Prepared by:

Vishal kukadiya
Hetal Mewada

Meaning of Rural Marketing

The term rural marketing used to be an umbrella term.

It got a separate meaning and importance after the
economic revaluation in India after 1990.
Rural marketing is defined as managing all the
activities involved in assessing, stimulating and
converting the purchasing power of the rural
consumers into effective demand for specific products
and services and moving them to the people in rural
areas to create satisfaction and a better standard of
living and thus achieving organizational objectives.

Rural marketing in modern India

URBN
RURAL

RURAL

RURAL
URBAN

RURAL

 Urban

to rural - Major part of rural

marketing. Includes transactions of urban

marketers who sell their goods and services in
rural areas pesticides, fertilizers, FMCG
products, tractors, bicycles, consumer durables,
etc.
Rural

to urban - Basically falls under

agricultural marketing. A rural producer seeks to

sell his produce in urban market like seeds,
fruits and vegetables, forest produce, spices,
milk and related products, etc.

Rural to Rural - Includes the activities that take

place between two villages in close proximity
to each other like agricultural tools, handicrafts,
dress materials, bullock carts, etc.

The word Rural is so much associated with

agriculture and farmers that rural marketing is
often confused with agricultural marketing but
it should not be so as the latter is only a part of
rural marketing.

Difference between Rural

marketing & Agriculture
Marketing
Agricultural marketing denotes marketing
of produce of the rural areas to the urban
consumers or industrial consumers.
These primarily consist of agricultural
commodities and some small scale industry
products such as Khadi Gram Udyog
products or Amul's dairy products.
Rural marketing involves delivering
manufactured or processed goods or
services to rural producers or consumers.

Introduction to Rural Market

Improving the lives of billions of people at

the bottom of the economic pyramid is a
noble endeavour. It can also be a lucrative
one. C.K. Prahlad.

Over the past few years rural India has

witnessed an increase in the buying power
of consumers, accompanied by their desire
to upgrade their standard of living. Host of
projects, such as NREGA, ITC's echaupal,
HLL's project Shakti, retail hubs like Kisan
Sansar (Tata), Haryali Kisan Bazar (DMC),
both from the government and the private
companies, have changed the rules of the
marketing game in rural India.

The Indian rural market with its vast size and

heterogeneous demand base offers great lucrative
opportunities to marketers. After all, two thirds of
countries consumers live in rural areas and almost
half of the national income is generated in the rural
hinterland.
India is classified into around 450 districts, and
approximately 6,30,000 villages, which can be
segmented in different parameters such as literacy
levels, accessibility, distribution networks, income
levels, market penetration, distances from nearest
towns, etc.
Recent developments, which has taken place in the
rural areas under the five- year plans and other such
special programmes, are phenomenal. The overall
growth of the economy has resulted into substantial
increase in the purchasing power of the rural
communities.

Indian economy post

independence:

The Indian economy at the time of independence

showed all the signs of stagnation. About 47% of the
population was below the poverty line in 1951.This
figure went up in 1964-65, came down and again went
up in 1977-78. Presently the World Bank estimates that
a third of the global poor reside in India.
At he time of independence 72% of the work force was
employed in agriculture and it contributed to nearly
50% of the national income. Industrialization was at a
very low level with only 2% of the work force employed
in industries. In addition to this there was hardly any
investment in industries.
The only industries which existed were cotton and jute
industries. They also suffered a major setback, as at
the time of partition major jute producing areas went to
Pakistan and as a result there was a shortage of raw
material.

Thus, at the time of Independence, low

agriculture output, little industrialization, low
figure of national income, high poverty and
unemployment, slow economic progress were
the features of Indias economy.
After India got independence from colonial rule
in 1947, the process of rebuilding the economy
started.
For this various policies and schemes were
formulated. First five year plan for the
development of Indian economy came into
implementation in 1952. These Five Year Plans,
started by Indian government, focused on the
needs of the Indian economy.

condition in rural areas is going from

bad to worse.
It is imperative that the villages of India
be made self-sufficient as they once
were. More initiatives like Grameen
Bank which provide micro credit to the
poor need to be encouraged.
On their part, the government should
make sure the funds allocated for rural
development are utilized efficiently.

The basic objectives of rural management

is to.
organize, develop and utilize the available
at optimal level to proper utilization and
productivity of resources, in such a manner
that the entire rural population may be
benefited by it and increase the production
and consumption to increase Indian
economy.
Rural management also helps to enhance
living standard rural people.
Since independence, the Government has
initiated certain plans for the betterment of
rural people. Upgrading rural market is one
way to improve access to marketing

India's GDP rate since 1951-2012

Financial
year

GDP of India at factor cost

(in %)

1951-52

2.3

1956-57

5.7

1961-62

3.1

1966-67

1971-72

1976-77

1.2

1981-82

1986-87

4.3

1991-92

1.3

1996-97

7.8

2001-02

5.8

2006-07

9.2

2010-11

9.6

2011-12

6.9

(SOURCE: mapsofindia.com/india-economy)

Importance of Rural marketing

LARGE POPULATION: Approximately 75% of
India's population resides in around 6,38,365
villages of India spread over 32 lakh square
kilometre. 41% of India's middle class resides
in rural areas.
HIGHER PURCHASING CAPACITY:
Purchasing power of rural people is on rise;
MARKET GROWTH: Market is growing at a
rate of 3-4% per annum According to a study
by the Chennai-based Francis Kanoi
Marketing Planning Services, estimated
annual size of market is LOW PENETRATION
RATES IN RURAL MARKETS FACILITATE
OPPORTUNITIES

Durables

Urban

Rural

Total (%of
rural
House
hold )

Colour TV

30.4

4.8

12.1

Refrigerator

33.5

3.5

12

FMCGs

Urban

Rural

Total(% of
rural
house
hold)

Shampoo

66.3

35.2

44.2

Toothpaste

82.2

44.9

55.6

Factors responsible for the

rural market boom to come
into existence:
1. Increase in population and hence increase

in demand.
2. A marked increase in the rural income due
to agrarian prosperity.
3. Standard of living is also increasing in rural
areas.
4. Large inflow of investment for rural
development programmes from government
and other sources.
5. Increased contact of rural people with their
urban counterparts due to development of
transport and wide communication network.

6. Increase in literacy and educational level

and resultant inclination to sophisticated lives
by the rural folks.
7. Inflow of foreign remittances and foreign
made goods into rural areas.
8. Change in the land tenure systems causing
a structural change in the ownership patterns
and consequent changes in the buying
behaviour.
9. Rural markets are laggards in picking up
new products. This will help the companies to
phase their marketing efforts. This will also
help to sell inventories of products out dated in
urban markets.

Estimated annual size of Rural

Market
FMCG

Rs. 65,000 Crore

Consumer Durables

Rs. 5000 Crore

Agri Inputs (e.g., Tractors)

Rs. 45,000 Crore

2/4 Wheelers

Rs. 8,000 crore

Total

Rs. 1,23,000 Crore

Rural market is big chunk for

marketers:
1)Infrastructure is improving rapidly.
2) In 50 years only 40% villages connected
by road, in next 10 years another 30%.
3) More than 90 % villages electrified,
though only 44% rural homes have
electric connections.
4) Rural telephone density has gone up by
300% in the last 10 years; every 1000+
pop is connected by STD.
5) Social Indicators have improved a lot
between 1981 and 2001

Large population

Better credit facilities

through bank

Growth in mkt

IT penetration in Rural
Indian

Green card / credit card for

farmers

Impact of globalization

Increasing income and

purchasing power

Improved exports due to

export policy

Remittances from indians

working abroad

Media

Accessibility of markets

Consumer behaviour
changes

New employment
opportunities

New employment
opportunities

Various government policies

Understanding the potential of rural

market

Emerging trends in
markets
Online

rural market (internet, nicnet)

Information through local agriculture
input dealers
Cost benefit analysis
Need based production
Processing industry
Apana mandi / kisan mandi /
rythubazaar
Rural agri- export

The Rural Marketing

Environment
(1) Rural consumer
India is one of the largest consumer
market in the world
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, like Shampoos, detergent etc. 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

Buying behaviour of rural

consumer

Heterogenity
Exposure to urban lifestyle
Situation
Availability of Electricity
Place
The influencer
Youngsters in Family
Influence by Bahus
Village community
Marketors effort

The Demand

Aggregate size of the rural market/ Demand

A Large market ,Larger than the Urban
Steady growth and welcome shift in
composition
Several non food products already
established
Despite of low penetration rates, the absolute
mkt is quite large for many pdt.
The great Indian number trick(Rama
bijapurkar)
In manny pdt.,rural consumption accounts for
a large share than urban.

Segmentation in rural market

Types of rural market segmentation:-

Demographic factors:Occupational segmentation(or)sociological

segmentat
This segmentation is based on economy vice
categorisation. This reflects the purchasing power of a
farmer and therefore the purchase power of his family
they are
Artisans, farm labourers
Small farmers
Tenant farmers
Medium level farmers
Large farmers
Very large farmers, zamindar:-

Geographic

Regions
States and union territories
Districts
Sub-division/Talukas
Community development blocks
Panchayats
Villages
Hamlets

Sources of Data on Rural

Market

(1)Thomson rural market

index(TRMI)segmentation
Developed by Hindustan Thomsan
Associates Ltd in 1972
Use in segmentation of rural mkt
10 selected variables having strong corelation to rural market potential.
Agricultural labourers
Gross cropped area
Gross irrigated area
Area under non-food crops
pump sets.

Fertilisers consumption
Tractors
Rural credit
Rural deposits
& village electrifie
Based on these factors, the districts are
classified as A,B,C,D&E. Which are in
order of high potential market to low
potential market..

(2)LINQUEST

This method is software developed by

initiative media on data along the following
parameters
Demographic
Agriculture
Income.
Literacy &
Civic amends.

(3)MICA:
Mundra Institute of Communication,
Ahmedabad
Classifies districts on the basis of the
indices.
Helps in select the appropriate target
segment.
Demographic & Geographic Data
Package use digital maps showing
railway lines, motorable roads, Districts
headquater,location of 43,888 village
haats.

(4)Ruralscan

Quantitative data on the rural haats &

melas.

Marketing-Mix Decision
Product strategies in rural market: Sturdy products: prefer tough and
long
lasting product. Ex.
bullet motor cycle
Royal Enfield
Ambassador car continuous to be
popular in rural areas.

Designing products:- newproducts or promote

existing products to suit field conditions in rural
areas. For exa
L.G electronics
Voltas has introduced a refrigerator for rural
areas
Nokias basic model

Small unit packing:-opportunity for the

consumers to try the product and help the
company to reach consumers. For exa
Ponds
Cavin kare
Rasnna
Godrej Sara lee

Utility products:- The rural people

are concerned with the utility of the
items rather than appearance or
show
Philips- free power radio RL117
priced at 995Rs
HMT watches

Branding Decision

Big question today for CMOs & CEOs of

various companies- from FMCG to
Consumer Durables are facing is: How to
create this Brand in Rural Market? Is it
actually possible to do so? How to get a
share of the pie of this underutilized and
mostly under-penetrated market?
Wrong impression rural people do not
prefer branded products.
Chunk of rural consumers- generic to
branded pdt.
Way of reducing risk- buying an
established & well of brands

A consumer from rural areas will go to local

kiryana shop, for Medicare or Lifeboy
Branding campaigns impact
Strategy different than urban
Differentiation
While creating a Brand, the company needs
to consider some of the following aspects:
the company should try to exceed their
perceived expectations in quality of Product.
maximum effective coverage through mediums.
For consumer durables, Aesthetics, warranties
and recommendations of Shop-keeper.
More induced by brand ambassador
Try to use local beliefs, culture or traditions to
ones advantage
To take care after Branding,- availability of the
product and satisfaction of consumers are next
important steps it fulfils

Pricing Strategy
Introduce small packs( sachets) &
coinage pricing( Rs 1,2 & 5)
Comman price for both mkt is more
effective
For exa
L.G & samsung- rural specific prive
approach
Policy- similar models at similar prices to
similar consumers.
Some time some pdt offered to urban
mkt too,but they would target at the rural
mkt.
For exa,,.sonata watch

Social occasion pricing

Strategy on payment terms
For e.g.
Harvest repayment scheme Salaried
class
EMI package
Rural rich- almost cash down basis

Physical Distribution

Rural people mostly purchase from village shops,

mandi town,Haats

Obstacles to reach rural consumers:

Cost of distribution
Non availability of dealer
Poor viability of outlates
Inadequate banking facilites
Only about 82% of the markets are connected by roads
Interior village roads gets flooded during the monsoon.
Poor transportation and communication facilituies in
rural areas.
Credit requirement of channel members

Physical distribution includes.order,

packaging, inventory handalling, ware housing,
transpotation
Company own delivary van
Ex, Bharat petrolium

Hired vans: for example HUL distributers

bullock carts or cemal: for no motorable
road
Syndicate van distribution: a firm
manfacturing odible oil and another any local
firm dealing in biscuits, Namkin, atta could
jointly service rural opertaion through van
operation

Retail Chain in rural market

HARIYALI KISAAN BAZAAR MODEL : to provide

single-point solution to the diverse needs of the
contemporary Indian farmer.

AADHAAR MODEL:Godrej Aadhaar is the agri

services cum retail initiative of Godrej Agrovet Ltd. It
is a complete solution provider for the Indian
farmers and provides professional guidance with an
objective to improve productivity, higher returns and
improved cost benefit ratio. The services offered are
crop advisory services, soil & water testing services;
buy back of output, crop finance, supply of agri
inputs and animal feeds, transfer of information
(weather, price, and demand supply), door delivery
of products etc

Project shakti model :

Rural malls: chaupal sagar
Mandis, melas,haats

Sales force management

Rural salesmen must posses certain
traits like:
Willingness to be located in rural
areas
Cultural congruence: Role of advisor
rather than seller,
Attitude factor
Knowledge of local language
Ability & willingness for handling
several product lines