Rural Marketing

  • Post last modified:10 February 2021
  • Reading time:13 mins read

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.

Rural Marketing refers to the activities undertaken by the marketers to encourage the people, living in rural areas to convert their purchasing power into an effective demand for the goods and services and making these available in the rural areas, with the intention to improve their standard of living and achieving the company’s objective, as a whole.

Why Rural Marketing?

The following areas are the commonest of the worries that trouble the urban marketers, when they even think of rural markets:

  1. The first source of worry is the product price and affordability in the rural markets. With low income levels, the rural buyer is almost considered a non–buyer, and yet the sales being made in rural markets by certain companies defies the logic.

  2. The next source of worry is the needed distribution patterns with problems arising out of lack of proper transportation, bad roads adding to the irksome “product availability situation”.

  3. Reaching out to the rural customer through advertising poses a major problem due to.

  4. Illiterate population and lack of media reach.

  5. Most importantly, however, it is rural mindsets that create a barrier of significant magnitude to put off several prospective rural marketers.

Nature and Characteristics of Rural Market

There goes a saying that the proof of the pudding lies in the eating. So also the proof of all production lies in consumption/ marketing. With the speedy pace of technological development and Introduction to Rural Marketing augment in peoples buying capacity, more and better goods and services now are in constant demand.

The liberalization and globalization of the Indian economy have given an added advantage to sophisticated production, proliferation and mass sharing of goods and services.

Taking these into deliberation, the question may arise whether marketers should concentrate their activities in urban India consisting of metros, district headquarters and large industrial townships only, or extend their activities to rural India. Rural India is the real India.

The bulk of India’s population lives in villages. In terms of the number of people, the Indian rural market is almost twice as large as the entire market of the USA or that of the USSR.

  • 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.
  • 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 behavioral characteristics.
  • 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.

Challenges and Opportunities in Rural Markets

Marketers need to understand the social dynamics and attitude variations within each village though nationally it follows a consistent pattern. The main problems in rural marketing are:

  • Understanding the Rural Consumer.
  • Poor Infrastructure.
  • Physical Distribution.
  • Channel Management.
  • Promotion and Marketing Communication.

There has been a considerable amount of discussion on rural India of late and the opportunity it presents and one almost gets tired of the rate at which CK Prahlad is being quoted these days.

Rural India definitely does present immense opportunity but for everyone trying to make millions out of it, there are a few words of caution on the challenges that the landscape presents.

  1. Distribution and logistics: Infrastructure continues to be a challenge in rural India. Moreover, the lack of an efficient distribution network prevents penetration of products/ services into rural India. One of the most innovative models in recent times has been the usage of the postal service by mobile operators to penetrate scratch cards to the villages.

  2. Payment collection: The majority of the rural population is still unbanked. Clearly, noncash collection becomes rather unlikely. Cash collections, on the other hand, are messy and difficult to monitor, especially since cash cards or technology-enabled centralized POS (like Suvidha or ItzWorld) have still not reached rural areas.

    The timetested manufacturer-distributor-retailer network has been the only real success so far but setting up such a structure is rarely feasible. Partnering with MFIs comes to mind but often, the MFIs don’t cater to the relatively more privileged/affluent segments of the rural economy who are likely to be early adopters.

  3. Pricing: While Sachet pricing may have worked very well for Chik shampoo, the overheads involved in payment collection do not always allow easy execution of sachet pricing.

    It is easier to collect in larger amounts as every instance of collection and carrying of cash has associated costs. Disposable income, though, isn’t always high since the bulk of rural India is agricultural and income cycles in agricultural are very erratic and not as predictable as in the case of us salaried individuals.

  4. Scaling across geographies: If India is a land of many cultures, the contrast becomes that much starker in the case of rural India. Setting up operations on a pan-India level presents different types of hurdles in different states ranging from political juggling to downright local factors.

    Any model where scalability involves scaling on-ground operations (and not merely an increase in downloads) is bound to run into myriad issues as we move from one state to the next.

    Add to that the greater differences in consumer tastes and behavior across geographies than in the relatively more cosmopolitan urban population.

  5. Developing inorganic scale: Developing synthetic scale through partnerships typically results in larger overheads in the rural context. Finding the right partner with reach and presence in villages is difficult to start with.

    More importantly, there are very few players who are strong on these counts across multiple geographies. Hence, a pan- India rollout typically requires multiple partnerships resulting in higher partner management overheads.

  6. Social and cultural challenges: The cyber café (or kiosk) model has not worked in many parts of rural India due to socio-cultural issues. One of the reasons for the failure of the kiosk model in Kuppam (HP’s i-community) was the lack of usage by women which was largely due to their discomfort in going to kiosks run by men.

Rural Products

Most products required in cities are also needed in the rural markets (with few exceptions), as given below:

  1. FMCG products like cosmetics, food items, cooking oil, kerosene, and medicines.

  2. Consumer durables like refrigerators, stoves, motor cycles.

  3. Farm products like tractors, harvesters, seeders, seeds, fertilizers, and diesel, water supply for household use including drinking purposes and for watering farms.

  4. Services like, health clinics, water supply, electricity, eateries, inns.

  5. Housing Pricing in rural markets is tricky because the companies spend more on transporting the products as compared to transporting them to the cities.

    However, the paying power in rural areas is much less. Companies can, therefore, plan to have low cost packaging with a bit of attractive glitter while keeping the product unchanged in most cases. The companies can work out the rural customers MTBP (Mean Time Between Purchase).

    They will find that the rural customer will stretch the purchase time much longer. This would be true for most FMCG products. Food items, however, would be needed as per household requirements. The business, however, will snowball because of the sheer numbers of buyers in villages.

Product Promotion in Rural Markets

Products are kept for sale at the grocers’ shops, diesel/kerosene dealers, and tractor repair shops. Besides, companies sell through mobile vans that cover the villages mostly on the days of their weekly markets. These vans carry advertising materials, audio-visual equipments for showing movies besides company’s advertisements and the products for sale, and also samples like shampoo sachets for test marketing of the products.

Product promotion in rural markets is done through the vans. Besides, the radio, which has a wide coverage as it covers the entire country geographically, is used. Television reach has increased of late and with better electricity availability it has become a good option, more especially because of its universal appeal.

Pamphlets, loudspeaker announcements during weekly markets, mostly on roaming rickshaws, and banners on elephants and camels are used in many areas.

Villages need schools, as the literacy levels are still low. Technical and computer education is becoming increasingly important even in villages.

There is a great need for libraries, bookstores and newspapers, magazines in local languages. Income levels in the rural India can be described as follows:

  1. High in certain areas for rich land owning farmers,
  2. Low for farmers with small lands,
  3. Very low for farm hands and migratory farmers.

Village industries, specially cottage and small scale industries, handlooms, milk farming, and sheep rearing need governmental support or infusion of cooperatives in these areas.

The Amul example must be replicated in other parts of the country. The village Bania, who has been the proverbial loan shark, is fast disappearing as a tribe and yet the rural banking needs much more thrust.

A number of banks have started branches in villages, though they are affected by non availability of collaterals for giving loans to farmers.

Farm insurance would go a long way in settling this problem it is hoped. Bad crops further derail the interest payments leading to bad debts that retard the progress for which the banks have been setup.

Unique Selling Proposition

Companies do a cost benefit analysis before planning marketing communication as the advertising, promotion and personal selling revolve around the USP. A single product benefit well advertised can capture the customers’ imagination and get firmly planted in their psyche.

Attitudes, beliefs and purchase decisions are taken due to such mindsets. However, at times multi-benefit communication can be used to further focus the product into the psyche.

Products need to be differentiated for achieving distinctive competitive advantage. The differentiation can be made in product itself, and in the following areas:

  • Product features.
  • Service, both sales service and after sales service.
  • Quality, both static structure and dynamic specifications.
  • Consistency of quality.
  • Reliability of product and service.
  • Availability of spares and repair facility.
  • Customer training in proper use of the product.
  • Channel members personnel.
  • Advertising campaigns.

Market Evolution

In the beginning of the time, people lived in caves, hunted for food and searched for edible roots, fruits. The division of work or of labour started with more proficient hunters going for the beasts while others kept the search for vegetable foods.

Next, minerals were found. The women were engaged in preparing food for eating and shaping the animal hides for wearing and using minerals as cosmetics.

We can consider the women as manufacturers of that time. Later, people found that they had a little surplus of a few items of food or clothing while they needed some other items.

This lead to persons going with their wares to neighbouring areas to barter their products with those of the areas they were visiting. These persons were the first salesmen. As the commerce increased, it became necessary for some people to precede the salesmen and could talk about the products.

Thus started the profession of advertising. Still later, the community heads, the warriors and others who had nothing to sell, and yet they wanted to buy, needed an item, which they could give in exchange of goods.

The currency, and monetary systems can find their genesis from this point. From such beginnings, we have reached the world of supermarkets, and Internet sales with highly competitive products coming out in the market on a continuous basis.

This has led to organized market research into the needs of the customers, and research and development for developing the needed products, besides other innovative products which find market eventually, like the cell phone, through diverse and complex distribution systems.

The government of the country – its monitory systems, money supply organizations together with greater awareness of products and their needs among the customers, has made the market place complex as also rewarding.

The sequence of market development can thus be shown as given below:

  • Later periods saw the burgeoning Distribution Channels, rise of Middleman, the Agency System, Credit Sales, and Hire-Purchase.

  • Over a period of time the concept of just selling got converted into the Grand Marketing.

  • Phenomenon. Tracing back the evolution of commerce, we find that after the age of barter and beginning from the last decade of the nineteenth century, sales became an important discipline in business.

    During that time Industrial Revolution had started in Europe, followed by Mass Manufacturing Techniques the Assembly Line Operation, which as per experts was propagated by Henry Ford of the Ford Motor Company.

    The result was increased production of Quality Goods. Hence for most products, the supply exceeded demand. It was natural, under the circumstances that the manufacturers had to resort to hard sell, or power selling techniques.

    Salesmanship became an extremely valued profession. Successful salesmen believed that salesmen are born and people cannot be trained to become good salesmen. And yet training for salesmanship started in right earnest at about that time, that is in the early twentieth century.

Market Scenario in India

Changing scenario in the twenty-first century for India is due to:

  1. Opening of country’s economy.

  2. Global competition.
  3. Better quality products.
  4. A large variety of models of same products.
  5. High-tech products.
  6. New channels of distribution.
  7. New channels/media for advertising.
  8. Educated well-informed customers, who are aware of their rights.
  9. Complaint redress forums.

In 1991, the Government of India changed the rules of the business game as follows:

  1. Removal of license to manufacture for most products.
  2. Foreign equity allowed in industries.
  3. Lower rates of import duty.
  4. Partial convertibility of rupee.
  5. Lowering of importance of government/public sector business.

The above resulted in several global players getting into the country with massive investments. Later changes in governments, let to slowing down of economy and reforms and in many cases foreign firms found that the large investments have not borne the expected results e.g. Daewoo Motors.

However with a large purchase group of some two hundred million people, the foreign firms believe that they can yet make a profit by just persevering in India.

Lowering import duty has helped in exports as export related manufacturers could get their raw materials imported without any problem. This has also helped foreign firms in getting their products for Indian market, giving Indian customer the choice of a variety of goods, of better quality.

Partial convertibility of Rupee has helped exporters in more that one way, specially by allowing them unrestricted imports. The public sector or government owned firms have lost their importance over the years and now the government has put quite a few of them for disinvestments.

The fact that there was a Ministry of Disinvestments in the center shows the importance the government of India places on disinvestments.

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