Rural Market and Marketing

By
Dr. Mahima M Dubey
 Introduction
• Rural marketing is a type of marketing in which activities are planned
according to the needs and requirements of the people living in the rural
areas. Marketing is the process of identifying the needs and wants of the
consumers, then prepare that particular product or service in order to
satisfy them, keeping in consideration the benefits of the organization.
This concept applies to every type of marketing, whereas when we talk of
rural marketing the emphasis is to be given on the rural areas.
• The focus remains on the people who are living in the remote areas, and
the marketing activities should be planned accordingly. Seeing this, now-a-
days many companies are turning towards the rural market to expand
their scope, and to overcome competition or to restart or give new shape
to competition. A lot of focus is required to be given on the rural markets
because rural markets are the “tomorrow’s markets”.
• In order to understand the term “Rural Marketing” we have to first
understand the term ‘Rural’. There is much confusion associated with the
word rural as there is no accepted definition of the term. However there
are different perceptions of the term and some of them are- To some,
rural means a place with less than one lakh population; others consider
the income level of the population to determine the rural segment.
 Rural Market?
• If the income levels are less than Rs.11,000/- per annum then the segment
is a rural segment. Yet to some others the term rural means smaller towns
and mofussil areas having population of less than 10,000 persons.
• Even the corporate sector faces this confusion about the term rural. In the
absence of any clear concept of the rural area, there will not be a proper
understanding of the rural problems and hence the marketing
considerations and strategies might tend to go wrong.
• In the absence of any standard definition of the term rural, let us
understand it by studying the definition of the term ‘Urban’. The Census
Department of India defines the term ‘Urban’ as (a) All places with
Municipality, Corporation, Cantonment Board or Notified town area
committee, (b) All the places with a minimum population of 5,000
persons, with at least 75% of the male working population engaged in
non-agricultural activity and with a population of at least 400 persons per
square kilometre or 1000 persons per square mile. If we exclude the areas
that come under the above definition, the remaining areas can be
considered to be the rural areas.
• When marketing activities are carried out in the rural markets it is known
as ‘Rural Marketing’.
 Rural Marketing in India – Definitions Provided by
National Commission on Agriculture
• In the process of defining rural market, for the purpose of clarity, it has
been attempted to firstly, deal these two terms ‘market’ and ‘rural’
separately and then combine them into one, later.
• The term, ‘market’ is used in many contexts. For example, the urban
market, the rural market, the agriculture market, the commodity market
etc. Thus, market as a concept is most confusing. According to economist’s
view, market is a physical place where buyers and sellers get together, and
a transfer of title takes place as goods are exchanged.
• Thus, markets include the people who sell the goods and services and also
those who purchase them. Another view is that market refers to the
people with buying power and willingness to buy. In the present study,
both the views have been taken into account.
• With regard to the term ‘rural area’ also there is no unanimity among the
authorities. A few authorities defined a geographical place as a rural area
with a population of 10,000 while few others defined – place with a
population of 20,000 as rural area. But, for the present study, the criterion
adopted by the census of India, 1981 for defining an urban area has been
taken as the basis for defining the rural area.
 FMCG- Fast Moving Consumer Goods
• Accordingly, rural area is defined as a place with human habitation of 5000 and
below with agriculture as the main economic activity and with a density of
population less than 400 sq. km. Some areas with a population more than 5000
are also classified as rural area in view of the agriculture being the main economic
activity of a vast majority of population in that area.
• On the basis of the definitions of the above two terms, the rural market may be
defined as any market that exists in the rural area with a population less than
10,000 where the areal density of population at any population nucleation is low
without any significant infrastructure.
• In other words, total market of India excluding the urban markets can be called as
rural market. These rural markets are mostly unintegrated, very small in size and
rudimentary in nature.
• According to the National Commission on Agriculture – “Rural Marketing is a
process which starts with a decision to produce a saleable farm commodity and it
involves all the aspects of market structure or system, both functional and
institutional, based on technical and economic considerations, and includes pre
and post-harvest operations, assembling, grading, storage, transportation and
distribution.”
• According to Thomsen – “The study of Rural Marketing comprises
of all the operations, and the agencies conducting them, involved in
the movement of farm produced food, raw materials and their
derivatives, such as textiles, from the farms to the final consumers,
and the effects of such operations on producers, middlemen and
consumers.”
• The above two definitions reflects only one side of the coin and are
narrow in explanation, i.e., it explains only the movement of goods
from rural to urban areas, whereas, the rural markets also need
agricultural inputs like seeds, fertilizers, pesticides, cattle feed and
agricultural machinery, as well as the rural population needs
consumables, consumer durables and services also. That’s why the
urban manufacturers have entered the rural markets with
consumables, consumer durables and services.
 Rural Marketing in India – Nature
• The rural market is quite different from urban markets. Agriculture is the chief
economic activity in rural areas, the entire village population is associated directly
or indirectly to agriculture. In the process of development of civilisation agriculture
and pastoral life along river banks are the first form of settled life.
• In the Bronze Age, major civilisation evolved. Archaeological evidence reveals that
bronze industry supplied tools and implements to agriculture. Textiles, paper, iron
and furniture making developed to lid man in his economic activities.
• Agriculture supplies inputs for fabrication into manufactures cotton, oil seeds
spices etc. All food items had a marl origin. Villages were self-contained units,
which traded their produce for gold, arm and precious stones. The rural society
has high status persons and the poor ones.
• The distribution of land was made by state, which belonged to the state- The
British rule for more than three centuries was the worst blow to the rural society.
The worst blow was to cottage and small scale industries, cultivation of indigo, tea
and jute, development of timber trade and denudation of forests.
• The terms of trade were not favourable to Indian farmers. In these circumstances
farmers were forced to live in deprivation and poverty. British India was with the
princely states under the administration of Rajas and Nawabs; the big states had
all the powers except defence and foreign affairs.
• Agriculture and industries based on raw-materials and local
skills are identified for the development of the rural
economy. An integrated approach was evolved to take care
of projects ranging from milk and milk-products to
horticultural products like fruits, vegetables, flowers, herbs,
etc.
• The processing of these is not widespread in rural areas.
Modern technology is too accessible to enterprises there. It
is beyond the financial capacity of an average entrepreneur.
The low cost and labour based technologies have been the
common mode of village industry. As a result, the rural
products do not enjoy competitiveness in a wider market.
Most of the products are consumed locally.
 Rural Marketing in India – Types of Rural Markets: Periodic
Markets, Mobile Traders and Permanent Retail Shops

• The rural marketing structure is not uniform in all parts of the country. The
type of structure prevalent in a particular State or Region depends on
various factors like the state of development of agriculture, condition of
transport and communication facilities, purchasing power of population,
etc.
• In the North-Eastern region and far-flung areas of the country where the
‘agricultural production and levels of income are low and communication
and transport facilities are not available the marketing structure
comprises predominantly. Primary markets like hats and shandies which
have sprung-up at convenient places to cater to the needs of the local
population.
• At the other end are areas in North-West like Punjab and Haryana where
the agriculture and other facilities are developed. The market structure
comprises a larger number of organised markets.
• However, rural markets of India can be broadly categorised into three
types.
 Type # 1. Periodic Markets:
• Periodic markets are the important characteristic feature of the rural marketing in
India. In spite of urbanisation and development of retail stores, periodic markets are
also playing an important role in rural economy as well as in social life of the rural
masses. The periodic marketing function is performed by two institutions, viz., fairs,
and weekly markets.
• A fair denotes a gathering of people who assemble at regular intervals in certain
fixed places—generally around shrines or other religious institutions. Although, by far
the largest number of fairs have a religious background, there are some which owe
then origin to purely economic considerations.
• A general concept regarding Inn is that they are simply an occasion for the recreation
of rural folk. These fairs provide an opportunity for rural people for yearly and half-
yearly, sometimes be-biennial or once in 12 years like that of Kumbha-Mela, Godavari
Pushkarmas, etc.
• The purchase and sale of goods, etc. The important fairs draw people not only from
surrounding tracts, but also from very distant places. There are about 1700 fairs
organised in different parts of the country involving produce and also livestock. There
are a few fairs which are attended by a few lakhs of population and there are others
which are attended by a few thousands.
• On an average, the attendance per fair works out at about 16,000. The periodicity of
fair varies from one fair in one state with that of another in other States also from
one region to another within the State. The time schedule of a fair may vary between
1 day to 7 days.
 The various types of fairs include:

• i. On the basis of Primary Purpose:

• (a) Religious fair,
• (b) Commercial fair,
• (c) Commodity fair,
• (d) Cattle fair,
• (e) Exhibition fair, and
• (f) Mixed fair.
• ii. On the basis of the periodicity:
• (a) One-day fair,
• (b) Short- duration fair, and
• (c) Long-duration fair.
• iii. On the basis of their importance or area of
influence:
• (a) Local fair,
• (b) Regional fair,
• (c) Inter-regional fair or national fairs
• Now-a-days international fairs are also organised by the Governments. Festivals of
India, organised by the Government of India in important cities of several
countries like USA, France and Germany, etc., belong to this category. However,
with the change in rural economy, the pattern of shopping in fairs has also been
changed.
• The development of permanent shops in rural areas and easy contact with towns
have also changed the shopping practice of the rural people. But the importance
of fairs is still the same, due to behavioural pattern of rural people who always
wait for the purchase of many items. The State Governments are also helping in
popularizing the fairs.
• Paintings, hats, shandies, bazaars are different names employed in various parts of
the country to designate periodical markets held usually once or twice a week and
in some cases even often. They are commonly known as weekly markets. However,
there is slight distinction between these terms.
• For example, the term paints, is used in united province to denote a periodical
market dealing more in agricultural produce than in livestock, whereas in a hat the
reverse is the case.
• As the goods and services of daily market or permanent shops are not available in
remote rural areas, most of the villages are not connected with all-weather roads.
Added to this, the state of agriculture is subsistence, peasants have to dispose
their meagre surpluses on one hand and have to purchase limited manufactured
goods on the other.
• Created out of this situation in rural areas are weekly markets, and to
purchase their daily consumption goods. A periodic market is a public
gathering of buyers and sellers of commodities meeting an appointed or
customary location at regular intervals. Though the time varies between
different regions, in most of the cases these meet once in a week.
• The number of hats or weekly markets held in various parts of the country
are estimated around 22,000. These markets are found in greater numbers
(80%) in the eastern and north eastern regions of the country comprising
Assam, Bengal, Bihar, United Provinces and Central Province.
• Out of the States, Hyderabad State occupies the first position with as
many as 1,000 hats. Gwalior, Travancore, Mysore and Bhopal followed
with 300,225, and 200 hats respectively.
• Most of the weekly markets serve an area within a radius of 8 to 16 kms.
In some States like Maharashtra and Tamil Nadu, these markets serve a
larger area while in northeastern states these serve a smaller area.
Transactions are mostly on cash basis though the barter system is still in
practice.
• The volume of produce traded, commodities traded, number of villages
and the population served by the weekly markets differ considerably from
State to State and from market to market within the same State. For
example, the number of villages served varies from 27 in the case of
markets in Andhra Pradesh to 277 in case of markets in Bihar.
• In terms of the population served, the variation is 40,000 in
respect of a market in Andhra Pradesh to 1,83,000 in the
case of market in Gujarat.
• However, the weekly markets at the village level are
generally devoid of most of the market facilities. The
consumers are subjected so many malpractices indulged in
by the traders both in purchasing farms produce from the
rural masses and also in selling their required consumer
goods to them.
• In spite of this, these markets serve as an important
marketing institution in rural areas. Most of the agricultural
labour who get their wages once in a week visit these
markets and purchase their consumption goods.
 Type # 2. Mobile Traders:
• There is another important agency known as mobile traders to fulfill the limited needs like
vegetables, fruits, clothes, utensils, cosmetics, spices, toiletries etc. of rural consumers. The
practice of mobile trading is not a new one, but even in ancient India this phenomenon was
common.
• The mobile traders are those merchants who move from one place to another, from one house to
another in order to sell those commodities which are often required by rural masses. As it is rightly
observed by Stine, important reason for the existence of mobile trader is that when the maximum
range is smaller than the threshold requirement of the firm, the firm either ceases to function or
else it becomes mobile.
• Even in those villages where there are permanent shops and weekly markets, there is a phase for
mobile traders because of behavioural pattern of rural masses. Mobile traders move from one
village to another on foot or bicycle or buses, bullock carts, etc. They visit the villages once or twice
in a week. Sometimes, they visit those villages which are on the way of weekly markets in return
direction after attending these weekly markets.
• While moving from one house to another within the village they loudly announce the name of the
commodity which they sell such as chadar, (bed sheet), pandlu (fruits), gajulu (Bangles), palu,
perugu (milk and curd), etc. There will be too such haggling in price fixation. The payment is made
either in cash or in kind in the form of foodgrains. Sometimes these traders extend credit upto
periods harvests.
• Mobile traders move in groups or 3 to 5 persons carrying different types or similar types of articles.
They move only in those parts of the village, they have decided at the time of the entry. Female
mobile traders are also found significantly dealing in cosmetics, utensils, toiletries, plastic goods,
spices, etc.
• During harvesting season, the frequency of visits by mobile traders is more. Most of these traders
belong to certain castes like Poosala in Andhra Pradesh. These mobile traders are an integral part of
the rural marketing system.
 Type # 3. Permanent Retail Shops:
• Permanent retail shops are developed as the population of villages
increased, their incomes improved, the demand for goods and that too on
daily basis increased. The traditional fairs, weekly markets or peddlers
were not able to meet the situation and this led to the emergence and
growth of permanent shops.
• Permanent shops were set up as a result of the demand of the rural
inhabitants primarily of the same village. The number of shops, their
various forms largely depends upon the size of the population of the
village, their incomes, purchasing power, their preferences, etc.
• In the Indian context, the most sophisticated types of retail outlets
comparable to that of western countries are found in metropolitan cities,
while in rural areas (with population less than 10,000), only the traditional
independent general stores or small-scale retailing are prevailing.
• In rural areas, only traditional methods of distribution, i.e., wholesaler and
retailers are working as usual. The modern methods of distribution, such
as chain stores, super markets and franchise shops are not existing in rural
areas because of small size of villages and lower income of rural folk.
 Rural Marketing in India – Significance
of Rural Markets
• Every sales executives today if asked which market he would prefer to serve, the immediate answer
would be. “Rural Markets”. A number of factors have been recognised as responsible for the rural
market boom.
• Some of them are:
• 1. Population Increase- Increase in population, and hence increase in demand. The rural population
in 1971 was 43.80 crore, which increased to 52.50 crore in 1981, and 72 crore in 1994 and it is
about 78 crore in 2000.
• 2. Addition in the Rural Increases- A marked increase in the rural income due to agrarian property.
• 3. Development of Villages- Large inflow of investment for rural development, programmes from
government and other sources.
• 4. Development of Educational Facilities- Increase in literacy and educational level among rural
folks, and the resultant inclination to lead sophisticated lives.
• 5. Increasing Contract- Increased contract of rural people with their urban counterparts due to
development of transport and a wide communication network.
• 6. Role of Foreign Goods- Inflow of foreign remittances and foreign made goods into rural areas.
• 7. Prosperity- The general rise in the level of prosperity appears to have resulted in two dominant
shifts in the rural consuming systems. One is conspicuous consumption of consumer durables by
almost all segment of rural consumers, and the second, the obvious preference for branded goods
as compared to non-branded goods of rural origin.
• 8. Change in Buying Behaviour- Changes in the laud tenure system causing a structural change in
the ownership pattern and consequent, changes in the buying behaviour.
• Rural Marketing in India – Approaches: Availability, Affordability,
Awareness and Acceptance
• The rural market may seem very attractive because of its vast size
and largely untapped markets. C.K. Prahalad, the renowned
management guru had talked about the huge market potential
offered by the world’s poor in his book the fortune at the bottom of
the pyramid. According to him, commercial success can be
successfully combined with societal development if multinational
companies targeted the population of the developing world in a
way that would fulfill the needs of both.
• But entering the rural market is not so easy. There are some
problems specific to this kind of market. The 4 a’s approach is a
consumer-oriented model that explains the uniqueness of rural
markets.
• The 4 a’s are:
 Approach # 1. Availability:
• The biggest challenge is to ensure availability of goods and services in the
markets. Rural markets do not have a proper physical distribution system
like those in urban markets. India’s 6,38,000 villages are scattered all over
the country and each village would have particular distribution problems.
Village areas do not even have a well-developed roadways system.
• Many of the roads are not even pucca, and are rendered useless during
the monsoons. The mountainous villages become inaccessible during
landslides and snow storms. Therefore it is a big challenge to ensure
availability of products at far flung areas. To counter such problems, big
companies like the global giant unilever’s Indian subsidiary Hindustan
unsilver have built a strong distribution system to reach the remotest of
the villages.
• More traditional forms of transport like bullock carts, auto rickshaws and
even boats in some parts of Kerala are used in the rural distribution
system. Coca cola has developed a special distribution system to deliver its
products to the village areas. Some companies even open up factories and
offices in such areas to penetrate the market.
 Approach # 2. Affordability:

• Key to successful rural marketing lies in selling goods and services that can
be afforded by villagers. Most of the rural population depends upon
agriculture for livelihood and as such their income is irregular. Also the per
capita income of the rural areas is lower.
• It is estimated that more than two-thirds of Indian villagers belong to low
income group, and thus they are very much price-sensitive. A villager will
purchase a particular product only if he feels that he is getting enough
value for it.
• Rural population normally does not indulge in conspicuous spending. In
order to sell to the village markets, many organizations developed low
priced options specifically suited to the rural customer’s pockets.
Britannia’s tiger biscuit is a low priced snack which is popular among
village kids.
• In the year 1998, Lg electronics introduced its sampoorna television range
targeted at rural buyers. Procter and gamble brought out tide naturals, a
comparatively cheaper detergent powder. Most brands of shampoo are
available in sachets priced at Rs. 2-3.
 Approach # 3. Awareness:
• It is significant to create awareness about the product in the minds of the
customers. The mass media for reaching rural people should be chosen
carefully. It should be kept in mind that even today the media reach is
lower in villages.
• Television ownership is very low in villages and viewership is limited to
doordarshan channels even for those who watch television. Print media
will be ineffective because of low literacy rates.
• Among electronic media, radio and cinema have a comparatively wider
coverage in villages. Advertisements in regional languages broadcast on
local radio stations will influence consumer thinking.
• Outdoor advertising options like banners, billboards, wall paintings,
posters, etc. can be used successfully in rural areas. Advertisements
should be in local languages so that people can easily understand them.
Hindustan unsilver makes use of street performers like magicians, singers
and dancers to promote its products.
 Approach # 4. Acceptance:
• The most important issue in rural marketing is to make the customers accept the
product. Villagers are more likely to resist change and are slower in adopting
newer products. So it is vital to assure them about the benefits and value they can
get by purchasing a particular product. Since rural people would not spend their
precious money on wasteful products, producers should offer goods that suit the
villagers’ needs.
• People in a rural Chinese province used washing machines to wash not just
clothes, but also vegetables. Chinese appliance maker Haier group leveraged this
opportunity and modified their washing machine to enable washing farm produce
safely. The villagers happily purchased this machine, giving Haier group a
competitive advantage over rivals.
• Marketers should facilitate the process of product acceptance—coca cola provides
low cost ice boxes to its rural distributors who do not have electricity or
refrigerators. The customers should feel that a product is worth the efforts they
are making to get it.
• Rural people are more price-sensitive and believe in getting the maximum value
out of whatever they buy. Many models of Nokia mobile phones are equipped to
handle SMS facilities in regional Indian languages making it user friendly for non-
English speaking groups.
 Rural Marketing in India –
Assumptions
• Many assumption prevail about rural marketing. For instance, one
assumption is that the rural buyer is not very discriminating. Once he is
persuaded to buy a particular product, he develops a strong affinity for it,
and if satisfied, becomes brand loyal.
• As a result, Indian manufacturers are generally known to prefer selling
fewer items at higher prices than selling more items at lower prices. A
contrary view is that the rural buyer, being suspicious of the marketer’s
hard-sell techniques, is quite discriminating, and is not easily persuaded.
• Yet another assumption is that the rural buyer is not particularly been
about quality and packaging.
• Some other assumption can be quoted. But all these need deep probing
for assuring at valid and reliable conclusions. Consumer’ research, thus, is
indispensable for entering the rural segment of the market. The pace of
urbanisation has brought into existence new markets for pronumerous
consumer goods.
 The rural market consists of two
segments, viz.-
• i. The market for consumption goods including consumer durables, and
• ii. The market for investment goods, including agricultural inputs. Rural consumers
in both these segments are far less homogeneous than their urban counterparts,
and also differ from region to region. A number of research studies have been
made on the behaviour of rural consumers towards agricultural inputs like
fertilizers, pesticides, sprayers and food-grains.
• The rural markets are green pastures for any marketer, provided his marketing plan
are attuned to the specialities of rural markets. The rural market is estimated to be
growing faster, compared to urban market. Being a new market, it could be easily
manipulated, provided the manufacturers develop an insight into the behavioural
patterns of rural consumers.
• The potential of rural markets is said to be like that of a woken up sleeping giant.
This is substantiated in a study of market growth conducted by the Operations
Research Group (ORG) during a six year period (1983-89). The study revealed that
the offtake of rural markets for packaged consumer products accounted for Rs.
2,083 crores in 1989.
• The growth works out to 184 per cent, compared to the figure for 1984. Against
this, the increase in urban market off take was from Rs. 1,855 crore in 1984 to Rs.
3,628 crore in 1989, working out to a 96 per cent crawl.
 Rural Marketing in India – Reasons for Increase
in the Importance of Rural Markets
• Cut Throat Competition in Urban Markets:
• Now-a-days people say that there is lot of competition in the market.
Actually it is not only lot of competition but cut throat competition,
especially in the urban areas. Companies are playing on the basis of price.
Every big company is trying to swallow the small and new companies.
Prices are going down steeply just because of the tough competition.
• Apart from the price factor, companies have started increasing product
features and added value to their products to compete in the market,
without increasing the prices. The concept is increase the utility and value
and decreases the prices. Irrespective of the above facts, there are certain
products which have already achieved the maturity level or have reached
the saturation level. Demand is not increasing in these sectors so the best
strategy is to explore new markets for the products.
• So rural marketing is turning out to be a market for the packaged products
with a minimum or no competition. Firms can generate demand and
increase profits.
 2. Socioeconomic Changes:
• Today a revolution has come in the rural areas which in turn have brought a change in the socio-
economic conditions. This is basically in terms of increase in the productivity of the agriculture.
Most of the income of people residing in rural areas comes from agriculture. Due to the adoption of
the latest technology the yield per acre or animal has increased considerably.
• One of the major reasons behind these changes is the Government Policies to uplift the agriculture
and remote areas, and the opening of the cooperatives in some major belts of India. Because of
adoption of latest technology, production has increased which has resulted in the increase in
income of farmers. Due to increase in income the rural customer also wants to be in the same
frame as the urban customer.
• Urge for increasing income and better standard of living by the rural customers has motivated the
companies to go and spread their business activities in these areas. Some fertilizer companies have
started adopting villages for increase in their production. Some companies have taken it as a social
cause for the upliftment of remote areas. Integrated rural development programs encompass
health, education, latest technology farming products sales, development of industry etc.
• Another reason for this change is the media which has reached in the rural areas. Specially
Television has brought a revolution in this area. Today we have so many regional channels.
Customer can be made aware of the latest products, their utility, new brands, etc. With the
increased income and aspiration for standard of living, with this kind of awareness provided by the
media, the companies are motivated to go and take charge of the rural areas.
• 3. Scope and Size of Rural Market:
• Today the size and scope of rural market is increasing at a very fast pace. A
major part of Indian population lives in the rural areas which are now
turning as a new market. Now the rural market is not limited to the sale of
fertilizers and pesticides but it is going beyond that with the increase in
the income and the aspiration level.
• Urge for good standard of living has opened the rural market as an
opportunity for the companies to come and grab the market. Now in rural
areas also there is a demand for TV, Cars, Shampoo, packaged goods etc.
• 4. Occupation:
• Most of the rural customers are engaged in farming, trading, poultry work,
plumbing, electric works, dairy, etc. We have different varieties of the
occupation in the rural areas. In rural areas also big farmers usually
possess almost everything like TV, fridge, furniture, and other home
appliances etc. of the major brand. Small farmers have scarcity of
resources and funds etc. so there is no question of possessing almost any
branded products, specially costly products.
5. Reference Groups:
In rural areas there are totally different reference groups. Any
person who is having a say in their area, a respect in the society and
a place in the hearts of the residents form a reference group.
Higher the profile and requirement of these people in the society,
higher will be their influence on them. They are basically health
workers, doctors, teachers, panchayat members, local bodies,
samiti members, bank managers etc.

6. Media Types:
Now-a-days televisions, presentations, display, radio etc. has taken
the place of old traditional folk programmes like ‘Nautanki’. Because
of the literacy rate being so low, print media is not so effective.
Rural Marketing in India – Factors Contributing to the Change in the Rural Markets
• While a variety of factors, acting in concert, have brought about this change, three
factors deserve special mention.
1. Concerted Efforts at Rural Developments:
• As a part for planned economic development, the government has been making
concerted efforts towards rural development. Plan after plan, it has been
committing large outlays to sectors like agriculture, animal husbandry, irrigation,
flood control, and khadi and village industries. They have generated new
employment, new income and new purchasing power among the rural people.
2. The Green Revolution:
• The green revolution has been the next major factor. A technological breakthrough
took place in Indian agriculture. Rural India derived considerable benefit from the
green revolution. Today, rural India generates 170 millions tonnes of food grains
per year and an equally substantial output of various other agricultural products.
• It produces 14 billion eggs, 80 millions broilers and 40 million tonnes of milk per
annum obviously, rural India is acquiring a new power.
3. The Expectation Revolution:
• The expectation revolution among the rural folks completed the process. More
than the green revolution, the revolution of ‘rising expectations’ of the rural
people influenced the marketing environment of rural India. While the expectation
revolution did not in itself result in any additional purchasing power, it brought
about a powerful change in the environmental dynamics.
• It enlarged the awareness of the marl people; it kindled their hopes; it
strengthened their motivation to work, earn and consume. Political and social
changes taking place in the country strengthened this phenomenon. The rise in
income resulting from the new farming strategy has added meaning and substance
to the growing aspirations of the rural people.
 Rural Marketing in India – Marketing
Mix for the Rural Markets
1. Product Decisions:
The product for rural market must be little bit different from the
product for urban market. The product should be easy to use,
simple, easily serviceable, and easily maintainable. Take the
example of tube wells which are very easy to use and maintain in
the fields as compared to electrical motor systems. The product
literature should be easily understandable, it should be simple and
in simple or local language.
Packaging should be given due weightage i.e. product should be
available in small pack sizes (100 gm, 200 gm, 500 gm etc.) because
rural consumer prefers to buy one unit as compared to urban
buyers who purchases in bulk quantities. Focus can be on providing
products in small sachets packs like in the case of shampoo, pan
masala etc.
• 2. Pricing Decision:
Law of demand says ‘Higher the price of the products, lower will be the
demand of the product and lower the price of the product, higher will be
demand for that product’. This law is totally applicable in the rural
markets. Because of the relatively lower income, the rural consumer is
more sensitive towards price. Marketers have to plan their activities in
order to bring down the cost of production. They have to bring down the
price in order to attract the customers e.g. Nirma Washing Powder.

• 3. Promotion Decisions:
Television, Radio, Presentation, Displays can be used to promote the
marketing activities of the company. Programmes like folk dances, rural
fairs, nautankis, local contests can be taken into consideration to promote
the company’s products. Personal selling can also play an important role in
this respect. ‘Brand’ can be established through visible logos etc.
• 4. Distribution Decision:
In order to send the products of the company to
the rural customers the company should provide
its products to local retailers or distributors.
Company cannot wait for the customers to come
to the city and purchase the products. The
company may arrange for mobile vans to send
their products in the rural areas or focus on
weekly markets of the rural areas.
 Rural Marketing in India – Role, Types and
Minimization of Risk in Rural Marketing

• Risk plays a vivid role in the profitability and successful functioning of rural marketing or any
marketing system. There are number of theories’ of profits like uncertainty, contingencies theory,
risk bearing theory, M.P. theory.
• The theory which is acceptable to most of the economist is the risk bearing theory- Hardy has
defined Risk as uncertainty which may give you ample of benefits or it may ruin badly.
• At one place, he points out that no risk no profit, more risk more profits. He has defined the risk
theory as, “Profit is the reward of uncertainty and Risk Bearing”. Risk is inherent in all marketing
transactions. There is the risk of the destruction of the produce by fire, rodents or other elements,
quality deterioration, price fall, change in tastes, habits or fashion, and the risk of placing the
commodity in the wrong hands or area.
• There is a time lag between the production and consumption of arm products. The longer the time
lag, the greater the risk. The risk associated with marketing cannot be dispensed with for this risk
contributes to profit. Someone has to bear the risk in the marketing process.
• But most of the risk is taken by market middlemen, for they have the capacity to bear it. Whenever
risks are greater and varied, the margin taken by the risk bearers is higher, and vice versa. One who
holds the commodity in the process is the bearer of the risk, because of which lie may be better off
or worse off.
 Types of Risk:

1. Physical Risk:
This includes a loss in the quantity and quality of the
product during the marketing process. It may be due to
fire, flood, earthquake, rodents, insects, pests, fungus,
excessive moisture or temperature, careless handling
and unscientific storage, improper packing, looting or
arson.
These together account for a large part of the loss of
the produce at the individual as well as at the macro
level. Such losses are a loss to society, too, and must be
averted to the extent possible.
2. Price Risk:
The prices of rural products fluctuate not only from year to year, but
during the year from month to month, day to day and even on the same
day. The changes in prices may be upward or downward. Price variation
cannot be ruled out, for the factors affecting the demand for, and the
supply of, rural products are continually changing.
A price fall may cause a loss to the trader or farmer who stocks the
produce. Sometimes, the risks are so great that they may result in a total
failure of the business, and the person who owns it may become
bankrupt.

3. Institutional Risks:
These risks include the risks arising out of a change in the government’s
budget policy, in tariffs and tax laws, in the movement restrictions,
statutory price controls and the imposition of levies.
 Minimization of Risks:
The agencies engaged in marketing activities worry about the risks associated at every stage; and they
continually try to minimize the effects of these risks. A risk cannot be eliminated because it also
carries profit. The agencies which do not take risks hardly earn profit.
The risk management by the adoption of some of the measures listed below may minimize the risks:

a. Reduction in Physical Loss:

• The physical loss of a product (quantity and quality both) may be reduced by the adoption of the
following measures:

• (i) Use of fire-proof materials in the storage structures to prevent accidents due to fire;
• (ii) Use of improved storage structures and giving necessary pre-storage treatment to the product
to prevent losses in quality and quantity arising out of excessive moisture, temperature, attacks by
insects and pests, fungus and rodents;
• (iii) Use of better and quicker transportation methods and proper handling during transit; and
• (iv) Use of proper packaging material.

b. Transfer of Physical Losses to Insurance Companies:

• The burden of physical risk may be minimized by shifting it is insurance companies. There are
specialised professional agencies to bear such risks. They collect some premium and provide full
compensation to the party in case of loss due to the reasons for which the products are insured. In
this way, the company insures a number of farmers against losses.
 c. Minimisation of Price Risk:
The risk associated with the variation in prices may be minimized by the
adoption of the following measures:
• (i) Fixation of minimum and maximum prices of commodities by the
government and allowing movements in prices only within the defined
range;
• (ii) Making arrangements for the dissemination of accurate and scientific
price information to all sections of society over space and time- This
should include information on market demand, average under a particular
crop, estimates of market supply and of the import and export of
commodities.
• (iii) An effective system of advertising may reduce price uncertainty and
create a favourable atmosphere for the commodity;
• (iv) Operation of speculation and heading. The price risk associated with
the commodities for which the facility of forward trading is available may
be transferred to professional speculators through the operation of
hedging. A detailed exposition of speculation and hedging follows.