WHAT IS RURAL?

GOI
• The "rural sector" means any place as per the "latest census(External website that opens in a new
window)" which meets the following criteria,
• A population of less than 5,000
• Density of population less than 400 per sq km and
• More than "25 per cent of the male working population" is engaged in agricultural pursuits.

Insurance Regulatory Development Authority (IRDA) defines:

All areas with a population of less than 5,000, with a density of population less than 400 per
sq.km and where at least 75 per cent of the male working population was engaged in agricultural
pursuits. The IRDA had amended the definitions earlier in 2002 to bring down the required
stipulated percentage of the population that had to be engaged in agricultural pursuits to at least 25.
Facts
•  Rural economy contributes 25-30% to the GDP. Traditionally,
agriculture used to be the main source of income and employment in
rural areas, but that place is being taken by the non-farm sector.
• In 2017, the rural population in the country amounted to about 450
million and was estimated to reach 506 million in 2022.
• 15 Marketing initiatives that made headlines in 2020 - Rural Marketin
g
OPPORTUNITIES
 Seventy per cent of India’s population, 56 per cent of its income, 64 per cent of its
expenditure and 33 per cent of its savings come from rural India.

 A recent study by the Confederation of Indian Industries (CII) points out that the
consumption trend in rural areas has shown a paradigm shift from price-driven to quality-
driven products.

 Many companies like Asian Paints, HUL, ITC, Colgate-Palmolive, Godrej, Philips, LG,
Nokia Dabur and Appolo Hospitals have made inroads into the countryside, offering
different product categories—consumer non-durables, consumer durables and services.

 “Go rural and be rural” seems to be the guiding principle of today’s marketing
• Bharti AXA launches ‘Bohot Zaroori Hai’ campaign for crop
insurance.
• CEAT Specialty launches farm tyre range — Vardhan

• Mahindra brings in precision potato

planting machinery
 RURAL MARKETING MODELS

Four rural marketing approaches:

1. Trickle-down approach
2. Undifferentiated approach
3. Differentiated approach
4. Bottom-of-the-pyramid marketing
TRICKLE-DOWN APPROACH

4 P’s Urban
Sales

Trickle-down

CSR Rural Areas Image Rural

(Philanthropy) (Select Groups) Sales

Figure 1: Trickle-down Approach

 ASSUMPTIONS

 Rural market can be ignored. The top-end rural market is small in size and in
culture approximates the culture of the West at the aspirational level and
similar to the urban.
 The rural householder buys his wares from the nearby “feeder town” either on
a special visit or when he is there on work.

Suitability: Companies offering top-end, urban-centric premium and luxury

products do not have any concern for rural markets.
ASSUMPTIONS

Nature of rural focus: Corporate social responsibility to build image.

Role of marketing: Marketing is, at best, public relations and publicity

with the twin objectives of:

 Educating the target beneficiary groups in order to encourage and

engage them in the development process.

 Building the image of the corporate enterprise as a good citizen and

promoting sales of the company’s products and services in the urban as
well as in rural areas.
UNDIFFERENTIATED APPROACH

4 P’s Urban
Sales

Trickle-down

CSR Rural Image Rural

(Social Cause) Development Sales

Figure 2: Undifferentiated Approach

ASSUMPTIONS

 Affordability: Low and unstable income.

 Accessibility: Poor road connectivity.
 Acceptance: Rural consumer moulding his aspirations to mach those of his
urban cousin.
 Availability: Poor availability of branded products of FMCGs. The major
players in the rural market are the agri-business companies.

Suitability: FMCG and consumer durables companies offering products to

middle- and lower-end market segments.

Rural focus: Corporate social responsibility to enhance corporate profitability.

This approach is similar to “cause branding” advocated by Carole Cone.
DIFFERENTIATED APPROACH

4 P’s Urban
(Urban) Sales

CSR Rural Market Development Image

(Development) Trickle-down

Rural
4 P’s Sales
(Rural)

Figure 3: Differentiated Approach

ASSUMPTIONS

 Affordability: Rise in size and stability of incomes due to non-farming occupations,

government schemes of employment, subsidies, loan waivers, microfinance, free meal and
education schemes.

 Accessibility: Infrastructure development programmes by Central and State governments

has improved road connectivity.

 Acceptance: New connectivity with IT and telephone services. Rural people, especially the
youth, share the same visions as their urban cousins and are adopting similar lifestyles.

 Availability: Many Indian firms and MNCs have become suppliers to rural markets.
 ASSUMPTIONS (CONTD.)

Suitability: FMCG and consumer durables companies

Rural Focus: Rural market development as well as rural development. CSR programmes
to subserve the marketing goals of enterprises.

Union Bank of India Bhumiheen Green Card (loans without security), Joint Liability
Groups (group financing), "No Frills" Accounts (for the poor) and its campaign for
“100 per cent Banking Habit Villages’.
.

Rural Marketing: Differentiated strategies recognizing hurdles like infrastructural

constraints and nature of consumers (value conscious, price sensitive, collective decision
making, adaptive approach, slow information processing).
 BOTTOM-OF-THE-PYRAMID APPROACH

C. K. Prahalad and Stuart Hart opined that the poor can be the engine of global trade
and prosperity if we stop thinking of the poor as victims or as a burden and start
recognizing them as resilient entrepreneurs and value-conscious consumers.

New Opportunity–The Invisible BOP: More than 4 billion people live at the bottom of the
pyramid (BOP) on less than $2 per day.

Demands Innovations: Innovations in technology, products and services and business

models.

Requires Partnerships: Public–private partnerships (PPPs) markets can be created.

Promotes Entrepreneurship: People at the grass roots level especially women —working as
distributors and entrepreneurs to village level micro enterprises.
Core Business, Not Social Responsibility: BOP markets become an integral part of the work
of the private sector.
BOTTOM-OF-THE-PYRAMID MARKETING

Tasks Outcomes Goal

Entrepreneurial/ Creating Buying Power

Inclusive

Educative Shaping Aspirations

Empowered Rural Consumer

Innovative Tailoring Local Solutions

Integrative Improving Access

INTEGRATED, INNOVATIVE AND INCLUSIVE
GROWTH MODEL

4 P’s Urban
(Urban) Sales

NGOs

Rural Market Image Trickle-down

Government Development
(Social Entrepreneurship)

Private
Organizations

Rural
4 P’s Sales
(Rural)

Figure 5: Integrated–Innovative–Inclusive Approach

 EVOLUTION OF RURAL MARKETING

The term “rural marketing” that was earlier used us an umbrella term to refer to all commercial
transactions of rural people, acquired a separate meaning of great significance in the 1990s.

Phase I (before mid-1960s): It was considered synonymous with “agricultural marketing.”

Table 1: Rural marketing before mid-1990s

From/To Rural Urban

Urban Agricultural inputs- Not relevant
consumables
Rural Artisan services and Agricultural products
products
EVOLUTION OF RURAL MARKETING

Phase II (mid-1960s–mid-1990s): Two distinct areas of marketing

emerged

From/To Rural Urban

Urban Agricultural inputs Not relevant
Rural Artisan Services and Products Agricultural Produce

Phase III (after mid-1990s): Entry of FMCGs and consumer durables

companies

From/To Rural
Urban Agri-inputs marketing (Occupational inputs)
Consumer marketing (products and services to households)

Rural Products and services of rural origin

EVOLUTION OF RURAL MARKETING

Phase IV (around 2015): Some of the key drivers are:

 Globalization
 Information revolution
 The bottom-of-the-pyramid theory
 Growth in size of Indian organizations
 Ability to create appropriate technologies by R&D institutions for the rural
market
 Heavy competition in domestic rural markets
 Increasing urbanization and disappearance of many rural areas
URBAN VERSUS RURAL MARKETING

Sl No. Base Urban marketing Rural marketing

1. Philosophy Integrated, innovative Additionally, development

relationship orientation. oriented with inclusive
growth concept.

2. Views about customers A buyer. An innovator A buyer and an entrepreneur,

who looks for style, partner in business growth
novelty and quality. model. As a buyer looks for
quality products that offer
value for money.
URBAN VERSUS RURAL MARKETING (CONTD.)

Sl No. Base Urban marketing Rural marketing

3. Marketing research Sophisticated marketing Needs simple, interactive

research methods. Internet, TV approaches (like interviews,
channels and mobile SMS, etc. discussions), observation (diary of
are being used. farmer, a day in Haat, etc.). Simple
methods of rating scale are
required. Image of faces, colour
wheel for rating, playing cards and
carom coins for ranking are helpful.
 URBAN VERSUS RURAL MARKETING (CONTD.)

Sl No. Base Urban marketing Rural marketing

4. Segmentation Psychographic (lifestyle) and Demographic and
usage-based segmentation. geographic segmentation is
the starting point. Research
agencies have developed
marketing potential studies
that help in segmenting
markets.
5. Targeting Segment with relevant Segment with relevant
characteristics. characteristics with or
without buying power.
Urban URBAN VERSUS RURAL MARKETING (CONTD.)

Sl No. Base Urban marketing Rural marketing

6. Marketing goal Sustainable market share, Sustainable development of the poor,

profitability and image. market share, profitability and image
building.

7. Development strategy Limited to CSR Partnering with government, NGOs

(philanthropy to cause and private organizations (for
marketing). training, microfinance, and
managerial assistance in
entrepreneurial ventures of the poor).
MARKETING ENVIRONMENT AND CHALLENGES
Environment Opportunities
Social environment Rural population is large. Household
sizes are larger. Sex ratio is
comparable to all standards.
Economic environment Self-employment and labour
constitutes the major avenues of
earning money. About 40 per cent of
the people are landless. Life-style
changes are progressive. Rural credit
flow has improved. New retailing
opportunities are in the offing.
Limitations
Per capita income is lower.
Literacy levels are lower.
Awareness of products and
services will be lower.
Income earners are many but
incomes are low. A large
proportion of the population is
in the bracket that earns below
Rs75,000 per annum. In the
credit scenario, role of non-
institutional agencies is
increasing.
MARKETING ENVIRONMENT AND CHALLENGES

Environment Opportunities Limitations

Technological Power, postal and telecommunication Media reach is not extensive.

environment services showed significant
improvement. Innovative measures
are in the offing.

Political environment The Government promotes many Low levels of education and
schemes. Self-help groups and lack of motivation.
voluntary organizations are also
helping actively.