Project Report

RURAL MARKETING

Submitted to:
Submitted by: Mr.Sandeep srivastava
Shiv om mishra (06293G) Senior Lecturer
VII sem., B.Tech. PD Département
Computer Science Engg.
JIET, Guna, MP JIET

1
 ACKNOWLEDGEMENT

I hereby regard my sincere thanks to Mr.Sandeep Srivastava,

JIET Guna under whose guidance this project was undertaken.

I would also like to thank my friends who have so generously

helped me. I got chance to recognize my gratitude to all staff P.D.

department for making available all facilities to complete the

projectwork. As well as to all others who extended the precious

co-operation by providing all documents and details required for

this work.

2
Content

Abstract

1. Introductions

1.1. Description of Project

1.2. Scope of Project

2. Facts and Figures

3. Opportunity

4. Challenges

5.1 General Problem

5.2 4A’s Approach

6.Rural Marketing in india

7. Soft Drinks In Rural Market In India (A research paper study)

8.Some Myths

9.Strategy

9.1Marketing Strategy

9.2Distribution Strategy

9.3Promotional Strategy

10.Conclusion

11.Reference

3
 ABSTRACT

Rural markets are an important and growing market for most

products and services. The characteristics of the market in terms
of low and spread out population and limited purchasing power
make it a difficult market to capture. The Bottom of the pyramid
marketing strategies and the 4 A’s model of Availability,
Affordability, Acceptability and Awareness provide us with a
means of developing appropriate strategies to tackle the
marketing issues in rural areas.

As a result of the growing affluence, fuelled by

good monsoons and the increase in agricultural output to 200
million tones from 176 million tones in 1991, rural India has a
large consuming class with 41 per cent of India's middle-class and
58 per cent of the total disposable income.

4
 1. INTRODUCTION

1.1 Description

The concept ‘Rural’ and ‘Marketing’, though used very frequently

in various forums, have eluded any precise and non- controversial
definitions. When we join them, the resulting concept ‘Rural
Marketing’ means different things to different persons. This
confusion leads to distorted understanding of the problems of
rural marketing poor diagnosis and, more often than not, poor
prescriptions.
The Indian rural market with its vast size and demand base offers
great opportunities to marketers. Two – thirds of countries
consumers live in rural areas and almost half of the national
income is generated here. It is only natural that rural markets
form an important part of the total market of India. Our nation is
classified in around 450 districts, and approximately 630000
villages, which can be sorted in different parameters such as
literacy levels, accessibility, income levels, penetration, distances

5
from nearest towns, etc.
Rural marketing and urban marketing are identical as regards
basic marketing structure. However, rural markets and rural
marketing have special features and dilemmas as compared to
urban markets. The rural markets offer a great scope for a
concentrated marketing effort because of the recent increase in
the rural incomes and the likelihood that such incomes will
increase faster because of better production and higher prices for
agricultural commodities.

The rural markets dominate Indian marketing scene and need

special attention for the expansion of marketing activities and
also for providing better life and welfareto the rural people.
Given the development, which has taken place in the rural areas
under the five- year plans and other special programmes, today
the rural market offers a vast untapped potential. Development
programs in the field of agriculture and allied activities, health
education, communication, rural electrification, etc have
improved the lifestyles of poor and the illiterate and some
market...

2.2 Scope

Rural markets are an important and growing market for most

products and services. In recent years, rural markets have
acquired significance, as the overall growth of the economy has
resulted into substantial increase in the purchasing power of the
rural communities. The Indian rural market with its vast size and
demand base offers a huge opportunity that MNCs cannot afford
to ignore. With 128 million households, the rural population is
nearly three times the urban.

6
3.Facts and Figure

These are some facts that make rural market attractive, Rural
market has following attributes and the following facts
substantiate this: -

 742 million people

 Estimated annual size of the rural market -

 In 2001-02, LIC sold 55 percent; of its policies in rural India.

 Of two million BSNL mobile connections, 50 percent; are in

small towns / villages.

 Of the 6.0 lakh villages, 5.22 lakh have a Village Public

Telephone (VPT).

 41 million Kisan Credit Cards have been issued (against 22

million credit-plus-debit cards in urban), with cumulative credit
of Rs. 977 billion resulting in tremendous liquidity.

 Of the 20 million Rediff mail sign-ups, 60 percent are from

small towns. 50 percent of transactions from these towns are
on Rediff online shopping site.

 42 million rural households (HHs) are availing banking services

in comparison to 27 million urban HHs.

7
 Investment in formal savings instruments is 6.6 million HHs in
rural and 6.7 million HHs in urban.

8
4.Opportunities

 Infrastructure is improving rapidly -

9
  In 50 years only, 40 percent villages have been connected
by road, in next 10 years another 30 percent would be
connected.

 More than 90 percent villages are electrified, though only

44 percent rural homes have electric connections.

 Social indicators have improved a lot between 1981 and 2001 -

 Number of "pucca" houses doubled from 22 percent; to 41

percent; and "kuccha" houses halved (41 percent to 23
percent).

 Percentage of BPL families declined from 46 percent; to 27

percent;.

 Rural literacy level improved from 36 percent to 59

percent.

 opportunities –

Durables Urban Rural Total (percent of Rural HH)

CTV 30.4 4.8 12.1

Refrigerator 33.5 3.5 12.0

FMCGs Urban Rural Total (percent of Rural

10
 HH)
Shampoo 66.3 35.2 44.2

Toothpaste 82.2 44.9 55.6

Marketers can make effective use of the large available

infrastructure –

Post Offices 1,38,000

Haats (periodic markets) 42,000

Melas (exhibitions) 25,000

Mandis (agri markets) 7,000

Public Distribution Shops 3,80,000

Bank Branches 32,000

Proliferation of large format Rural Retail Stores, which have been

successful also -

 DSCL Haryali Stores

 M & M Shubh Labh Stores

 TATA / Rallis Kisan Kendras

 Escorts Rural Stores

11
  Warnabazaar, Maharashtra (Annual Sale Rs. 40 cror

 5.Challenge

5.1 General Problem

 Rural India buys -

 Products more often (mostly weekly).

 Buys small packs, low unit price more important than

economy

 In rural India, brands rarely fight with each other; they just
have to be present at the right place.

 Many brands are building strong rural base without much

advertising support.

 Chik shampoo, second largest shampoo brand.

 Ghadi detergent, third largest brand.

 Fewer brand choices in rural areas; number of FMCG brand in

rural is half that of urban.

 Buy value for money, not cheap products

12
5.2 The 4A approach

The more daring MNCs are meeting the consequent challenges of

availability, affordability, acceptability and awareness (the so-
called 4 As)

5.2.1 Availability

The first challenge is to ensure availability of the product or

service. India's 627,000 villages are spread over 3.2 million sq
km; 700 million Indians may live in rural areas, finding them is not
easy. However, given the poor state of roads, it is an even greater
challenge to regularly reach products to the far-flung villages.
Marketers must trade off the distribution cost with incremental
market penetration.

5.2.2 Affordability

The second challenge is to ensure affordability of the product or

service. With low disposable incomes, products need to be
affordable to the rural consumer, most of who are on daily wages.

13
Some companies have addressed the affordability problem by
introducing small unit packs. Godrej recently introduced three
brands of Cinthol, Fair Glow and Godrej in 50-gm packs, priced at
Rs 4-5 meant specifically for Madhya Pradesh, Bihar and Uttar
Pradesh — the so-called `Bimaru' States.

5.2.3 Acceptability

The third challenge is to gain acceptability for the product or

service. Therefore, there is a need to offer products that suit the
rural market. One company which has reaped rich dividends by
doing so is LG Electronics. In 1998, it developed a customized TV
for the rural market and christened it Sampoorna. It was a runway
hit selling 100,000 sets in the very first year. Because of the lack
of electricity and refrigerators in the rural areas, Coca-Cola
provides low-cost ice boxes — a tin box for new outlets and
thermocol box for seasonal outlets.

5.2.4 Awareness

Building awareness is another challenge. Fortunately, however,

the rural consumer has the same likes as the urban consumer —
movies and music — and for both the urban and rural consumer,

14
the family is the key unit of identity. However, the rural consumer
expressions differ from his urban counterpart. Outing for the
former is confined to local fairs and festivals and TV viewing is
confined to the state-owned Doordarshan. Consumption of
branded products is treated as a special treat or indulgence.

Hindustan Lever relies heavily on its own company-organized

media. These are promotional events organized by stockiest.
Godrej Consumer Products, which is trying to push its soap brands
into the interior areas, uses radio to reach the local people in their
language.

6.Rural Marketing in India

The concept of Rural Marketing in India has always played an

influential role in the lives of people. In India, leaving out a few
metropolitan cities, all the districts and industrial townships are
connected with rural markets.

The rural market in India is not a separate entity in itself and it is

highly influenced by the sociological and behavioral factors
operating in the country. The rural population in India accounts
for around 627 million, which is exactly 74.3 percent of the total
population.

15
The rural market in India brings in bigger revenues in the country,
as the rural regions comprise of the maximum consumers in this
country. The rural market in Indian economy generates almost
more than half of the country's income. Rural marketing in Indian
economy can be classified under two broad categories. These are:

• The market for consumer goods that comprise of both

durable and non-durable goods
• The market for agricultural inputs that include fertilizers,
pesticides, seeds, and so on .

The concept of rural marketing in India is often been found to

form ambiguity in the minds of people who think rural marketing
is all about agricultural marketing. However, rural marketing
determines the carrying out of business activities bringing in the
flow of goods from urban sectors to the rural regions of the
country as well as the marketing of various products
manufactured by the non-agricultural workers from rural to urban
areas. To be precise, Rural Marketing in India Economy covers
two broad sections, namely:

• Selling of agricultural items in the urban areas

• Selling of manufactured products in the rural regions

16
Some of the important features or characteristics of Rural
Marketing in India Economy are being listed below:

• With the initiation of various rural development programmes

there have been an upsurge of employment opportunities for
the rural poor. One of the biggest cause behind the steady
growth of rural market is that it is not exploited and also yet
to be explored.
• The rural market in India is vast and scattered and offers a
plethora of opportunities in comparison to the urban sector.
It covers the maximum population and regions and thereby,
the maximum number of consumers.
• The social status of the rural regions is precarious as the
income level and literacy is extremely low along with the
range of traditional values and superstitious beliefs that
have always been a major impediment in the progression of
this sector.
• The steps taken by the Government of India to initiate
proper irrigation, infrastructural developments, prevention of
flood, grants for fertilizers, and various schemes to cut down
the poverty line have improved the condition of the rural
masses.

17
7.Soft Drinks In Rural Market In India
NON-ALCOHALIC BEVERAGES IN INDIA

In India, the Coca-Cola and Pepsi soft drink brands suffered a

setback in August of last year due to a product contamination
scare. Both have cut profit margins to the bone in order to fend
off competition from low-priced local fruit drinks.
Indian consumers are accustomed to drinking a variety of locally-
produced soft drinks that are sold in small stands throughout the
country. Rural India is still a highly price-sensitive marketplace, so
the major soft drink companies are forced to cut profit margins in

18
order to compete there. India’s purchasing power parity
per capita of US$2,850 is representative of a nation in which the
average consumer has insufficient income to engage in
discretionary spending. Nevertheless, during the hot season,
spur-of-the-moment beverage sales are commonplace. In order to
position themselves for sales growth, the major soft drink
companies priced a 200-milliliter bottle at the equivalent of 11
U.S. cents. Although that price is not sustainable beyond the short
term, management hopes that it will be enough to wrest market
share away from local products and substantially increase sales
volume in 2004.Beverage companies cannot afford to
ignore India's rural consumers if they wish to expand market
share. According to data release by the PRB, only 28 percent of
India's population lived in urban areas in 2003. On average, rural
consumers have a lower income level than their urban
counterparts and demand lower-cost beverage options.In order to
remain cost competitive, soft drink companies have to contain the
transportation costs involved in expanding their distribution
network into widespread towns and villages. Faced with high fuel
and vehicle costs, companies are turning to less expensive means
of transportation including Ox carts & rickshaw. Another challenge
facing the major soft drink companies is regaining consumer
confidence in the aftermath of a well- publicized scandal over
the...

8. Some Myths

 Myth 1: Rural Market is a Homogeneous Mass

19
 Reality: It's a heterogeneous population. Various Tiers are
present depending on the incomes like Big Landlords,
Traders, Small Farmers, Marginal Farmers, Laborers,
Artisans. State wise variations in rural demographics are
present viz. literacy (Kerala 90 percent, Bihar 44 percent)
and population below poverty line (Orissa 48 percent, Punjab
6 percent).

 Myth 2: Disposable Income is Low

Reality: Number of middle class HHs (annual income Rs.
45,000 - 2,15,000) for rural sector is 27.4 million as
compared to the figure of 29.5 million for urban sector. Rural
incomes CAGR was 10.95 percent, compared to 10.74
percent in urban between 1970-71 and 1993-94.

 Myth 3: Individuals Decide About Purchases

Reality: Decision making process is collective. Purchase
process - influencer, decider, buyer, one who pays - can all
be different. So marketers must address brand message at
several levels. Rural youth brings brand knowledge to
Households (HH).

20
9.Strategies

9.1Marketing Strategy

Marketers need to understand the psyche of the rural

consumers and then act accordingly. Rural marketing involves
more intensive personal selling efforts compared to urban
marketing. Firms should refrain from designing goods for the
urban markets and subsequently pushing them in the rural areas.
To effectively tap the rural market, a brand must associate it with
the same things the rural folks do. This can be done by utilizing
the various rural folk media to reach them in their own language
and in large numbers so that the brand can be associated with
the myriad rituals, celebrations, festivals, "melas", and other
activities where they assemble

9.2Distribution Strategy

One of the ways could be using company delivery van which

can serve two purposes - it can take the products to the
customers in every nook and corner of the market, and it also
enables the firm to establish direct contact with them, and
thereby facilitate sales promotion However, only the bigwigs can
adopt this channel. The companies with relatively fewer resources
can go in for syndicated distribution where a tie-up between non-
competitive marketers can be established to facilitate
distribution. Annual "melas" organized are quite popular and

21
provide a very good platform for distribution because people visit
them to make several purchases.

9.3 Promotional Strategy

Firms must be very careful in choosing the vehicle to be used

for communication. Only 16% of the rural population has
access to a vernacular newspaper. So, the audio visuals must be
planned to convey a right message to the rural folk. The rich,
traditional media forms like folk dances, puppet shows, etc., with
which the rural consumers are familiar and comfortable, can be
used for high impact product campaigns.

22
 10. Conclusion

Thus, looking at the challenges and the opportunities, which

rural markets offer to the marketers, it can be said that the future
is very promising for those who can understand the dynamics of
rural markets and exploit them to their best advantage. A radical
change in attitudes of marketers towards the vibrant and
burgeoning rural markets is called for, so they can successfully
impress on the 230 million rural consumers spread over
approximately six hundred thousand villages in rural India.

23
Reference

www.business.mapsofindia.com

www.wikipedia.com

www.scribd.com

www.mpvidhansabha.com

24