MODULE 6 RURAL MARKETING

37.1 RURAL MARKETING ENVIRONMENT

The rural market environment needs a separate examination as it varies
significantly from that of the urban market. This subject can be studied
under 3 broad segments:
1. The Rural Consumer
2. The Rural Demand AND
3. Other Aspects of the Rural Market Environment

The Rural Consumer

Size of the Rural Consumer Group:

Population of India --- Rural Vs Urban

1971

1981

1991

2001

Pop (in % to Pop (in %

to Pop (in % to Population % to
mill)
total
mill)
total
mill)
total
(in mill)
total
Rural
Urban
Total

439.0
109.1
548.1

80
20
100

502.0
156.2
658.2

76.3
23.7
100

641.0
203.0
844.0

76
24
100

740.0
290.0
103.0

73
27
100

(Source: Census of India)

In numerical terms, Indias rural market is indeed a large one; it
consists of more than 740 million consumers. The above table presents
the details of rural vs urban population of India.
It can be seen from the table that now 73% of Indias total population is
rural. Though over the last 3 decades there has been a marginal
reduction in the rural population expressed as a % of the total
population, there has been a steady growth in rural population in terms
of absolute numbers. And, it had reached 740 million by 2001. In terms
of HHs, the rural market consists of more than 120 million HHs,
forming over 70% of the total HHs in the country.
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37.2 CHARACTERITICS OF RURAL CONSUMER GROUP
Location Pattern
Practically, the whole of India, barring the metros & towns, constitutes
the Indian rural market. In other words, the market is spread through
the length & breadth of the vast country.

A Scattered Market
It is thus evident that the rural market of India is a geographically
scattered market. Whereas the urban population of India is
concentrated in 3200 cities & towns, or less than 1.1%, have a
population of > 5000 each. More than 0.3 million villages, or > 55% of
the total # of villages, are in the category of 500 people or less and > 0.15
villages or 25% are in the category of 200 people or less. The inference
is clear; unlike urban demand, which is highly concentrated, rural
demand is scattered over a large area.

Socio-Economic Position
By & large, rural consumers continue to be marked by low purchasing
power/low per capita income. Similarly, they continue to be a traditionbound community, with religion, culture & tradition strongly
influencing their consumption habits.
Nearly 60% of rural income comes from agriculture. Rural prosperity &
discretionary income with rural consumers are thus linked to a sizeable extent with
agricultural prosperity. More than the HHs are in the income category of <25K
per annum, but about 14% of the HHs have an annual income that exceeds 50K.
Remittances from Indians working outside have made a sizeable contribution to the
growing rural income/purchasing power in some states.
Analysis reveals that, in recent years, rural consumers have been increasingly
drawn into the savings habit. As much as 70% of the rural HHs now save a part of
their income. The habit is relatively more widespread among salary earners.

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37.3 CULTURALLY A DIVERSE & HETEROGENEOUS MARKET
The rural market is not only a scattered market, but is also diverse &
heterogeneous. Rural consumers are diverse in terms of religious, social,
cultural & linguistic factors. The diversity is manifest in a more intense
manner among the rural segments.
It can be said that heterogeneity is the #1 hallmark of the rural market
570K villages, a dozen religions, 33 languages, 1650 dialects &
diverse sub-cultures characterize the market.

State-to-State Variation in Extent of Development

There is also a great deal of difference between different states in extent
of development. A recent study conducted by IMRB provides some clue
on the relative status of the rural areas of different states.
The study provides development index points for each state, after
collecting village-level data on various parameters, such as availability
of health & education facilities, availability of public transport,
electricity, TV transmission, banks, post offices, water supply & so on.
A weight was decided upon for each facility, based on the relative
importance of that facility in indicating the extent of development of the
village.
According to the study, while the average village in India has 33
development index points, villages in Kerala had an average of 88 points
while those in Bihar had just 22; MP, Rajastan & UP were close to
Bihar; and states like Maharashtra, Haryana, Karnataka had points
ranging between 40 & 50.

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37.4 LIRERACY LEVEL/LIFESTYLE
Literacy Level
It has been estimated that rural India has a literacy rate of 28%
compared with 55% for the entire country. The aspects mentioned
below need to be emphasized specifically with regard to rural literacy.
The picture has been changing over the years, as a decade ago it was
20%.
Every year about 8 m people get added to rural Indias literate
population.
The adult literacy programs launched in the rural areas are bound to
enhance the rural literacy rate.
In absolute #s, already there are more literate people in rural India
(165 m) than in urban India (160 m).
The picture also differs from state to state & even district-to-district.

Lifestyle
By & large, the rural consumers are marked by a conservative &
tradition-bound lifestyle. But, what is striking today about this matter is
not the basic conservative characteristic, but the fact that the lifestyle is
undergoing a significant change.
Growth in income & change in income distribution.
Growth in education.
Enlarged media reach (particularly TV).
Growing interaction with urban communities.
Marketers efforts to reach out the rural market.
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37.5 LIFESTYLE
Buying Behavior:
To understand the buying behavior of rural consumers, we must go to
the factors that influence their buying behavior. These factors include:

Socio-economic environment of the consumer

Cultural environment
Geographic location
Education/Literacy level
Occupation
Exposure to media & enlarged media reach
The points of purchase of products
The way the consumer uses the products
The way the consumer uses the products
Involvement of others in the purchase
Marketers efforts to reach out the rural market

Influence of Culture:
Culture & tradition influence perceptions & buying behavior. For ex,
the preference in respect of color, size & shape is often the result of
cultural factors. Rural consumers perceptions of products are strongly
influenced by cultural factors.
Geographical Location:
Rural consumer behavior is also influenced by the geographical location
of the consumers. For ex, nearness to feeder towns & industrial projects
influence the buying behavior of consumers in the respective clusters of
villages. Yet another example will be the lack of electricity in many
rural HHs acts as a barrier to purchase of certain consumer durables.
Exposure to urban lifestyles:
Extent of exposure of rural consumers to urban lifestyles also influences
their buying behavior. An increased exposure & interaction with urban
communities has been the trend in recent years.

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37.6 LIFESTYLE
The way the consumer uses the products:
The situation in which the consumer utilizes the product also influences
their buying behavior. Lack of electricity automatically increases the
purchase of batteries by the rural consumers.

Places of purchase:
Different segments of rural buyers buy their requirements from
different places/outlets. Some buy from the village shopkeepers; some
from village markets; others buy from the town that serves as the feeder
to the rural area. The marketer therefore must a question to himself:

Where from do they buy the products & why?

Involvement of others in the purchase:
In the past, the head of the family used to make the purchase decision
all by himself. In contrast, the involvement of other members of the
family in the purchase decision has been growing in recent years. An
increase in literacy coupled with great access to information has
resulted in this development.
Marketers efforts to reach out the rural market:
Presently, many firms have been trying hard to develop a market for
their products in the rural areas. This has brought about some change
in the way buyers purchase different products. Developmental
marketing has created discriminating buyers & hitherto unknown
demand in the rural market.
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37.7 LIFESTYLE
Buying behavior undergoes major change
Changes have been taking place over the years in practically all the
factors that have been listed as influencers of the buying behavior of
rural consumers. Rural consumers differ from their urban equals in
their buying habits.
This is because of the difference in circumstances. Corporates, like
HLL, which is a major force in both urban & rural markets, have been
talking of a new trend with regard to the role of youth in the rural
markets.
In their perception, the youth, urban or rural, have the same
aspirations. It may be that the rural youth are not in a position to follow
their aspirations to the same extent as the urban youth can due to
certain reasons.

No stereotype rural consumer

One cannot proceed on the basis of a stereotype of the rural consumer
or of rural consumer behavior. This signals problems as well as
opportunities for the marketer. The low purchasing power/low per
capita income/low literacy level are common traits of rural consumers.
Marketers also say that the rural consumers are a tradition-bound
community, with religion, culture & tradition strongly influencing their
consumption habits. None of this, however, constitutes the
representative picture of rural consumers as a whole.
A sizeable segment of rural consumers defy this description. There is
thus great scope & need for segmenting the rural market on the basis of
buying behavior.