Rural Marketing in Indian Context Introduction In recent years, rural markets of India have acquired significance, as the overa

ll growth of the Indian economy has resulted into substantial increase in the pu rchasing power of the account of green revolution, the rural areas are consuming a large quantity of industrial and urban manufactured products. In this context , a special marketing strategy, namely, rural marketing has emerged. Rural India with its traditional perception has grown over the years, not only i n terms of income, but also in terms of thinking. The rural markets are growing at above two times faster pace than urban markets; not surprisingly, rural India accounts for 60% of the total national demand. Today, rural market occupies a larger part of our economy and it is expected to grow at least four times the existing size. Another contributing factor for rura l push was growing saturation in urban markets. To be precise, rural marketing i n Indian economy covers two broad sections: 1. Selling of agricultural products in the urban areas 2. Selling of manufactured products in the rural regions In present situation, our huge population is helping marketers to think new mark eting strategies. 630 Billion rural populations are greater than total consuming markets of many countries like Canada, South Korea, etc. Rural Consumer Insights 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 presen t at the right place Many brands are building strong rural base without much advertising support, lik e Chik Shampoo is second largest shampoo brand of India, and Ghadi detergent is third largest detergent brand in India Fewer brand choices in rural areas; number of FMCG brands in rural areas is half that of urban Buys value for money, not cheap products Exposure of Rural Markets in India It is an upcoming market and the following facts substantiate this: 630 million people Estimated annual size of the rural market * FMCG Rs 85,000 Crore * Durables Rs 12,000 Crore * Agri-inputs (incl. tractors) Rs. 5,000 Crore

* 2/4 wheeler vehicles Rs. 12,000 Crore In 2001-02, LIC sold 55% of its policies in rural India Of the two million BSNL mobile connections, 50% are in small towns / villages Of the six lakh villages, 5.22 lakh have a Village Public Telephone (VPT) 41 million Kisan Credit Cards issued (against 22 million credit-plus-debit cards in urban) with cumulative credit of Rs. 977 billion resulting in tremendous liq uidity 42 million rural households are availing banking services in comparison to 27 mi llion urban households Investment in formal savings instruments: 6.6 million households in rural and 6. 7 million in urban India Nano-Marketing or sachets worked well in rural India and there is ample scope fo r the products to be accepted by consumers if the price is competitive The rural market is highly fragmented and the supply chain for the FMCG goods ha s to be strong 4 P's of Rural Marketing FMCG and consumer durable companies have, in the past, tried tinkering with all the four 'P's - product, pricing, promotion and place - of the marketing mix. Th e area where innovation has moved to center-stage is in the fourth P - place (or distribution). Infrastructure has always been the bug-bear of the Indian market er. Distribution channels can make or break a company's rural marketing efforts. To sell in villages, products must be priced low, profit margins must be kept to th e minimum, and the marketing message must be kept simple. Rural marketing seems to be essentially a problem of price and place (distribution). And products desi gned for the urban market seem to do decently in rural India as well. Perhaps th e urban / rural divide is not as large as most people believe it to be. The problem for most companies is that Product and Promotion is strangely enough , the easiest to redo or remake. Cost competencies which affect Price and Distri bution, and supply chains, which make Place irrelevant, are far more difficult t o obtain. They take experience and initial investment. 4 A's of Marketing Strategies 4 A's means Affordability, Availability, Acceptance & Awareness. Affordability Rural consumer affordability is very low. So marketers need to concentrate on th is. LG developed a TV in late 1990s with on-screen displays in Indian languages such as Hindi, Bengali, Tamil & Marathi. The sub-brand, SAMPOORNA, has predomina ntly kept for the rural markets price Rs. 2000 to Rs. 3000 than competitive nati onal TV brands. As an extension of SAMPOORNA, an entry-level CTV called CINEPLUS was launched in rural markets, priced attractively at Rs. 5000. Availability 1. Availability of electricity is hurdle in the countryside. PHILIPS developed f

ree power radio, a radio set that does not need batteries for electricity. It ru ns on simple winding of a layer provided in the set with an attractive price at Rs. 995 per set. 2. To remove fluoride content from hand-pumps, Ion Exchange designed water-purif ying attachments to the pumps that do not need electricity. 3. NOKIA developed affordable cell-phones for rural areas with unique features l ike local language capability, present time / cost units on calls, etc. 4. ICICI Banks' rural ATMs are battery operated. 5. DENA Banks' ATMs have VOICE INSTRUCTIONS for rural. 6. BP Energy Cells have SMOKELESS biomass run stoves (Oorja) for rural markets w ith attractive price at Rs. 675 in Tamil Nadu. 7. Bank of India introduced BHUMIHEEN Credit Card for providing credit facilitie s to landless farmers. Why Different Strategies? These markets, as part of any economy, have untapped potential. There are severa l difficulties confronting the effort to fully explore rural markets. The concep t of rural markets in India is still in evolving stage, and the sector poses a v ariety of challenges. Distribution costs and non-availability of retail outlets are major problems faced by the marketers. The success of a brand in the rural market is as unpredictable as rain. Many bra nds, which should have been successful, have failed miserably. This is because m ost firms try to extend marketing plans that they use in urban areas to the rura l markets. The unique consumption patterns, tastes, and needs of the rural consu mers should be analyzed at the product planning stage so that they match the nee ds of the rural people. Major Initiatives of Some Market Players 1. Hariyali Kisaan Bazaar, was set up by DCM Shriram Consolidated tate sale of agri-inputs such as fertilizers, pesticides, farming ds, animal feed, etc. Each such bazaar caters to a catchment area . Marketers of FMCG, durables and branded apparel tie-up with the ell their productS. This company now has 300 such bazaars. Ltd. to facili equipment, see of above 20 km DCM Group to s

2. ITC's internet-enabled rural interface to help sale of agri outputs, e-Choupa l, is presently operational in 6 states and there are 5200 kiosks. The kiosks ar e supported by ware-houses for farmers to sell crops. ITC also leverages the e-C houpal extensively as a distribution point. ITC first pushed its own products li ke salt into the hinter land and then invited others like PARACHUTE and PHILIPS to ride on this distribution chain. ICICI tied up with ITC to use e-Choupal for its insurance policies. 3. TRIVENI KUSHALI Bazaar, a rural agri-inputs store run by Thriven Engineering Industries Ltd. in the sugarcane belt of U.P., is also used to sell cement and F MCG products. 4. Bancassurance in rural context is being implemented vigorously as insurance f irms try to catch up with the rural commitments mandated by IRDA. Max New York L ife has 11 bancassurance tie-ups with regional rural banks (RRB). 5. NGOs and SHGs operating in rural areas are also being tapped by marketers. HU

L's Project SHAKTHI best exemplifies this. Through the state governments and NGO s involved in micro-finance, women entrepreneurs in villages are identified to a ct as local distribution and sales point for HUL products. About 25,000 SHAKTHIA MMAS, as these women entrepreneurs are called, operate in 15 states. Indirectly SHGs and NGOs, who identify the SHAKTHIAMMAS, play the role of distribution part ners of HUL. Strategies to be Followed for Prospects Marketing Strategy: Marketers need to understand the psyche of the rural consume rs and then act accordingly. Rural marketing involves more intensive personal se lling efforts compared to urban marketing. Firms should refrain from designing g oods 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 b e associated with the myriad rituals, celebrations, festivals, "melas", and othe r activities where they assemble. Distribution Strategy: One of the ways could be using company delivery vans, whi ch can serve two purposes - it can take the products to the customers in every n ook and corner of the market, and it also enables the firm to establish direct c ontact with them, and thereby facilitates sales promotion. However, only the big -wigs can adopt this channel. The companies with relatively fewer resources can go in for syndicated distribution where a tie-up between non-competitive markete rs can be established to facilitate distribution. Annual "melas" organized are q uite popular and provide a very good platform for distribution because people vi sit them to make several purchases. According to the Indian Market Research Bure au, around 8000 such melas are held in rural India every year. Also, every regio n consisting of several villages is generally served by one satellite town (term ed as "Mandis" or Agri-markets) where people prefer to go to buy their durable c ommodities. If marketing managers use these feeder towns, they will easily be ab le to cover a large section of the rural population. Promotional Strategy: Firms must be very careful in choosing the vehicle to be u sed for communication. Only 16% of the rural population in India has access to a vernacular newspaper. So, the audio visuals must be planned to convey the right message to the rural folk. The rich, traditional media forms like folk dances, puppet shows, etc., with whi ch the rural consumers are familiar and comfortable, can be used for high impact product campaigns. The advertisement has to be done in the local languages. Thi s gives a powerful impact on the marketer needs to first grab their heart share by inducing local elements and flavors to the product so that they have some emo tional attachment to it, then their mind share by advertising in the local mediu m that is easily accessible, and ultimately, the market share by being available abundantly in the rural market so that a competitor finds it difficult to penet rate. Sales Strategy: Rural sales strategy will include hiring employees who genuinely like spending time in the rural areas and who are comfortable with the local la nguage. Marketers can continuously assess all aspects of the business by interac ting with people and their family members personally, evaluating product choices for popularity, and keeping favorites on the list so that the marketer rotates the pumping of products weekly and seasonally. Looking at the challenges and the opportunities which these Indian rural markets offer to the marketers. It can be said that the future is very promising for those who understand the dy namics of rural markets and exploit them to their best advantage. A radical chan ge in attitudes of the consumers is expected in a short period of time and the m

arketers should be ready to quench the needs of the rural customers. If the prod ucts are cost effective with a marginal profit going to the manufacturer, then i t will be a Win-Win situation for both the consumers and producers. FMCG compani es focus on urban markets for value and rural markets for volume. And rural mark ets are extremely price-sensitive and vital for survival, since the urban market s are getting saturated in India. Myths about Rural Marketing Myth 1: Indian Rural Market is a Homogeneous Mass Reality: It's a heterogeneous population. Various tiers are present depending on the incomes like big landlords, traders, small farmers, marginal farmers, labou rers, artisans. People belonging to different social classes stay in a concentri c area, so the available FMCG products should suffice the consumption for everyo ne. Myth 2: Disposable Income is Low Reality: Number of middle class households (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% compared to 10.74% in urban between 1970-71 and 1993-94. The disposable income is still higher in the rural market. Myth 3: Individuals Decide About Purchases Reality: Decision making process is collective. Purchase process influencer, dec ider, and buyer, one who pays can all be different. So marketers must address br and message at several levels. Rural youth brings brand knowledge to households. Basic awareness of the product brand has to be there in the market. This can be done by putting up small advertising sheets at the mandis and places where the rural masses meet regularly. Conclusion The journey of markets to the rural markets has indeed been one of surmounting o ne hurdle after another; these include the 4 As - Availability, Affordability, A cceptance & Awareness - adopting themselves to the rural atmosphere marketers. Q uickly innovated along with all elements of the 4 Ps of the marketing mix - Prom otion, Pricing, Place & Product. Evolution of supporting eco-system in 21st century provides several opportunitie s for serious marketers continues customization with inputs from all stake holde rs, seems a sure shot approach to provide both short- and long-term returns in t he rural markets. 'Rural markets are future battlegrounds.'