Prospects and Problems of Indian Rural Markets: V V Devi Prasad Kotni

ZENITH International Journal of Business Economics & Management Research
Vol.2 Issue 3, March 2012, ISSN 2249 8826

Online available at http://zenithresearch.org.in/
PROSPECTS AND PROBLEMS OF INDIAN RURAL MARKETS
V V DEVI PRASAD KOTNI*
*Assistant Professor,
Department of Management Studies,
GVP College for Degree and PG Courses,
Rushikonda, Endada, Visakhapatnam,
Andhra Pradesh, India.
ABSTRACT
In recent years, rural markets have acquired significance, as the overall growth of the
economy has resulted into substantial increase in the purchasing power of the rural
communities. Rural Markets are defined as those segments of overall market of any
economy, which are distinct from the other types of markets like stock market, commodity
markets or Labor economics. Typically, a rural market will represent a community in a rural
area with a population of 2500 to 30000. On 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 to satisfy the needs of rural
consumers. Hence, it is proposed to undertake this study to find out various ways to tap the
potential rural markets. The main aim of this study is to observe the potentiality of Indian
Rural Markets and finding out various problems are being faced by rural markets. This paper
attempts to provide a brief literature on rural marketing and finally offers policy
recommendations for better performance of rural markets by adopting SWOT analysis matrix
to rural markets.
KEYWORDS: Rural Markets, Rural Marketing, Market Potential, Marketing Myopia.

___________________________________________________________________________
INTRODUCTION
The concept of Rural Marketing in India Economy has always played an influential role in
the lives of people. In India, leaving out a few metropolitan cities, all the districts and
industrial townships are connected with rural markets. The rural market in India is not a
separate entity in itself and it is highly influenced by the sociological and behavioral factors
operating in the country. The rural population in India accounts for around 627 million,
which is exactly 74.3 percent of the total population. Rural Markets are defined as those
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segments of overall market of any economy, which are distinct from the other types of
markets like stock market, commodity markets or Labor economics. Rural Markets constitute
an important segment of overall economy, for example, in the USA, out of about 3000
countries, around 2000 counties are rural, that is, non-urbanized, with population of 55
million. Typically, a rural market will represent a community in a rural area with a population
of 2500 to 30000. The concept of rural marketing in India is often been found to form
ambiguity in the minds of people who think rural marketing is all about agricultural
marketing. However, rural marketing determines the carrying out of business activities
bringing in the flow of goods from urban sectors to the rural regions of the country as well as
the marketing of various products manufactured by the non-agricultural workers from rural to
urban areas. To be precise, Rural Marketing in India Economy covers two broad sections,
200
namely - Selling of agricultural items in the urban areas and Selling of manufactured products
in the rural regions. The Registrars of Companies in different states chiefly manage, the rural
market in India brings in bigger revenues in the country, as the rural regions comprise of the
maximum consumers in this country. The rural market in Indian economy generates almost
more than half of the country's income. Rural marketing in Indian economy can be classified
under two broad categories. These are: The market for consumer goods that comprise of both
durable and non-durable goods and the market for agricultural inputs that include fertilizers,
pesticides, seeds, and so on.
NEED FOR THE STUDY
Rural Markets are defined as those segments of overall market of any economy,
which are distinct from the other types of markets like stock market, commodity markets or
Labor economics. The so-called urban markets are crowded and saturated and the share of
agriculture in GDP is going down but India still lives in her villages. Such a potential market
was being ignored by corporate sector and small and medium industries. Hence it is proposed
to study the potentiality and problems of rural market with a special reference to Indian Rural
Market.
OBJECTIVES OF THE STUDY
Rural markets, as part of any economy, have untapped potential. There are several
difficulties confronting the effort to fully explore rural markets. The concept of rural markets
in India, as also in several other countries, like China, is still in evolving shape, and the sector
poses a variety of challenges, including understanding the dynamics of the rural markets and
strategies to supply and satisfy the rural consumers. The objectives of this study include
observing the dynamics of Indian Rural Markets over a period of time, reviewing the
literature of rural markets and rural marketing, outlining the potentiality of rural markets with
respective to different segments like FMCG, Automobiles, Retail etc. The study also
concentrates on the problems faced by rural markets and finally offering suggestions to
overcome the problems and tapping the potentiality of the rural markets at maximum level.
METHODOLOGY OF THE STUDY
In order to study the various problems and prospects of rural markets, to find out the
facts, to analyse the findings and to offer suggestions – a tool, namely, SWOT Analysis
Matrix has been adopted. The inputs for this matrix have been collected from past studies of
rural marketing, reports published by various institutions etc.
REVIEW OF LITERATURE
DEFINING RURAL MARKET
- NSSO (Census) defined rural market as a Market with population density less than
400 sq km., 75% of male working population is engaged in agriculture and no
Muncipal Corporation / board.
- Planning Commission of India defined rural market as towns up to 15,000 populations

are considered as rural market.
201
- NABARD defined as all locations with a population up to 10,000 considered as rural

area.
- The Consumer electronics giant LG Electronics defined as all places other than seven
metro cities of India.
- The Sahara group defined as commercial establishments located in areas serving less
than 1000 population are rural markets.
(Source: The Rural Marketing Book – Text & Practice, Kashyap. P and Ruat. S (2007))
DEFINING RURAL MARKETING
- National Commission on Agriculture defined Rural Marketing as ―decisions to

produce salable commodities involving all aspects of the market system or structure,
both functional and institutional, based on technical and economic considerations and
includes the pre and post harvest operations‖.
- Several Rural NGOs defined rural marketing as Marketing products produced in rural
area to urban areas. Or Marketing Products produced in rural areas in rural markets.
- Several Corporates defined Rural marketing as ―function that manages all activities
involved in assessing, stimulating and converting the purchase power of rural
consumers into effective demand for specific products and services to create
satisfaction and a better standard of living for achieving organisational goals.
PHASES IN RURAL MARKETING
PHASE ONE (PRE 1960’S)
- Marketing Rural Products in Rural Areas and Urban Areas.
- Agriculture inputs in rural areas.
- Agriculture Marketing.
- Farming methods were primitive and mechanisation was low.
- Markets unorganised.
PHASE TWO (1960S TO 1990S)
- Green Revolution.
- Companies like Mahindra & Mahindra, Sri Ram Fertilisers and IFFCO Emerge.
- Rural Products were also marketed through agencies like KVIC.

202
PHASE THREE (1990S AND PRESENT)
- Demand for Consumables and durables rise.
- Companies find urban markets declining.
CHARACTERISTICS OF RURAL MARKETING
Some of the important features or characteristics of Rural Marketing in India

Economy are being listed below:
- With the initiation of various rural development programmes there have been an
upsurge of employment opportunities for the rural poor. One of the biggest cause
behind the steady growth of rural market is that it is not exploited and also yet to be
explored.
- The rural market in India is vast and scattered and offers a plethora of opportunities in
comparison to the urban sector. It covers the maximum population and regions and
thereby, the maximum number of consumers.
- The social status of the rural regions is precarious as the income level and literacy is
extremely low along with the range of traditional values and superstitious beliefs that
have always been a major impediment in the progression of this sector.
- The steps taken by the Government of India to initiate proper irrigation,

infrastructural developments, prevention of flood, grants for fertilizers, and various
schemes to cut down the poverty line have improved the condition of the rural
masses.
DEMOGRAPHIC DETAILS OF INDIAN RURAL MARKETS
- About 285 million live in urban India whereas 742 million reside in rural areas,
constituting 72% of India's population resides in its 6, 27,000 villages.
- The number of middle income and high income households in rural Indian is expected
to grow from 46 million to 59 million.
- Size of rural market is estimated to be 42 million households and rural market has
been growing at five times the pace of the urban market.
- More government rural development initiates.
- Low literacy rate
- Increasing agricultural productivity leading to growth of rural disposable income.
- Lowering of difference between taste of urban and rural customers.

203
SIGNIFICANCE OF RURAL MARKETING
Rural market is getting an importance because of the saturation of the urban market.
As due to the competition in the urban market, the market is more or so saturated as most of
the capacity of the purchasers has been targeted by the marketers. So the marketers are
looking for extending their product categories to an unexplored market i.e. the rural market.
This has also led to the CSR activities being done by the corporate to help the poor people
attain some wealth to spend on their product categories. Here we can think of HLL (now,
HUL) initiatives in the rural India. One of such project is the Project Shakti, which is not only
helping their company attain some revenue but also helping the poor women of the village to
attain some money which is surely going to increase their purchasing power. Also this will
increase their brand loyalty as well as recognition in that area. Similarly we can think of the
ITC E-Chaupal, which is helping the poor farmers get all the information about the weather
as well as the market price of the food grains they are producing. In other view these
activities are also helping the companies increase their brand value. So as it is given above
the significance of the rural market has increased due to the saturation of the urban market as
well as in such conditions the company which will lead the way will be benefited as shown
by the success of HUL and ITC initiatives.
In recent years, rural markets have acquired significance in countries like China and
India, as the overall growth of the economy has resulted into substantial increase in the
purchasing power of the rural communities. On account of the Green Revolution in India, 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 taken shape.
Sometimes, rural marketing is confused with agricultural marketing – the later denotes
marketing of produce of the rural areas to the urban consumers or industrial consumers,
whereas rural marketing involves delivering manufactured or processed inputs or services to
rural producers or consumers. Also, when we consider the scenario of India and China, there
is a picture that comes out, huge market for the developed products as well as the labor
support. This has led to the change in the mindset of the marketers to move to these parts of
the world.
Rural India buys small packs, as they are perceived as value for money. There is
brand stickiness, where a consumer buys a brand out of habit and not really by choice. Brands
rarely fight for market share; they just have to be visible in the right place. Even expensive
brands, such as Close-Up, Marie biscuits and Clinic shampoo are doing well because of deep
distribution, many brands are doing well without much advertising support — Ghadi, a big
detergent brand in North India, is an example.
The Indian rural market has a huge demand base and offers great opportunities to
marketers. Two-thirds of Indian consumers live in rural areas and almost half of the national
income is generated here. The reasons for heading into the rural areas are fairly clear. The
urban consumer durable market for products like colour TVs, washing machines,
refrigerators and air conditioners is growing annually at between 7 per cent and 10 per cent.
The rural market is zooming ahead at around 25 per cent annually. "The rural market
is growing faster than urban India now," says Venugopal Dhoot, chairman of the Rs 989 -
crore (Rs billion) Videocon Appliances. "The urban market is a replacement and up gradation
market today," adds Samsung's director, marketing, Ravinder Zutshi.
204
REASONS FOR IMPROVEMENT OF BUSINESS IN RURAL AREA
- Socio-economic changes (lifestyle, habits and tastes, economic status)
- Literacy level (25% before independence – more than 65% in 2001)
- Infrastructure facilities (roads, electricity, media)
- Increase in income
- Increase in expectations
PROSPECTS OF RURAL MARKETS
The Indian growth story is now spreading itself to India's hinterlands. The rural
consumer market, which grew 25 per cent in 2008, is expected to reach US$ 425 billion in
2010-11 with 720-790 million customers, according to a white paper prepared by CII-
Technopak, in November 2009. The figures are expected to double the 2004-05 market size
of US$ 220 billion. The Union Budget for 2010-11 has hiked the allocation under the
National Rural Employment Guarantee Act (NREGA) to US$ 8.71 billion in 2010-11, giving
a boost to the rural economy.
FMCG SECTOR: According to figures released by market researcher Nielsen, demand for
personal care products grew faster in rural areas than urban areas during the period January-
May 2010. In shampoos, rural demand grew by 10.7 per cent in value terms, while in urban
markets, it rose by 6.8 per cent. Similarly, toothpaste sales grew by 9.1 per cent in rural India
and by 4.4 per cent in urban markets. Several fast moving consumer goods (FMCG)
companies such as Godrej Consumer Products, Dabur, Marico and Hindustan Unilever
(HUL) have increased their hiring in rural India and small towns in order to establish a local
connect and increase visibility. Swiss FMCG giant, Nestle plans to make further inroads into
the rural markets. The company has asked its sales team to deliver "6,000 new sales points
every month in rural areas" to expand its presence in Indian villages, according to Antonio
Helio Waszyk, Chairman and Managing Director, Nestle India.
RETAIL SECTOR: The rural retail market is currently estimated at US$ 112 billion, or
around 40 per cent of the US$ 280 billion Indian retail market, according to a study paper,
'The Rise of Rural India', by an industry body. Hindustan Unilever (HUL) is planning to
significantly increase its rural reach. According to Harish Manwani, Chairman, HUL, the
quality and quantity of rural coverage will go up to the extent that "what we have done in the
last 25 years we want to do it in the next two years." Currently HUL products reach
approximately 250,000 rural retail outlets and the company intends to scale it up to nearly
750,000 outlets in two years time. Direct selling firm Tupperware India, known for its storage
containers plans to foray into the rural markets in the next two-three years. "We have solid
plans for the rural market. We are working on bringing products for rural people as well,"
said Asha Gupta, Managing Director, Tupperware India. Castrol India is pushing its rural
sales by building up a distribution infrastructure to reach out to all villages. According to
Ravi Kirpalani, Chief Operating Officer, Castrol India, "Our distribution now reaches 5,000-
7,000 towns and villages, but we are planning to take our products to six lakh villages with a
population of less of 5,000.''
205
AUTOMOBILE SECTOR: Car sales in rural India have been on the increase in the last
three years since the government announced various schemes such as farm loan waiver etc,
for the rural population. Maruti Suzuki's share of rural sales has increased from 3.5 per cent
to 17 per cent in the last three years. Mahindra & Mahindra (M&M) is now selling more
Scorpios in rural and semi-urban markets. Scorpio sales have increased from 35 per cent to
50 per cent in the last two years. Toyota Kirloskar Motor (TKM), in which Japan's Toyota
Motor Corp holds an 89 per cent controlling stake, is planning at selling 40 per cent of its
cars in rural markets in India. According to Hiroshi Nakagawa, Managing Director, TKM,
"We are aggressively expanding our dealership footprint in India and quite a significant
portion of this will be in country's heartland. By end of 2010, we plan to have 150 dealers
across the country." Yamaha is also planning a major initiative in rural India by launching
more models in the affordable price range in 2010. "We are very strong in Tier 1 and Tier II
cities. Now onwards, our focus will be rural India (Tier III towns). We will launch more
models in the affordable price range to dominate the rural market," according to Pankaj
Dubey, National Business Head, India Yamaha Motor. At present, around 15 per cent of its
sales come from the rural market and Dubey sees this demand increasing substantially in
2010. Tata Motors is also making efforts to sell its pick up truck Ace in rural markets. It has
already opened 600 small outlets for the Ace in rural and semi-urban markets. It has also tied
up with 117 public sector, gramin (rural) and co-operative banks to help small entrepreneurs
buy the vehicle.
ESTIMATED ANNUAL SIZE OF THE RURAL MARKET
TABLE 1: ESTIMATED ANNUAL SIZE OF THE RURAL MARKET
FMCG Rs. 65,000 Crore
Durables Rs. 5,000 Crore
Agri-Inputs (including tractors) Rs. 45,000 Crore
2 / 4 Wheelers Rs. 8,000 Crore
Source: NCAER Report, 2011
In 2001-02, LIC sold 55% of its policies in rural India. Of two million BSNL mobile
connections, 50% are in small towns / villages. Of the 6.0 lakh villages, 5.22 lakh have a
Village Public Telephone (VPT). 41 million Kisan Credit Cards have been issued (against 22
million credit-plus-debit cards in urban), with cumulative credit of Rs. 977 billion resulting in
tremendous liquidity. Of the 20 million Rediffmail sign-ups, 60% are from small towns. 50%
of transactions from these towns are on Rediff online shopping site. 42 million rural
households (HHs) are availing banking services in comparison to 27 million urban HHs.
Investment in formal savings instruments is 6.6 million HHs in rural and 6.7 million HHs in
urban.
206
OPPORTUNITIES OF RURAL MARKETS
In the early 2000s, around 700 million people, i.e. 70% of the Indian population lived
in 6,27,000 villages, in rural areas. Of this, 90% were concentrated in villages with
population less than 2000. According to a study conducted in 2001 by the National Council
for Applied Economic Research (NCAER), there were as many "middle income and above"
households in rural areas as there were in urban areas.
Infrastructure is improving rapidly - In 50 years only, 40% villages have been

connected by road, in next 10 years another 30% would be connected. More than 90%
villages are electrified, though only 44% rural homes have electric connections. Rural
telephone density has gone up by 300% in the last 10 years; every 1000+ population is
connected by STD. Social indicators have improved a lot between 1981 and 2001 - Number
of "pucca" houses doubled from 22% to 41% and "kuccha" houses halved (41% to 23%).
Percentage of BPL families declined from 46% to 27%. Rural literacy level improved from
36% to 59%. Low penetration rates in rural areas, so there are many marketing opportunities
TABLE 2: COMPARISON OF USAGE B/W URBAN AND RURAL AREAS
Durables Urban Rural Total (% of Rural HH)
CTV 30.4 4.8 12.1
Refrigerator 33.5 3.5 12
TABLE 3: COMPARISON OF USAGE B/W URBAN AND RURAL AREAS
FMCGs Urban Rural Total (% of Rural HH)
Shampoo 66.3 35.2 44.2
Toothpaste 82.2 44.9 55.6

Marketers can make effective use of the large available infrastructure –
TABLE 4: RURAL MARKETS INFRASTRUCTURE
Post Offices 1,38,000
Haats (periodic markets) 42,000
Melas (exhibitions) 25,000
Mandis (agri markets) 7,000

207
Public Distribution Shops 3,80,000
Bank Branches 32,000
Proliferation of large format Rural Retail Stores, which have been successful also -
DSCL Haryali Stores
M & M Shubh Labh Stores
TATA / Rallis Kisan Kendras
Escorts Rural Stores
Warnabazaar, Maharashtra (Annual Sale Rs. 40 crore)
ANALYSIS AND DISCUSSIONS
A SWOT analysis matrix has been developed to interpret the prospects and problems
of rural markets. SWOT analysis matrix contains Strengths, Weaknesses, Opportunities and
Threats of Rural Markets. After defining SWOTs of rural markets, Opportunities are
compared against Strengths and then Weaknesses to draw SO and WO Strategies. Threats are
also compared against Strengths and then Weaknesses to draw ST and WT Strategies as
shown in the table 5.
TABLE 5: SWOT ANALYSIS MATRIX OF INDIAN RURAL MARKETS
Strengths (S) Weakness (W)

Internal
Factors S1: Large Indian Rural W1: Lack of good
Population Infrastructure
S2: Good Government W2: Lack of physical
Support distribution
S3: Availability of networks
Products, W3: Low consumption levels
Raw Materials W4: Less Research and

Development
Activities on Rural
External Factors Markets
208
SO Strategies WO Strategies
O1: Growing Income 1. Companies have to 1. As the consumer levels of

Levels customize quality,
Rural the products according Literacy and Income are
Consumers to growing,
O2: Growing Literacy consumer need for good infrastructure
Levels demographics. (S1, like
O3: Growing quality S3, O1, O4) roadways, communication,
Consciousness 2. Companies have to availability of retail outlets
O4: Changing Socio- strengthen supply should
economic chains with be available for effective
Lifestyles govt. support and rural
O5: Increasing Infrastructure. (S2, O5) marketing. (W1,W2,O1,O2,
infrastructure 3. Companies have to O3, O5)
Facilities launch 2. Companies have to
branded products in concentrate on
rural Research Activities to
Markets too due to observe the
increasing rural consumer behavior,
levels of quality and usage
Opportunities (O)
Literacy. levels, consumption

(S3, O2, O3) patterns,
observing rural life style.
(W3,
W4, O4)
ST Strategies WT Strategies
T1: Increasing grey 1. Companies have to 1. Improve extension system

market educate and
T2: Growing consumers in transfer of technology to
Competition identifying gross-root
T3: Less Knowledge their product and usage. level. (W1, W2, T2)
levels on (S1, S3, T2, T3) 2. Building Strong Brand
Product 2. Government has to Identity can
Identification implement laws, rules solve the problem of
and product
regulations effectively identification and grey
Threats (T)
so that grey market can market

be products. (T1, T3, W3, W4)
controlled. (S2, T1)
209
PROBLEMS OF RURAL MARKETS
- The development of appropriate communication systems to rural market may cost up

to six times as much as reaching an urban market through established media, need
rural communication facilities.
- The problems of physical distribution and channel management adversely affect the
service as well as the cost aspect. The existent market structure consists of primary
rural market and retail sales outlet. The structure involves stock points in feeder towns
to service these retail outlets at the village levels. But it becomes difficult maintaining
the required service level in the delivery of the product at retail level.
- Rural consumers are cautious in buying and decisions are slow and delayed. They like
to give a trial and only after being personally satisfied, do they buy the product.
- Culture is a system of shared values, beliefs and perceptions that influence the
behavior of consumers. There are different groups based on religion, caste,
occupation, income, age, education and politics and each group exerts influence on
the behavior of people in villages.
- As a general rule, rural marketing involves more intensive personal selling efforts
compared to urban marketing. Marketers need to understand the psyche of the rural
consumers and then act accordingly. 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 be associated with the myriad rituals, celebrations, festivals, melas
and other activities where they assemble.
- Life in rural areas is still governed by customs and traditions and people do not easily
adapt new practices. For example, even rich and educated class of farmers does not
wear jeans or branded shoes.
- An effective distribution system requires village-level shopkeeper, Mandal/ Taluka-

level wholesaler or preferred dealer, distributor or stockiest at district level and
company-owned depot or consignment distribution at state level. The presence of too
many tiers in the distribution system increases the cost of distribution.
- Television has made a great impact and large audience has been exposed to this
medium. Radio reaches large population in rural areas at a relatively low cost.
However, reach of formal media is low in rural households; therefore, the market has
to undertake specific sales promotion activities in rural areas like participating in
melas or fairs.
- Many rural areas are not connected by rail transport. Kacha (wet) roads become
unserviceable during the monsoon and interior villages get isolated.
- There are not enough opportunities for education in rural areas. The literacy level is as
low (36%) when compared to all- India average of 52%.
210
- Demand for goods in rural markets depends upon agricultural situation, as agriculture
is the main source of income. Agriculture to a large extent depends upon monsoon
and, therefore, the demand or buying capacity is not stable or regular.
RECOMMENDATIONS FOR EFFECTIVE RURAL MARKETING PRACTICES
- The Government has to develop infrastructure facilities like roadways, railways etc.,
in rural areas so as to reach large Indian rural market.
- The rural communication facilities like telecommunication systems, internet facilities,

broadcasting systems etc., have to be improved so that there will not be any
communication gap among players of the rural market segments.
- Effective Supply Chain Management practices can bring down the various costs
associated with rural markets like distribution cost, cost of communication, customer
cost, cost of sale etc.
- Educating rural consumers is the key to successful rural marketing. Rural consumers
need to be educated in all aspects like usage of the products, gathering product
information, consumer rights, laws and regulations, getting the right product at right
place at right cost in right time.
- The efficient marketing is predominantly influenced by efficient distribution system it

means products such ultimate consumer in the quickest time possible at minimum
cost.
- The state marketing board or federation or market committees also the producers,
traders and sellers have necessarily to be consulted as they have the principle interest
towards its use.
- Suitable structure of support prices for various farm commodities adjusted from time-
to-time. Adequate arrangement of agricultural produce on support price, if the price
falls below the level.
- Rural marketing is the nerve center of a rural economy; rural markets are the channels
for the movements of goods and services as well as to promote cultural integration.
- Greater Need for Strategic Rural Marketing Practices Which includes

- Client and location specific promotion
- Joint or cooperative promotion
- Bundling of inputs
- Developmental marketing
- Unique selling proposition (USP)
- Extension services
211
- Business ethics
- Partnership for sustainability
- Management of demand
CONCLUSION
There were almost twice as many "lower income households" in rural areas as in
urban areas. There were 2.3 million "highest income" households in urban areas as against
1.6 million in rural areas. NCAER projections indicated that the number of "middle income
and above" households was expected to grow to 111 million in rural India by 2007, compared
to 59 million in urban India. Gone were the days when a rural consumer had to go to a nearby
town or city to buy a branded product. The growing power of the rural consumer was forcing
big companies to flock to rural markets. At the same time, they also threw up major
challenges for marketers. In rural markets, customs and beliefs play important role in success
or failure of any product. Therefore every marketer has to concentrate on rural markets apart
from the matured urban markets. The role of government is very vital in solving the problems
of rural markets. Development of infrastructure and effective implementation of laws, rules
and regulations will protect of interest of rural consumer.
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ZENITH International Journal of Business Economics & Management Research

Vol.2 Issue 3, March 2012, ISSN 2249 8826

PROSPECTS AND PROBLEMS OF INDIAN RURAL MARKETS

V V DEVI PRASAD KOTNI*

KEYWORDS: Rural Markets, Rural Marketing, Market Potential, Marketing Myopia.

NEED FOR THE STUDY

OBJECTIVES OF THE STUDY

METHODOLOGY OF THE STUDY

DEFINING RURAL MARKET

- Planning Commission of India defined rural market as towns up to 15,000 populations

- NABARD defined as all locations with a population up to 10,000 considered as rural

DEFINING RURAL MARKETING

- National Commission on Agriculture defined Rural Marketing as ―decisions to

PHASES IN RURAL MARKETING

PHASE ONE (PRE 1960’S)

- Marketing Rural Products in Rural Areas and Urban Areas.

- Agriculture inputs in rural areas.

- Farming methods were primitive and mechanisation was low.

PHASE TWO (1960S TO 1990S)

- Rural Products were also marketed through agencies like KVIC.

PHASE THREE (1990S AND PRESENT)

- Demand for Consumables and durables rise.

- Companies find urban markets declining.

CHARACTERISTICS OF RURAL MARKETING

Some of the important features or characteristics of Rural Marketing in India

- The steps taken by the Government of India to initiate proper irrigation,

DEMOGRAPHIC DETAILS OF INDIAN RURAL MARKETS

- More government rural development initiates.

- Low literacy rate

- Increasing agricultural productivity leading to growth of rural disposable income.

- Lowering of difference between taste of urban and rural customers.

SIGNIFICANCE OF RURAL MARKETING

REASONS FOR IMPROVEMENT OF BUSINESS IN RURAL AREA

- Socio-economic changes (lifestyle, habits and tastes, economic status)

- Literacy level (25% before independence – more than 65% in 2001)

- Infrastructure facilities (roads, electricity, media)

PROSPECTS OF RURAL MARKETS

ESTIMATED ANNUAL SIZE OF THE RURAL MARKET

TABLE 1: ESTIMATED ANNUAL SIZE OF THE RURAL MARKET

FMCG Rs. 65,000 Crore

Durables Rs. 5,000 Crore

Agri-Inputs (including tractors) Rs. 45,000 Crore

2 / 4 Wheelers Rs. 8,000 Crore

Source: NCAER Report, 2011

OPPORTUNITIES OF RURAL MARKETS

Infrastructure is improving rapidly - In 50 years only, 40% villages have been

TABLE 2: COMPARISON OF USAGE B/W URBAN AND RURAL AREAS

Durables Urban Rural Total (% of Rural HH)

CTV 30.4 4.8 12.1

Refrigerator 33.5 3.5 12

Source: NCAER Report, 2011

TABLE 3: COMPARISON OF USAGE B/W URBAN AND RURAL AREAS

FMCGs Urban Rural Total (% of Rural HH)

Shampoo 66.3 35.2 44.2

Toothpaste 82.2 44.9 55.6

Source: NCAER Report, 2011

Marketers can make effective use of the large available infrastructure –

TABLE 4: RURAL MARKETS INFRASTRUCTURE

Post Offices 1,38,000

Haats (periodic markets) 42,000

Melas (exhibitions) 25,000

Mandis (agri markets) 7,000