09 - Chapter 2 PDF

CHAPTER - II
RURAL MARKETING AN
INDIAN PERSPECTIVE
RURAL MARKETING: AN INDIAN PERSPECTIVE
The concept of marketing and its role in influencing purchases has helped
change lifestyles, and the benefits that it brings to the economy cannot be
denied. Marketing has become a pervasive element in contemporary life. It
provides an opportunity to contribute to society as well as to individual
enterprise. In the context of a competitive environment marketing has become
the key in deciding the success and the health of a company. Corporate India
has recognised this fact and increasingly, many companies are laying a greater
emphasis on marketing.
The growth of an economy is indicated by an increase in the Gross national

Product (GNP) and per capita income. Increase in gross national product and
per capita income in a country is a consequence of an increase in the production
of goods and services. Hence, the level of production is significant in
determining the level of income - whether of an individual economic unit, or of
the economy as a whoie^
Marketing has both micro and macro aspects. In its micro aspect, an efficient
system of marketing enables the producer of commodity to get a higher price
for the product and this enables him earn a larger income and maintain a higher
standard of living. In its macro aspect, it enables society to get different
products that its members need, at reasonable prices, and thereby enables
them to improve their consumption levels and standard of living. It avoids
waste of economic resources by mobilising goods from places where they are in
plenty and hence do not have much value in terms of human satisfaction, to
places where they are scarce, and hence have a greater value in terms of such
satisfaction^
Ph.D Thesis: Competitive Advantage Strategies for Rural Marketing 34

With reference to Agriculture Inputs - HOPE Pipes -a case study -
Amravathi University-2005
Marketing is undisputedly the most important function of most business
organisations, worldwide. Today, it lias also come to play a significant role in
helping service-oriented and non-profit organisations reach their goals .as well.
Further, this is the age of information technology, which facilitates development
of communication as an integrating process of civilised societies. In recent
times, marketing has gained ascendancy over other managerial functions in
improving the quality of life.
The growing sophistication in technology, the maturity in the thinking and living
habits of people, have expanded the horizons of marketing. The competition
among marketers to satisfy consumer needs with myriad products and services
and the improvements in the standard of living have helped usher in a new era
of marketing. In this era, marketers have to adopt a new philosophy, and new
strategic approaches to achieve their goals^'
THE CONCEPT OF MARKETING
The term " Marketing" connotes different meanings to different people; to some
it is shopping, to many others it is selling. There are also people who
understand the term to encompass both selling and buying. Marketing in its
most general definition " is the directing of the flow of goods and services from
the producer to the consumer, or user." Marketing is the set of human activities
directed at facilitation and consummating exchanges"^. Marketing is human
activity directed at satisfying needs and wants through exchange prices^.

Witli reference to Agriculture Inputs - HOPE Pipes -a case study -
Marketing is also referred to as the process of discovering and translating
consumer needs and wants into products or services, create a demand for
them, and meet the demand^.
Paul Mazar defines marketing as the creation and delivery of standard of living^.
Marketing is a matching process, based on goals and capacities by which a

producer provides a marketing mix (product and services, promotion pricing and
distribution) that meets consumer needs within the limits of society^.
Marketing is a total system of business designed to plan, promote, and

distribute want-satisfying products and services and ideas to target markets in
order to achieve organisational objectives^.
Marketing is the process of planning and executing the conception, pricing,

promotional and distribution of ideas, goods and services to create exchanges
that satisfy individual and organisational objectives^". To put it succinctly,,
marketing may be defined as the process of providing the right product in the
right place, at the right time, and at the reasonable cost to the consumer.
Marketing has moved away from the selling of basic necessities to selling
specific facilities. The application of marketing concepts makes a company view
consumer needs as focal points for identification, analysis, and development of
strategies, which emerge from a clear understanding of customer needs. To
be precise, target market needs are identified and attempts are made to
develop marketing programmes that focus on increasing consumer satisfaction.

All marketing starts with the consumer, and ends at his or her satisfaction.
Understanding the consumer Is therefore pivotal for companies to plan and
execute marketing strategies that address customer needs at all levels.
RURAL MARKETING
The term " rural marketing" which was earlier used as an umbrella term to
refer to all commercial transactions of rural people, acquired a separate
distinctive Identity and significance In the 1990s. The evolution Is briefly
depicted in Table 2.1.
Table 2.1
EVOLUTION OF RURAL MARKETING
Phase Origin Function Major Source Destination

Products Market Market
I Since Agricultural Agricultural Rural Urban
Independence Marketing Produce
II Mid-Sixties Marketing of Agricultural Urban Rural
Agri-inputs Inputs
III Mid-Nineties Rural Consumables Urban & Rural
Marketing and durables for Rural
consumption
and production
Phase I (From Independence to the mid-1960s): During this period, rural

marketing referred to marketing of rural products in rural and urban areas,
and agricultural inputs in rural markets. It was considered synonymous with
"Agricultural Marketing" (Table 2.1)

Table 2.2
RURAL MARKETING BEFORE MID-1960's
From / To Rural Urban

Urban Agricultural Inputs Not Relevant
Consumables
Rural Artisan Services and Agricultural Products
Products
Agricultural produce like food grains and agri-inputs for industry - like cotton, oil
seeds, sugarcane etc. occupied centre-stage in any discussion of rural marketing
during this period. Manufacturing firms making agricultural inputs struggled to
sell their products, as did artisans trying to find remunerative markets for the
goods they produced. Agricultural inputs mainly included fertilisers, seeds and
pesticides. The market for durables like tractors, harvesters, threshers power
tillers, pump sets, oil engines, electric motor pumps was however, minuscule.
The marketing of products like bamboo baskets, ropes, window and door
frames, household earthenware and small agricultural tools by rural artisans and
craftsmen were discussed at various for a but received little attention as most of
these goods were produced in the unorganised sector.
Phase I I : (Mid 1960's-1990's) The green revolution ushered in scientific

farming practices and transformed many of the poor villages into prosperous
busy centers as the demand for agricultural inputs went up. Better irrigation
and soil-testing facilities, use of high-yielding variety seeds, fertilisers, pesticides
and employment of machinery like power tillers, harvesters, threshers etc.
changed the rural scenario during this period.
Ph.D Thesis: Competitive Advantage Strategies for Rural IMarketing 38

In this context, marketing of agricultural inputs assumed significance. Two
separate areas of activities had emerged: the new " Marketing of Agricultural
Inputs" and the conventional " Agricultural Marketing". Table 2.2 presents the
overview of marketing during this phase.
Table 2.3
RURAL MARKETING IN PHASE I I
From / To Rural Urban

Urban Agricultural Inputs Not Relevant
Rural Artisan Services and Products Agricultural Products
During this period, the marketing of rural products received considerable

attention in the general marketing framework. The formation of agencies like
Khadi and Village Industries Commission, Girijan Cooperative Societies and
APCO Fabrics (in Andhra Pradesh), Co-optex (in Tamil Nadu) Gurjari (in Gujarat)
and the special attention the government paid to promote these products were
responsible for scaling up the efforts to market goods that were produced in
rural areas in markets all over the country. Village industries flourished and
products like handicrafts, handloom goods, textiles, soaps, safety matches,
crackers etc. continue to be marketed in urban areas on a large scale.
Phase I I I (After mid 1990's) So far, we have not considered the marketing
of household consumables and durables to the rural markets. The reasons are
obvious:
First, there was no rural market as such. The market for these products was
not substantial enough to attract the attention of urban marketers. Second,
they were inaccessible: small villages and hamlets were widely scattered.
Ph.D Thesis: Competitive Advantage Strategies for Rural Marl<eting 39

making marketing reach difficult, and expensive. As a result, rural markets
were seen as an adjunct to urban markets, and conveniently ignored.
However, since the 1980s, India's industrial sector had gained in strength
and maturity. Its contribution to GNP has increased substantially. A new
service sector had emerged, signifying the slow metamorphosis of agricultural
society into industrial society. Meanwhile, thanks to the development
programmes undertaken by central and state governments, service
organisations and socially responsible business groups with interest in rural
uplift, the country has witnessed all round socio-economic progress. The
economic reforms of 1991-92 further accelerated the process by introducing
competition to the markets. The rural market for household consumables and
durables was nurtured, and grew steadily.
Rural marketing represented the emergent distinct activity of attracting and

servicing rural markets to fulfill the needs and wants of persons, households and
the vocational needs of rural people. Table 2.4 depicts the present scenario.
Table 2.4
RURAL MARKET - PHASE I I I
From/to Rural
Urban Occupational inputs: Consumables
and durables
Household Goods: Consumables and
durables
Rural Artisan services and products
As result of the above analysis, we are in a position to define rural marketing:

"Rural marketing can be seen as a function which manages all those activities
involved in assessing, stimulating and convention the purchase power into an
effective demand for specific products and services, and moving them to the
people in rural area to create satisfaction and a standard of living to them, and
thereby achieve the goals of the organisation".
The definition of Vural' as given in census reports is "not being urban"^^- There
could be several approaches to understand the rural market. It will not be an
exaggeration to define Vural market' as the whole of India excluding the
metropolitan cities, districts headquarters, and the large industrial townships^^.
Rural market is not an independent entity by itself. In fact, there are

sociological and behavioral factors that affect the rural economy. By and
large, markets may be described as an environment of the countryside and the
habitants thereof^^. People are the market for marketers. In this sense, India
is the second largest market in the world. As per 2001 census data, the
population of India is 102.7 crores. It is growing at the rate of 2.0 per cent
each year. The rural population of the country is at 741 million, and accounts
for 72.00 per cent of the total population.
The Indian rural market, with its vast size and demand base, does offer great
opportunities to marketers. It accounts for nearly three-forth of the country's
consumers, and contributes to more than half of the national income. The rural
market is made up to two broad components: (1) the market for consumer
goods that include both durable and non-durable goods, and (2) the market
for agricultural inputs (fertilisers, pesticides, seeds, pumps, pipes etc) and other

Witli reference to Agriculture Inputs - HDPE Pipes -a case study -
investment goods. The market for agricultural inputs is predominantly rural and
relatively well established.
Marketing in rural areas has varied conceptual dimensions; the changes taking
place in rural markets are triggered by conditions that affect rural consumers, as
well as institutions involved in rural uplift. Many marketers see rural marketing
as synonymous with agricultural marketing. By rural marketing, we mean the
performance of business activities that direct the flow of goods from urban to
rural areas (for manufactured goods) and vice versa (for agriculture produce),
and products manufactured by rural non-agricultural workers. Therefore, rural
marketing has two major focus areas:
a. Marketing of agricultural products; and,

b. Marketing of manufactured products in rural areas^"*.
RURAL-URBAN DISTINCTION
It is of relevance here to present the salient features of rural markets and the
difference between rural an urban markets. The urban markets are a large
contiguous settlement of towns or urban agglomerations whereas the rural
markets are small, contiguous settlement units of villages far from the cities.
The rural consumers are far less homogeneous than their urban counterparts,
and that has important implications for marketers^^. To begin with, the " rural
urban construct" (rural being defined as "Not urban" says the Census) is born
out of convenience and the availability of data. In other words, it is not
vigorously characterised^^.

With reference to Agriculture Inputs - HDPE Pipes -a case study -
Table 2.5
DISTINCTION BETWEEN RURAL AND URBAN MARKETS
Attribute Rural Urban

Density of population Low High
Literacy Low High
Occupation Agriculture & cottage Trade, industry,
industries. and services
Exposure to Media Low High
Mobility Low High
Family Structure Joint family Nuclear family
Attitude to nnodernisation Tradition-bound Ready for change
Infrastructure Poor and weak Abundant and strong
Economy Closed and less Open and magnetised
magnetised
Distribution outlets Few Extensive
Dependence of outlets Low High
Dependence for High on natural factors Low on natural factors
Employment
Social norms More visible Less visible
Manufacturing activity Low High
Exposure Low product exposure High product exposure
Low brand awareness High brand awareness
High exposure to locally- High market reach to
made unbranded goods Branded goods
Source: Ramarao, "Assessing the rural market"

Witli reference to Agriculture Inputs - HDPE Pipes -a case study -
Even if we were to work with this definition, the rural setting is fundamentally
different from the urban^^ From the marketing angle, a clear distinction
between urban and rural centres can be made taking the attributes shown
in Table 2.5. The contrast between the rural and urban consumers can be
made clearer when we delve into sociological, economic, psychological and
exposure factors that influence their behaviour and attitudes.
The rural consumer is frugal and does not consider the daily chores of life a
physical exertion. Things of utility are more likely to attract his attention, A
rural consumer, as a rule wants to be very sure of the quality of the product and
expects the product to spell-out its promise upfront. He will purchase only that
product which would give him satisfaction, and insists on getting his money's
worth. Upon buying the product he should feel that he has made a wise choice
and that he has not been taken for a ride by a fast-talking city-slicker.
The urban and rural consumers also differ with regard to brand loyalty. The
urban consumer, being discriminative, generally tends to try out any new
product, or a product with a novel add-on feature. In that sense, we could call
an urban buyer flexible and dynamic. Not so the rural consumer; once the rural
buyer is induced to buy and use a particular product or brand and is satisfied
with it, he becomes a staunch supporter and loyal user, and may even make
efforts to get the whole village to use it^^.
CHARACTERISTICS OF INDIAN RURAL MARKET

The rural market in India is spread over nearly 6.30 lakh villages, some
developed and many underdeveloped. Its important characteristics are:

A STEADILY GROWING MARKET
The rural market in India lias been undergoing a considerable change during
the last three decades both in quantitative and qualitative terms. This was the
result of new employment opportunities and new sources of income made
available through development programmes which have helped create the
green and white revolutions, and a revolution of rising expectations among the
rural masses. The rural market in India is full of contradictions and paradoxes.
Rural consumers are far less homogenous than their urban counterparts.
Rural markets are by and large less explored, less exploited and largely
agricultural oriented. By and large, they deal in mass-consumed products, and
inputs that facilitate agriculture. The green revolution brought prosperity to a
few select areas; in these regions, we saw a rise in demand for consumer items.
The income generated by the members of rural households employed overseas
also contributed to increase the purchasing power in some rural areas.
In spite of the growth in urban population through migration and other channels
and the increase in their purchasing power, rural markets still offer opportunities
which are vast and yet relatively untapped^^. A study made by the Operation
Research Group (ORG) in 1989 estimated the contribution of the rural market at
Rs. 2,083 crores, which was then as high as 37% of the all-India market^°. In
countries like India, the rural market centres are the farmer's first contact points
with the marketing channel. Therefore, rural markets may be considered as the
nerve centres of the economic, social and cultural activities of rural life in the
country^^

Amravathi UniversltY-2005
VAST AND SCATTERED MARKET
Nearly 49 % of the villages have a population of less than 500 persons, and this
accounts for 20% of the rural populace. Nearly 25% of the rural populace
inhabit villages with a population size that ranges from 1000-5000 persons;
these villages are considered as medium-sized. Only 1.3 per cent of the rural
populace inhabit villages where the population exceeds 5000 people. Hence,
one can only think of tackling the 90,000+ villages, which are categorised as
being medium-sized. The distribution of population will help marketers decide
the extent of coverage they want, and design appropriate strategies to win
customers.
India's rural market is vast, and encompasses 627 million consumers. In terms
of value, it crosses Rs. 40,000 crore; of this, Rs. 22,000 crores is from non-food
items, and Rs. 18,000 crore is from food items. It is scattered and spread over
6.30 lakh villages unlike the urban market that is confined to a handful of
metropolitan areas, cosmopolitan cities, and large towns.
Hindustan Lever Limited (HLL) was perhaps the first of the marketing giants to
realise the tremendous purchasing power of rural consumers. A early as in
1983, the then HLL chairman devoted his entire speech at the AGM to this issue.
And over the past decade, the company has developed a highly penetrative
distribution networks that reach practically every nook and corner of the vast
Indian rural market. Other corporate giants like Colgate-Palmolive, Escorts,
Bajaj Auto, Godrej Soaps, Asian Paints, Hero Honda, VIP Industries, Nirma, P&G
have also committed significant human and material resources to win customer
confidence and conquering rural markets^^. Details of the vast and scattered
rural market are presented in Table 2.6.

Table 2.6
DISTRIBUTION OF VILLAGES IN INDIA ( 2001)
Village Population Number of Villages Percentage
Less than 200 1,14,267 17.9
200-499 1,55,123 24.3
500 - 999 1,59,400 25.0
1000-1999 1,25,758 19.7
2000 - 4999 69,135 10.8
5000-9999 11,618 1.8
10000& above 3,064 0.5
Total No of Villages 6,38,365 100
Source : Bus/nesswor/d marketmg white book, 2003-04
SEASONALITY OF DEMAND
The demand for goods and services in rural India depends heavily on agriculture
as it accounts for over 60 per cent of rural income. Thus, the demand for
products - ranging from agricultural inputs to consumer non-durables and
durables - in seasonal, and as a consequence, uneven during the year.
Since 75 % of the rural income is generated through agriculture operations,

which is seasonal, the demand pattern is also seasonal. The demand for
fertilisers pumps, pipes and seeds is always high during the start of Kharifanti
Rati seasons. Therefore, fertiliser manufacturers have evolved a distribution
pattern, so that they can meet the seasonal demand. Like-wise, the demand
for consumables and durables will be high during the peak crop harvesting and
marketing seasons. This is the time during which rural people have substantial
Ph.D Thesis: Competitive Advantage Strategies for RurarMarketing 47

Rural marketsin-flows. Hence, the marketing and distribution networks gear
themselves for hectic activity during the peak crop harvesting and marketing
seasons. The arrangement would result inadequate sales realisation.
During summer months, in places that lack irrigation facilities, the demand will
be very minimal. Therefore, the distribution system has to gear itself to the
seasonal pattern of demand. In addition, festival seasons like Sankranti or
Pongal in South India, and Baisaki or Deepavali in North India also see demand
peaking. The festivals also coincide with harvest seasons; Sankranti is a
celebration following the Kharif harvest and Baisaki celebrates the harvest of the
Rabi crop. As a consequence, there is a hectic off-take of goods and services
during the harvest and festival seasons, as opposed to the relatively static
demand pattern in urban areas.
LOW LIVING STANDARDS - LOW PER CAPITAL INCOME

The low per capita income in rural areas and the propensity of rural households
to save, and low literacy levels, result in a low standard of living. Added to this
the traditions, religious pressure, cultural values and deep-rooted superstitions
are other factors that hinder upward social mobility. Even thought 33-35 per
cent of Gross Domestic Product is generated in rural areas, it is shared by 74
per cent of the population. Hence, the per capita income in rural areas is low,
when compared to that in urban areas.
This apart, the distribution of income in highly skewed, since the land holding
pattern, which is the basic asset, itself in skewed. Thus the rural population
presents a highly heterogeneous scene. People alone do not make a market,
they must have money to spend^^ It is of utmost importance to a marketer to

study rural income patterns before foraying into the market. The sources of
rural income are presented in Table 2.7.
Table 2.7
RURAL INCOME PATTERN
Source of Income Percentage of House Holds

Agriculture 58.80
Agriculture Wages 16.10
Business and Craft 8.80
Non-Agricultural Wages 7.20
Salaries 2.50
Current Transfers 1.90
Others 4.70
TOTAL 100.00
Source. IMRB 1999
Agriculture and agricultural wages account for 75 per cent of total income
generated. It is important for the marketer to note that agriculture being an
occupation susceptible to the vagaries of the monsoons, Income flows can be
seasonal as also erratic, and affect sale of consumer durables. The other
sources of income in the rural market include business and crafts (8.8 per cent),
non-agricultural wages (7.2 per cent), and salaries (2.5 per cent).
SOURCES OF PURCHASING POWER
The purchasing power of the people in rural areas is dependent on several

direct and indirect factors related to the rural economy. Marketable agricultural
surplus and terms of trade are the main influencers of purchase decisions

among rural consumers. For every one per cent increase in marketable surplus
of food grains, the consumption of manufactured consumer goods increase by
0.7 per cent. To a large extent, Indian agriculture is dependent on rainfall, and
the rain God influences the demand for consumer goods.
The government spends huge amounts of money on irrigation, flood

control, infrastructure development, anti-poverty schemes, fertiliser subsides,
etc. This governmental expenditure that directly generate income among rural
people ultimately leads to increased consumption of manufactured items.
Further, these governmental investments are expected to augment

rural incomes, which in turn, will accelerate the growth of rural markets.
Government policies that encourage setting up of industries in rural areas,
growth of small scale and khadi industries, promotion of industries in backward
areas, etc. are designed to raise rural incomes and generate more purchasing
power in rural communities.
REGIONAL VARIATIONS I N DEMAND
Income distribution in rural areas across the country is not uniform, mainly due
to uneven agricultural development. For example, the impact of the green
revolution is more pronounced in the areas where assured irrigation is available.
For instance, in Punjab, Haryana, coastal Andhra Pradesh, Western Maharastra,

Cauvery belt in Tamil Nadu and Western Uttar Pradesh, agricultural productivity
is considerably higher due to assured irrigation. This has resulted in higher
incomes for rural households in these regions, and consequently, higher
purchasing power.

SKEWED INCOME DISTRIBUTION
Income distribution is more skewed in rural India. The lower 90% of the rural
house holds account for two-thirds of total rural household incomes while a
third of the income is accounted by the top 10 per cent. Due to this skewed
distribution of income, the demand patterns for manufactured goods differ
widely in the rural areas. The study of distribution of rural income is quite
significant in the sense that is gives'the marketer insights on how to segment
the market on the basis of income. The details in this regard are presented in
Table 2.8.
Table 2.8
DISTRIBUTION OF RURAL HOUSEHOLDS BY INCOME
Annual Income Distribution Percentage
Rs. Urban Rural Total
Upto 20000 36.73 65.30 57.55
20001-40000 33.07 23.15 25.86
40001 - 62000 17.07 7.54 10.15
62001 - 86000 7.85 2.50 3.97
Above 86000 5.28 1.42 2.48
TOTAL 100.00 100.00 100.00
Source. NCAER 1996
It is evident from table 2.8, that 57.55 per cent of households have income up
to Rs. 20000 per annum, and about 26% have incomes that range between
20,001- 40,000. About 16 per cent of households have incomes that are in
excess of Rs. 40,000 per annum.
In rural areas, households having annual income above Rs. 20,000 is at 64.35
per cent, as against country's average of 57.55 per cent. Barring this segment.
Ph.D Thesis; Competitive Advantage Strategies for Rural Mari<eting 51

in all other higher income segments, income levels in rural areas are far lower
when compared to either the country's average income, or average urban
annual income. The single implication of this analysis is that in rural areas, the
majority of the rural population is poorer when compared to the urban
population.
Table 2.8A
INCOME-WISE DISTRIBUTION OF RURAL HOUSEHOLDS
(PROJECTIONS)
(in Crores)
2001-02 2006-07
Income Rural Rural
Total No % Total No. %
High 0.26 0.07 26.9 0.52 0.12 23.1

Middle 12.04 7.73 64.2 16.70 10.32 61.8
Low 5.74 5.09 88.7 3.68 3.52 95.7
Total 18.04 12.89 71.4 20.90 13.96 66.70
Source: The future of the new marketplace, NCAER Research Project,
Business Today, April 7-21, 1997.
MEDIA HABITS
Media habits of rural consumers are likely to be different when compared to
urban consumers. As illiteracy is more in rural areas, the print media does
not reach large rural audiences. Research studies on the media habits of
farmers indicate that 62 per cent of them in A.P. and 58% are movie-goers
in Tamil Nadu, while this figure is only 26% in the Punjab. This shows that
media habits vary significantly from region to region across the country.
BUYING BEHAVIOUR
The rural consumer is more of an adopter than an innovator. If the product is
of good quality and gives value for money, there is a higher probability of
Ph.D Thesis; Competitive Advantage Strategies for Rural Marketing 52

adoption and brand loyalty. Older generation and male members of rural
households have a decisive role to play in purchase decisions as they are
frequent visitors to nearby urban markets and weekly rural markets.
However, this phenomenon is changing as the youth in rural households, who

are more educated and better informed, are increasingly influencing buying
decisions. This is projected to influence the purchase of durables by rural
households, as well as items of mass consumption.
CREDIT REQUIREMENT
Unlike their urban counterparts, the source of income for the rural consumer is
agriculture. Cash income accrues at the time of harvests only. In one crop
season, the farmer gets his income only once a year, and has to spend it
throughout the year. This necessities credit purchases of consumer goods. It
is, therefore, necessary to introduce credit facilities when marketing goods to
rural audiences. Production credit has already been introduced, but the need
now is to introduce consumer credit. This could end up altering the existing mix
of elements that marketers use to target rural customers.
RURAL MARKET - SOME ISSUES
Manufacturers and marketing experts have to pay special attention to the

question of whether rural consumers constitute a distinct market niche. It is
clear that the rural market as a whole has features different from those that one
finds in the urban market. The differences seem to surface mainly on account of
certain external factors. An attempt is made to present here some of the issues
that concern the rural market.

Amravathi Universlty-2005
PRODUCT PLANNING
A popular belief in that the rural buyer imitates his urban counterpart when it
comes to buying behaviour. Does this mean that the same products can be sold
in two different markets? Some manufacturers who tried to enter the rural
market have however, found to their utter dismay, that this is not the case.
Goods have to be specially designed to meet the tastes and preferences of the
rural consumer. Before one embarks on a programme of rural marketing, one
should have a sound idea about rural consumer attitudes, habits, social
standards, important festivals, the marriage season, crop season, significance of
astrology, local institutions which have an impact on daily life, the importance of
gold as a store of value, etc^''. This would help marketers design strategies that
would spur sales in rural areas.
Is there a need to redesign or modify the products to suit the rural consumers
or can the same products as are sold in urban areas also be sold in rural areas?
The answer to this question is yes and no, since it depends upon the product,
and its characteristics. While there may not be much leeway for redesign or
modification in the case of some products, it should be is possible for several
others.
There are several examples of product packaging to suit rural consumers.

From 50-paise tea packs to 5-gram packs of Vicks and 25 gm pouches of
Colgate tooth powder, marketers are thinking 'small' to increase sales. Smaller
denomination packets of washing powders like Wheel & Nirma, sachets of
shampoo and coconut oil costing less than a rupee, are all set to change
the way marketers address low-income consumers, as well as win over target

Witii reference to Agriculture Inputs - HOPE Pipes -a case study -
customers by giving them an opportunity to try out branded products.
It can reasonably be assumed that most manufacturers are under the

impression that many products now sold in urban areas can also be sold in rural
areas. While it cannot be disputed that rural consumers also demand such
consumables like toilet soaps, detergents, cigarettes, etc. in the context of
increasing incomes, their changing usage and purchase habits, their income
levels etc. are factors to be considered while addressing their needs.
The need to re-think on products specific to rural demand, ties in the fact that
there are numerous imitation products in the rural market which look like the
original product, but are priced cheaper. These products ride piggyback on the
established brands of popular consumable items. Names of few original and
imitation products are presented in Table 2.9.
Table 2.9
NAMES OF ORIGINAL AND IMITATION PRODUCTS
Original Product Imitation Product

Ponds Polons
Rin Run / Trim
Nirma Nilima, Narima
Lifebuoy Lifejoy, Lite boy
Colgate Toothpaste Colleoge Toothpaste
Fair and Lovely Friends and Lovely
These imitation products are clones of the original product, in terms of packing
and printing, and could even deceive a sophisticated, educated urban buyer.

RETAIL OUTLETS
Most marketing managers believe that rural families mostly buy their
manufactured, consumer goods in towns or mandi market. While in the case of
some durables this might be true, it is not necessarily true for consumer
products, which have a high frequency of use - like soaps, hair oils, tea,
tobacco, biscuits etc. For products, which cannot be taken up for sale by either
the general stores or the kirana stores, mandi markets have become the most
suitable place to make retail sales. For radios, transistors, cycles, and white
goods, which call for a degree of servicing and stocking of spare parts, it makes
sense to ensure that retail outlets are not located far from the consumer,
though the costs of setting up the retail outlets could be considerably higher.
BRANDING
Some market analysts believe that special efforts need to be made to target
rural audiences, and that sophisticated brand names will ring in sales in rural
areas. This is seldom true. Therefore, marketers need to come up with product
names that are easy to remember and pronounce, and have packaging
materials printed in local languages. On account of high proportion of illiteracy
and lack of persistent publicity, branding does little to promote product
use in remote villages. The rural consumer does not often discriminate between
brands, but once induced to buy and use a product, he becomes loyal to the
brand, provided he is satisfied about its function and utllity^^.
Ogiivy and Mather Rural Communication Network head, D K Bose observes:

"Branded goods comprise 65 per cent of sales in villages today. The share of
non-branded goods is shrinking dramatically". Realising this, Castrol positioned
its branded lubricants in a category where consumers bought the product as a

commodity. The company aggressively targeted non-conventional outlets like
automobile and mechanic shops and 'built awareness and loyalty for their
lubricant brands through powerful advertising".
BRAND NAMES MAKE PRODUCTS FAMILIAR
This has come true in case of L G Electronics of India. It named the customised
TV developed for the rural market as " Sampoorna". The word is familiar to
large audiences across the country who speak different languages, namely
Bengali, Hindi, Marathi, Telugu and Tamil. The brand name strategy worked,
and TV sets worth about Rs. 114 crore were sold in villages in a year.
"Strategy becomes effective when other elements are in consonance with it".
Brooke Bond's Red Label Tea illustrates the point. Packed in red colour cartons
made identification of the brand easy. In its recent repositioning exercise, ads
were designed with the slogan " Jiyo-mere-lal (Long life my son)";lal has
another meaning : Red. This made identification with the brand complete and
strengthened the emotional bonds that the company had with its customers.
The case for branding is gaining strength. It is reported that is 18 categories,

branded consumption goods accounts for 80 per cent of sales in rural India^^.
PRODUCT PROMOTIONS AND ADVERTISING

Yet another belief that exists is that strategies adopted in promotion and
advertising for urban consumers can be replicated with only minimal changes
for use in rural areas. For instance, manufacturers make no distinction when
dealing with customers from different market segments. Today, even the
biggest rural marketers extend service just up to the town level. The marketers

who swear by their marketing clout have singularly failed to exploit rural India's
traditional selling systems. They are obsessed with just duplicating the urban
network, and consequently meet with little success in garnering market share.
Corporate India has till recently catered to the needs of the affluent rural elite,
paying no attention whatsoever to the needs of marginal / small farmers. One
rarely ever thought of developing a brand specifically for the rural market,
let alone positioning it to meet the needs of marginal classes among rural
consumers^''. Firms are increasingly realising the importance of weekly markets,
fairs and melas, and mobile publicity vans. For certain consumer products
market experts have successfully tried to use mobile publicity vans as sales
outlets with the idea of making these self-paying; this reduce the burden of the
additional expense on promotion.
The battle for the rural consumer market has been increasingly in intensity
over the years. Product promotion has become the biggest challenge to rural
marketers today. Only those who can overcome it will emerge successful.
Rural marketers have to skillfully communicate with a much larger but scattered
audience that is characterised by variations in language, culture and life style.
Their poor ability to comprehend sophisticated messages and low media
exposure only add to the problem of communicating them using the mass
media. The requirement, therefore in three-fold:
i) To expose the available media at the different locations.
ii) To develop region-specific consumer profiles to understand the
characteristics of the target market, and
iii) To design right communication and motivation strategies to induce
target audiences to buy the product^^.

MEDIA AND RURAL MARKETS
The media revolution lias been changing the perceptions and mindset of rural
audiences. When consumers see a bouquet of product offerings in the available
media channels, they aspire to upgrade their standard of living in an effort to
catch up with consumers in urban areas who are popularly perceived as being
one-up. The rural consumer often seeks to ape western or urban lifestyles by
scaling up from smoking beedis to plain cigarettes, and gradually move on to
filter cigarettes of premium brands, all in an effort to live life king-size!. Major
types of media are presented in Table 2.10.
Table 2.10
TYPES OF MEDIA
Print Broadcast Outdoor Other Media

Newspaper Radio Bill boards Cinema Ads
Magazines Television Direct Ads
Direct Mail Video on Wheels
The rural consumer is exposed to a larger number of commercial messages

that at any time in the past. Advertising is indeed a vehicle by which
advertisers convey their message to a large group of prospects and thereby
help in bridging the gap between the producer at the one end, and the
customer at the other.
It may be of significance to marketers to study the media that is available to

them in their tryst to reach rural audiences. The media scene in India is
presented in Table 2.11
Ph.D Thesis: Competitive Advantage Strategies for Rural IMarl<eting 59

Table 2.11
MEDIA IN INDIA
Percentage of Households Exposed to

TV Radio Print Cinema
All India 51.4 15 32 36.7
South Zone 68 23 45 52
West Zone 33 30 17 17
North Zone 29 31 11 09
East Zone 26 39 12 29
Source. Businessworld Marketing White Book, 2003-04
SIZE OF RURAL MARKET

The size of the rural market reveals certain interesting points. Since the
rural market is basically dependent on agriculture, the consumption of
certain products like fertilisers, pesticides, pumps and pipes is high as seen from
Table 1.12. The market for fertilisers is at a staggering 9 million tonnes and
growing at about 10 per cent per annum, while for pesticides the size of the
market stands at 68000 tonnes and iprojected to grow at about 12 per cent
per annum. The market for tractors is estimated at 1,00,000 and is growing at
a steady 15 per cent annually.
Table 2.12
SIZE OF THE RURAL MARKET
* Market for food items:: More than Rs. 18,000 crores

* Market for non-food items Rs. 22,000 crores ( Growing at 2.5% per annum)
* Consumption of pesticides: 68,000 tonnes ( Growing at 12% per annum)
* Consumption of Fertilisers : 9 million tonnes ( Growing at 10% p.a.)
* Tractors: 1,00,000 numbers per year ( growing at 15% pa)
* Pumps and tubewells (increasing at 11 % per annum)
Pipes (including GI, HDPE, RPVC ) - ( Growing at 25% per annum)

Amravathi Univer5ity-2005
Table 2.13
CONSUMER PRODUCT MARKET
(Rs.in crores)
YEAR URBAN RURAL

1984 1955 733
1991 3628 2083
Source: ORG Report, 1990
The market for packaged consumer products is a little more than Rs.2000 crore
while, the market for non-food items stands very high at Rs. 22,000 crore. An
ORG Study (Table 1.13) clearly establishes that the rural market is now almost
as big as the urban market, if not bigger. For instance, in packaged consumer
products, the rural market has grown threefold in 5 years, touching Rs. 2083
crore in 1991. In the nineties, it is expected to touch Rs. 5,000 crores. That is
the macro picture. The fine print reveals more. The rural market has already
outspread the urban one in many product categories like soaps & detergents,
dry battery cells, toilet soaps, razor blades etc.
Over the last 5 years, demand for consumer products in rural India has grown
at a faster pace than in the urban centres. Till 1987, it was growing at 17 per
cent; by 1990, this figure zoomed to 4 1 % and by 2000, and currently is more
than 50 per cent. The writing on the wall, is that rural markets are poised to
scale a new high, and marketers are gearing to battle for market share.

SIGNIFICANT FACTS ABOUT RURAL MARKETS
In 2001-02, Lie Sold 55% of its policies in rural India

Of the two million BSNL mobile phone connections 50% are in
rural areas
The number of rural super markets (haats) in India is 42,000,
which exceeds the total number of retail chain stores in United
States of America ( 5,000)
The number of middle and higher income families ( having
annual income of Rs. 70,000) in nearly the same in rural (2.17
crore) and urban areas ( 2.42 crore)
The billing per cell phone in small towns in Andhra Pradesh is
higher than in Hyderabad
The 24 million Kissan credit cards issued in rural India exceeds
the 17.7 million credit plus debit cards issued in urban India
IMPORTANCE OF RURAL MARKETING
Marketing has a large role to play as an influencer in promoting product

sales and contributing to development of rural areas. This is because the rural
sector is the main supplier of inputs for agriculture as consumer products
that the rural populace requires. Hence, an efficient system of marketing I
n the rural areas that acts as a link between the rural and urban sectors,
and is a perquisite to the development of rural markets in the country.
In the recent past, the rural sense has been undergoing a sea change. The
green revolution has had a tremendous effect over the rural sector; transport
and communication systems have improved, the market intelligence system has
improved considerably, retail outlets have expanded, fashion and tastes of the
urban elite have had a demonstration effect on rural consumers, and financial
institutions are pumping more funds to develop rural areas ^.

Marketing is a critical factor at all stages of economic development. The
contribution of an efficient system of marketing to the rural development of a
country like India is great •^°. In developing economics like India, the study of
the evolution of rural market systems is relevant in the context of their ability to
spread economic prosperity. Occuring through agricultural and rural
developments, because it reveals how the consuming system adjust to such
spurt in material prosperity^^
The survey conducted by National Council of Applied Economic Research

(NCAER) suggests that 1992-93 was a year that saw great disparity in incomes,
with a dramatic increase in the number of people having incomes below
Rs. 18,000 per annum. The trend towards a faster increase in the proportion
of people with higher levels of income in rural India as against those in urban
India continued. Some change in occupation patterns in rural India is visible
with an increase in wage earners. Education and literacy levels are on the rise,
and more so in rural India than in urban India.
In rural households, there appears to be a change in character of the heads of

households; with the spread of education, there is more participation of family
members in decisions regarding purchase of household amenities^^. The
contribution of the rural market to countrywide sales of products in certain
categories clearly shows the growing importance of the rural market in India.
It has been noted that the rural consumer is discerning and that the rural
market is vibrant. At the current rate of growth, it may even outstrip the urban
market^"^. Surveys and audits for a number of consumer products and services
have, over the years, clearly highlighted the importance of this sector. The
rural market is not sleeping any longer and the slogan that is enthusing product

companies is to "Go Rural". Consumption of all products is growing by leaps
and bounds, since the urban market has reached near saturation levels in a
number of categories like washing power, toilets soaps, batteries and talcum
powder^"*-
Table 2.14.
PER CAPITAL CONSUMPTION
Product Urban Rural

Soap 5339 2199
Premium soaps 1379 209
Toothpaste 1229 129
Shampoo 20 Ml 1.2 ml
Talcum Powder 46 g 4h
Source. Mehr Mehata " Rural Marketing: The new buzzword", Indian Express,
August 23, 1993
If a marketer takes rural consumer on the path to change, even products that
now find favour with urban audiences will bring in increased sales in rural
markets. The rural market is now almost as big as the urban market, and for
some product categories, even bigger.
Mr. Keshub Mahindra of Mahindra & Mahindra, a well-known industrialist says

that with the breakthrough in agriculture and the rise in rural incomes, the face
of the Indian countryside is changing. The villages will need, and are asking for
a variety of goods that were beyond their reach two decades ago. Motor cycles,
bicycles, radios, black & white TVs, fountain pens, soaps, watches, furniture,
better clothes and many other products are now in demand in rural areas-^^.

The size of the rural population will serve as large potential demand base
for a variety of products. The revolution in agriculture will certainly result in
increased generation of wealth, increased productivity, and increased income.
This will lead to increased consumption of household goods, consumer durables,
agricultural inputs, agriculture capital goods etc. The rate of growth of the rural
market will depend not only on increasing rural incomes but also on the
strategies that manufacturers come up with to develop national markets^^.
If penetration of rural areas is necessary for manufacturers to find new outlets

for their products, widening the marketing horizon beyond urban and semi-
urban areas is also imperative to raise the standards of living of the rural
masses. To help raise productivity levels in rural areas, manufacturers need to
expand the market both for consumer goods as well as capital goods-^^.
PROBLEMS OF RURAL MARKETING

In the Indian context, rural marketing is a complex subject. For a business
organisation, rural marketing is beset with a number of problems. The process
of rural marketing poses many problems due to the vastness of the country.
Other problems stem from the fact that the markets are underdeveloped and
illiterate and gullible people still constitute a large segment of the market^^.
The rural markets in India have some peculiar problems. These problems arise
basically out of the peculiar dynamics of rural market of India - the uniqueness
of rural consumers, the structure of the rural market, and the peculiarities of the
distribution infrastructure in rural areas. The rural market in India is a fit case
for the introduction - after appropriate innovation, selection and adoption - of
traditional marketing activities of promotion, distribution, sales and servicing.
The major hurdles in tapping the rural markets are listed in Table 2.15.
Ph.D Thesis; Competitive Advantage Strategies for Rural Marketing 65

Table 2.15
HURDLES IN TAPPING RURAL MARKETS
1 High distribution costs

2 High initial market development expenditure
3 Inability of small retailers to carry stocks without adequate credit facility
4 Generating effective demand for manufactured goods
5 Lack of adequate wholesaler and dealer networks.
6 Mass communication and promotion problems
7 Banking and credit problems
8 Managing sales
9 Market research problems
10 Inadequate infrastructure facilities
11 Highly scattered and thinly populated markets
12 Low per capita incomes and poor standards of living
13 Low exposure to different products and brands
14 Low levels of literacy
15 Cultural gap between urban-based marketers and rural consumers
To make in-roads into rural markets, product manufacturers will have to incur
additional costs for promotion, as creating awareness of their product and brand
is a precursor to sale. They will then need to strengthen their distribution
networks to ensure that their products - which could range from mass
consumption products to agricultural inputs -- are available at points where the
consumer can easily access them.

Amravathi Universlty-2005
UNDEVELOPED ROAD NETWORK
The development of rural markets depends on a network of roads to connect
the villages to towns, and to transport products to the hinterland. However only
40.7 per cent of the villages are accessible by all-weather roads. Development
of roads to link all of India's 6,30,000 villages, will give a fillip to economic
development and employment. It will also make household necessities and
convenience products of daily use freely available in the villages-^^.
INADEQUATE COMMUNICATION FACILITIES

Market development is rural areas will receive tremendous fillip if infrastructure
and facilities for communication are strengthened. The growth of telecom
infrastructure has been tardy in India with the country having only 50 lakh
telephones by the 1990's. The studies by UNO and World Bank indicate that the
number of telephone connections in India is low. There has to be a concerted
effort to boost the number of telephone connections in the villages. The means
to communicate freely will lubricate the wheels of commerce and marketing'^°.
Traveling in the hinterland is extremely tedious and stay poses a big problem. It
is necessary to build more circuit houses on small hotels in interior villages.
ORTHODOX AND CONSERVATIVE CONSUMERS

Orthodox and conservative views held by a large segment of rural consumers
influence their buying decisions. It has at times, even happened that a
consumer product was rejected outright because it was considered a bad omen.
The villagers are very conservative in their attitude and approach, and highly
reluctant to change their traditional way of thinking, or doing things. Their
attitude, in many respects, is that "home made" is the best. Many of these
antiquated attitudes are changing, although, the rate of change is sluggish'*\

INADEQUATE MARKET STUDY
Research on rural markets scanty and reliable quantitative data is not available
about the total size of the market for specific durable and non-durable products.
In the absence of adequate data, the marketer finds it difficult to evolve
strategies and draw up specific plans. There is a greater need to quantif/
market size for specific products by geographical income and occupational
segments. Consumer behaviour in the rural market needs further exploration in
the light of traditions, culture, and the impact of urban influences.
LIMITED REACH OF MEDIA

Studies conducted by the National Readership Survey and ORG reveal that only
10 per cent of the rural adult population read a newspaper or magazine, 27
per cent watch TV regularly, 37 per cent listen to the ratio, and 29 per cent
watch cinema.
LOW LEVELS OF LITERACY

The low level of literacy is a major factor that is inhibiting the reach of printed
advertising communication from reaching target audiences. This is also having
an effect in the design of promotional strategies.
Table 2.16
LITERACY^ LEVEL IN RURAL AREAS Vs (COUNTRY - BY GENDER
Year Rural Total Country
Men % Women% Men% Women%
1981 41 18 56 30
1990-91 57 27 64 39
2001 62 38 60 40
Source: Businessworld Marketing White Book 2003-04

Table 2.16 shows that the literacy level for men in rural areas has gone up
from 41 per cent to 57 per cent during the period 1981-1991. For the same
period, the literacy level for women has gone up from 18 per cent to 27 per
cent. When compared to the rise in literacy levels in urban areas, the
percentage increases in rural areas is much higher for the same period.
INADEQUATE OUTLETS
There are around ten lakh retail outlets in rural areas selling consumer products,
toiletries and household necessities to 62.5 crore potential customers. The
number of outlets in a village primarily depends upon the level of economic
prosperity, purchasing power of the villagers, population, the awareness among
villagers about consumer goods, the reach of distribution networks.
PRESENCE OF SPURIOUS PRODUCTS

Imitation products are another major problem when it comes to marketing
products in rural areas. As soon as a brand becomes popular, 10-15 imitations
and spurious products enter the market. Loosely defined, spurious brands
and look-alike products are introduced into the market in packaging that
mimes the established brand, and have similar sounding brand names.
Their primary motive is to capitalise on the trust built by established brands.

The manufacturers of such products offer higher margins to the retailer than
the established brands, and their retail prices too are considerably lower. To
counter this unhealthy competition, companies need to create a clear brand
identity and build strong brand loyalty with the rural consumer. Local promoters
in individual village markets could be used to educate the rural customer on the
need to avoid spurious goods'*^.

RURAL MARKETING: A REVOLUTION-IN-WAITING
The rural market has been growing steadily since the 1980s and is now bigger
than the urban market for both FMCG companies (with a 53 per cent share of
the market) and durables (59 per cent), The annual size of the rural market, is
value terms is currently estimated at around Rs 50,000 crore for FMCG
companies, Rs. 5000 crore for durables, Rs. 4500 crore for agri-inputs and
implements, and Rs. 8000 crore for automobiles.
Rural markets are vital for the growth of most companies; for instance, take
HLL, the largest FMCG company in the country. More than half its annual
turnover of Rs. 9,954 crore comes from the rural market. The situation is similar
for companies manufacturing dry batteries, wristwatches, cassette recorders,
soaps, tea and many other consumer products. But despite the high volume
turnover in these categories, the market penetration rates are low in rural
areas, and thus offer tremendous potential for growth. In durables, lack of
infrastructure is a major factor resulting In low market penetration. The number
of consumer durables was twice as higher in households that had electricity.
Therefore, in order to develop the market for consumer durables, electricity
connections need to be made available to more rural households.
The agricultural reforms proposed in the Tenth Plan, easy availability of

agricultural credit, the Rs, 60,000 crore village road programme, introduced
recently to connect 1.9 lakh villages, and improved communication networks
(STD and mobile phones) should give impetus to rural development, and result
in higher market penetration and higher consumption rates for goods and
services in the coming years.

SOME IMPRESSIVE FACTS ABOUT THE RURAL SECTOR^^
• The number of rural super markets {haats) in India - at 42,000, exceeds

tine total number of retail chain stores in the US (35,000)
•:• In 2001-02 , Lie sold 55 per cent of its policies in rural India.
• Of the 20 lakh BSNL mobile phone connections, 50 per cent are in rural
areas.
• Of the 20 crore Internet users who have registered with rediffmail, 60

per cent are from small towns;, of the one lakh who have transacted on
rediff's online shopping site, 50 per cent are from small towns.
• The 24 million kissan credit cards (KCC) issued in rural areas exceeds
the 17.7 million credit plus debit cards issued in urban India. A whopping
sum of Rs. 52,000 crore has been sanctioned under the KCC scheme.
•:• The difference in the number of middle and higher income families
(Having Rs. 70,000 plus annual income) in rural areas(21.7 million) and
urban (24.2 million) is not very large.
• Electricity consumption by the agriculture sector has shown a sharp

increase from 17.6 per cent of total consumption in 1980-81 to 29.2 per
cent in 1999-00. During the same period, consumption of power by
industry dropped from 58 to 34.8 per cent of total output.
A mere one pe rcent increase in India's rural rural income translates to a
whopping Rs. 10,000 crores of buying power. And even though they may
Ph.D Thesis: Competitive Advantage Strategies for Rural {Marketing 71

appear as different as chalk and cheese, Indian urban and rural consumers
differ largely only In their sensitivity to price, which is again a reflection of the
age-old urban-rural income disparity'*'*.
It would be interesting to review penetrations of select FMCG companies by

2007 in rural India''^ According to a research study, penetration of colour TVs is
likely to go up by 363 per cent from the 38 to 138percent 1000 house holds.
Refrigerators from 29 to 65. Even in consumer expendable packaged biscuits is
believed to ready to nearly 50 percent from current level of less that 40 percent.
RISING RURAL PROSPERITY

Table 2.17 shows how India is now seeing a dramatic shift towards prosperity in
rural households. The lowest income class ( Rs. 25000 & below ) will shrink
from more than 60% in 1994-95 to 20% in 2006-07. The higher income classes
will more than double thanks to the development efforts that the government
is making. Other special programmes such as land reforms, creating credit and
communication facilities, and infrastructure development will go a long way to
bring prosperity to the rural areas..
Table 2.17
RISING RURAL PRGASPERITY
Income Groups 1994-95 2000-01 2006-07
Above Rs. 1,00,000 1.6 3.8 5.6
Rs. 77,000 - 1,00,000 2.7 4.7 5.8
Rs. 50,001 - 77,000 8.3 13.0 22.4
Rs. 25,001 - 50,000 26.0 41.1 44.6
Rs. 25000 & below 61.4 37.4 22.2
Projections based on 7.2 per cent GDP growth

Source: NCAER, Business World, 11* Oct. 1999 page 28
Ph.D Thesis: Competitive Advantage Strategies for Rural {Marketing 72

In another study ( 1997) NCAER came up with the projections of distribution
of house holds and people, income-wise. A simplified version of the projections
are shown Table 2.18 & 2.19
Table 2.18
DISTRIBUTION HOUSEHOLDS: INCOME-WISE PROJECTIONS
(Rs. crores)
2001-02 2006-07
Income Rural Rural
Groups Total No % Total No %
High 0.26 0.07 26.90 0.52 0.12 23.1

Middle 12.04 7.73 64.20 16.70 10.32 61.8
Low 5.74 5.09 88.70 3.68 3.52 95.7
Total 18.04 12.89 71.40 20.90 13.96 66.70
Source: T he future of the new mcjrket place, NCAER Research Proiec t. Business
Today, April 7-21 1997
Table 2.19
DISTRIBUTION OF PEOPLE : INCOME-WISE PROJECTIONS
(Rs crores)
2001-02 2006-07
Income Rural Rural
Groups Total No % Total No %
High 1.48 0.41 27.70 2.96 0.70 23.6

Middle 69.18 44.83 64.80 90.25 59.85 66.3
Low 32.29 29.52 91.42 20.41 95.80 95.70
Total 102.95 74.76 72.60 114.52 80.96 70.70
Source: T he future of the new me3rket place, NCAER Res(2arch Proiect, Business
Today, April 7-21, 1997
Ph.D Thesis: Competitive Advantage Strategies for Rural {Marketing

From the above projections, the following inferences are drawn.
The Indian Rural Market constitutes 71.4 per cent of households in 2001-02. It
will decrease to 67.7 per cent by 2006-07; only 70.7 per cent of the people in
will live in rural areas as against 72.6 per cent in 2001-02 as a result of growing
urbanisation. The middle income segment constitutes the major chunk of the
total market population-wise in 2001-02 and 2006-07 being 85.5 per cent (
88.38 crores out of 105.95 crores of people and 89.1 per cent) (102 crores out
of 114.52 crores of people) of the total market respectively. Where as this
large middle segment? In rural areas, about 70 percent of the people and
house holds of the total market are in the rural areas.

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CHAPTER - II

The growth of an economy is indicated by an increase in the Gross national

Ph.D Thesis: Competitive Advantage Strategies for Rural Marketing 34

THE CONCEPT OF MARKETING

Ph.D Thesis: Competitive Advantage Strategies for Rural Marketing 35

Marketing is a matching process, based on goals and capacities by which a

Marketing is a total system of business designed to plan, promote, and

Marketing is the process of planning and executing the conception, pricing,

Ph.D Thesis: Competitive Advantage Strategies for Rural Marketing 36

Phase Origin Function Major Source Destination

Phase I (From Independence to the mid-1960s): During this period, rural

Ph.D Thesis: Competitive Advantage Strategies for Rural Marketing 37

From / To Rural Urban

Phase I I : (Mid 1960's-1990's) The green revolution ushered in scientific

Ph.D Thesis: Competitive Advantage Strategies for Rural IMarketing 38

From / To Rural Urban

During this period, the marketing of rural products received considerable

Ph.D Thesis: Competitive Advantage Strategies for Rural Marl<eting 39

Rural marketing represented the emergent distinct activity of attracting and

As result of the above analysis, we are in a position to define rural marketing:

Ph.D Thesis: Competitive Advantage Strategies for Rural Marketing 40

Rural market is not an independent entity by itself. In fact, there are

Ph.D Thesis: Competitive Advantage Strategies for Rural Marketing 41

a. Marketing of agricultural products; and,

Ph.D Thesis: Competitive Advantage Strategies for Rural Marketing 42

DISTINCTION BETWEEN RURAL AND URBAN MARKETS

Attribute Rural Urban

Ph.D Thesis: Competitive Advantage Strategies for Rural Marketing 43

CHARACTERISTICS OF INDIAN RURAL MARKET

Ph.D Thesis: Competitive Advantage Strategies for Rural Marketing 44

Ph.D Thesis: Competitive Advantage Strategies for Rural Marketing 45

Ph.D Thesis: Competitive Advantage Strategies for Rural Marketing 46

Source : Bus/nesswor/d marketmg white book, 2003-04

Since 75 % of the rural income is generated through agriculture operations,

Ph.D Thesis: Competitive Advantage Strategies for RurarMarketing 47

LOW LIVING STANDARDS - LOW PER CAPITAL INCOME

Ph.D Thesis: Competitive Advantage Strategies for Rural IMarketing 48

Source of Income Percentage of House Holds

SOURCES OF PURCHASING POWER

The purchasing power of the people in rural areas is dependent on several

Ph.D Thesis: Competitive Advantage Strategies for Rural IMarketing 49

The government spends huge amounts of money on irrigation, flood

Further, these governmental investments are expected to augment

REGIONAL VARIATIONS I N DEMAND

For instance, in Punjab, Haryana, coastal Andhra Pradesh, Western Maharastra,

Ph.D Thesis: Competitive Advantage Strategies for Rural Marketing 50

Ph.D Thesis; Competitive Advantage Strategies for Rural Mari<eting 51

High 0.26 0.07 26.9 0.52 0.12 23.1

Ph.D Thesis; Competitive Advantage Strategies for Rural Marketing 52

However, this phenomenon is changing as the youth in rural households, who

RURAL MARKET - SOME ISSUES

Manufacturers and marketing experts have to pay special attention to the

Ph.D Thesis: Competitive Advantage Strategies for Rural Marketing 53

There are several examples of product packaging to suit rural consumers.

Ph.D Thesis: Competitive Advantage Strategies for Rural Marketing 54

It can reasonably be assumed that most manufacturers are under the

Original Product Imitation Product

Ph.D Thesis: Competitive Advantage Strategies for Rural Marl<eting 55

Ogiivy and Mather Rural Communication Network head, D K Bose observes:

Ph.D Thesis: Competitive Advantage Strategies for Rural Marketing 56

BRAND NAMES MAKE PRODUCTS FAMILIAR

The case for branding is gaining strength. It is reported that is 18 categories,