introduction

Relevance

& Importance
Problems in Rural Marketing

What is Rural?
According to NCAER ( national council for applied
economic research), New Delhi ; Rural is defined as:
Village with a population of less than 5000 nos.
75% of the male population is engaged in agriculture
Population density is less than 400 per sq.KM
The boundary is minimum 25KM from the urban limit
Rural market contributes:
46% of GDP ( India GDP US$ 1.8 trillion = Rs 10 lakh Cr)
35 to 45% of annual sales revenue of major companies

Government of India defines URBAN as one that

follows any of the following two sets of criteria:
Presence of municipality/municipal council /
corporation or cantonment and a minimum
population of 5000
A population density of over 400 per sq.km
At least 75% of male population is engaged in non
agricultural activity
Whatever is not URBAN is RURAL

Share of Agriculture in GDP and creation of employment

during 2013 by various sectors is:
Sector

Share in GDP

Share in
Employment

Agriculture

14

58

Service

58

34

Manufacturing
Industry

28

14

In a narrower sense rural marketing includes only

marketing of agri produce In a broad sense, rural marketing
includes consumer durables also
Rural marketing includes marketing of agricultural produce
(output) and various inputs required for its production.
Rural marketing is thus a two-way marketing process. It
encompasses :
inflow of products and services of all agricultural inputs like
fertilizers, pesticide, tractor, seeds, power tillers, irrigation
pump sets for production and consumption purposes and
other goods and services for rural consumption
outflow of output products( seeds, rice, wheat, onion)

Rural marketing is the process of developing, pricing,

promoting, distributing rural-specific goods & services,
leading to exchanges between urban to rural markets /
rural markets to urban market or / within rural market
Demand means fulfilling of wants for specific products
backed by an ability and willingness to buy
The demands of urban and rural folks are different.
Therefore, marketers and manufacturers must deliver
goods and services to suit rural demand than dump
urban products on rural consumers
Thus market development strategies will be different for
Urban and Rural marketing

In a broader sense, the rural marketing activity also

includes flow of goods like:
(i). Consumables ( bath and detergent soaps, cosmetics,
beverages, cigarettes) ,
(ii). Durables ( mopeds, motorcycles, TV, radio, clocks
,electrical appliances) and
(iii). Services ( credit card, insurance, education)
The rural market classification is done on the basis of flow
of goods and services between:
(a) Urban to Rural (U2R)
(b) Rural to Urban(R2U)
(c) Rural to Rural (R2R)

Urban to Rural : Major part of rural marketing falls in this

category. Here urban marketers sell their products and
services in rural areas. Items include pesticides, fertilisers,
seeds, tractors, consumer durables, FMCG products etc.

Rural to Urban : Fruits, vegetables, spices, forest produce

such as honey, handicrafts etc are sold. Agent or
middleman plays a crucial role

Rural to Rural: includes activities that take place between

two close by villages such as, repair works, implements,
bullock, labours, dress materials etc.

To Rural

To Urban

1. Consumable and Durable

Agricultural Inputs

From
Urban

2. Consumables

Outside the scope

3. Consumer Durables

From
Rural

1. Rural Artisans Products

1. Agricultural and allied

production (output)

2. Rural Labour services

2. Rural artisans and rural

industry Products

Some of the important reasons are :

About 60% Indian population lives in rural areas (apprx

720 million spread over six lakh villages)

Even 1% increase in purchase would lead to a billion

rupee in revenue

Rising rural prosperity and buying power, IT penetration

and globalisation has fuelled the growth of rural market

No wonder, companies are launching a plethora of

products to cater to changing life style of Rural India.

India is a big country with over six lakh villages spread

across 3000KM in width and 3500KM in length
The characteristics change from people to people,
region to region and from area to area.
Some of the main features of Indias rural markets are:
Diverse nature ( age/economic/lifestyle)
Fifteen Agri Climate zones
Diverse acceptance level
Low literacy level ( though rising)
Rapid spread of cable television and other media
Increased awareness of government schemes
Socio-political changes

It is not easy to operate in this market because of several

problems. Rural marketing is time consuming, requires
considerable investment and different strategies. Some of the
major problems are:
Seasonal demand ( kharif and rabi season)
Underdeveloped people
Underdeveloped hierarchical market
Underdeveloped infrastructure & communication facilities
Low level of literacy
Low per capita income
Improper Media for communication
Many language and dialects
Vastness and uneven spread
Poor logistics, storage and handling facility
Product positioning
Non availability of Appropriate staff
Presence of spurious brands

Marketing of manufactured goods and agricultural inputs

in Rural markets are hampered by:
High distribution costs
High initial market development costs
Inability to carry large stocks
Inadequate infrastructural facilities
Price sensitivity
Smaller pack size
Seasonal variation
Fluctuating income

Traits of rural consumer can be grouped under eight

categories as under :
Low literacy level : it is around 45% overall with vast
difference between states to states. The highest
average education is primary school in general. Thus,
print media and hoardings do not make much impact.
Live product demonstration is absolutely essential.
Different dialect & language: the dialect changes in
every 8KM and so does the language spoken in rural
areas

Low income levels: Though it is slowly and steadily rising,

money earned by average rural consumer is still lower than
his counterpart in urban areas. A large part of his basic
income is spent on basic necessities leaving a smaller
portion for consumer goods. Rural consumers have low
purchase power; poor standard of living; low per capita
income and dominated by cast based social system
Scattered location pattern: While the urban population is
concentrated in about 3200 cities, the rural population is
spread over 6 lakh villages. The population density is widely
spread 500 or less people in a village constitute 55% and
200 or less people in a village constitute 25% of the number
of villages in India during 2010

Influence by reference: Typically, purchase decisions of

village consumers are influenced by reference groups, such
as teachers, primary health care worker, doctor, village grocer
and gram panchayat mukhiya.
Word of mouth and reference from user about brand/make
greatly influences the purchase decision. A common sight in a
village a consumer walks into the grocery shop and says
who pila wala packet dena!
A marketer needs to be aware of these influencers who can
effect changes in the rural consumers consumption pattern
Occupation: Principal occupation is farming ( growing crops/
cattle farming/ poultry), trading, crafts, repairing etc. The basis
for differentiation is size and ownership of land. The
consumption pattern differs according to level of income

Media Habits: Rural people are mostly fond of music and

folklore. Then comes, radio, TV and newspaper.
These media greatly influences the buying pattern and
buying decision of rural consumers
Other variables: culture, language, religion, caste, social
customs are very important variables for profiling a rural
customer.
Rivalry between two or more villages play crucial role in
purchase and consumption decision making
Rural consumers have lot of inhibitions and tend to be rigid
in their behaviour

The affluent group: numerically this group forms a small part

of Indian population. People of this group afford consumption
of high order. However, they do not provide base large
enough for manufacturing or marketing firms. [Example cash
rich wheat farmers of Punjab / onion cultivators of
Maharashtra/ chili merchant of AP]
The middle class: They are the largest segment and base for
estimation of demand for manufactured goods. They are
further sub-divided into climbers and aspirants [Example :
sugarcane farmers of UP / Jute cultivators of WB/ Tea
growers of Assam]
The poor: Their size is very large and their purchasing power
is very low. This group gets the benefits of social, economic
and educational schemes. They provide base large enough
for manufacturing or marketing firms for small packs.
[Example poor farmers of Bihar and Orissa]

Affluent / Very Rich

: 2.4 million (1.6%)
Consuming Class :
47.7 million(31.2%)
Climbers : 72.4
million(47.4%)
Aspirants : 16.2
million(10.7%)

Destitute : 14.1
million(9.1%)

Rural Consumer behaviour is about how individuals

make decisions to spread their available resources( time/
money / effort) on consumption related products
That includes:
what they buy? why they buy it? when they buy it? where from
they buy it? how often they buy it? how often they use it?

Studying consumer behaviour involves:

examining the individuals, groups or organisations ; the
process they use to make purchase decisions ; apply this
information to use and evaluate products and services

Following points can be deduced to evaluate rural

consumer behaviours
a) Behaviour occurs either at individual level or in the context
of a group
b) It might or might not have been influenced
c) It involves use and disposal of products and how they are
purchased. Product use is of great importance to marketer
to position or increase consumption. [ For Example- in
Punjab and Haryana, tractor is used as means of
transportation and not limited to agriculture]
d) It involves availability of services
e) Impact of consumer behaviour on status in society

There is a vast difference in the life styles of rural and urban

people.
The choice of brand that an urban customer enjoys is
different from that available to the rural customer. [ Rose
brand tea pack from Lipton is very popular in Sothern Indian
villages but hardly available in north or east Indian villages]
There is also difference in perception and way of thinking.
Rural consumer understand in their own way even if they
were explained properly by the marketers/manufacturers. [In
North Karnataka village, Godrej hair dye is conceived as
beautifying agent for buffalo to make them look presentable
in animal fairs ]

Need
Recognition

Pre-purchase
Search

Evaluation of
Alternatives

Post Purchase
Behaviour

Purchase
Decisions

Stimuli

Stimuli are inputs to any of the human senses.

Stimuli includes products / package/ brand name / promotion
Marketing stimuli includes commercials and numerous other
variables that affect consumer perceptions.
These variations include: nature of the products, their physical
and commercial attributes including positioning of the print ad
or the timing of the commercial and cues or information about
the product itself

Perception

Perception is approximation of reality. It is the process of

selecting, organising and interpreting or attaching meaning to
events happening in the environment

Attitudes

It is inner expression or feelings that reflect whether the

consumer is favourably or un favourably placed towards the
subject. Attitude is composite of consumers beliefs, feelings
and behavioural intentions towards some object
The belief that may hold about an object could be positive
( say, sturdy, durable, tough : example- Rajdoot motorcycle
among dairy farmers) ,negative (say, fragile, perishable ;
example- maruti car) or neutral ( say, any colour will do)
The feeling of a rural consumer is sometimes based on beliefs
[ex: one village in Bharatpur has banned TV since they believe
watching TV is at the cost of farming duties]

Attitudes

Changing attitude is generally very difficult particularly when

the rural consumer feels that the marketer has vested interest.
Successful ad campaign sometimes help. Escorts paired the
tough man of Hindi cinema Dharmendra with punchline
jaandar sawari, shanndar sawari. The bike was positioned as
tough and rugged. The rural folk immediately equate it with
Dharmendra and their attitude changed
Rural consumers are used to charcoal, neem sticks, salt and
other traditional forms of oral hygiene. Babbol a product of
Bulsara has successfully changed the attitude of rural
consumers by focusing on these aspects

Needs & Motives

Need is a state of deprivation of basic satisfaction
food, clothing and shelter.
To sell in rural markets, marketers have to adapt
products to suit rural needs
The rural priority in outlays can be different. [ Ex.: a rural
consumer in Northern India would prefer to buy a
scooter or motorcycle. Whereas, a fisherman in Kerala
prefers to buy a cell phone rather than scooter so that
he can obtain market information to sell his marine
products at a better price]

Demographics
Following are demographic profiles:
Family size , age , income , occupation , education , caste
This distribution help marketer to position products .
However, the problem of rural demographics is that there is
no good correlation between personal characteristics of
consumers and what they want to buy. For example: male
may prefer kadak chai while women may prefer flavour
Culture
Culture is a material elements created by society. These
elements are transmitted from generation to generation
Culture is total of learned beliefs, values and customs
which has dominant presence among rural consumers

Culture
Ex : Cadbury introduced chocobix a chocolate
flavoured biscuit in rural India targeting the
mothers who opt for biscuit than chocolates
Beliefs & Values
Social Class
Influence Groups
Reference groups(head of family / mukhiya / school
teacher)
Opinion leaders ( usually men and not women)
Innovations ( used by marketers in Camouflaged
manner)

Cultural factors offer the deepest influence on buyers

mind in rural market
Product ( colour/size/design/shape)
Social Practice
Decision making by male head of family
Changes in saving and investment pattern
4As approach:
Availability
Affordability
Acceptability
Awarness

What is a Market?
The word market means a place where business is
conducted. It means any place where persons assemble
for the sale or purchase of all commodities intended for
satisfaction of human wants/needs
In business parlance, :
A market is the sphere within which price determining
forces operate and an area where forces of demand and
supply converge to establish a single price
A market exists when buyers wishing to exchange the
money for a good or services for money

Markets are classified on the basis of twelve dimensions :

i. Location
ii. Area/coverage
iii.Time span
iv.Volume of transaction
v. Nature of transaction
vi.Nos. of commodities exchanged
vii.Degree of competition
viii.Nature of commodities

ix.Stage of marketing
x. Extent of public intervention
xi.Population served
xii.Market functionaries

Indian Rural Market is much larger than Urban market

Rural market is characterized by low per-capita income,
average agricultural productivity and low level of
industrialization
Some of the environmental factors are:
1.Population- for every consumer in urban area, there
are three in rural areas. A large population requires a
wide variety of consumables and durable goods only
when backed by disposable income
2.Occupation pattern- the main occupation is agriculture
and allied activities. About half of the rural population
owns land, another 27% work there as labourers. The
reminder is engaged in petty activities

Location of Population- one of the deterrents for marketers to

exploit rural market potential is vastness in area and location
of the population ( urban areas have large concentration in
relatively smaller geographical areas)
Expenditure pattern- See next page the value of consumption
of different items per person per month under two major
heads--- food and non-food items
Some interesting facts:
(a)Expenditure incurred by rural areas is 2- times of urban on
food items and 1.4 times on non-food items of urban
(b)The demand in rural areas is for cheaper and long lasting
durable goods ( bicycle / moped / electrical goods / B&W TV /
hand-wound watches) than in urban area demand( washing
machine / colour TV / 4-wheelers etc.)