A SUMMER TRAINING PROJECT REPORT ON

SCOPE OF RURAL MARKETING IN INDIA

Submitted in partial fulfilment of the requirements

For the award of the Degree of

Master of Business Administration

(2022-23)

(Dr. APJ AKTU, Lucknow)

By

ADITI PANDEY

Roll No. 21GIMMBA014

MBA Semester IV

(GIMT, Greater Noida)

Report Submitted to:

Indian Rural Market play a pivotal role as it provides great opportunities to the corporations to stretch their

reach to nearly seventy percent of population. Rural market also benefits the rural economy by providing

infrastructure facilities, uplifting the standard, and quality of life of the people resides in rural area. Though

the rural market has become a favourite destination for every marketer but it’s important to realize that it has

lot of challenges and risk, therefore corporations should assess the obstructions as vigilantly as possible. A

thorough understanding of rural markets and systematic move towards are necessary to penetrate rural market.

In order to develop marketing strategies and action plans, the corporations need to consider the complex

factors that influence the rural consumers buying behaviour. The rural market is developed by rising

purchasing power, changing consumption pattern, increased access to information and communication

technology, improving infrastructure and increased government initiatives to boost the rural economy. The

marketers tune to their strategies in accordance to the rural consumer in the coming years. Despite all

complexities involved in the rural marketing, the rural scene of rural environment is changing steadily in India.

The biggest challenge today is to develop a scalable model of influencing the rural customer mind over a large

period and keep it going. Traditional urban marketing

strategies will have to be localized as per the demands of the rural markets. It has to reach out to rural

consumers and relate to them at an appropriate level, so that it can bring about the desired behavioural change.

Government support is necessary for the development of rural market in India to face the emerging issues and

challenges in the core areas like; transportation, communication, roads, and credit institutions, crop insurance

for better utilization of land and water management. The future no doubt lies in the rural market. In conclusion,

the rural markets are enticing and marketing to rural consumers is exciting. However, a clear understanding

or the rural consumers and their current and future expectations are the major part of strategies to tap the rural

market nowadays.

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 ACKNOWLEDGEMENT

It is a matter of great satisfaction and pleasure to present this report. I take this opportunity to owe my thanks

to all those involved in my training.

This project report could not have been completed without the guidance of Prof. Amit Manlik

I express my gratitude to all those who have helped me directly or indirectly in completing the training.

Name: ADITI PANDEY

Roll No. : 21GIMMBA014

MBA (IV SEM)

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 CONTENT

S.NO. TOPICS PAGE NO. SIGN

1. INTRODUCTION TO THE TOPIC 1-36

2. OBJECTIVE 37

3. SCOPE OF THE STUDY 38-39

4. IMPORTANCE OF THE STUDY 40-42

5. RESEARCH METHOD 43-48

6. DATA ANALYSIS AND INTERPRETATION 49-69

7. CONCLUSION 70

8. RECOMMENDATION 71-72

9. LIMITATIONS OF THE STUDY 73-75

10. BIBLIOGRAPHY 76

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INTRODUCTION

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 RURAL MARKETING IN INDIA

Everything you need to know about rural marketing in India. The rural marketing structure is

not uniform in all parts of the country.

The type of structure prevalent in a particular State or Region depends on various factors like

the state of development of agriculture, condition of transport and communication facilities,

purchasing power of population, etc.

Rural marketing is a type of marketing in which activities are planned according to the needs

and requirements of the people living in the rural areas.

Marketing is the process of identifying the needs and wants of the consumers, then prepare that

particular product or service in order to satisfy them, keeping in consideration the benefits of

the organization. This concept applies to every type of marketing, whereas when we talk of

rural marketing the emphasis is to be given on the rural areas.

1. Definitions of Rural Marketing in India

2. Nature of Rural Marketing in India

3. Types

4. Significance

5. Approaches

6. Assumptions

7. Reasons for Increase in Importance

8. Factors Contributing

9. Marketing Mix for Rural Markets

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10. Role of Risk

11. Difference between Rural and Urban Marketing

12. Rural Marketing Research

13. Current Scenario.

Rural Marketing in India – Introduction

Rural marketing is a type of marketing in which activities are planned according to the needs

and requirements of the people living in the rural areas. Marketing is the process of identifying

the needs and wants of the consumers, then prepare that particular product or service in order

to satisfy them, keeping in consideration the benefits of the organization. This concept applies

to every type of marketing, whereas when we talk of rural marketing the emphasis is to be

given on the rural areas.

The focus remains on the people who are living in the remote areas, and the marketing activities

should be planned accordingly. Seeing this, now-a-days many companies are turning towards

the rural market to expand their scope, and to overcome competition or to restart or give new

shape to competition. A lot of focus is required to be given on the rural markets because rural

markets are the “tomorrow’s markets”.

In order to understand the term “Rural Marketing” we have to first understand the term ‘Rural’.

There is much confusion associated with the word rural as there is no accepted definition of

the term. However there are different perceptions of the term and some of them are- To some,

rural means a place with less than one lakh population; others consider the income level of the

population to determine the rural segment. If the income levels are less than Rs.11,000/- per

annum then the segment is a rural segment. Yet to some others the term rural means smaller

towns and mofussil areas having population of less than 10,000 persons.

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Even the corporate sector faces this confusion about the term rural. In the absence of any clear

concept of the rural area, there will not be a proper understanding of the rural problems and

hence the marketing considerations and strategies might tend to go wrong.

In the absence of any standard definition of the term rural, let us understand it by studying the

definition of the term ‘Urban’. The Census Department of India defines the term ‘Urban’ as (a)

All places with Municipality, Corporation, Cantonment Board or Notified town area

committee, (b) All the places with a minimum population of 5,000 persons, with at least 75%

of the male working population engaged in non-agricultural activity and with a population of

at least 400 persons per square kilometre or 1000 persons per square mile. If we exclude the

areas that come under the above definition, the remaining areas can be considered to be the

rural areas. When marketing activities are carried out in the rural markets it is known as ‘Rural

Marketing’.

Rural Marketing in India – Definitions Provided by National Commission on Agriculture

In the process of defining rural market, for the purpose of clarity, it has been attempted to

firstly, deal these two terms ‘market’ and ‘rural’ separately and then combine them into one,

later.

The term, ‘market’ is used in many contexts. For example, the urban market, the rural market,

the agriculture market, the commodity market etc. Thus, market as a concept is most confusing.

According to economist’s view, market is a physical place where buyers and sellers get

together, and a transfer of title takes place as goods are exchanged.

Thus, markets include the people who sell the goods and services and also those who purchase

them. Another view is that market refers to the people with buying power and willingness to

buy. In the present study, both the views have been taken into account.

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With regard to the term ‘rural area’ also there is no unanimity among the authorities. A few

authorities defined a geographical place as a rural area with a population of 10,000 while few

others defined – place with a population of 20,000 as rural area. But, for the present study, the

criterion adopted by the census of India, 1981 for defining an urban area has been taken as the

basis for defining the rural area.

Accordingly, rural area is defined as a place with human habitation of 5000 and below with

agriculture as the main economic activity and with a density of population less than 400 sq.

km. Some areas with a population more than 5000 are also classified as rural area in view of

the agriculture being the main economic activity of a vast majority of population in that area.

On the basis of the definitions of the above two terms, the rural market may be defined as any

market that exists in the rural area with a population less than 10,000 where the areal density

of population at any population nucleation is low without any significant infrastructure.

In other words, total market of India excluding the urban markets can be called as rural market.

These rural markets are mostly unintegrated, very small in size and rudimentary in nature.

According to the National Commission on Agriculture – “Rural Marketing is a process which

starts with a decision to produce a saleable farm commodity and it involves all the aspects of

market structure or system, both functional and institutional, based on technical and economic

considerations, and includes pre and post-harvest operations, assembling, grading, storage,

transportation and distribution.”

According to Thomsen – “The study of Rural Marketing comprises of all the operations, and

the agencies conducting them, involved in the movement of farm produced food, raw materials

and their derivatives, such as textiles, from the farms to the final consumers, and the effects of

such operations on producers, middlemen and consumers.”

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The above two definitions reflects only one side of the coin and are narrow in explanation, i.e.,

it explains only the movement of goods from rural to urban areas, whereas, the rural markets

also need agricultural inputs like seeds, fertilizers, pesticides, cattle feed and agricultural

machinery, as well as the rural population needs consumables, consumer durables and services

also. That’s why the urban manufacturers have entered the rural markets with consumables,

consumer durables and services.

Rural Marketing in India – Nature

The rural market is quite different from urban markets. Agriculture is the chief economic

activity in rural areas, the entire village population is associated directly or indirectly to

agriculture. In the process of development of civilisation agriculture and pastoral life along

river banks are the first form of settled life.

In the Bronze Age, major civilisation evolved. Archaeological evidence reveals that bronze

industry supplied tools and implements to agriculture. Textiles, paper, iron and furniture

making developed to lid man in his economic activities.

Agriculture supplies inputs for fabrication into manufactures cotton, oil seeds spices etc. All

food items had a marl origin. Villages were self-contained units, which traded their produce

for gold, arm and precious stones. The rural society has high status persons and the poor ones.

The distribution of land was made by state, which belonged to the state- The British rule for

more than three centuries was the worst blow to the rural society. The worst blow was to cottage

and small scale industries, cultivation of indigo, tea and jute, development of timber trade and

denudation of forests.

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The terms of trade were not favourable to Indian farmers. In these circumstances farmers were

forced to live in deprivation and poverty. British India was with the princely states under the

administration of Rajas and Nawabs; the big states had all the powers except defence and

foreign affairs.

Agriculture and industries based on raw-materials and local skills are identified for the

development of the rural economy. An integrated approach was evolved to take care of projects

ranging from milk and milk-products to horticultural products like fruits, vegetables, flowers,

herbs, etc.

The processing of these is not widespread in rural areas. Modern technology is too accessible

to enterprises there. It is beyond the financial capacity of an average entrepreneur. The low cost

and labour based technologies have been the common mode of village industry. As a result,

the rural products do not enjoy competitiveness in a wider market. Most of the products are

consumed locally.

Rural Marketing in India – Types of Rural Markets: Periodic Markets, Mobile Traders

and Permanent Retail Shops

The rural marketing structure is not uniform in all parts of the country. The type of structure

prevalent in a particular State or Region depends on various factors like the state of

development of agriculture, condition of transport and communication facilities, purchasing

power of population, etc.

In the North-Eastern region and far-flung areas of the country where the ‘agricultural

production and levels of income are low and communication and transport facilities are not

available the marketing structure comprises predominantly. Primary markets like hats and

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shandies which have sprung-up at convenient places to cater to the needs of the local

population.

At the other end are areas in North-West like Punjab and Haryana where the agriculture and

other facilities are developed. The market structure comprises a larger number of organised

markets. However, rural markets of India can be broadly categorised into three types.

They are:

1. Periodic Markets:

Periodic markets are the important characteristic feature of the rural marketing in India. In spite

of urbanisation and development of retail stores, periodic markets are also playing an important

role in rural economy as well as in social life of the rural masses. The periodic marketing

function is performed by two institutions, viz., fairs, and weekly markets.

A fair denotes a gathering of people who assemble at regular intervals in certain fixed places—

generally around shrines or other religious institutions. Although, by far the largest number of

fairs have a religious background, there are some which owe then origin to purely economic

considerations.

A general concept regarding Inn is that they are simply an occasion for the recreation of rural

folk. These fairs provide an opportunity for rural people for yearly and half-yearly, sometimes

be-biennial or once in 12 years like that of Kumbha-Mela, Godavari Pushkarmas, etc.

The purchase and sale of goods, etc. The important fairs draw people not only from surrounding

tracts, but also from very distant places. There are about 1700 fairs organised in different parts

of the country involving produce and also livestock. There are a few fairs which are attended

by a few lakhs of population and there are others which are attended by a few thousands.

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On an average, the attendance per fair works out at about 16,000. The periodicity of fair varies

from one fair in one state with that of another in other States also from one region to another

within the State. The time schedule of a fair may vary between 1 day to 7 days.

The various types of fairs include:

i. On the basis of Primary Purpose:

(a) Religious fair,

(b) Commercial fair,

(c) Commodity fair,

(d) Cattle fair,

(e) Exhibition fair, and

(f) Mixed fair.

ii. On the basis of the periodicity:

(a) One-day fair,

(b) Short- duration fair, and

(c) Long-duration fair.

iii. On the basis of their importance or area of influence:

(a) Local fair,

(b) Regional fair,

(c) Inter-regional fair or national fairs

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Now-a-days international fairs are also organised by the Governments. Festivals of India,

organised by the Government of India in important cities of several countries like USA, France

and Germany, etc., belong to this category. However, with the change in rural economy, the

pattern of shopping in fairs has also been changed.

The development of permanent shops in rural areas and easy contact with towns have also

changed the shopping practice of the rural people. But the importance of fairs is still the same,

due to behavioural pattern of rural people who always wait for the purchase of many items.

The State Governments are also helping in popularizing the fairs.

Paintings, hats, shandies, bazaars are different names employed in various parts of the country

to designate periodical markets held usually once or twice a week and in some cases even often.

They are commonly known as weekly markets. However, there is slight distinction between

these terms.

For example, the term paints, is used in united province to denote a periodical market dealing

more in agricultural produce than in livestock, whereas in a hat the reverse is the case.

As the goods and services of daily market or permanent shops are not available in remote rural

areas, most of the villages are not connected with all-weather roads. Added to this, the state of

agriculture is subsistence, peasants have to dispose their meagre surpluses on one hand and

have to purchase limited manufactured goods on the other.

Created out of this situation in rural areas are weekly markets, and to purchase their daily

consumption goods. A periodic market is a public gathering of buyers and sellers of

commodities meeting an appointed or customary location at regular intervals. Though the time

varies between different regions, in most of the cases these meet once in a week.

The number of hats or weekly markets held in various parts of the country are estimated around

22,000. These markets are found in greater numbers (80%) in the eastern and north eastern

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regions of the country comprising Assam, Bengal, Bihar, United Provinces and Central

Province.

Out of the States, Hyderabad State occupies the first position with as many as 1,000 hats.

Gwalior, Travancore, Mysore and Bhopal followed with 300,225, and 200 hats respectively.

Most of the weekly markets serve an area within a radius of 8 to 16 kms. In some States like

Maharashtra and Tamil Nadu, these markets serve a larger area while in northeastern states

these serve a smaller area. Transactions are mostly on cash basis though the barter system is

still in practice.

The volume of produce traded, commodities traded, number of villages and the population

served by the weekly markets differ considerably from State to State and from market to market

within the same State. For example, the number of villages served varies from 27 in the case

of markets in Andhra Pradesh to 277 in case of markets in Bihar.

In terms of the population served, the variation is 40,000 in respect of a market in Andhra

Pradesh to 1,83,000 in the case of market in Gujarat.

However, the weekly markets at the village level are generally devoid of most of the market

facilities. The consumers are subjected so many malpractices indulged in by the traders both in

purchasing farms produce from the rural masses and also in selling their required consumer

goods to them.

In spite of this, these markets serve as an important marketing institution in rural areas. Most

of the agricultural labour who get their wages once in a week visit these markets and purchase

their consumption goods.

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 2. Mobile Traders:

There is another important agency known as mobile traders to fulfill the limited needs like

vegetables, fruits, clothes, utensils, cosmetics, spices, toiletries etc. of rural consumers. The

practice of mobile trading is not a new one, but even in ancient India this phenomenon was

common.

The mobile traders are those merchants who move from one place to another, from one house

to another in order to sell those commodities which are often required by rural masses. As it is

rightly observed by Stine, important reason for the existence of mobile trader is that when the

maximum range is smaller than the threshold requirement of the firm, the firm either ceases to

function or else it becomes mobile.

Even in those villages where there are permanent shops and weekly markets, there is a phase

for mobile traders because of behavioural pattern of rural masses. Mobile traders move from

one village to another on foot or bicycle or buses, bullock carts, etc. They visit the villages

once or twice in a week. Sometimes, they visit those villages which are on the way of weekly

markets in return direction after attending these weekly markets.

While moving from one house to another within the village they loudly announce the name of

the commodity which they sell such as chadar, (bed sheet), pandlu (fruits), gajulu (Bangles),

palu, perugu (milk and curd), etc. There will be too such haggling in price fixation. The

payment is made either in cash or in kind in the form of foodgrains. Sometimes these traders

extend credit upto periods harvests.

Mobile traders move in groups or 3 to 5 persons carrying different types or similar types of

articles. They move only in those parts of the village, they have decided at the time of the entry.

Female mobile traders are also found significantly dealing in cosmetics, utensils, toiletries,

plastic goods, spices, etc.

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During harvesting season, the frequency of visits by mobile traders is more. Most of these

traders belong to certain castes like Poosala in Andhra Pradesh. These mobile traders are an

integral part of the rural marketing system.

3. Permanent Retail Shops:

Permanent retail shops are developed as the population of villages increased, their incomes

improved, the demand for goods and that too on daily basis increased. The traditional fairs,

weekly markets or peddlers were not able to meet the situation and this led to the emergence

and growth of permanent shops.

Permanent shops were set up as a result of the demand of the rural inhabitants primarily of the

same village. The number of shops, their various forms largely depends upon the size of the

population of the village, their incomes, purchasing power, their preferences, etc.

In the Indian context, the most sophisticated types of retail outlets comparable to that of western

countries are found in metropolitan cities, while in rural areas (with population less than

10,000), only the traditional independent general stores or small-scale retailing are prevailing.

In rural areas, only traditional methods of distribution, i.e., wholesaler and retailers are working

as usual. The modern methods of distribution, such as chain stores, super markets and franchise

shops are not existing in rural areas because of small size of villages and lower income of rural

folk.

Rural Marketing in India – Significance of Rural Markets

Every sales executives today if asked which market he would prefer to serve, the immediate

answer would be. “Rural Markets”. A number of factors have been recognised as responsible

for the rural market boom.

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Some of them are:

1. Population Increase- Increase in population, and hence increase in demand. The rural

population in 1971 was 43.80 crore, which increased to 52.50 crore in 1981, and 72 crore in

1994 and it is about 78 crore in 2000.

2. Addition in the Rural Increases- A marked increase in the rural income due to agrarian

property.

3. Development of Villages- Large inflow of investment for rural development, programmes

from government and other sources.

4. Development of Educational Facilities- Increase in literacy and educational level among

rural folks, and the resultant inclination to lead sophisticated lives.

5. Increasing Contract- Increased contract of rural people with their urban counterparts due to

development of transport and a wide communication network.

6. Role of Foreign Goods- Inflow of foreign remittances and foreign made goods into rural

areas.

7. Prosperity- The general rise in the level of prosperity appears to have resulted in two

dominant shifts in the rural consuming systems. One is conspicuous consumption of consumer

durables by almost all segment of rural consumers, and the second, the obvious preference for

branded goods as compared to non-branded goods of rural origin.

8. Change in Buying Behaviour- Changes in the laud tenure system causing a structural change

in the ownership pattern and consequent, changes in the buying behaviour.

Rural Marketing in India – Approaches: Availability, Affordability, Awareness and

Acceptance

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The rural market may seem very attractive because of its vast size and largely untapped

markets. C.K. Prahalad, the renowned management guru had talked about the huge market

potential offered by the world’s poor in his book the fortune at the bottom of the pyramid.

According to him, commercial success can be successfully combined with societal

development if multinational companies targeted the population of the developing world in a

way that would fulfill the needs of both.

But entering the rural market is not so easy. There are some problems specific to this kind of

market. The 4 a’s approach is a consumer-oriented model that explains the uniqueness of rural

markets.

The 4 a’s are:

Approach # 1. 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

6,38,000 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. Therefore it is

a big challenge to ensure availability of products at far flung areas. To counter such problems,

big companies like the global giant unilever’s Indian subsidiary Hindustan unsilver have built

a strong distribution system to reach the remotest of the villages.

More traditional forms of transport like bullock carts, auto rickshaws and even boats in some

parts of Kerala are used in the rural distribution system. Coca cola has developed a special

distribution system to deliver its products to the village areas. Some companies even open up

factories and offices in such areas to penetrate the market.

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Approach # 2. 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.

Rural population normally does not indulge in conspicuous spending. In order to sell to the

village markets, many organizations developed low priced options specifically suited to the

rural customer’s pockets. Britannia’s tiger biscuit is a low priced snack which is popular among

village kids.

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. 2-3.

Approach # 3. 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.

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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, posters, etc. 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.

Approach # 4. Acceptance:

The most important issue in rural marketing is to make the customers accept the product.

Villagers 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.

Marketers should facilitate the process of product acceptance—coca cola provides low cost ice

boxes to its rural distributors who do not have electricity or refrigerators. The customers should

feel that a product is worth the efforts they are making to get it.

Rural people are more price-sensitive and believe in getting the maximum value out of

whatever they buy. Many models of Nokia mobile phones are equipped to handle SMS

facilities in regional Indian languages making it user friendly for non-English speaking groups.

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Rural Marketing in India – Assumptions

1. Many assumption prevail about rural marketing. For instance, one assumption is that the

rural buyer is not very discriminating. Once he is persuaded to buy a particular product, he

develops a strong affinity for it, and if satisfied, becomes brand loyal.

As a result, Indian manufacturers are generally known to prefer selling fewer items at higher

prices than selling more items at lower prices. A contrary view is that the rural buyer, being

suspicious of the marketer’s hard-sell techniques, is quite discriminating, and is not easily

persuaded.

2. Yet another assumption is that the rural buyer is not particularly been about quality and

packaging.

3. Some other assumption can be quoted. But all these need deep probing for assuring at valid

and reliable conclusions. Consumer’ research, thus, is indispensable for entering the rural

segment of the market. The pace of urbanisation has brought into existence new markets for

pronumerous consumer goods.

The rural market consists of two segments, viz.-

i. The market for consumption goods including consumer durables, and

ii. The market for investment goods, including agricultural inputs. Rural consumers in both

these segments are far less homogeneous than their urban counterparts, and also differ from

region to region. A number of research studies have been made on the behaviour of rural

consumers towards agricultural inputs like fertilizers, pesticides, sprayers and food-grains.

The rural markets are green pastures for any marketer, provided his marketing plan are attuned

to the specialities of rural markets. The rural market is estimated to be growing faster, compared

17
to urban market. Being a new market, it could be easily manipulated, provided the

manufacturers develop an insight into the behavioural patterns of rural consumers.

The potential of rural markets is said to be like that of a woken up sleeping giant. This is

substantiated in a study of market growth conducted by the Operations Research Group (ORG)

during a six year period (1983-89). The study revealed that the offtake of rural markets for

packaged consumer products accounted for Rs. 2,083 crores in 1989.

The growth works out to 184 per cent, compared to the figure for 1984. Against this, the

increase in urban market off take was from Rs. 1,855 crore in 1984 to Rs. 3,628 crore in 1989,

working out to a 96 per cent crawl.

Rural Marketing in India – Reasons for Increase in the Importance of Rural Markets

1. Cut Throat Competition in Urban Markets:

Now-a-days people say that there is lot of competition in the market. Actually it is not only lot

of competition but cut throat competition, especially in the urban areas. Companies are playing

on the basis of price. Every big company is trying to swallow the small and new companies.

Prices are going down steeply just because of the tough competition.

Apart from the price factor, companies have started increasing product features and added

value to their products to compete in the market, without increasing the prices. The concept is

increase the utility and value and decreases the prices. Irrespective of the above facts, there are

certain products which have already achieved the maturity level or have reached the saturation

level. Demand is not increasing in these sectors so the best strategy is to explore new markets

for the products.

So rural marketing is turning out to be a market for the packaged products with a minimum or

no competition. Firms can generate demand and increase profits.

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2. Socioeconomic Changes:

Today a revolution has come in the rural areas which in turn have brought a change in the

socio-economic conditions. This is basically in terms of increase in the productivity of the

agriculture. Most of the income of people residing in rural areas comes from agriculture. Due

to the adoption of the latest technology the yield per acre or animal has increased considerably.

One of the major reasons behind these changes is the Government Policies to uplift the

agriculture and remote areas, and the opening of the cooperatives in some major belts of India.

Because of adoption of latest technology, production has increased which has resulted in the

increase in income of farmers. Due to increase in income the rural customer also wants to be

in the same frame as the urban customer.

Urge for increasing income and better standard of living by the rural customers has motivated

the companies to go and spread their business activities in these areas. Some fertilizer

companies have started adopting villages for increase in their production. Some companies

have taken it as a social cause for the upliftment of remote areas. Integrated rural development

programs encompass health, education, latest technology farming products sales, development

of industry etc.

Another reason for this change is the media which has reached in the rural areas. Specially

Television has brought a revolution in this area. Today we have so many regional channels.

Customer can be made aware of the latest products, their utility, new brands, etc. With the

increased income and aspiration for standard of living, with this kind of awareness provided

by the media, the companies are motivated to go and take charge of the rural areas.

3. Scope and Size of Rural Market:

Today the size and scope of rural market is increasing at a very fast pace. A major part of Indian

population lives in the rural areas which are now turning as a new market. Now the rural market

19
is not limited to the sale of fertilizers and pesticides but it is going beyond that with the increase

in the income and the aspiration level.

Urge for good standard of living has opened the rural market as an opportunity for the

companies to come and grab the market. Now in rural areas also there is a demand for TV,

Cars, Shampoo, packaged goods etc.

4. Occupation:

Most of the rural customers are engaged in farming, trading, poultry work, plumbing, electric

works, dairy, etc. We have different varieties of the occupation in the rural areas. In rural areas

also big farmers usually possess almost everything like TV, fridge, furniture, and other home

appliances etc. of the major brand. Small farmers have scarcity of resources and funds etc. so

there is no question of possessing almost any branded products, specially costly products.

5. Reference Groups:

In rural areas there are totally different reference groups. Any person who is having a say in

their area, a respect in the society and a place in the hearts of the residents form a reference

group. Higher the profile and requirement of these people in the society, higher will be their

influence on them. They are basically health workers, doctors, teachers, panchayat members,

local bodies, samiti members, bank managers etc.

6. Media Types:

Now-a-days televisions, presentations, display, radio etc. has taken the place of old traditional

folk programmes like ‘Nautanki’. Because of the literacy rate being so low, print media is not

so effective.

20
Rural Marketing in India – Factors Contributing to the Change in the Rural Markets

While a variety of factors, acting in concert, have brought about this change, three factors

deserve special mention.

1. Concerted Efforts at Rural Developments:

As a part for planned economic development, the government has been making concerted

efforts towards rural development. Plan after plan, it has been committing large outlays to

sectors like agriculture, animal husbandry, irrigation, flood control, and khadi and village

industries. They have generated new employment, new income and new purchasing power

among the rural people.

2. The Green Revolution:

The green revolution has been the next major factor. A technological breakthrough took place

in Indian agriculture. Rural India derived considerable benefit from the green revolution.

Today, rural India generates 170 millions tonnes of food grains per year and an equally

substantial output of various other agricultural products.

It produces 14 billion eggs, 80 millions broilers and 40 million tonnes of milk per annum

obviously, rural India is acquiring a new power.

3. The Expectation Revolution:

The expectation revolution among the rural folks completed the process. More than the green

revolution, the revolution of ‘rising expectations’ of the rural people influenced the marketing

environment of rural India. While the expectation revolution did not in itself result in any

additional purchasing power, it brought about a powerful change in the environmental

dynamics.

21
It enlarged the awareness of the marl people; it kindled their hopes; it strengthened their

motivation to work, earn and consume. Political and social changes taking place in the country

strengthened this phenomenon. The rise in income resulting from the new farming strategy has

added meaning and substance to the growing aspirations of the rural people.

Rural Marketing in India – Marketing Mix for the Rural Markets

1. Product Decisions:

The product for rural market must be little bit different from the product for urban market. The

product should be easy to use, simple, easily serviceable, and easily maintainable. Take the

example of tube wells which are very easy to use and maintain in the fields as compared to

electrical motor systems. The product literature should be easily understandable, it should be

simple and in simple or local language.

Packaging should be given due weightage i.e. product should be available in small pack sizes

(100 gm, 200 gm, 500 gm etc.) because rural consumer prefers to buy one unit as compared to

urban buyers who purchases in bulk quantities. Focus can be on providing products in small

sachets packs like in the case of shampoo, pan masala etc.

2. Pricing Decision:

Law of demand says ‘Higher the price of the products, lower will be the demand of the product

and lower the price of the product, higher will be demand for that product’. This law is totally

applicable in the rural markets. Because of the relatively lower income, the rural consumer is

more sensitive towards price. Marketers have to plan their activities in order to bring down the

cost of production. They have to bring down the price in order to attract the customers e.g.

Nirma Washing Powder.

22
3. Promotion Decisions:

Television, Radio, Presentation, Displays can be used to promote the marketing activities of

the company. Programmes like folk dances, rural fairs, nautankis, local contests can be taken

into consideration to promote the company’s products. Personal selling can also play an

important role in this respect. ‘Brand’ can be established through visible logos etc.

4. Distribution Decision:

In order to send the products of the company to the rural customers the company should provide

its products to local retailers or distributors. Company cannot wait for the customers to come

to the city and purchase the products. The company may arrange for mobile vans to send their

products in the rural areas or focus on weekly markets of the rural areas.

Rural Marketing in India – Role, Types and Minimization of Risk in Rural Marketing

Risk plays a vivid role in the profitability and successful functioning of rural marketing or any

marketing system. There are number of theories’ of profits like uncertainty, contingencies

theory, risk bearing theory, M.P. theory.

The theory which is acceptable to most of the economist is the risk bearing theory- Hardy has

defined Risk as uncertainty which may give you ample of benefits or it may ruin badly.

At one place, he points out that no risk no profit, more risk more profits. He has defined the

risk theory as, “Profit is the reward of uncertainty and Risk Bearing”. Risk is inherent in all

marketing transactions. There is the risk of the destruction of the produce by fire, rodents or

other elements, quality deterioration, price fall, change in tastes, habits or fashion, and the risk

of placing the commodity in the wrong hands or area.

23
There is a time lag between the production and consumption of arm products. The longer the

time lag, the greater the risk. The risk associated with marketing cannot be dispensed with for

this risk contributes to profit. Someone has to bear the risk in the marketing process.

But most of the risk is taken by market middlemen, for they have the capacity to bear it.

Whenever risks are greater and varied, the margin taken by the risk bearers is higher, and vice

versa. One who holds the commodity in the process is the bearer of the risk, because of which

lie may be better off or worse off.

Types of Risk:

1. Physical Risk:

This includes a loss in the quantity and quality of the product during the marketing process. It

may be due to fire, flood, earthquake, rodents, insects, pests, fungus, excessive moisture or

temperature, careless handling and unscientific storage, improper packing, looting or arson.

These together account for a large part of the loss of the produce at the individual as well as at

the macro level. Such losses are a loss to society, too, and must be averted to the extent possible.

2. Price Risk:

The prices of rural products fluctuate not only from year to year, but during the year from

month to month, day to day and even on the same day. The changes in prices may be upward

or downward. Price variation cannot be ruled out, for the factors affecting the demand for, and

the supply of, rural products are continually changing.

A price fall may cause a loss to the trader or farmer who stocks the produce. Sometimes, the

risks are so great that they may result in a total failure of the business, and the person who owns

it may become bankrupt.

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3. Institutional Risks:

These risks include the risks arising out of a change in the government’s budget policy, in

tariffs and tax laws, in the movement restrictions, statutory price controls and the imposition

of levies.

Minimization of Risks:

The agencies engaged in marketing activities worry about the risks associated at every stage;

and they continually try to minimize the effects of these risks. A risk cannot be eliminated

because it also carries profit. The agencies which do not take risks hardly earn profit.

The risk management by the adoption of some of the measures listed below may minimize the

risks:

a. Reduction in Physical Loss:

The physical loss of a product (quantity and quality both) may be reduced by the adoption of

the following measures:

(i) Use of fire-proof materials in the storage structures to prevent accidents due to fire;

(ii) Use of improved storage structures and giving necessary pre-storage treatment to the

product to prevent losses in quality and quantity arising out of excessive moisture, temperature,

attacks by insects and pests, fungus and rodents;

(iii) Use of better and quicker transportation methods and proper handling during transit; and

(iv) Use of proper packaging material.

b. Transfer of Physical Losses to Insurance Companies:

The burden of physical risk may be minimized by shifting it is insurance companies. There are

specialised professional agencies to bear such risks. They collect some premium and provide

25
full compensation to the party in case of loss due to the reasons for which the products are

insured. In this way, the company insures a number of farmers against losses.

c. Minimisation of Price Risk:

The risk associated with the variation in prices may be minimized by the adoption of the

following measures:

(i) Fixation of minimum and maximum prices of commodities by the government and allowing

movements in prices only within the defined range;

(ii) Making arrangements for the dissemination of accurate and scientific price information to

all sections of society over space and time- This should include information on market demand,

average under a particular crop, estimates of market supply and of the import and export of

commodities.

(iii) An effective system of advertising may reduce price uncertainty and create a favourable

atmosphere for the commodity;

(iv) Operation of speculation and heading. The price risk associated with the commodities for

which the facility of forward trading is available may be transferred to professional speculators

through the operation of hedging. A detailed exposition of speculation and hedging follows.

Rural Marketing in India – Difference between Rural and Urban Marketing

It may be of relevance to present the salient features of rural market and the difference between

rural and urban markets. The urban markets are a large contiguous settlement of towns or urban

agglomerations whereas the rural markets are small contagious settlement units of villages far

from cities.

26
The rural consumers are far less homogeneous than their urban counterparts and differ and that

has go important implications for the marketers. To begin with the “rural-urban” construct

(rural being defined as “not urban”, says the Census) is born out of convenience and the

availability of data, words, it is not vigorously characterised.

Second, even if we were to work with this definition, the rural setting is fundamentally different

from the urban. From the marketing angle, clear distinction between urban and rural centers

can be made taking the attributes. The contrast between the rural and urban consumers can be

made clearer by the factors such as sociological, economic; psychological and exposure factors.

These factors contributing in their own way to the awareness of rural people by putting them

to greater exposure and providing them with information about the happenings in the world

outside. The rural consumer, unlike his counterpart, is frugal and does not consider the daily

chores of life a physical exertion. Things of utility are more likely to attract his attention.

A rural consumer, as a rule, wants to be very sure of the quality of the product and expects the

product to spell out its use at the outset. He will purchase only that product which would give

him the satisfaction of having got his money’s worth. Upon buying the product, he should feel

that his has been a wise choice and that he has not been taken for a ride by a fast talking city

salesman.

The urban and rural consumers differ with regard to brand loyalty too. The urban consumer,

being discriminative, generally has a try at any new product or the same product with a novel

feature or plus attraction. In that sense, we could call an urban buyer flexible and dynamic.

Not so the rural consumer, once the rural buyer is induced to buy and use a particular product

and once he is satisfied with it, he becomes a staunch supporter and loyal user of that brand

and may even make efforts to get the whole village to use it.

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Rural Marketing in India – Rural Marketing Research

Rural market research has traditionally existed much longer and has had a structure even before

the urban markets developed fully. This is quite ironical but it is true, as most research which

have pertained to health, literacy, family planning or infrastructure related projects have their

base always in the suburban or rural areas to start with.

However, research related to marketing and its problems have started to take shape more

recently when companies like HLL, Dabur, Colgate-Palmolive, Richardson Hindustan Ltd.

(now P&G) started to make headway into the rural markets and found that they had very little

or no information regarding the markets.

Data existed pertaining to socioeconomic classifications, more specifically on occupation

profiles, education profile or ownership profile, but data on income, its allocation and buying

preferences was not available. Hence, it became difficult to segment the markets. Most

organisations wanting to enter rural markets either relied on the existing published sources or

commissioned studies.

However, commissioning a study was time consuming and involved huge financial resources.

Besides, the heterogeneity of the market meant that data from one region could not be adopted

elsewhere. It was difficult to assess the market size and the potential. After having spent

considerable amount of time and investments in research today companies like HLL have

strong rural presence.

But, issues like infrastructure and geographic reach of the places still continue to bother

companies. The situation regarding rural marketing research is however slowly changing with

our knowledge base on rural marketing growing on the basis of both higher experiential data

available as well as deeper penetration of rural markets.

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The Prevailing Scenario of Rural Market Research:

Organisations like NCAER, ORG-MARG, PSI, National Institute of Family Health and

Welfare (NIFHW), Statistical Institutes of India, GOI’s Census Study Organisation, etc. have

for quite some time now been involved in rural research. Organisations like NCAER are

involved directly in primary research pertaining to demographic study for both urban and rural

markets besides handling a portfolio of other products under research.

ORG-MARG’s retail audit is one of the most accomplished and largest research processes

involving brand tracking for companies at retail level. The number of regions covered is

geographically expansive and therefore, the retail audit of ORG-MARG is respected in the

trade circles. Agencies like PSI, TERI, and NIFHW are involved in research of the completely

different kinds in rural India.

Their research is focused more on Health, Sanitation, Family Planning, Literacy and other

related social issues. Unfortunately, a large part of our rural India still cannot access basic

health facilities and primary education. Pregnancy related deaths are still the highest in India

and even basic amenities are not provided because of which such deaths are common. Low

literacy levels, absence of a local Health Centre are reasons for such mishaps too, so research

in these areas is imperative.

The government has been taking several initiatives in this regard and several government-

funded institutions are involved in related projects. For instance on the AIDS awareness drive

alone close to Rs.1000 crores is supported by grants from external and internal sources. Several

NGO’s are also involved in researches in rural areas either for an eradication or awareness

programme. The Pulse Polio Campaign and the Balbir Pasha AIDS campaign are a few

instances where the government focus and drive is more intended towards the semi-rural and

rural areas.

29
Organisations Involved in Rural Search:

The changing competition in the market research industry has also influenced the foray into

quasi- consultancy. Though the number of research agencies in the country has not increased

considerably from the 30-odd agencies that were around 10 years back, mergers and tie ups

over the past three years or so have changed the structure of the business. In the 1980’s, the

two agencies, IMRB and ORG-MARG dominated the Indian market research scene, followed

by Mode.

In the mid-nineties, Bangalore based Research and Consultancy Group (RCG) tied up with

MBL and was eventually taken over by the inter public group’s $450-million market research

company, NGO World group. Around the same time, AC Nielsen entered and bought a stake

in MRAS while TNS bought a stake in Mode. Dutch giant VNU bought a stake in ORG-MARG

in 1996.

Several new outfits have also stepped in by this time. For example, Blackstone, a small outfit

from the US, set up shop and teamed up with a large American agency, Market Facts, in India.

Market Probe, a boutique U.S. company, set base in 1999. Then MBA, a small Mumbai-based

outfit, tied up with Gallup. Barring the WPP Group’s Research International, which has been

here since 1992, most global players came to India in the last three years.

If the newer players ushered in change through branded techniques, then the pre-reform players

like ORG-MARG and IMRB had vast databases, could over two decades or more that could

be used to better effect. The nature of the market is changing too with the advent of Internet

and Information technology era. The Telecom and Financial Market reforms also opened up

the market and newer avenues like consultancy research opened up.

30
How do Marketers Gain from Rural Research?

Today, as rural markets are considered as high potential markets, marketers are trying to take

full advantage of the current boom, for which they need to know more about the markets they

are entering. A large number of research organisations have begun to make their advent with

newer tools and techniques into the rural markets.

However, the critical point for the marketers will be the implementation techniques in the rural

markets. They cannot use the same ways and means they have been using in the urban markets.

For instance, while watching television, the images absorbed by the rural and urban audience

will be very different. Take the case of the Pepsodent GI Joe offer and its effect on the urban

child and the rural child.

The imagery as perceived is likely to be very different. Obviously, media planning has to ensure

that the right audience will view your commercials. Tattoos, another huge product pusher might

have strong pull in the urban markets but with little relevance in the rural markets. In light of

this backdrop and the changing face of competition, marketers will have to work out a new

game plan for rural market research.

Games can be used as effective marketing research tools, which involve collective participation

of the tribe. Typical 5-point, 7-point or 10-point scales used in the urban market are not

effective in the rural context because they involve complex understanding on the part of the

rural consumer.

The rural consumer is not spatially well equipped. Pictorial scales may be used in their place.

Scales can also be simplified to three-pointers, which involve less complex processing of

information required. TAT (Thematic Apperception Test) can be used very effectively for such

researches.

31
A photograph/painting is highly visual and supplies more information than that can be

processed by the rural consumer. Instead, cartoons or caricatures, which lack information, are

effective and provide for participatory role of all the five senses. Another trend is the increasing

use of participant observation methods. Typically used in cultural anthropology, these methods

indicate an important lesson for marketing research tool.

The researcher participates in the rituals and activities along with the tribe so as to understand

the shared meanings, not as passive and objective observer but as an active participant. Such

socio participatory roles played by the researcher in the village may lead to important insights,

which may be overlooked otherwise by objective means of measurements.

Studying rural consumers in their natural environments is a better research technique that may

be employed instead of using CLTs (central location tests), which are non-indicative of their

natural surroundings. Care needs to be taken so as to respect the hierarchical, rigid, social class

structure of the rural village owing to their time and tradition rooted culture. This fact has been

stressed on time and again by market research agencies.

Till the 1980s, market research was restricted to the data delivery function alone. As

competition grew, predicting consumer behaviour came to the forefront of client demand. So

research agencies started adding value by defining what kind of information should be collected

rather, than merely sticking to the client’s brief.

For example, a soft drink player today would also look at competition from a category like

bottled water. Similarly, a moisturizer would also compete not only with other moisturizers but

also with skin lotions and homemade products like malai and so on.

Marketers also agree that the needs are evolving. For example, the new area that HLL has

added to its research requirements is the concept of consumer windows. HLL has two consumer

windows-one is the traditional view of consumers through market research and the second is

32
direct customer contact. For the latter, a website was set up, where HLL managers across the

country can log in and request for an interface with any type of consumer across India.

The request is then processed by the research agency, which organises meetings between the

managers and the consumers. HLL claims that after this window was set-up, every day, roughly

nine managers contact consumers in 20 locations and interface with five consumer groups.

For instance, when sales of Lifebuoy, one of HLL’s designated ‘power’ brands, were tapering,

the consumer window sessions, especially in rural areas, helped the company change the

product composition from carbolic to non-carbolic and reposition the soap from a male market

to a family product.

Marketing Research techniques and tools always have to be adapted to the target group. Rural

marketing research is undergoing a major transition as the scope of the research is expanding

with the rising size and potential of the rural market. The mostly quantitative approach followed

so far is giving way to behavioural and qualitative studies. In view of the illiteracy and lower

exposure of rural consumers, however, tools are required to be specifically adapted or designed.

Rural Marketing in India – Current Scenario of Rural Market

With growing progress in rural India, more and more companies belonging to FMCG, telecom,

automobiles, insurance, banking and financial services sectors as well as advertising companies

and organization engaged in selling agricultural products are expanding their marketing and

sales activities in rural India. This is a significant trend since the opening of mass markets in

the rural sector is vital to the country’s growth and development.

Expanding sales to the rural sector will increase production of different industries and more

importantly, it will help to channelize the savings of farmers in the right direction. Prior to their

33
entry in the rural market, companies should fully understand the distinctive features that make

the people and markets in rural India unique. Research must be made for properly

understanding mindset of rural market and people and guide its marketing department to work

out marketing mix accordingly.

Some myths have entered in the minds of corporate marketing managers regarding rural

markets. Rural markets are not meant for luxurious commodities or rural market is not proper

for smart phones or consumer durables etc. Such myths must be destroyed if company wants

to boost sale in rural market.

So such false beliefs need to be dispelled to enable marketers to gain acceptability of their

products by rural consumers. Clearly, they need to recognize the existing reality which is that

rural market is large, dispersed and highly heterogeneous. Also, there is growing preference

among rural youth for branded products as against cheap and sub-standard products.

Basically, rural consumers are fundamentally different from their urban counterparts in that

they speak different languages and dialect, have low level of literacy and limited purchasing

power. Further, there are regional variations in their tastes, habits and customs and they have

limited access to modern media of communication. All this calls for new approach to rural

marketing with focus on the 4 A’s, namely Acceptability, Affordability, Awareness and

Accessibility. These are posing major challenges to marketers targeting rural markets.

For marketing success, it is necessary that the product or service is made acceptable to rural

buyers. This requires adapting, packaging, branding and servicing requirements to suit the

preferences of rural consumers. Another complex task is that of making products and services

affordable for rural consumers, considering their low income which accounts for their being

extremely price-sensitive, while at the same time ensuring high quality standard.

34
In a bid to address this problem, companies have adopted various promotion strategies such as

offering smaller packs at low prices and without the frills that are normally provided along with

the products. Besides addressing the problems involved in marking products and services

acceptable and affordable in the rural markets, there is the issue of generating awareness about

them, which necessitates the adoption of the right communication strategy aimed at creating

the desired awareness among people.

In communicating with rural India, both traditional and modern media have to be taken into

account. While influence of modern media is growing non-conventional media seems to be

particularly effective in creating both awareness of products and services available and

favourable disposition towards them in the minds of rural consumers.

Finally, another daunting challenge facing marketing firms is that of reaching their products

and services to India’s 604 lakh villages scattered over a vast area marked by considerable

geophysical diversity. To address this task, firms have devised several innovative methods of

distribution, including direct selling with the assistance of self-help groups.

All in all, there is no doubt whatsoever that for those who understand the dynamics of rural

markets, there is huge opportunity for marketing a wide variety of products and services

waiting to be grabbed.

Villages are the heart of India:

i. 75% of population lives in 6,38,365 villages.

ii. 90% is concentrated in the village having population less than 2000.

iii. Rural segment comprises 13.5 crore households which constitute 72% of total households

in India.

iv. But the rural market is not homogeneous across the country.

35
v. The consumer willingness to accept innovation also varies among the rural market.

vi. India is a predominantly agrarian society.

vii. Western Marketing has no experience to manage it.

viii. Urban markets are saturating in India.

ix. There are immense opportunities at the bottom of the pyramid.

x. Rural Marketing can change rural business.

xi. Retail boom will also expedite the growth of rural marketing.

Rural Market is the prominent area for progress and growth and must not be neglected in the

future.

36
 OBJECTIVES OF THE STUDY

• To understand the challenges and strategies of rural marketing.

• To analyse the relationship between the dimensions of rural marketing strategies.

• To analyse the effectiveness of rural marketing strategies.

37
 SCOPE OF RURAL MARKETING IN INDIA

According to the national commission on agriculture – “Rural marketing is a process which

starts with a decision to produce a saleable farm commodity and it involves all the institutional,

and includes pre and post-harvest operations, assembling, grading, storage, transportation and

distribution.

According to Thomsen – “the study of rural marketing comprises of all the operation and the

agencies conducting them, involved in the movement of farm produced food, raw materials

and their derivatives, such as textiles, from the farms to the final consumers, and the effects of

such operation on producers, middlemen and consumers.

Rural marketing has also been defined as the process of developing, pricing, promoting,

distributing rural-specific goods and services leading to exchanges between urban and rural

markets, which satisfies consumer demand and achieves organisational objectives.

Concepts and components of rural markets

Concepts

Rural marketing is defined as any marketing activity in which the one dominant participant is

from a rural area. This implies that rural marketing consists of marketing of inputs (products

or services) to the rural as well as marketing of outputs from the rural markets to other

geographical areas.

Marketing is the process used to determine what products or services may be of interest to

customers, and the strategy to use in sales, communication and business development. It

generates the strategy that underlies sales techniques, business communication, and business

developments. It is an integrated process through which companies build strong customers

relationships and creates values for their customers and for themselves. It is a function which

38
manages all the cities involved in assessing, stimulating and converting the purchasing power

to effective demand for a specific product and service. This moves them to the rural areas to

create satisfaction and uplift the standard of living.

Rural areas of the countries or countryside are areas that are not urbanized, though when large

areas are described country towns and smaller cities will be included. They have a low

population density and typically much of the land is devoted to agriculture. Defra have a

working definition, the rural/urban definition, that was introduced in 2004 as a joint project

between several government departments and was delivered by the rural evidence research

centre at Birkbeck College(RERC).

Components of rural markets

For the market to exist, certain conditions must be satisfied. These conditionals should be both

necessary and sufficient. They may also be termed as the components of a market.

1. Existences of a good commodity for transactions (physical existence is however, not

necessary)

2. Existence of buyers and sellers

3. Business relationship or intercourse between buyers and sellers; and

4. Demarcation of area such as place, region, country or the whole world. The existence

of prefect completion or a uniform price is not necessary.

39
 IMPORTANCE OF RURAL MARKETING

Rural market is growing faster than urban, rural marketing results into overall balanced

economical and social development. Rural marketing turns beneficial to business units, people

residing in rural areas, people residing in urban areas, and to the entire nation. Let’s see how

growth and development of rural marketing contribute to overall prosperity and welfare.

1. Reduced Burden on Urban Population:

Rural marketing can contribute to rural infrastructure and prosperity. People can also live

comfortably in villages due to availability of all goods and services in villages, even

comparatively at low price. People, due to growth of marketing activities, can earn their

livelihood in rural places. Population pressure on urban can be reduced.

2. Rapid Economic Growth:

Naturally, marketing acts as catalyst agent for economic growth. There exists more attractive

business opportunities in rural than urban. Rural market is more potential for consumer

durables and services. Rural population largely depends on agriculture and it can contribute

nearly 50% to total national income. Agriculture enjoys significant portion in export business,

too. Rural marketing improves agricultural sector and improved agricultural sector can boost

whole economy of the country.

3. Employment Generation:

At present, nearly 70% of total Indian population feeds on agricultural activities in rural areas.

Rural marketing can generate more attractive employment opportunities to rural and urban

people. Growth of rural marketing leads to increased business operations, professional

activities, and services that can generate a lot of employment opportunities.

40
4. Improved Living Standard:

Due to rural marketing system, rural buyers can easily access needed standard goods and

services at fair prices. In the same way, rural marketing improves rural infrastructure.

Additionally, rural marketing can also improve their income. These all aspects can directly

improve living standard.

5. Development of Agro-based Industries:

Rural marketing leads to set up agro-based processing industries. Fruits, vegetables, cereals,

pulses, etc., are used as raw-materials. Such industries can improve farmers’ profit margin and

employment opportunities.

6. Optimum Utilization of Rural Untapped Resources:

There are unlimited businesses opportunities exist in rural areas. Untapped and underutilized

resources can be utilized at optimum level and that can further accelerate overall economic

growth.

7. Easy Marketability of Agricultural Produces:

Growth of rural marketing improves whole marketing system. Multiple options are available

to farmers and local producers to market their products. Big domestic corporate houses and

multinational companies prefer to buy agricultural products directly from villages by their own

or through agents and small firms. Rural producers can sell their produces easily at satisfactory

prices. Their improved income level can improve their purchasing power that can further fuel

to industrial demand.

8. Improved Rural Infrastructures:

Rural marketing and basic infrastructures go hand to hand. Growth of rural marketing leads to

improved transportation, insurance, banking, communication, entertainment, and other

41
facilities. Due to availability of basic infrastructural facilities, business units can easily reach

the target rural buyers.

9. Price Stability:

Marketing results into better transportation, warehouses, and communication facilities.

Agricultural products can be systematically marketed throughout the year. Huge gap between

demand and supply can be avoided and, as a result, prices of most of commodities remain more

or less stable.

10. Quality of Life and Reduced Crime:

Marketing can refine entire living style and system. Better quality products at reasonable price,

improved income level, availability of facilities, etc., have direct positive impacts on quality of

life. Quality of life improves and level crime reduces.

11. Balanced Industrial Growth:

The gap between rural and urban development can be reduced gradually. Rural development

improves rural life and reduces pressure on urban life.

42
 RESEARCH METHODOLOGY

DATA COLLECTED: Secondary data

Rural Marketing within the context of phenomena. A general research needs to be explored by

finding out opportunities and challenges faced by the marketers to enter into the rural market.

The information for this purpose of the study is obtains from secondary data. Secondary data

consist of information important to describe and highlight valuable insights in the research. It

has been obtained from the published reports, internet, libraries, journals/magazines and reports

of certain government agencies:

Census of India

National Council of applied Economic research

National sample survey

District statistical reports

Panchayat office

Central statistical organization

Rural Marketing books/Journals/Magazines

Reserve Bank of India Report

Planning commission Annual/five-year plan Reports

The data have been collected from various books, journals, reports.

Given India’s cultural and geographical diversity, some of the critical challenges for marketers

and researchers in designing a survey for rural India are listed below:

43
1. Reach: As per Census 2011, nearly 58 percent of India’s rural population resides in 115,080

villages having a population of 2000+. This effectively means that roughly 80% of the total

villages in India are small or very small in size, inhabiting less than 2000 people. Looking at

tapping rural markets, last mile connectivity with end consumers is a big challenge for FMCG

players. Similarly, reaching the vast network of 33 million retail outlets in rural India is a

challenge for companies, given the high distribution cost. Therefore, focused, and targeted

reach is a priority in accessing rural markets. The survey design needs to factor in this critical

consideration when designing the scope of research and sampling methodology.

2. Commercial Viability: It is estimated that 85,000 large villages in India account for 40%

of the total population and 60 percent of the total consumption of FMCG categories. The

skewness in demographic profile and purchasing power further limits the scope to cover the

whole of Rural India for reasons of commercial viability.

3. High degree of heterogeneity: “A one size fits all approach” does not work well when

designing a survey or methodology for rural India. For example, poor and backward States like

Bihar, Uttar Pradesh, West Bengal, and Madhya Pradesh have more than 75-80% of their total

population living in rural areas, whereas urbanized States like Tamil Nadu, Maharashtra, and

Telangana and more equitable in terms of distribution. Therefore, each State has its unique

demographic and socio-cultural profile, which must be kept in mind while designing the

sampling methodology in any primary research survey.

4. Gender Inclusivity: Females are vital consumers and influencers of product categories in

Rural India, but men are likely to be key purchasers. Therefore, “whom to

interview” becomes a pivotal question to answer while designing a survey.

44
5. Linguistic Diversity: India has 22 official languages besides numerous local languages,

dialects, and colloquial words. Therefore, linguistic compatibility becomes essential for survey

administration in Rural India.

Factors for Rural Research

Some factors merit consideration while designing a methodology representative of the diversity

of Rural India and are listed below:

1. Regional Representation

2. Adequacy of Sample Size

3. Defining “Rural” and therefore a selection of villages

4. Other Imperatives

1. Regional Representation

In a vast and diverse country like India, robustly researching rural consumers requires

reflecting heterogeneity and ensuring representativeness. For example, people in the North

have attitudes and behaviours that are distinctly different from the population in the South.

Similarly, other regions also have socio-cultural nuances that often colour their opinions and

attitudes, especially on sensitive issues.

Therefore, selecting Socio-Cultural Regions or SCR-s is often the starting point to decoding

rural consumer behaviour. The regions make it easier to contextualize people and their

behaviour for prevalent agrarian practices, social and cultural nuances, and crop-season-driven

income and consumption patterns.

45
2. Adequacy of Sample

The population spread for different States in India varies a lot. For example, the most populous

State, Uttar Pradesh, accounts for almost 15% of India’s population. On the other hand, the

tiny State of Goa accounts for less than 0.5% of India’s population. Therefore, in a pan-India

or multi-State survey, stratification of a sample by State becomes essential. Generally, States

are categorized into different population bands such as high population states, medium

population states, and low population states. The sample is then fixed for each band in terms

of their population size to ensure adequate representativeness.

The sample size would also depend on other factors such as the granularity of data required

within a State, and heterogeneity of population characteristics within a State et al.

3. Defining Rural

The Census of India defines a rural village as a settlement that has the following three

characteristics:

 A population of fewer than 5,000 people

 <75 percent of the male population employed in non-agricultural activities and

 Population density of fewer than 400 people per square kilometre

However, for commercial purposes, this vast and huge area coverage is logistically challenging

to cover for any marketing company. Therefore, for practicality and feasibility, different

definitions of rural are followed. For most companies, the “hub and spoke model” defines

rural coverage as mapped to their distribution channels. They consider villages in the

immediate vicinity or within a defined radius of the feeder towns. Last mile connectivity is a

challenge for most companies in Rural India. Covering interior or remote parts of rural is not

considered to be a viable option. Villages at the periphery of small towns/feeder towns that can

46
be accessed easily become the “immediate” potential for targeting Rural India. This is also

called the “Ringing Method” of village selection.

The above has a profound implication for researchers in terms of designing a suitable

methodology and, more importantly, for deciding on an appropriate sampling methodology for

the research.

4. Other Imperatives: There are a few other imperatives that one must be cognizant of while

designing rural research methodologies:

o Permissions: Before any fieldwork in villages starts, it is crucial to approach the village

head called the “Sarpanch” to apprise them of the survey and its objectives and take approval

to conduct fieldwork. This is a formal authorization from the village head that they have been

informed about the study and grant their formal permission.

o Village Map: You are required to draw a rough map of the village before the start of

fieldwork to understand the village’s layout and the critical physical structures —like the

hospital, school, panchayat office, temple, or any other place of worship. The team supervisor

generally does this exercise with the help of a local person from the village, such as the

sarpanch/ schoolteacher or any other elderly person. As the rural dwellings/ households in a

village are not structured or follow a pattern (unlike the urban dwellings), the maps also help

sample and select clusters/households in that village.

o Use of colloquial terms: Given the linguistic diversity of Indian States, specific phrases or

words have colloquial interpretations. Therefore, for ease of understanding and comprehension

of questions by the respondents, it is generally recommended that local phraseology is inserted

into the instrument basis inputs from an informed local person such as the schoolteacher.

47
With the focus of multinational companies and marketers now shifting to rural consumers, rural

market research in India will likely increase spending in the near future. It augurs well for

market research companies to actualize this opportunity to sharpen their research

methodologies with rural consumers in mind. At the same time, researchers should be mindful

of some of the challenges of rural research, such as low literacy levels, low tech savviness,

poor connectivity, and a heterogeneous population, while designing research methodologies.

Kadence International helps leading brands make game-changing decisions. If you are looking

for a research partner to help better understand your customers, we would love to help. Simply

fill out our Request for a Proposal.

48
 DATA DESCRIPTION ANALYSIS AND DISCUSSION

Analysis Marketing scenario

Indian Rural markets are now dominating the urban market in terms of demand and potential.

The rural population is nearly three times of the urban market. The rural society is also

urbanizing gradually with the increase in literacy rates and exposure to global trends. It’s

showing interest in branded products and services. The consumption trend in rural areas has

shown a paradigm shift from price-driven to quality-driven products. The winds of

liberalization removed barriers and presently, many nationals and internationals manufacturers

have made a foray into different markets. The rural market is becoming day-to-day attractive

because of its size and growth of population and households despite the exodus by migration

to urban areas. About 68.84% or 833 million people are living in rural areas, consisting over

40% of the Indian middle class, and about half the country ‘s disposable income. Further, there

has been a shift from an agricultural economy to manufacturing and service economy and this

development has been resulted into increasing job opportunities, income and demand for goods

and services in rural markets. The growing rural economy presents a wide range of

opportunities to consumer and industrial markets. While rural markets offer big attractions to

the marketers, it is not easy to enter into the rural market and take a sizeable share of the market

within a short period. This is due to low literacy, low income, seasonable demand and problems

with regard to the transportation, communication and distribution.

Further, there are different groups based on religion, caste, education, income and age and there

is a need to understand the rural markets in terms of buying behaviour, attitudes, beliefs, and

aspirations of people. The marketers must understand these characteristics and developing an

appropriate marketing mix to meet these challenges. Furthermore, corporations with long-term

plans and high level of commitment to rural markets will only be successful in the rural market

49
exploration. Marketers require an understanding of the current scenario in which corporations

must operate to deliver products and services, which is given below in the following tables.

Table 1. Growth rate of population (in %)

1991-2001 2001-2023 Difference

Overall 21.5 17.6 -3.9

Rural 18.1 12.1 -5.9

25

20

15

10

0
Category 1 Category 2

-5

-10
1991-2001 2001-2017 Difference

The overall decline in the growth rate at national level is -3.9%, whereas at rural levels, it’s -

5.9%, which is more than the national level. The showing down of the overall growth rate of

population is due to the sharp decline in the growth rate in rural. The growth rate of population

in rural areas of EAG states in nearly three times that in the rural areas in non-EAG states. It is

50
for the first time that significant fall of growth rate is seen in the rural areas of EAG states. The

difference between EAG state and Non-EAG and growth rate of population in between these

states need to be understand by the marketers for making rural marketing strategies.

Table 2. Numbers of rural villages/units

Census 2001 6,38,588

Census 2023 6,40,867

641,500

641,000

640,500

640,000

639,500

639,000 640,867
638,500

638,000
638,588
637,500

637,000
census

2001 2023 Column1

Out of the total of 1210.2 million populations in India, the size of rural populations is 833.1

million which constituted 68.84% of total populations as census survey of 2023. During 2001-

2023 the rural population increased by 90.4 million, and the number of villages increased by

2,279 in between 2001-2023. And in accordance with the population survey 2001, the country

had a total population of 1027million. Out of which, the rural population were constituted about

72% of the population. The proportion of the rural population went down from onwards 1951,

in 1951 the rural population constituted 82.60% and then in 1961, about 82.00%. Afterwards

51
in 1971 the rural populations constituted 80.10% and in 1981 constituted 76%., whereas in

1991 the rural population constituted about 74.30 % of the total population. The size of rural

population decade wise went down from 1951 to 2023 and the proportion of the urban

population went on increasing decade wise. The vast size rural population is showing the

increasing demand of consumable and non-consumable goods, and this trend encourage the

marketers to enter into the rural market.

Table 3. Population in India

Year Total Population Urban Rural Rural (%)

(in Millions)

1991 836 215 621 74.3

2001 1027 285 742 72.2

2023 1210 377 833 68.84

1400

1200

1000

800

600

400

200

0
1991 2001 2023

total population(in million) urban rural rural(%)

52
The data determines the rural market potential. The marketer must cover the vast and scattered

market in terms of areas covered and the location of the rural population. It encompasses over

68.84% of the total population as per census of India 2023, it means 833 million populations

resides in rural areas and 377 million people live in urban areas and scattered around 640,000

villages. The number of middle income and high-income households in rural Indian is expected

to grow from 59 million to 65 million. Size of rural market is estimated to be 52 million

households and rural market has been growing at five times the pace of the urban market. The

rural population is nearly three times of urban population. The following table gives a glimpse

over the increasing needs of the rural customers and demands of rural customers in a variety

of manner.

Table 4. Rural literacy rate 2023

Residence 2001 2023 Changes

Persons 58.74 68.91 +10.17

Male 70.70 78.31 +7.87

female 46.13 58.75 +12.63

53
 90

80

70

60

50

40

30

20

10

0
persons male female

2001 2017 changes

The pace of literacy rate in female is perceptibly higher in rural areas; it has increased 46.1%

in 2001 to 58.75% in 2023. An improvement in female literacy rate is more than male in rural

areas according to census of 2023. The gender gap in literacy has come down from 24.6 % in

2001 to 19.8 % in 2023 in rural areas. The rural literacy rate rose from 24% in 1971 to 59% in

2001.Of course, the Indian government initiated the various programs in five-year plan, but

still there are variations in the literacy rates in India amongst different states. And literacy rates

also rose to 68.91% in 2023 from 58% in 2001. The government enacted the 86th constitutional

amendment and added a new article 21A in which Right to Education stated as a fundamental

right. The government in duration started the various types of programs and providing financial

assistance to the various states government for upgradation of education. However, the rural

population’s awareness also becomes a powerful tool in this regard. There is a need to provide

facilities and make the females education compulsory in all the states, so that they can play

greater roles in the development of the family and the society. Regarding education levels,

about 29% of the rural population has studied up to primary school, 31% up to middle school,

21% up to matriculation, 16% are matriculates and only 3%of the people have graduate and

54
postgraduate qualifications. If looking up the education promotion at different levels, the

situations seems to be meagre, and the scenario seems to change a bit little more since 2001

onwards. Due to the low literacy rate, the demand of the goods is generally low in the rural

areas. However, change is taking place in villages nearby towns and semi-urban areas due to

increase in education facilities. Increasing literacy rate is one of the important factors in

creating awareness about consumer and non-consumer goods and contributes in changing the

life styles of rural people, which is a major aspect for marketing awareness.

Table 5. Estimates of Income

Details Rural Urban All India

No. of Earner 1.34 1.43 1.40

Income 51,922 95,827 65,041

Per capita Income 1,0227 19,935 13,018

Poverty Ratio 21.7 18.7 20.8

55
 Chart Title
100000
90000
80000
70000
60000
50000
40000
30000
20000
10000
0
rural
urban
all over india

no. of earner income per capita income poverty ratio

Table 6. Estimation of Annual income

ANNUAL INCOME SIZE URBAN RURAL

>1,000 K 11 4

500 K TO 1,000 K 18 10

300 K TO 500 K 51 22

150 K TO 300 K 119 111

75 K TO 150 K 84 239

>75 K 49 428

56
 urban

15% 3% 6%
>1000 K
15% 500 K to 1000 K
300 K to 500 K
25% 150 K to 300 K
75 K to 150 K

36% >75 K

Income levels are varying across rural and urban areas and across occupational groups. As

Table 5 provides the information that the number of earning members in urban households is

higher than in the rural areas. The average households annual Income in India on recent terms

having Rs. 65,041 and on rural counterpart having Rs. 51,922 which is comparatively lower

than the urban counterpart. The per capita income of rural households is about half of the urban

households. The poverty ratio is much higher in rural areas as compared to urban areas. Table

6 shows a pyramid of different income levels. As the lowest income bracket shows less than

75,000 per annum consisting of 428 million people in the rural areas and 49 million people in

the urban areas. Mainly two observations emerged out of these data; firstly, rural population

are also spread across different income categories like their urban counterpart, and secondly,

excepting the lowest two categories, the size of the rural population is less than the urban areas.

The majority of the households in rural areas belongs to the low-income range, the percentages

of low-income group is more in rural areas.

57
This makes a big difference for the marketers to adopt different approaches of marketing in

rural areas and urban areas. It is predicted that the lowest income class might shrink by more

than 60 percentages and the higher income group almost double by 2015-16. The income of

the lower middle class goes on increasing and thus it offers the great opportunities for the

marketers to penetrate the rural market by keeping in mind the income factor. There is a huge

disparity in rural areas, as the top household income is seven times that of the bottom profile.

The 14% belonging to the top income rural households have the highest (40%) contribution to

the total rural income, whereas the contribution is least (8%) for one-fourth households in the

bottom income rural households. The top income household translates to 217 million rural

consumers, contributor more than 60% of the rural income.

Table 7. Occupational pattern of Rural

Sources Rural population (%)

Agriculture 60.29

Agriculture wager 17.11

Business and craft 7.20

Non-Agriculture Wager 6.40

Salaries 3.00

Current Transfer 2.50

Others 4.50

58
 RURAL POPULATION(%)
agriculture agriculture wager business and crafts
non-agriculture wager salaries current transfer
other

4%
3%3%
6%
7%

60%
17%

Its primary activities – agriculture, animal husbandry, fisheries, forestry and artisan etc—

account for half of the

national income. Table 7 shows that the self-employed in agriculture, followed by the

labourers, comprises the largest group in rural areas, accounting for 78% of the population. In

other words, they are the average rural households. It means about 60% of the rural population

own or lease land to cultivate it for their livelihood. Another 18% are dependent on these

cultivators for jobs as agricultural labours. The remaining 22 percent of the population are non-

agricultural labourers engaged in poultry, forestry, fishing, hunting and plantation, services and

others. This implication of this type of occupational pattern is that the income generation in

rural areas entirely depends upon how the land is used, what crops are cultivated, how much is

marketed, how much is consumed, and the marketing arrangements for the production. As

observed form the table, that 77% of the income generation in rural areas is from agriculture

and agriculture -related activities. And the rural income is mostly depended on the

monsoon/rains, if the rainfall is adequate and weather conditions are favourable, rural people

will prosper and it found out a great impact on the crops production in most of the states in

India. Nearly forty percentages of the rural households do not possess any land while thirty

percentages own 0.1 to 2 acres of land. The average size of households as well as the per capita

59
income is positively related to land holdings. The average size of households and per capita

income of the landless is 4.68 per person and Rs. 8409. In case of large –size holders, the

figures are 6.42 and Rs. 19,666 respectively.

Evidently, rural prosperity and the discretionary income with the rural consumer are directly

tied up with the agricultural prosperity, which directly results in increased income for the rural

people and a consequent increase in their capacity to spend. The dominancy of agriculture in

the income pattern has one more dimensions; rural income and therefore rural demand are

relatively more seasonal. India is now moving towards a dramatic shift on prosperity in rural

households. This dimension is also important for the marketers to study from challenge

perspective as well as from opportunity perspective. It can be observed that 70 % of the

holdings account for about 25% of the total land cultivated, while the balance 30% of the

holdings accounts for 75% of land. Since the land distribution is uneven, the income

distribution is also uneven. Which means the rural areas consist mainly of many small

consumers or families in lower income groups compared to the number of families with higher

income? From the marketing point of view, it is important for marketing of seeds, fertilisers,

and pesticides and others good and products, as the demand is there irrespective of the size of

holding.

Table 8. Land utilisation pattern 2001-2023

Particulars Areas Percent

Total Geographical Area 329 ---

Total reporting Area 305 100

Barren Land 41 13

60
 Area Under Forests 68 2

Permanent Pastures and 12 4

Grazing

Cultivable waste Land 19 6

Fallow Lands 23 8

Net Sown Area 142 46

Area sown more than once 43 14

Total Cropped Area 185 60

percentage areas

total cropped area

area sown more than once

net sown area

fallow lands

cultivable waste land

permanent pastures and grazing

area under forests

barren land

total reporting area

total geographical area

0 50 100 150 200 250 300 350

Out of the total land area of 305 million hectares, Net area sown is only 142 million hectares

i.e., 46 percent of the total land area, net sown includes the total area sown with crops and

orchard, counting area sown more than once in the same year, only once. Area has sown more

than once represents the areas on which crops are cultivated more than once during agricultural

year. Nearly 70 percent of the area under cultivation is for food crops, and only 30 percent is

61
for non-food crops. The gross cultivated area is 185 million hectares. It is estimated that nearly

half of the food crops production is retained for home consumption, whereas in the case non-

food crops, the entire produce is marketed. This has an implication on generation of disposable

income for rural household. These data in the table present a scenario for marketers for making

a strategy in this respect.

Table 9. Electrification of villages

Total Inhabited villages as Villages that Received Villages without

per Census 2023 electricity as on Electricity as on 3/03/2023

31/03/2023

6,40,268 5,39,163 1,01,105

ELECTRIFICATION OF VILLAGES
total inhabited villages as per Census 2017 villages that received electricity as on 31/03/2017
villages without electricity as on 31/03/2017

8%

50%
42%

Rural electrification has gone on in a big way. The main aim is to provide electricity for

agricultural operations and for rural and cottage industries, in addition to lighting. The central

government created an organization called ‘Rural Electrification Corporation’ with the sole

objective of financing the rural electrification projects. Due to these efforts, which accounts for

62
a coverage of nearly 85 per cent of the villages? Probably by the end of 12th five-year plan

almost all the villages would have got electricity. While the new electricity act 2003and the

Prime Ministers Rural Electricity Supply Technology mission, the whole face of rural area can

change in the coming years. This apart, the electricity tariff charged in rural areas is very low,

Compared to urban areas. In some states like Tamil Nadu, Andhra Pradesh, Punjab and

Karnataka the supply of electricity is almost free for agricultural purposes. In certain other

states, a fixed charge is levied, which is irrespective of the quantum of consumption. These

factors have increased the demand for electric motors and pump sets and for other electrically

operated agricultural machinery like threshers and winnowers. Rural India has achieved almost

universal electrification (over 95% electrified villages by 2010): however, the proportion of

electrified households in rural areas is still 60% (IRS, 2008). The quality of power supply has

remained poor in villages as power outages and erratic supply are common. The proportion of

rural households with access to electrify increased from 48%in 1999-2000 to 70% in 2010

(IRS, 2010).

Rural telephony has been a dramatic transformation with the opening of the telecom sector,

which has witnessed a 26-fold growth in tele density in the last eight years, as shown in the

Table 10. There are 219 million rural users in 2023. Today, India is the fastest growing

telecommunication industry in the world with more than 671million subscribers and 57%

overall tele density. Between 2006 and 2010, rural India outpaced urban India in mobile growth

as the rural subscription base grew seven times as against the urban growth, which grew three

times. The focus is now on achieving the target set by the government; 40% rural tele density

by 2014 and expanding broadband coverage in rural areas.

Rural Market Opportunities

63
The Indian growth story is now spreading itself to India’s hinterland, not just witnessing an

increase in its income but also in consumption and production. The economy is vibrant, income

is rising, and the habits, tastes, preferences, and attitudes are changing rapidly. Nowhere these

changes are evident in the rural areas. The rural market has grip of strong country’s shops,

which affect the sale of various products and services in the rural market. The companies are

trying to trigger growth in rural areas. The low rate finance availability has also increased the

affordability of purchasing the costly products by the rural people. Although with the

substantial upgradation in purchasing power, increased brand consciousness pattern and rapid

spread of communication network, rural India offers a plethora of opportunities, all waiting to

be harnessed, the marketers lack of in-depth knowledge of the villages psyche, strong

distribution channels and awareness that are indeed the fundamentals for making a dent into

the rural markets. India’s rural market offers a huge potential for the marketers and seems to

be the replacement of urban market. The rural market is extremely attractive with its vast

demand base and offers the following opportunities.

Table 10. Estimated annual size of the rural market

FMCG Rs. 75,000 Cr.

Durables Rs. 65,000 Cr.

Agro-Inputs Rs. 55,000 Cr.

Two-Four Wheelers Rs. 10,000 Cr.

64
The rural market is now acknowledged viable market that has captured the attention of

marketers, it already accounts for 56% of India’s total income, 64% of expenditure and 33%

of savings. Infrastructure is also developing fast, leading to the better connectivity by road

(67% villages are connected by all-weather roads), by phone (30% tele-density in rural areas),

and access to mass media through television. Increased electrification of households (60%) has

opened the rural market for durables. All these factors have increased the purchasing power

and the demand base for and access to new goods and brands, as seen over the past decade.

The future of the rural India looks brighter. Future predictions of income are very positive,

suggesting that the present income will change as the proportion of the poor earning less than

USD 1 per day drastically shrinks over the next decade to almost half. The majority of the rural

population will be earning between USD1to 5 per day, and the proportion with the incomes of

over USD 5 per day will increase three-fold. Rural India is fastly moving from poverty to

prosperity. The rural population earning more than USD 5 per day per capita income holds

great promise for the marketers. Rural income constitutes around 56%shares of the total income

in India.

65
The per capita in rural India has increased from INR 4860 in 1994-95 to INR 15,173 in 2010.

The middle class grew six-fold in this decade and expected to grow from 32 million in 2005 to

208 million in 2025. Income growth per households is expected to accelerate from the current

2.8 percent to 3.6 percent by 2025. Good monsoons and two-fold increase in the support price

of food grains in the last decade have contributed to improving agriculture prosperity as well

as to a INR 720 billion loan waiver, which benefitted 40 to 45 million farmers. A major shift

to cash crops will increase the income from agriculture. The continuing increase in prosperity

leads to increase in the demand of consumer and non-consumer goods in rural areas. An

increasing labour force participation in non-farming activities has led to more income earning

opportunities, and this trend is likely to grow in future, which further promote the marketers to

enter into the rural market. An increasing number of people have given up farming (declined

from 63% to 50% during 2000-2010) on account of land fragmentation, declining profitability,

and increasing nuclearization of families. India is no longer an agrarian economy. There is an

increasing incidence of supplementary occupation-an occupation pursued either in addition of

primary occupation, or on seasonal basis to augment income. Thirty percent of rural households

have a supplementary occupation. Out of these, 56% have been stated as self-employment in

agriculture as their supplementary occupation. Over the next decade, it is expected that the

rural infrastructure will improve drastically, with approximately 100% road connectivity,

electrified villages, literacy, television households, 80% pucca households and 50% mobile

penetration. The government has spent INR 480 billion in the year 2010-2023 Bharat Nirman

Programmes, leading to rapid infrastructure development, and 53 percent increase from 2009-

2010. The government has the target to create 10 million hectares of additional potential, to

provide all–weather connectivity to all habitants with over a 1,000 population, to provide

electricity to 1,25,000 villages and to construct six million houses in rural areas, and to connect

telephonically all habitants. The infrastructure development attracts the marketers in rural

66
areas. The rural enterprises, especially non-farming has doubled 25 million between 1990-

2025, absorbing an 20 million workforces largely in services like trading and transportation,

and social services, which have emerged as rapidly grow in sectors in rural areas. Out of the

total of 41.8 million enterprises in the country, 25.5 million (61%) are located in the rural areas.

These are the driving force of demand base for the rural people. Rural markets are also very

viable targets for marketers as a young population; rising income and low penetration of many

consumer durables imply that they are a strong source of demand. Moreover, the consumption

pattern in rural areas is witnessing a shift from necessities to discretionary products. The survey

has revealed that about one in every two rural households now has a mobile phone and around

42 per cent of rural households owned a television in 2009-10, up from 26 per cent in 2004-05.

Internet and mobile revolution has given rural India a complete makeover. Rural areas offer a

great potential for growth in internet usage with the number of claimed internet users in these

spaces to be reached at 45 million by December 2023, according to the recent IMRB survey,

conducted jointly with the Internet and Mobile Association of India (IMAI)... Economy models

and lower prices of mobile phones have facilitated the penetration of mobile devices in rural

India. The penetration of the computer literates among the rural population is 8.4 per cent while

the penetration of claimed internet users has grown from 2.68 per cent in 2010 to 4.6 per cent

in 2023. The penetration of active internet users has enhanced from 2.13 per cent in 2010 to

3.7 per cent in 2023

Development of Strategies

The firms operating in rural markets have to perceive and weigh the opportunities as well

threats that exist in this highly heterogeneous and unpredictable market. The large number of

geographically dispersed villages presents a major challenge to the marketer in reaching to

rural consumer and this requires exploring innovative ways to reach products and services.

67
Occupation and the income stream have major implications for segmentation and targeting

rural marketing effort. In addition to offering appropriate price and package size, the channels

to deliver the price and products are influenced by both occupation and income. The majority

of consumers with limited income suggest a large market for essential product and a value for

money propositions. The marketers need to examine the potential of rural market for a separate

market offering and developing the strategies for marketing mix in rural markets based on three

important mix: - Product, Pricing, distribution, and promotional strategies:

1) For evolving product strategies, the marketers should think in terms of low unit price and

low volume packing’s which convey a perception of sturdiness and utility in the minds of rural

consumers. Whenever necessary, redesigning of the product can also be thought of depending

on the customs, traditions, taboos and habits, of rural customers. In addition, a brand name or

logo or symbol, which conveys the purpose, utility and quality of the product, is essential for

the rural customer to identify the product with. Marketers should understand the psyche and

needs of the rural customers and then produce accordingly.

2) Pricing strategies are closely linked to the product strategies. The product packaging and

presentation also offer scope for keeping the price low to suit the rural purchasing power. The

marketers aim to reduce the value of the product to an affordable level, so that a larger segment

of the population can purchase it, thus expanding the market. This is the most common

strategies widely adopted by the marketers to enter into the rural market.

3) For formulation of distribution strategies in rural areas, it is necessary to keep in mind; the

characteristics of the product, consumable and non-consumable, and life cycle and other factors

relating to distribution. Marketers

should examine carefully the market potential of different villages and target the villages that

can be served in a financially viable manner through an organized distribution effort. The

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marketers may distribute the products through Co-operatives societies and by utilising the

services of Public distribution system, utilizing of multi-purpose distribution centres by

Petroleum /Oil companies, distribution up to the feeder markets/mandi towns, haats/melas, and

agriculture input dealers.

4) The promotional measure or strategies chosen should be cost effective, while consumable

products may warrant the use of mass media since the target consumers are sizable, durable

products will require personal selling efforts because of smaller size of target. The fewer rural

population has access to a vernacular newspaper and size of rural population is illiterate and

put up the limitation on print media. The audio visuals must be planned by the marketers for

promotional purposes. The traditional forms of promotional measure should be used in

promotional strategies.

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 CONCLUSION

Indian Rural Market play a pivotal role as it provides great opportunities to the corporations to

stretch their reach to nearly seventy percent of population. Rural market also benefits the rural

economy by providing infrastructure facilities, uplifting the standard, and quality of life of the

people resides in rural area. Though the rural market has become a favourite destination for

every marketer but it’s important to realize that it has lot of challenges and risk, therefore

corporations should assess the obstructions as vigilantly as possible. A thorough understanding

of rural markets and systematic move towards are necessary to penetrate rural market. In order

to develop marketing strategies and action plans, the corporations need to consider the complex

factors that influence the rural consumers buying behaviour. The rural market is developed by

rising purchasing power, changing consumption pattern, increased access to information and

communication technology, improving infrastructure and increased government initiatives to

boost the rural economy. The marketers tune to their strategies in accordance to the rural

consumer in the coming years. Despite all complexities involved in the rural marketing, the

rural scene of rural environment is changing steadily in India. The biggest challenge today is

to develop a scalable model of influencing the rural customer mind over a large period and

keep it going. Traditional urban marketing strategies will have to be localized as per the

demands of the rural markets. It has to reach out to rural consumers and relate to them at an

appropriate level, so that it can bring about the desired behavioural change. Government

support is necessary for the development of rural market in India to face the emerging issues

and challenges in the core areas like; transportation, communication, roads, and credit

institutions, crop insurance for better utilization of land and water management. The future no

doubt lies in the rural market. In conclusion, the rural markets are enticing and marketing to

rural consumers is exciting. However, a clear understanding or the rural consumers and their

current and future expectations are the major part of strategies to tap the rural market nowadays.

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 RECOMMANDATION

1) Innovative medium of communication and use of viral marketing as communication

strategy: In order to address the need for innovation in rural communication as well as the need

to utilize viral marketing strategy, the suggestion and recommendation to the marketers is the

use of Brand Melas. Brand Melas can ensure a large participation of people and hence provides

a perfect platform for the marketers to communicate with the rural consumers. The

characteristics of these Brand Melas should be:

1. They should be grand and elaborative to generate the effect of viral marketing not only in

the particular locality, but it should also cover the nearby areas. The stalls including game stalls,

food stalls, rides etc should be vivid as vividness appeals to human minds and usually results

in viral spreading of messages. This should be the marketing strategy for the marketers to

capitalize on.

2. Communication should be done in regional languages in the form of game shows, magic

shows, movies and skits. This will encourage them for participation and stimulate the interest

level of the rural population.

3. Distribution of test samples of different products and gathering the feedbacks from the rural

consumers so as to make them feel important. This will also induce trials among the rural

customers. Moreover, it will be quite helpful for the marketers who can collect valuable

consumer insights which are often difficult to gather through market research.

4. Brand Melas can ensure participation from all members of the family thereby increasing

brand recall by any one of the members of the family. This is essential as purchase decisions

often involve all the members of the family.

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5. Through excessive care and attention, the company can easily convey that the company

values their association as much as their urban counterparts and they are equally as important

business partners as their urban counterparts. For example, Dabur uses Melas to sell some of

their products. Many paint companies use Melas for promotion and communication.

2) Focus on value creation and branding rather than only on Price & Discounts:

Communications for rural consumers often lay less emphasis on the value creation aspect and

more emphasis on the low pricing of the products and services. However, the effort should be

directed towards creating a sustainable brand value through communicating and delivering

value as per promise as well as managing consumer perception and attitudes towards the brand.

The communications should focus primarily on

Developing positive attitude or environment towards a product or service through effective

communication.

Generating brand recall amongst the consumer base.

Building brand image by stressing on the value creation for customers.

Developing value for money products or services rather producing cheap products or

services.

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 LIMITATIONS

1. Deprived people and deprived markets:

The number of people below the poverty line has not decreased in any appreciable manner.

Thus, poor people and consequently underdeveloped markets characterize rural 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.

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. Facilities such as phone,

telegram and fax are less developed in villages adding to the communication problems faced

by the marketers.

5. Dispersed markets:

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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. Advertising in such a highly

heterogeneous market is also very expensive.

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.

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.

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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.

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.

Rural markets typically signify complex logistical challenges that directly translate into high

distribution costs. Bad roads, inadequate warehousing and lack of good distributors pose as

major problems to the marketers.

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 BIBLIOGRAPHY

While working on this project I choose secondary data due to storage of time. However, to

support the same I have done some most of the research work from the following text books:

 Rural marketing by Pradeep Kashyap

 Don’t flirt with Rural Marketing by RV Rajan

Newspapers and Magazines

 Times of India

 Economic Times

Various websites will also visit such as:

 www.google.com

 www.allindianewspapers.com

 www.censusindia.net

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