villages to predict its success.
If the result is positive, they will implement this marketing plan for the entire
rural market.
Exploring Research:
When a manager is unaware of a phenomenon, they may initiate an exploratory
research to gain a basic understanding of it.
Descriptive Research:
Marketers may take up descriptive research to obtain through and analytical view of it.
They may opt for examination before making huge investments on it.
Causal Research:
It's a type of research that examines if there's a cause-and-effect relationship between
two separate events.
Quantitative Research:
Quantitative research is number driven and involves the use of structured interview
questionnaires or other tools for data collection. The data thus gathered in the form of
numbers. It is analyzed through various statistical techniques such as frequency and
cross tabulation.
Qualitative Research:
The research does not involve any fixed format or set of questions to be answered by
the respondent, instead of, the emphasis is on a free-flowing interview or discussion to
aid an in-depth exploration of various issues or problems.
The questions asked are open-ended and unstructured.
For example,
1. “What problems do you face in the paddy cropping, describe”,

2. “To whom do you consult when taking decisions on which type of seeds to purchase
and why?”
Step # 4. Selection of Research Methods:
Next step in conducting marketing research is to decide the research methods; the
marketer is to decide from where to collect data, either from primary sources or from
secondary sources.
PRIMARY SOURCES SECONDARY SOURCES
 Primary source of data refer to the first

The secondary data include facts and
hand original data collected by the
figures which are already collected by
investigators through observation,
other individuals and institutions.
experimentation and field survey.
 It is not a published source of data, but
The sources of secondary data include
has to be collected by the researcher.
publications of Government, private
 This data can be collected at a huge cost,
institutions like Trade Association and
but it is useful as it is collected for a
Chambers of commerce, International
specific objectives.
institutions like IMF, World Bank and
 The information may be collected
data collected by other research
directly from the customers, dealers and
agencies etc.
salesman.
Step # 5. Selection of Sample Design:
It is a rare phenomenon that total population is taken for the purposes of analysts. The
use of sample (a sub-set of population) is commonly occurrence. In selection of sample
design, two important decisions are taken.
• One is to choose the sampling method and
• second is to decide the sample size.
Step # 6. Designing the Research Instrument:
The research instrument can be of two types :

1. discussion guide in the case of qualitative research
2. questionnaire in the case of quantitative research.
A discussion guide is an unstructured measurement from that permits a range of

possible responses. It includes an open-ended questions with a lot of insights for probing
a particular area.
On the other hand, a questionnaire is a more structured research instrument. It involves

close-ended questions and seeks definitive responses in a particular format.
For example, how satisfied are you with the usage of the new tractor? Please rate your
satisfaction on the following scale – Completely Satisfied, Somewhat Satisfied, Neither
Satisfied Nor Dissatisfied.
Step # 7. Organising the Field and Collecting the Data:
In QUALITATIVE RESEARCH, the researcher uses discussions guides to conduct focus

groups in-depth interviews. Interviews in qualitative research in rural areas are always
held within the natural setting of the villages, rather than at a location that is central for
the researcher and the respondent.
Interactions with respondents are mostly audio recorded for the purpose of analysis.
Focus groups are conducted at caste-neutral and common village points. As far as
possible, in-depth interviews are conducted at the respondent’s house or at an isolated
place as villagers tend to crowd around stranger.
In rural QUANTITATIVE RESEARCH, data is collected using a structured questionnaire.

Quality control measures are important in quantitative research since it is normally
conducted by the field investigators from field research agencies, who may not have clear
understanding about the product category or the brand. In such a case, it is necessary to
ensure that investigators involved in the field work have prior experience of conducting
the research in rural areas.
Step # 8. Data Analysis:
1. In the case of qualitative research, the data collected in the form of notes, audio
recordings is transcribed and collected in a set format.
2. Further, content analysis is done using filters and specific colour codes to find
similarities and variations in the data.
3. In quantitative research, data input frames are prepared in excel or SPSS software
where the data captured in the questionnaires is transferred for analysis.
Step # 9. Interpretation of Findings:
1. The selection of an appropriate statistical tool helps in carrying out interpretation of

findings. Interpretation provides specific meaning to the data and helps convert into
information.
2. The information so generated is used to relate the findings with the work/studies
that already exist.
3. The interpretation should take place in the light of research objectives, limitations of
the samples etc.
Step # 10. Reporting the Findings:
As the last step in the marketing research process, the researcher presents the findings
relevant to the marketing decision to the rural marketer.
The report of the findings is prepared around the research objective of the study:
1. The executive summary provides the snapshot and key highlights of the research
findings.
2. The objective provides business and research objectives.
3. The research methodology describes the methodology used to conduct the research
study.
4. The findings provide the detailed findings of the research.
5. The conclusion and recommendations sum up the findings and provide the way
forward.
6. Appendices provide important, additional and detailed information used in the
analysis.
UNIT 10 –RURAL MARKETING RESEARCH - METHODS
SURVEY METHOD
 Surveys can be useful when researcher wants to collect data on phenomena that
cannot directly observe.
 Surveys are used extensively in marketing research.
 Data are usually collected through the use of questionnaire, although sometimes
researchers directly interview subjects.
 With concise and straight forward questionnaire market researchers can analyze a
sample group that represents their target market.
 The larger the sample, the more reliable their results.
FOCUS GROUP METHOD
 A focus group is a form of qualitative research in which people of a group are asked
about their perceptions, opinions beliefs and attitude towards a product service,
concept, advertisement idea, or packaging.
 Companies use focus group as a qualitative marketing research methodology to

understand how people make decisions about their use of products or services.
 Focus group method of marketing research is more reliable for exploring new
product or service ideas, understanding an organization’s brand image testing
effectiveness of advertising etc.
PERSONAL INTERVIEW
 Personal interviews include unstructured open-ended questions.

 They usually last for about an hour and are typically recorded.
 Personal interview is normally conducted as a preliminary step in the research
process to generate ideas about the subject being investigated so that these might
be tested later in the survey proper.
 Such interviews are entirely informal and are not controlled by a specific set of
detailed questions. Rather the interviewer is guided by a pre-defined list of issues.
 These interviews amount to an informal conversation about the subject.
OBSERVATION
 Observation forms another class of techniques that are particularly well suited to
the rural market.
 It involves human or mechanical observation of what people actually do or what

events take place during a buying or consumption situation.
 Popular forms of observational techniques include the mystery shopper or

mystery customer technique to test quality of the customers experience or quality
of customer service.
 Others included the disposable camera technique, where respondents are asked to
take the snapshots of their friends behaving naturally interacting with products
being researchers.
FIELD TRIAL METHOD
 Field trial method is a kind of experimental research.

 Placing a new product in selected stores to customer’s response under real life
selling conditions can help company to make product modifications, adjust prices
or improving packaging.
 For example, in a sales test a new product might be tried in one store, city, state,
and region. While the marketing mix was held constant elsewhere.
 If a sales change take place in all territories, only the net changes in the trial
territory will be attributed to the new factor.
UNIT 11
SEGMENTATION, TARGETING
AND POSITIONING
SEGMENTATION
According to American Marketing Association,

“Market segmentation refers to dividing the heterogeneous markets into
smaller customer groups having certain homogeneous characteristics that can
be satisfied by the firm.”
According to Philip Kotler,

“Market segmentation is the sub dividing of a market into homogeneous subsets
of consumers, where any subset may conceivably be selected as a market target
to be reached with a distinct marketing mix.”
According to William J. Stanton,

“Market segmentation consists of taking the total heterogeneous market for a
product and dividing it into several sub markets or segments each of which
tends to be homogeneous in all significant aspects.”
RURAL MARKET SEGMENTATION
Rural market segmentation is the process of dividing a potential rural market
into distinct sub markets of consumers with common needs and
characteristics.
 Rural market segmentation is the starting step in applying the rural

marketing strategy.
 The basic problem in segmenting the rural market is the heterogeneous
nature of the market.
 In spite of there being heterogeneous market, the buyer of any product can
be divided into homogeneous groups of segments on the basis of their
common needs, habits, preferences etc.
IMPORTANT CHARACTERISTICS OF RURAL MARKET SEGMENTATION
MEASURABLE
ACCESSIBLE
DIFFERNTIABLE
SUBSTANTIAL
ACTIONABLE/FEASIBLE
MEASURABLE
 The size and purchasing power profiles of the market should

be measurable - quantifiable data available about it.
 A consumer’s profiles and data provide marketing strategists
with the necessary information on how to carry out their
campaigns.
 It would be difficult to create promotional strategies for
markets that have little to no data or for audiences that cannot
be measured.

ACCESSIBLE
 Accessibility means that customers and consumers are easily

reached at an affordable cost.
 This helps determine how certain ads can reach different target
markets and how to make ads more profitable.
 A good question to ask is whether it’s more practical to place
ads online, on print, or out of house.

DIFFERNTIABLE
 Marketers should make sure that different target markets

respond differently to different marketing strategies.
 If a business is only targeting one segment, then this might not
be as much of an issue.
 But for example, if your target market are rural college students,
then it’s essential to create a marketing strategy that both junior
students and senior students react to in the same positive way.
 This process ensures that the rural segmentation strategies are
more efficient and cost-effective.

SUBSTANTIAL

ACTIONABLE/FEASIBLE

OTHER GENERAL CONDITIONS

MAJOR SEGMENTATION
GEOGRAPHIC LOCATION
MAJOR SEGMENTATION
MAJOR SEGMENTATION
MAJOR SEGMENTATION
MAJOR SEGMENTATION
MAJOR SEGMENTATION
PSYCHOGRAPHIC SEGMENTATION
MAJOR SEGMENTATION
MAJOR SEGMENTATION
Example – Hatsun Dairy
TARGETING
 The selection of target markets involves the examination of

various aspects and measures of a market segment in
comparison to the firm’s goals and resources.
 Typically, the firm assesses:
1. whether the particular target market logically fits with the
firm’s strategic direction,
2. whether it is the best use of its resources (opportunity
cost), and to what degree
 Target market selection is a very important decision for an

organization as it is an integral part of their marketing
strategy.
 As consequence, firms will typically adopt a fairly analytical
approach to target market selection.
THE TARGET MARKET SELECTION PROCESS
POSITIONING STRATEGIES
Act of designing the company‘s offering and image so that it

occupies a distinctive place in the mind of the target segment.
Positioning involves :
 Identifying the unique features of the product as well as the
differences of the offer vis-à -vis the competitor‘s offer.
 Selecting the differences that have greater competitive
advantage and
 Communicating such advantages to the target audience.
 Eg. Himami positions Sona Chandi Chyavanprash on health body
and a sharp mind.
 Ghari detergent –low price high quality..
 Lifebuoy Active –from general soap to a family soap.
Identifying the Positioning Concept
Product Differentiation –Can be differentiated on the basis of

form, features, durability and quality. Coke introduced Chota Coke
at Rs 5 for rural. Hero Honda came out with the lower priced Dawn
model of motorcycle for the rural buyer. Meswak, Neem and
Babool toothpaste are herbal versions of the soap.
Service Differentiation –Service may be differentiated in respect

of delivery, installation and maintenance. Reliance, a private LPG
company, when pitted against the three well entrenched public
sector undertakings created service differentiation on the basis of
their distribution network and better refilling facility.
Selecting the Positioning Concept
Critical factors that should be considered while positioning a

brand are :
 Attractiveness – Does it provide value to the customer?

 Distinctiveness - Is it different from that of its competitors?
 Pre-emptive - Is it very difficult for the competitors to copy it?
Affordability - Can buyers pay for it?
 Communicability – Can the product difference be clearly
expressed?
Selecting the Positioning Concept
Critical factors that should be considered while positioning a

brand are :
 Attractiveness – Does it provide value to the customer?

 Distinctiveness - Is it different from that of its competitors?
 Pre-emptive - Is it very difficult for the competitors to copy it?
Affordability - Can buyers pay for it?
 Communicability – Can the product difference be clearly
expressed?
UNIT 12
MARKETING MIX IN
RURAL MARKETING
MARKETING MIX CHALLENGES FROM RURAL PERSPECTIVE
Product Mix
1. Product is a powerful tool of an organization’s success.
2. The products must be acceptable to rural consumers in all significant aspects like
size, shape, color, weight, qualities, brand name, packaging, labeling, services, and
other relevant aspect must be fit with needs, demands and capacity of buyers.
3. Product must undergo necessary changes and improvements to sustain its suitability
over time.
4. The effectiveness of other decisions like pricing, promotion and place also depends
on the product.
Price Mix
1. Price is the central element of marketing mix, particularly, for rural markets.
2. Rural consumers are most price sensitive and price plays more decisive role in
buying decisions.
3. Pricing policies and its strategies must be formulated with care and caution.
4. Normally, the low-priced products always attract the rural buyers, but few segment
of some rural customers are quality and status conscious.
Product Mix
1. The promotion strategies and distribution strategies and Ad makers have learned to
leverage the benefits of improved infrastructure and media reach.
2. Most of the companies advertise their products and services on television and they
are sure it reaches the target audience, because a large section of the rural India is
now glued to TV sets.
3. Marketers have to decide on promotional tools such as advertisement, sales
promotion, personal selling and publicity and public relations.
Price Mix
1. Rural market faces critical issues of distribution.
2. A marketer has to strengthen the distribution strategies.
3. Both physical distribution and distribution channel should be decided carefully to
ensure easy accessibility of products for rural consumers.
Product Mix 1.Underdeveloped people

2.Underdeveloped market
3.Improper communication facilities
4.Many languages
Price Mix 5.Vastness & uneven spread
6.Low per capita income
7.Poor infrastructure facilities
8.Seasonal demand
Place Mix 9.Ineffective distribution channel
10.Spurious brands
11.Low Literacy Levels
12.Transportation
13.Warehousing
Promotion Mix
PRODUCT CONCEPT AND CLASSIFICATION
Product Features
1. Product features are a product’s traits or attributes that deliver value to end-
users and differentiate a product in the market.
2. The battery life of an electronic device can be considered a feature.
3. So can the fabric or other materials a suitcase is made from.
4. When it comes to software, product features can include any of the
application’s functionalities, capabilities, and even its visual characteristics.
5. But the key trait of any product feature should be the value or benefit it
delivers to the user.
PRODUCT DIFFERENTIATION
PRODUCT LEVELS
PRODUCT LEVELS
1. Philip Kotler devised a model that recognizes customers have

five levels of need, ranging from functional or core needs to
emotional needs.
2. The model also recognizes that products are merely a means to
satisfy customers' varying needs or wants.
3. He distinguished three drivers of how customers attach value to
a product:
• Need: a lack of a basic requirement.

• Want: a specific requirement of products to satisfy a need.
• Demand: a set of wants plus the desire and ability to pay for
the product.
RURAL PRODUCT CATEGORIES
FMCG –Major players are HUL, Dabur, Marico, Colgate Palmolive, Nirma,
CavinKare and Godrej
Consumer Durables –Usha, Bajaj, Philips, Titan, Godrej, Videocon, Onida,

Salora, Hero Cycles, Hero Honda, Mahindra & Mahindra and Tata. New entrants –
LG, Samsung and Maruti.
Agricultural Products – Agricultural inputs such as seeds, fertilizers,

pesticides, insecticides and implements (tractors, tillers and threshers)
Livestock, poultry and fishery. Major players are Rallis India, Monsanto, DCM
Shriram, Chambal Fertilisers, IFFCO, Mahindra & Mahindra, Eicher and Escorts.
Services – Telecommunications (BSNL), transport, health care, banking (SBI),

insurance (LIC) and education.
NEW PRODUCT DEVELOPMENT PROCESS
New Product Development refers to the complete process of

bringing a new product to market.
This can apply to developing an entirely new product, improving

an existing one to keep it attractive and competitive, or
introducing an old product to a new market.
1. IDEA GENERATION
Idea generation involves brainstorming for new product ideas or ways to improve
an existing product.
During product discovery, companies examine market trends, conduct research,

and dig deep into users' wants and needs to identify a problem and propose
innovative solutions.
A SWOT Analysis is a framework for evaluating your Strengths, Weaknesses,

Opportunities, and Threats. It can be a very effective way to identify the
problematic areas of your product and understand where the greatest
opportunities lie.
There are two primary sources of generating new ideas.

1. Internal ideas come from different areas within the company—such as
marketing, customer support, the sales team, or the technical department.
2. External ideas come from outside sources, such as studying your competitors
and, most importantly, feedback from your target audience.
Some methods you can use are:

1. Conducting market analysis
2. Working with product marketing and sales to check if your product's value is
being positioned correctly
3. Collecting user feedback with interviews, focus groups, surveys, and data
analytics
4. Running user tests to see how people are using your product and identify gaps
and room for improvement
Ultimately, the goal of the idea generation stage is to come up with as many ideas
as possible while focusing on delivering value to your customers.
2. IDEA SCREENING
1. This second step of new product development revolves around screening all
your generated ideas and picking only the ones with the highest chance of
success.
2. Deciding which ideas to pursue and discard depends on many factors,

including the expected benefits to your consumers, product improvements
most needed, technical feasibility, or marketing potential.
3. The idea screening stage is best carried out within the company.
4. Experts from different teams can help you check aspects such as the technical
requirements, resources needed, and marketability of your idea.
3. CONCEPT DEVELOPMENT AND TESTING

1. All ideas passing the screening stage are developed into concepts.
2. A product concept is a detailed description or blueprint of your idea.
3. It should indicate the target market for your product, the features and benefits
of your solution that may appeal to your customers, and the proposed price
for the product.
4. A concept should also contain the estimated cost of designing, developing, and
launching the product.
5. Developing alternative product concepts will help you determine how

attractive each concept is to customers and select the one that would provide
them the highest value.
1. Once you have developed your concepts, test each of them with a select group
of consumers.
2. Concept testing is a great way to validate product ideas with users before
investing time and resources into building them.
3. Concepts are also often used for market validation.
4. Before committing to developing a new product, share your concept with your
prospective buyers to collect insights and gauge how viable the product idea
would be in the target market.
4. MARKETING STRATEGY AND BUSINESS ANALYSIS

Now that you have selected the concept, it is time to put together an
initial marketing strategy to introduce the product to the market and
analyze the value of your solution from a business perspective.
1. The marketing strategy serves to guide the positioning, pricing,

and promotion of your new product. Once the marketing strategy
is planned, product management can evaluate the business
attractiveness of the product idea.
2. The business analysis comprises a review of the sales forecasts,

expected costs, and profit projections.
3. If they satisfy the company’s objectives, the product can move to

the product development stage.
5. PRODUCT DEVELOPMENT
1. The product development stage consists of developing the
product concept into a finished, marketable product.
2. This stage usually involves creating the prototype and testing
it with users to see how they interact with it and collect
feedback.
3. Prototype testing allows product teams to validate design
decisions and uncover any flaws or usability issues before
handing the designs to the development team.
6. TEST MARKETING
Test marketing involves releasing the finished product to a sample

market to evaluate its performance under the predetermined
marketing strategy.
There are two testing methods you can employ:

1. Alpha testing is software testing used internally to identify bugs
before releasing the product to the public
2. Beta testing is an opportunity for actual users to use the product
and give their feedback about it
The goal of the test marketing stage is to validate the entire concept
behind the new product and get ready to launch the product.
7. PRODUCT LAUNCH
At this point, the firm is ready to introduce the new product to the
market. Ensure the product, marketing, sales, and customer support
teams are in place to guarantee a successful launch and monitor its
performance.
During Product Launch, some essential elements to consider.
1. Customers: Understand who will be making the final purchasing
decisions and why they will be purchasing your product. Create
buyer personas and identify their roles, objectives, and pain
points.
2. Value proposition: Identify what makes you different from the
competition and why people should choose to buy your product
3. Messaging: Determine how you will communicate your
product’s value to potential customers
4. Channels: Pick the right marketing channels to promote your
products specifically for Rural Products.

PRODUCT MIX AND MARKETING DECISONS
Dimensions of a Product Mix

1.Width
Width or breadth, that refers to the number of product lines
which is offered by a company to its customers.
2.Length
The length refers to the total number of products in a firm’s
product mix strategy.
3.Depth
Depth refers to the number of variations that exist in a product
line.
4.Consistency
This refers to how closely the products in a product line are
related to each other.
Importance of a Product Mix

The product mix of a firm is important to understand as it has a
profound impact on the firm’s brand image. The following are the
important points for the firm to expand its product mix:
1. Expanding the product mix width can provide the company with
the ability to satisfy the needs or demands of the different
consumers and thus, diversify risk.
2. Expanding the product mix depth can help the company to cater
to the current customers in a better and fulfilling way.
1.Profitability-
The company prefers introducing more product lines or product
items to its existing product lines to improve profitability. In the
meantime, the product mix is constantly adjusted to realize more
profits.
2.Objectives and Policy of Company:
The company formulates its product mix to attain the objectives
it has set. Therefore, the addition, subtraction, or replacement of
the product lines or the product items are based on the
company’s target. Hence, the product mix is prepared and
modified according to a company’s policy.
3.Production Capacity-
The decisions regarding the marketing mix, depend on the
capacity of the plant or production of the company to a large
extent. The company designs its product mix in a way that hails
optimum production capacity.
4.Demand-
Mostly the Product mix decisions are taken concerning demand.
A Marketer should study consumer behavior to find the
popularity of their products. The Change in the preferences of the
consumers’ especially for fashion, interests, habits, etc., must be
reflected in the product mix of the company.
5.Production Costs-
The product mix is widened or narrowed depending upon the
production costs of the respective items. The company will prefer
those products, which can be produced within the budgeted limit.
6. Government Rules and Restriction-
Companies generally produce products that are not restricted or
banned by the governments. At times, a company has to stop
certain products or varieties when they are declared illegal. In
the same way, social and religious protests also play a vital role in
this regard. The size and composition of the product mix is
directly affected by the contemporary legal framework.
8.Demand Fluctuation-
Apart from the behavior of the consumer, demand also fluctuates
due to other reasons as well. Demand is affected more due to
seasonal effects, non-availability of substitutes, increase in
population, war, situations of drought, flood, or any other reason.
To meet the changing demand for certain products, the company
has to adjust its product mix.
9.Competition-
It is one of the major factors affecting the product mix. All the
companies try to formulate their product mix in a way that the
competitions can be strongly responded to. The product mix
strategy adopted by the close competitors has a direct significant
impact on the company’s product mix.
9.Impact of Other Elements of Marketing Mix-

Other elements of the marketing mix such as price, promotion,
and distribution are also equally important in designing the
product mix. The company tries to maintain consistency among
these all elements to carry out marketing activities effectively
and efficiently.
10.Overall Business Condition or Condition of Economy-
Economic conditions domestically as well as globally are also
considered. Due to the process of liberalization and globalization,
no business can dare to underestimate the macro picture of the
world economy. Therefore, a company must keep in mind the
condition of the domestic economy concerning the world
economy and is more relevant for a company that is involved in
international trade.
PRODUCT PACKAGING
Packaging Development Strategies For Rural

Marketing
https://www.artworkflowhq.com/resources/packaging-development-strategies-for-
rural-marketing
RURAL MARKETING STRATEGY
1. Broad Base Of Customers: Today, the rural market is a vast area with around
895 million people in over 664,000 villages. It is estimated that this population will
increase by 1.7% by 2022.
2. Internet & Mobile Phone Usage Increased – Currently, about 227 million rural
people use the Internet, compared to about 205 million people in urban areas.
However, this figure is projected to increase by a decent percentage in the coming
few years.
3. Employment Opportunities Are Increasing – Rural development has led to

financial development in rural areas due to government initiatives over the years. It
also has increased the employment opportunities for the rural residents, and thus
the income level has increased.
4. Improve Literacy Rate: In this new generation, the rural peoples are more
aware of education. They understand the importance of education and try to
encourage it. Because of them, older people are also mindful of the importance of
education.
TYPES OF RURAL MARKETING
TYPES OF RURAL MARKETING
•Periodic Markets
The periodic market is one of the important features of rural marketing in India.
Despite urbanization and the growth of retail outlets, periodic markets are also
essential for rural people’s rural economy and social life. Periodic marketing work
is done by two institutions, fairs and weekly markets.
•Mobile Traders
There is another important agency known as mobile traders to meet the limited
needs of rural consumers like vegetables, fruits, clothes, utensils, cosmetics, spices,
toiletries etc. Mobile traders move from one place to another, from one house to
another, to sell items that the rural peoples often need.
•Permanent Retail Shops

With the increase in the population of villages, improvement in their income,
demand for goods, and daily development of permanent retail outlets take place.
Traditional fairs, weekly markets, or peddlers could not satisfy the situation,
which led to the rise and development of permanent shops.
RURAL MARKETING & BRANDING
Marketing & Branding Strategies In

Rural Areas
FAKE BRANDS IN RURAL MARKETS
FAKE BRANDS IN RURAL MARKETS
“Most people in rural India can recognize alphabets but

not complete words, so during a research, we found a
whole lot of samples of fake Clinic Plus shampoo sachets
where the visual was like the original brand, but the name
was changed to ‘Clinton’ as Bill Clinton was to arrive soon
in the country. During another such raid, we collected
about 99 variants of Fair & Lovely cream including Fair &
Lonely, Far & Lovely etc.”
Mr. Pradeep Kashyap, president,

Rural Marketing Association of India
(RMAI) and CEO, MART
FAKE BRANDS IN RURAL MARKETS - IMPACT
 Over the time the share of fake products in the FMCG market
has grown to 10-15% causing a deep hole in the pockets of the
FMCG companies.
 A study conducted by AC Nielson, a research agency reveals

that FMCG industry loses around 2500 crores annually to
counterfeits and pass-off products.
 In another recent survey conducted by AC Nielson reveals that

top brands in India are estimated to lose up to 30 percent of
their business to fake products.
 Besides the loss of revenue, the leading companies also bear

the damage to brand image and brand loyalty of consumers.
PRICING METHODS IN RURAL MARKETS
1. Cost-Based pricing.
2. Value-Based pricing.
3. Demand-Based pricing.
4. Competition-Based pricing.
1.Cost-Based pricing
It is a pricing method in which a fixed sum or a percentage is added
to the total cost of producing and selling a product to arrive at its
selling price. Cost-based pricing can be represented as a simple
equation:
Selling price = (FC + VC) + Mark-up
 In rural markets, apart from FC and VC, the cost of selling and
distribution must be added.
 These are often hidden and difficult to calculate.
 They are also very high, because economic modes of transport do
not exist.
2. Value-Based Pricing
 Value-based pricing is a method in which price is set based on the value
perceived by the customer in buying and using a product.
 The perceived value of a product is the sum of attributes and

psychological value.
 Value must be communicated, and this is not so easy in rural markets.
 Much of communication and consumer engagement has to be done

directly by companies in the absence of mass media.
 Except for high-end brands, rural consumers are more likely to be

swayed by functional benefits than by features that merely enhance
aesthetics.
2. Demand-Based Pricing
 Value-based pricing is a method in which price is set based on the value
perceived by the customer in buying and using a product.
 The perceived value of a product is the sum of attributes and

psychological value.
 Value must be communicated, and this is not so easy in rural markets.
 Much of communication and consumer engagement has to be done

directly by companies in the absence of mass media.
 Except for high-end brands, rural consumers are more likely to be

swayed by functional benefits than by features that merely enhance
aesthetics.
3. Demand-Based Pricing
 It focuses on the level of demand for a product or service, not on the cost
of materials or of making it.
 Here, companies try to assess demand at different prices, or the number
of products or services they can sell at different prices.
 However, it is quite difficult to estimate demand of any product based on
different price levels, more so in villages.
4. Competition-Based Pricing
 Competition-based pricing is relatively simple, because the company
sets its prices by looking at prices of similar products offered by
competitors.
 Prices of competing products are used as a benchmark for setting prices.
The different competition-based pricing strategies are:
i. Pricing at Par with the Competition

ii. Pricing above the Competition
iii. Pricing below the Competition
https://www.artofmarketing.org/rural-marketing-2/pricing-rural-marketing-2/pricing-of-
products-strategies-and-methods-india-rural-marketing/13467
MARKET ENTRY STRAGIES
https://hbr.org/2014/06/unlocking-the-wealth-in-
rural-markets
CHALLENGES IN RURAL MARKETING
Refer Slide No 9
MODELS OF RURAL DISTRIBUTION
Model # 1. Public Distribution System:

 The PDS was started in India before independence with the
objective of providing food security to the poor.
 Under the system, food-grains were sold from fair price shops
at lower prices than the market rate.
 In 1997, it was changed to Targeted Public Distribution
System (TPDS) so that cheap rations could be delivered to BPL
people, identified through a BPL survey.
 TPDS operates through a system in which the Central
government procures food-grains from farmers at a
minimum support price (MSP), allocates grains to each state,
and transports them to the central depots in each state.
 State governments identify eligible households to which the
grains are to be delivered from these depots to each ration
shop. The ration shop is the last point of the distribution
channel from where grains are sold to consumers.
Model # 2. Distribution through Wholesalers:

 This is the most common method of reaching rural areas.
 It involves no extra cost for the company since existing channels
are used.
 Wholesalers load the goods in a small vehicle and send them to
nearby villages.
 The driver delivers goods to village retailers and collects
payments.
 Alternately, village dealers make weekly trips to the town and
collect goods from different wholesalers, piling them up in their
pick-ups, and collect goods from various sources for selling
back home.
Model # 3. Distribution through Sub-Dealers:
 In this model, the wholesaler or the company appoints sub-dealers in
villages.
 Wholesaler commission is shared with these sub-dealers, who take
up the task of supplying to rural retailers through their own salesmen.
 Sub-dealers are convenient because the wholesaler is assured of
regular business and payment collections.
Model # 4. Distribution through Local Dealers/Partners (Hub-

and-Spoke Model):
 In this case, the company bypasses the town wholesaler and directly
appoints local dealers or partners who are served through company
depots in a nearby town.
 This resembles the hub-and-spoke model, where the company depot
serves as a hub serving surrounding villages.
Model # 5. Sales through Rural Sales Force (Direct Channel):
 Some companies appoint rural sales force to visit dealers and
retailers in villages.
 Goods are then supplied through the company depot in the town.
 Small companies follow this route and are able to achieve deep
penetration in their areas of operation.
 Wholesaler commissions are avoided but the company bears the cost
of distribution.
Model # 6. Company Outreach Programmes:

 Outreach programmes are an effective way to reach villages,
especially when demos or consumer education are required.
 The company uses BTL techniques to involve communities in their
brands.
 Excitement is built by multimedia devices and direct customer
experience.
 Consumers can experience products directly through this method,
and brand loyalty can be achieved.
Model # 7. Village Entrepreneurs (‘Feet on the

Ground’):
 This approach is called ‘feet on the ground’ approach, in which the
company trains and develops entrepreneurs in villages who act as
distributors and brand ambassadors.
 Case studies of Project Shakti, are examples of this approach.
 The advantage of this model is that the company can reach the
remotest of the villages.
 The village entrepreneur creates customers for the company and
works#for
Model 8.mutual
Localbenefit.
Influencers:
 In this case, the company works through people who can influence
others.
 Well-known or respected people in the village arrange community
meetings and product demos to influence consumers and inculcate
brand loyalty.
Model # 9. Rural Retail Chains:
 Companies can work with retail chains established to serve rural
areas.
 Chains such as Hariyali, Aadhaar and Choupal, or tying up with petrol
pumps, are easy ways to reach villages. However, many of these
initiatives have failed.
Model # 10. NGOs and Other Networks:

 Another way of reaching villages is to piggyback on existing networks
of NGOs, microcredit groups or SHGs.
 Companies work with these groups to tap their existing members.
 This initiative was used by Tata Tea, which started its ‘Gaon Chalo’
initiative with NGOs and SHGs.
 This is a beneficial model as the company gets access to a set of
people who are connected by a common cause. Building trust
becomes much easier.
EFFECTIVE MESSAGING FOR RM
The major challenge in rural marketing is rural consumer should

connect and relate to the message. Broadly, below are the important
considerations to be taken care of while crafting a rural message.
1.Languages – The message should be easily understood by the
rural consumer. Message should reflect culture and religious
sentiments of the audience. e.g. Dabur distributed religious calendars
in rural markets.
2.Pictorial Presentation – Considering the literacy levels of rural

markets, pictorial representation of message becomes an important
part of communication.
3.Message Form – The message should be native to the place and

have utility for the consumer.
4.Source – Many times the source from where the message is

coming from adds to the credibility in the rural market.
RURAL MARKETING PROMOTION TECHNIQUES
RURAL
MARKETING PROMOTIONS
RURAL MARKETING COMMUNICATION DECISION MAKING
RURAL MARKETING PROMOTIONAL STRATEGIES
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RURAL

This statement is still relevant as it was then.

TOTAL VILLAGES POPULATION

A shift from an agricultural economy to a service economy resulted

The rural producers have undergone a complete transformation in

While rural products offer tremendous opportunities for marketers,

Therefore understanding the purchase behaviour of the consumers

Late C.K. Prahalad, in his book

Increase in Employment Opportunities: Rural development due to government

Rural Marketing Strategy by Coca-Cola

DECISION MAKING STAGES WHAT THE CUSTOMER’S DO

The sub-factors are:

Availability of Consumer Credit

1. Rural to Urban Market

2. Rural to Rural Market

3. Urban to Rural Market

• The Indian rural market has grown in prominence in recent decades as

• As rural areas consume a huge number of products produced in cities.

Communication and Transportation

CONSUMER SERVICE INDUSTRIAL

2. Lack of communication facilities:

6. Low per capita Income:

8. Prevalence of spurious brands and seasonal demand:

9. Different way of thinking:

11. Problems in sales force management:

12. Distribution problem:

Companies have built a strong distribution system to

Haier subsequently released a washing machine capable of washing

Customer Complaint #2:

Haier’s customer service center later began to receive complaints that

The specially designed refrigerator features metal plates to cover holes in

Quadrant I − It explains a situation in which both the buyer

Quadrant II − It explains that the majority of people

Quadrant III − It is necessary to develop an urban-rural marketing

Quadrant IV − It explains a situation in which both the buyer and

 Poverty remains, however, because of restricted and inequitable access to

Poultry or Dairy Business

Small and Cottage Industries

 Because of the loss of income and income-generating resources, natural

Other Sources of Income

2. Rural Family is Orthodox in Nature:

3. Family Works as the Unit of Production and Unit of Consumption:

5. Rural Family is Based on Peasant Households:

6. Rural family is more homogenous, stable, integrated and organically

7. There is greater discipline and interdependence in the rural families.

 The occupation pattern reveals the income generation pattern as well.

 If we compare the availability of disposable income in the hands of rural and

 It is very difficult to define a definite boundary for the identification of socio-

The major factors which are used to construct different socio-cultural

 Sales promotional schemes, selling and distribution strategies,

In a nutshell, we can conclude that the urban

 Rural communities form the backbone of India- adhering to the adage

 It is the caste settlement in terms of its power that a particular

 There is a concept of dominant caste.

Kantara is a film that narrates the story of a

 Besides employment creation, the digital revolution has created

 Rural technology is widely recognized as one of the major determinants

 Technology has become an integral part of entrepreneurship. It helps to

HUL gave a technology boost to rural marketing. Its

CONSUMER BEHAVIOR IN RURAL MARKET

The Learning Model of consumer behavior As a marketer understanding these drives

Wal-Mart was once a store that sold many

How can we align the model to rural

 Decisions such as product design, pricing, packaging, distribution and making