UNIT-1

RURAL MARKETING
KMBI MK 04
 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.
 Introduction

• The emergence of rural markets as highly untapped potential

emphasizes the need to explore them. Marketers over the past
few decades, with innovative approaches, have attempted to
understand and tap rural markets. Some of their efforts paid off
and many markets still an enigma. Rural marketing is an evolving
concept, and as a part of any economy, has untapped potential;
marketers have realized the opportunity recently. Improvement
in infrastructure and reach, promise a bright future for those
intending to go rural. Rural consumers are keen on branded
goods nowadays, so the market size for products and services
seems to have burgeoned.
• The rural population has shown a trend of moving to a state of gradual
urbanization in terms of exposure, habits, lifestyles, and lastly,
consumption patterns of goods and services. So, there are dangers on
concentrating more on the rural customers. Reducing the product
features in order to lower prices is a dangerous game to play. Rural buyers
like to follow the urban pattern of living. Astonishingly, as per the census
report 2003-04, there are total 638365 villages in India in which nearly
70% of total population resides; out of them 35 % villages have more than
1000 population.
• Rural per capita consumption expenditure grew by 11.5 per cent while
the urban expenditure grew by 9.6 per cent. There is a tremendous
potential for consumer durables like two-wheelers, small cars, television
sets, refrigerators, air-conditioners and household appliances in rural
India.
 Nature Of Rural Market

• Traditional Outlook
• Rising literacy level.
• Diverse socio-economic background
• Infrastructural facilities
 Concept of Rural Marketing

• 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 generates 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.
 Concept of Rural Marketing
• These are:
• i. The market for consumer goods that comprise of both durable
and non-durable goods
• ii. The market for agricultural inputs that include fertilizers,
pesticides, seeds, and so on
• The concept of rural marketing in India is often been found to
forms ambiguity in the mind 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.
 Concept of Rural Marketing
• To be precise, rural marketing in India
Economy covers two broad sections, namely:
• i. Selling of agricultural products in the urban
areas
• ii. Selling of manufactured products in the
rural regions
 Scope of Rural Marketing
• 1. Large Population: According to 2001 census rural population is 72%
of total population and it is scattered over a wide range of geographical
area

• 2. Rising Rural Prosperity: Average income level has improved due to

modern farming practices, contract farming, industrialization, migration
to urban areas and remittance of money by family members settled
abroad.

• 3. Growth in Consumption: There is a growth in purchasing power of

rural consumers. The average per capita household expenditure is Rs.
382.

• 4. Changing Lifestyle: Lifestyle of rural consumer changed considerably.

 Scope of Rural Marketing
• 5. Life Cycle Advantage: The products, which have attained the
maturity stage in urban market, is still in growth stage in rural market.
E.g. popular soaps, skin cream, talcum powder, etc.
 
• 6. Market Growth Rate Higher than Urban: As per the survey made
by NCAER the growth rate of FMCG market and durables market is
higher in rural areas. The rural market share is more than 50% for
products like body talcum powder, toilet soaps cooking oil, hair oil etc.
 
• 7. Rural Marketing is not Expensive: To promote consumer durables
inside a state costs Rs one crore while in urban areas it will costs in
millions.
 Components of rural markets

 
• For the market to exist, certain conditions must be satisfied.
These conditions should be both necessary and sufficient. They
may also be termed as the components of a market.
 
• 1.  Existence of a good commodity for
• 2.  Existence of buyers and sellers 
• 3.  Business relationship or intercourse between buyers and
sellers
• 4. Demarcation of area such as place, region, country or the
whole world. The existence of perfect completion or a uniform
price is not necessary.
 Rural versus Urban Markets
• The difference between rural and urban
market shows that, to market to rural
consumers, companies need to adopt micro
strategies by understanding consumers in each
region. Many companies make the mistake of
having one campaign for cities and rural areas.
But not only are cities and villages different,
but they also vary from region to region. The
differences across regions are quite huge.
 Rural versus Urban Markets
Rural Consumer:
• i. Bound by tradition, social norms and religion; consumers tend to
be close minded.
• ii. Many consumers in high and middle income groups buy in bulk
are brand conscious and look for convenience. Buying is mostly
done from nearby towns.
• iii. Marked preference for fresh food items; food-grains purchased
in bulk.
• iv. Mostly cash economy; local traders provide credit.
• v. Erratic supply of electricity makes stocking of ice creams and
chocolates difficult.
 Rural versus Urban Markets
• vi. Trips to nearby towns are a source of enjoyment, where
several products are bought together.
• vii. Largely a value buyer, is turned off by gimmicks.
• viii. Likes direct communication in local language, rejects the
modern idiom and unable to respond to bizarre humour appeals.
• ix. Male-oriented products likely to do well as females are not
given importance.
• x. Buys products that are easily available. Exhibits brand loyal
behaviour; easy bait for imitation products.
• xi. Purchases are highly influenced by families or opinion leaders
like elders or local shopkeepers.
• xii. Buying power depends on good monsoons and harvests.
 Rural versus Urban Markets
• Urban Consumer:
• i. Modernity pulling at tradition; consumers appear outwardly
modern but are traditional at heart.
• ii. Though families buy on a monthly basis, trips to nearby
stores and supermarkets are more common. Impulse buying
and consumption of fast foods is high.
• iii. Preference for fresh vegetables, but processed foods also
bought. Only large families buy in bulk.
• iv. Credit and debit cards becoming popular.
• v. Larger per capita consumption of ice creams and
chocolates.
 Rural versus Urban Markets
• vi. Shopping for daily items is seen as a chore.
• vii. Willing to try premium products; gets influenced by
advertising.
• viii. Communication in a mix of languages, likes quirky
communications and influenced by hype.
• ix. Working women and higher education for girls make female-
oriented products successful.
• x. Mostly brand loyal but willing to experiment, discerning about
brands; lower income segments buy imitation products.
• xi. Highly influenced by families, but individual preferences on the
rise; dependent on online advice and peers.
• xii. Buying power is stable due to a social class dependent on fixed
salaries.
 Benefits of rural marketing
• Size of rural market
• Employment
• Better living
• Contribution to national income
 Problem and difficulties faced in rural
marketing
• Lack of proper communication.
• Distribution problem.
• Low literacy level.
• Lack of adequate transport facilities.
• Lack of proper retail outlets
 Various factors which have made rural
markets viable
• 1.Large population
• 2. Remoteness is no longer a problem
• 3. Growth in consumption
• 4. Life-style changes
• 5. Market growth rates higher than urban
• 6. Rural marketing is not expensive
 Rural market in India

• In India, rural market has been mounting progressively over the past

few years. Rural market in India has become a mantra of most
businesses. Even MNCs are eyeing rural markets to capture the huge
Indian market because 70 percent of India’s population still survives
in the rural community so it has large customer base, the large
purchasing capacity, and huge labor market. Indian rural market has
become an attraction for MNCs. In current times, large numbers of
projects/activities have been started by various corporate in Indian
villages. Rural marketing is a process of developing, pricing,
promoting, & distributing rural specific goods & services leading to
desired exchange with rural customers to satisfy their needs and
wants, & also to achieve organizational objectives.
 Scope and Size of Rural Market
 
• Today the size and scope of rural market is increasing at a
very fast pace. A major part of Indian population lives in
the rural areas which are now turning as a new market.
Now the rural market is not limited to the sale of fertilizers
and pesticides but it is going beyond that with the increase
in the income and the aspiration level.
• Urge for good standard of living has opened the rural
market as an opportunity for the companies to come and
grab the market. Now in rural areas also there is a demand
for TV, Cars, Shampoo, packaged goods etc.
 Scope and Size of Rural Market
• The various infrastructural and technological developments in
rural areas have augmented the span and opportunity in
these marketplaces.
• inflow and outflow of products/services have amplified up to
an immense level in rural market for manufacturing and
utilization.
• The outcome is seen in the form of increasing standard of
living, employment opportunities and demand pattern of the
inhabitants in villages. In the upcoming years, more and more
IT companies are going to make the Indian rural markets
more accessible and open for wider business opportunities.
 Factors contributing to Growth of Rural
Markets
• 1.Population Growth:
Increased in population and, hence, increase in demand. At present rural
population is account for nearly 72 crores of total Indian population, three
times more than urban population. More population means more demand.
• 2. Agriculture Prosperity:
Market increases due to agrarian prosperity. Profitable farming and better
marketing options in some states have made a large number of villagers the
potential consumers for FMCG (Fast Moving Consumer Goods) companies.
The greater the agriculture development in an area, the greater the rural
market.
• 3. Rural Development Programme:
Large inflow of investment in rural development programme from
government and other sources contributed to improved life style of rural
segments.
 Factors contributing to Growth of Rural
Markets
• 4. Intensive Interaction with Urban Population:
Increased contacts of rural people with urban counterpart due to rapid
development of transportation and telecommunication.
• 5. Increased Population Mobility:
Mobility of rural population to urban areas, metro cities and foreign countries
intensified incomes and, hence, purchasing power of rural people.
• 6. Increased Rural Attraction:
Increasing attraction of rich people to stay temporary or permanently in rural
areas for better and peaceful life. Agricultural land is being converted into
luxurious farm-houses. Such move is leading to tremendous development of
rural market.
• 7. Improved Literacy Rate:
Increased literacy rate and education level among rural folks, and growth of
academic and training institutes in rural places have accelerated growth of
rural market. Literacy level 25% before independence – is now more than 67%.
 Factors contributing to Growth of Rural
Markets
• 8. Improved Rural Infrastructure:
Improved infrastructure has positive impacts on rural market in several ways. Availability
of electricity, education, health, transportation, communication and entertainment, and
so on contributed to rural development and, hence, rural market.
• 9. Growth of Agro-processing Industry:
Establishment and growth of agro-processing industries, and active involvement of the
giant business units (For example, Reliance Fresh) in distribution of agro-products like
fruits, vegetables, serials, etc., have changed income and life style of rural people.
• 10. Political Influence of Rural Population:
Improved and increased political influence of rural people can significantly contribute to
rural development.
• 11. Foreign Income:
Inflow of foreign remittance (transfer funds) and foreign-made products into rural areas
significant fueled to rural market boom.
• 12. Reforms in Land Tenure System:
Significant changes in land tenure system causing a structural change in ownership
pattern affected positively the life of farmers.
 Factors contributing to Growth of Rural
Markets
• 13. Rural Development Priority:
Liberal assistance from national and international financial institutions
and agencies for rural development has changed rural lifestyle. World Bank
has granted billions of rupee for rural infrastructure.
• 14. Role of Giant Business Tycoons:
Increased corporate business interest in rural areas resulted into rapid
rural development and, consequently, has fueled to growth of rural market.
Corporate tycoons are liberally donating for improving rural infrastructures.
• 15. Rapid Socio-economic Changes:
Socio-economic changes (e.g., lifestyle, habits and tastes, economic
status, etc.) resulted into drastic changes in living pattern of rural people
resulted into greater potential for cosmetics and durable products along
with automobiles. After the basic needs of food, cloth and shelter, they are
looking at how to live better.