PROJECT ON

RURAL MARKETING

ENVIRONMENT
PROJECTED BY

KANNAN 15018
UMESH 15045
BHAVESH 15029
MAHESHWARAN 15022
VIVEK 15042

SUBJECT: CRM

CLASS : S.Y.B.M.S.

SUBMITED TO

KAVITA MAM
 INTRODUCTION
The emergence of an active cash economy is bound
to create is bound to create a strong rural demand and
promote rural consumption. The traditional growth and
dominance of urban industrial centres is undergoing rapid
changes. A more equitable distribution in rural areas would
also help in slowing down the rapidly increasing influx of
people from rural to urban areas.

There are two sections of rural population:

 A large portion has a low income and low consumption
levels;
 The rest are rural rich.

The rural population forms a major portion of the Indian

population as seen below:

About 75% of the Indian people reside in rural areas. In

other words, for every consumer in the urban area, there
are three of them in the rural areas. Though the
proportion of rural population is showing a slight decrease
over the years, but in absolute numbers, the rural
population is growing at a higher rate than the urban
population. This large population will require a wide range
of consumable and durable goods and services. At the
same time the need of the rural areas does not
automatically guarantee a market, unless it is backed by
income and the resultant purchasing power.
For a vast majority of the rural population, the main
occupation is agriculture and allied activities. The graph
below gives the distribution of rural population as per their
occupation pattern.

About half of the rural population own or lease land to

cultivate it for their livelihood. Another 27% are
dependent on these cultivators for their jobs as
agricultural laborers. Thus, a total of 77% of rural
population depend on land only for their living and land is
their source of living.

There are others, constituting small proportions,

who are engaged in business like petty shopkeepers or
merchants and salary earners like teachers, health
workers and village level officials. The implication of this
is that the income generation in rural areas entirely
depends on how the land is used, what crops are
cultivated, how much is marketed, how much is consumed
and the marketing arrangements for the production.

If rainfall is adequate, weather conditions are

favourable and appropriate technology is available, the
rural areas prosper as it has happened in the states of
Punjab, Haryana and Western Uttar Pradesh. So the
disposable income in the hands of the rural people is very
much conditioned by the status of agriculture and other
allied activities. This also indicates that major part of
income generated is a source of agriculture. 75% of
income generation in rural areas is from agriculture and
agriculture-related activities.

One of the deterrents for marketers to exploit the

rural market potential has been the vastness of the rural
market in terms of areas covered and the location of the
rural population. It is much easier to cater to the needs
of the urban population because of their concentration,
but it is very difficult in the case of rural population
because of their widespread nature.

The villages are also not uniform in size. Nearly

48% of the villages have a population of less than 500
persons or about 100 households, which is probably of no
consequence to marketers. This may be acceptable since
the proportion of population covered by these 48% of
villages account for only 12% of the total population. Yet
it should be borne in mind that the people of these villages
also have land and cultivate and generate some income.

Thus the location and size of population of villages

throw a challenge to marketers. This phenomenon is not
true for the whole country and there are wide variations
among the different states. In states with high irrigation
and fertile lands, the concentration of population is more
when compared to states with low irrigation facilities and
lack of arable land.
 Given the distribution of rural and urban population,
it can be seen that the number of literates in rural areas
are more than in urban areas. It is an interesting got note
that has been a considerable increase in the number of
literate persons in rural areas since the last two decades.
This has its implications in communicating with the rural
population.

It appears to prove that communication should not

prove to be such a big hurdle. Today, television has
proved to be an effective medium for communication with
the rural masses. The telecasting network in the country
today covers about 93% of the population.

Assuming that the entire urban population is covered

by the television but the television, which is only 23%,
then nearly 67% of the rural population will be covered by
television. Thus, television reaches a larger segment of
the rural population than any other form of mass media.
Though radio is also very popular, people like to see to
believe.

The above factors point that the potential for

marketing of goods and services depends heavily on
agriculture, since it is the main occupation in rural areas.
The market for agricultural inputs – fertilizers, pesticides,
insecticides, tractors, irrigation equipment and seeds – has
been expanding over the years in rural areas as the Indian
farming is fast becoming market-oriented. But the rural
market has remained a dark area for those manufacturing
and marketing consumables and consumer durables.
 To successfully exploit the potential offered by the
rural market, there is a need to first understand the rural
market in terms of the characteristics mentioned above.
Only a few established companies – HLL, Lipton, Brooke
Bond, TOMCO, and P & G – have been trapping the
potential of the rural market for a long time.

THE FEATURE OF INDIAN RURAL

MARKETING
1) Large and Scattered Market: - The rural market of
India is large and scattered in the sense that it consists
of over 63 crore consumers from 5, 70,000 villages spread
throughout the country.

2) Major Income from Agriculture: - Nearly 60 % of the

rural income is from agriculture. Hence rural prosperity is
tied with agricultural prosperity. Roughly speaking, a
location is defined as “rural”, if 75 per cent of the
population is engaged in agriculture related activity. In
India, close to 70 per cent of the population is agrarian
and contributes to about one-third of India’s GNP.
3) Low Standard of Living: - The consumers in the village
area do have a low standard of living because of low
literacy, low per capita income, social backwardness, low
savings, etc.

4) Traditional Outlook: - The rural consumer values old

customs and tradition. They do not prefer changes.

5) Diverse Socio-Economic Backwardness: - Rural consumers

have diverse socio-economic backwardness. This is
different in different parts of the country.

6) Infrastructure Facilities: - The Infrastructure

Facilities like roads, warehouses, communication system,
and financial facilities are inadequate in rural areas.
Hence physical distribution becomes costly due to
inadequate Infrastructure Facilities.

Profile of the rural consumer:

1.Size of the Rural Consumer:

The size of the rural consumer group can be
understood from the following details provided in the
table:
Population of India
Rural v/s Urban: 1971, 1981, 1991 and 2001
Population Total % Total % Total % Total %
1971 1981 1991 2001
 Rural 43.90 82 50.20 76. 64.1 76 74.2 cr 72.
Population cr cr 3 cr 3
Urban 10.91 20 15.62 23. 20.3 24 28.5 cr 27.
Population cr cr 7 cr 8
Total 54.81 10 65.82 10 84.4 10 102.7 10
Population cr 0 cr 0 cr 0 cr 0

Rural population forms a major portion of the

Indian population as seen in the table. If we consider
the state level picture, in several states like Uttar
Pradesh, Rajasthan, Madhya Pradesh and Kerala, the
rural population constitutes more than 80% of the total
population. In states like Bihar and Orissa 90% of the
population is in rural areas.

2. Location Pattern of Rural Consumer:

The urban population of India is concentrated in
3200 cities and towns and the rural population is
scattered over 6, 38,365 villages. Statistics shows that
out of the 6,38,3645 villages have populations of more
than 5000 persons each. About 55% of the villages have
population in the range of 500 people or less.

The influence is clear, rural demand is scattered

over a large area, unlike the urban demand, which is
highly concentrated.

3. Literacy Level:
It is estimated that there are 23% literate in
rural India as compared with 365 of whole country. The
 rural literacy in the rural area is on an increase. Among
the rural population Kerala tops with 77%.

The literacy rate has its implication in

communication with the rural population. It appears that
communication should not prove a hurdle, provided
appropriate means are chosen.

4. Rural Income:
An analysis of the rural income pattern reveals
that nearly 60% of the rural income is from agriculture.
Rural prosperity and the discretionary income with rural
consumers are directly tied up with agricultural
prosperity. The pre-dominance of agriculture in the
income pattern has one more significance-rural demand
is more seasonal.

5. Rural Savings:
The rural consumers have been drawn into the
saving habit in a big way. The commercial banks and the
co-operative have been marketing the saving habit in
the rural areas for quite some years. Today nearly 70%
of the rural households are saving a part of their
income.

The habit is particularly widespread among

salary earners and self-employed non-farmers.

6. Significant Aspects:
 It can be seen in general sense low purchasing
power, low standard of living, low per capita income, low
literacy level and overall low social and economic
positions are the traits of the rural consumers.

By and large, the rural consumers of India are a

tradition bound community; religion, culture and even
superstition strongly influence their consumption habits.

Rural Consumer
Class
2001- 02 2006-
07
Very Rich 0.8 1.6 NUMBER OF
HOUSEHOLDS
IN MILLIONS
Consuming 26.8 41.3
Class
Climbers 54.7 63.3
Aspirants 25 14.7
Destitutes 20.9 12.2

Understanding Rural Markets:

There has been always a vast difference between

the two markets for a long time now. The difference is
not only between urban and rural but also within the rural
areas -- between regions, states and districts. There is a
difference in the media reach, the education levels, in the
culture and the type of products that the two markets are
exposed to and this leads to a difference in the two
markets.
 The difference is in things like -- how do you
celebrate New Year, how do you celebrate birthdays?
Small things like these are celebrated in a completely
different manner when the rural and the urban customers
are concerned. There is a vast difference in the lifestyles
of the people in the two regions. The kind of choices of
brands that an urban customer enjoys is different from
the choices available to the rural counterparts.

The rural customer usually has 2 or 3 brands to

choose from whereas the urban one has multiple choices.
The difference is also in the way of thinking. The rural
customer has a fairly simple thinking as compared to the
urban counterpart. But with technology coming in, mass
media reach and the literacy levels going up - this divide
is expected.

The biggest thing is that there is lack of any

research into the consumer behavior of the rural areas.
There is considerable amount of data on the urban
consumer regarding things like -- who is the influencer,
who is the buyer, how do they go and buy, how much
money do they spend on their purchases, etc. but on the
rural front - the effort has started to happen now. So
there is a need to understand the buyer.

There is no collective effort. Some people have

spent time in the rural markets, carried out studies and
have understood the rural behavior, but their works have
not been passed or known to the rest of the industry. So,
an in depth understanding of the consumer is one key area
that the industry needs to work on.

There are vast differences in the rural areas as

well. There are some 5, 60,000 villages and some 525
districts and each one is different from the other. The
geographical spread is not as homogeneous as it is with the
urban areas owing to vast cultural differences. So an in
depth understanding of the areas is what is required.

The field of rural marketing has been witnessing a lot

of action from both the fast moving consumer goods
(FMCG) sector and consumer products manufacturers but,
there has been little success in the manner in which rural
research is carried out.

The limitation lies in the inadequate or unavailability

of appropriate tools to evaluate the rural market behavior.
The problem arises because of general lack of education
resulting in low awareness about the products and hence
the inability to respond to the queries of the researcher
in these areas. Conventional research tools do not work in
these markets, as these are difficult to comprehend for
the illiterate and semi-literate rural people.

The typical research scales used are for ranking,

rating and attitude measurement, limiting the research
questions to simple yes/no kinds that do not bring the true
essence of the research process.

In an effort to look in to this issue two students

from Management Development Institute, Gurgaon along
with Pradeep Kashyap, director of Marketing And
Research Team (MART) tried working out on some possible
solutions to this problem. The limitation of conventional
research tools during the research project prompted them
to look at alternative sources to solve this problem and
the results were favorable.

Colors are very strong indicators, and forms, of

expressing the feelings in the rural areas and there are
tools devised with colors that represent and reflect the
right answer to the researchers' queries. The selection of
colors is done on the basis of the association of rural
people with these colors.
For instance, it has been observed that dark green
represents a good crop or ‘Haryali’ (as they call it) and
hence represents prosperity and is considered to be the
best. Light green represents not very good crop and
stands next to dark green color.

Yellow represents dry sand or a dry field and hence

comes next. Orange is the color of the setting sun and
represents the end of the day and hence is placed after
yellow and just before red, a color that represents danger
to them. Such hypothesis has been working well, according
to MART, and it has incorporated these tools in its
research projects.

This is probably the beginning to a new form of

research and analysis that might change the paradigm of
rural marketing research and, who knows, one might just
see this field blossom into a specialized research activity.
If a simple ranking and rating is achieved, a lot can be
explained about the rural preferences and behavior
providing the marketers and manufacturers of goods
specific to the rural markets get that meaningful insight
to be able to help grow the markets in these areas.

Changing Profile of Rural Marketing

The position in the rural market was totally

different some twenty years ago. At present there is a
demand for certain articles like T. V., fans, radio, engine
oil, readymade garments, detergents, medicines, etc. New
product like toiletries, baby care products and consumer
durables are now getting good support in the rural market.

Parle Agro is marketing 80% of its sale in the rural

areas. Batliboi and Co. Ltd. is a leading marketer in
agricultural implements. Hindustan Lever sells its products
like soaps, shampoos, face cream, etc. in all rural markets
on a large scale.

Kirloskar and Crompton are leading rural marketers

in diesel engines and agricultural machinery.
In the service sector the Central Bank and Canara Bank
are the largest banks in rural India. More and more
manufacturers are turning towards rural markets because
the urban are getting saturated.

The Indian rural markets have turned out to be gold mine

for the marketers in the nineties.

Factors contributing to the growth of rural

marketing:

1. New Employment Opportunities: The income from new

employment and rural development efforts launched in
the rural areas has increased the purchasing power
among the rural people. Self employment policy with the
assistance from the bank has become a great success in
the rural areas.

2. Green Revolution: A technological break through has

taken place in Indian agriculture. Rural India derived
considerable benefit from green revolution. Today, rural
India generates 185 million tones of food grains per
year and substantial output of various other agricultural
products.

3. Expectation Revolution among Rural Masses: More than

the green revolution, the revolution of ‘rising
expectation’ of the rural people influenced the marketing
environment of rural India. It brought about a powerful
 change in the environmental dynamics. It enlarged the
desires as well as the awareness of the rural people.

4. Favorable Government Policies: As a part of the process

of planned economic development, the government has
been making concerted efforts towards rural
development. The massive investment in the rural India
has generated new employment, new income and new
purchasing power. In the recent years as a part of new
farm policy, high support prices are offered for farm
products. Various measures like tax exemption in
backward areas, subsidy, concessions, incentives,
assistances, literacy drive in rural areas has brought
rapid growth of rural markets.

5. Literacy Growth: The literacy rate is on the increase in

the rural areas. This brings about a social and cultural
change in the buying behaviour of the rural consumer.
They are exposed to mass media which create new

demand for goods and services.

6. Growth in Income: The rise in the income resulting from

the new farming strategy is adding meaning and
substance to the growing aspirations of the rural people.
Remittances from Indians working abroad have also
made a sizeable contribution to the growing rural income
and purchasing power.
7. Attraction for Higher Standard of Living: The rural
consumers have been motivated to change their
consumptions habits enjoy a higher standard of living by
the growing awareness about better living and easy
availability of information about the goods.

8. Marketing Efforts: Firms like Bajaj, HLL, etc., have

started penetrating the rural market realizing the rising
expectations and the demand revolution in the rural
India.
THANK YOU