Rural Marketing

4Ps of Marketing
• Product
• Price
• Place
• Promotion
 What are Rural Areas
• In general, a Rural area is a geographic area
that is located outside towns and cities.
• As per NSSO Census:
• Any habitation with a population density of
less than 400 per Sq. Km, is known as Rural.
• 75 percent of the male working population is
engaged in agriculture
• No Municipal corporation / board
• According to planning commission :
• Towns upto 15,000 population are considered
rural
• According to NABARD:
• All locations with a population upto 10, 000
considered “ rural”
 What is Rural Marketing
• Rural marketing is a process of developing,
pricing, promoting, and distributing rural
specific goods and services leading to desired
exchange with rural customers to satisfy their
needs and wants, and also to achieve
organizational objectives
• According to National Commission on
Agriculture:
• Decisions to produce saleable farm
commodities involving all the aspects of the
market system or structure, both functional
and institutional, based on technical &
economic considerations and includes the pre
& post harvest operations.
 Corporate Rural Marketing Definition

• Function that manages all activities involved in

assessing, stimulating and converting the
purchasing power of rural consumers into
effective demand for specific products and
services to create satisfaction & a better
standard of living for achieving organisational
goals.
 Phases in Rural Marketing
Sr. No Time Frame Key Events & Trends
1 Phase One( Pre Marketing rural products in rural and urban
1960’s) areas
Agricultural inputs in rural areas
“Agricultural marketing”
Farming methods were primitive and
mechanisation was low
Markets unorganised
 Cont’d
2 Phase Two ( 1960s to Green Revolution
1990s) Companies like Mahindra and Mahindra,
Sri Ram Fertilisers and IFFCO emerge
Rural products were also marketed
through agencies like KVIC

3 Phase Three( 1990s to Demand for consumables and durables

Present) rise
Companies find growth in urban markets
stagnating or falling
 NATURE AND CHARACTERISTICS OF
RURAL MARKET
• Agriculture is main source of income.
• The income is seasonal in nature. It is fluctuating
also as it depends on crop production.
• Though large, the rural market is geographically
scattered.
• It shows linguistic, religious and cultural
diversities and economic disparities.
 Cont.
• The market is undeveloped, as the people who
constitute it still lack adequate purchasing
power.
• It is largely agricultural oriented, with poor
standard of living, low-per capital income, and
socio-cultural backwardness.
• It exhibits sharper and varied regional
preferences with distinct predilections, habit
patterns and behaviorual characteristics.
 SIGNIFICANCE/IMPORTANCE OF THE RURAL
MARKETS
• Increase in population, and hence increase in
demand.
• A marked increase in the rural income due to
agrarian prosperity.
• Large inflow of investment for rural development
programmes from government and other sources.
• Increased contact of rural people with their urban
counterparts due to development of transport
and a wide communication network.
 Cont.
• Increase in literacy and educational level
among rural folks, and the resultant inclination
to lead sophisticated lives.
• Inflow of foreign remittances and foreign made
goods in rural areas.
• Changes in the land tenure system causing a
structural change in the ownership pattern and
consequent changes in the buying behaviour.
 Cont..
• The general rise in the level of prosperity
appears to have resulted in two dominant
shifts in the rural consuming system. One is
conspicuous consumption of consumer
durables by almost all segments of rural
consumers, and the obvious preference for
branded goods as compared to non-branded
goods of rural.
 FACTORS CONTRIBUTING TO THE CHANGE IN
THE RURAL MARKET
• Green revolution
• Emerging Role of Bio-Tech. in Indian
Agriculture Sector
• Rural communication
• Development programmes
 Cont.
• Rural marketing process is both a catalyst as
well as an outcome of the general rural
development process. Initiation and
management of social and economic change
in the rural sector is the core of the rural
marketing process. It becomes in this process
both benefactor and beneficiary.
Rural Marketing Opportunities
and Challenges
1. Increase in population, and hence
2. Increase in demand.
3. The rural population in 1971 was 43.80
crores, which increased to 52.50 crores in
1981, and 72 crores in 1994 to 83.3 crore in
2011
4. Large inflow of investment for rural development
programmes from government and other sources;

• National Rural Employment Programme (NREP)

• Training Rural Youths for Self-Employment (TRYSEM)
• Rural Landless Employment Guarantee Programme (RLEGP)
• Jawahar Rozgar Yojana (JRY)
• Mahatma Gandhi National Rural Employment Guarantee
Scheme (MNREGS)
• Indira Awas
• Bharat Nirman
• Increased contact of rural people with their urban
counterparts due to development of transport and a
wide communication network;

• Increase in literacy and educational level among rural

folks, and the resultant inclination to lead sophisticated
Lives;
• Inflow of foreign remittances and foreign made goods into
rural areas;

Large Untapped potential

Rural consumers own only 52 per cent of available consumer

durables, even though they form 72 per cent of total households
in India.
Unmet Needs/Low Penetration

a. Increase in the consumption of various types of products in rural

markets creates opportunities for marketers.

b. Products that were considered suitable only for urban markets

are now in demand in rural markets as well.

10. The estimated size of India’s rural market stated as a percentage

of world population in 2007 was 12.4 per cent.

The Fast Moving Consumer Goods (FMCG) sector in rural and semi-
urban India is expected to cross US$ 20 billion mark by 2018 and
reach US$ 100 billion by 2025
 Households Owning Specified Consumer Durables
Households (%)
Sl. Consumer Durable Rural Urban
1 Radio, transistor 31.5 44.5

2 Television 18.9 64.3

3 Telephone 3.8 23
4 Bicycle 42.8 46
5 Two-wheeler 6.7 24.7

6 Car, Jeep, Van 1.3 5.6

7 None of the specified assets 40.5 19
8 At least one of the assets 59.5 81

Source: Census of India, 2011

Sl.No. . Features Rural Urban
1 Demand Pattern Seasonal Uniform
2 Spread Widely Spread Concentrated
3 Source of Supply Inadequate Adequate
4 Literacy Level Low High
5 Physical Communication Poor Very good
Facilities
6 Product Knowledge Not known Known
7 Awareness of Needs Not known Known
8 Source of Information Word of Mouth Any Media
Mostly Oral
9 Product Concept Not Known Known
10 Timeliness of Supply Untimely Timely
11 After Sales Services Inadequate Adequate
Availability
12 Expenditure Pattern Somewhat Productive
Unproductive
13 Guidance on Usage Needed Not needed
14 Per Capita Income Low High
15 Product as Status Symbol Mostly No Mostly Yes
16 Consumer Protection Rarely Available Easily Available
17 Choice of Brands Low High
Rural markets are unique for the following
reasons:
The wants of rural consumers are not necessarily the
same as those of urban consumers. These wants are
shaped by a number of factors, including the
environment. The rural consumer who buys a vehicle for
meeting his transportation needs may want a rugged
rather than a sleek vehicle.

Social and cultural practices have an important influence

on rural consumer behaviour. A marketer cannot ignore
the influence of community on purchase and use
behaviour as this can affect the product and the
advertising message used.
Television viewing is still largely community viewing and
hence rural audiences are not comfortable with lot of
issues.

Culture influences perceptions and behaviour. The

preference for colour, size, shapes and taste are all
influenced by culture. The perceptions of products vary
because of these influences. An example of this is the
perception of value according to size. Philips introduced
large music systems instead of the compact ones it has for
urban markets.
The influence of culture on communication is an important
factor in promotion decisions. The importance and respect
for elders influence the message source. The meaning that
symbols carry needs to be taken into account in promotional
decisions. Marketers, thus, use names and symbols from the
epic Mahabharat for promotion.

The nature of occupation also influences the marketers’

strategy. Agricultural workers prefer to pay a smaller
purchase price because of the prevalence of a daily wage
system.

The popularity of small packs is a result of this.

Rural institutions are different from those in urban areas.
The social, political and economic institutions are
significant for marketers.

An important rural institution that influences marketing

is the weekly village market.

Recognising the importance of this institution marketers

use them to reach the rural consumer. Colgate-Palmolive,
for example, uses the weekly village markets to promote
its products.
Challenges in Rural Marketing

Though rural markets are a huge attraction to

marketers, it is not easy to enter the market and
take a sizeable share of the market, in the short
Time due to the following reasons.
 Low Literacy

Transportation
not connected by rail transport

Seasonal Demand -agriculture is the main source of income,

depends upon monsoon

Distribution- too many tiers, increases the cost

Communication Problems - Facilities such as telephone, fax and

telegram are rather poor in rural areas.

Traditional Life - 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 Lack of Desire for New Life-Style
Buying Decisions - 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

Media for Promotions - 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.

Vast and Scattered Market:

Language Problem – Multiplicity of languages

Low Turn Over - Due to limited demand in rural areas,
adds to the interest burden on business resources

High Inventory Costs - unnecessary stock which squeezes

the profit margin

Insufficient Storage and Warehousing Facilities-

Proper Segmentation Difficult-