RURAL MARKETING

In recent years, rural markets have acquired significance, as the overall growth of
the economy has resulted into substantial increase in the purchasing power of the
rural communities. On account of green revolution, the rural areas have started
consuming a large quantity of industrial and urban manufactured products. In this
context, a special marketing strategy has emerged which is called rural marketing.
The concept of rural marketing in India economy has always played an influential
role in the lives of people. Globalization, liberalization and privatization have
transformed the Indian economy into a vibrant, rapidly growing consumer market.
As a result the markets are flooded with different kinds of goods and services,
substantially effecting and changing the purchasing pattern of the consumers. The
rural markets, which were earlier ignored by most of the big international market
players, are now being seen as a land of great business opportunity. As the
disposable income of the masses is growing, more and more corporate houses are
entering into the rural markets with their new goods and products. Due to this
reason, the marketing for rural consumers is becoming more complex. The rural
market in India brings in bigger revenues in the country, as the rural regions
comprise of the maximum consumers in this country. India‘s vast rural market
offers a huge potential for a marketer facing stiff competition in the urban markets.
The rural market environment is very different from the familiar surroundings of
the urban market. Rural consumers have customs and behaviors that the marketers
may find difficult to contend with. The rural markets in India have grown size,
range and sophistication in recent times. Under the changing Socio-economic
scenario, the rural markets have great potentialities in India and offer bright
prospects and attraction to the companies. In fact, the rural markets are green
pastures for companies today, as they are growing faster as compared to the urban
markets. With their huge size and demand base, they offer great opportunities to
the marketers. More than three-fourths of country‘s consumers reside in rural areas
and more than half of the national income is generated by them. Due to the global
economic downturn, the companies are few facing slower urban sales, prompting
them to make a rush towards rural India.
RURAL MARKETING – DEFINITION
The term ‗rural marketing‘ has been used widely in both academic and corporate
worlds. Business organizations have incorporated the word into their marketing
rhetoric. Academics have produced a plethora of textbooks and offered elective
courses on rural marketing in various business schools, which bears testimony to
the growing importance of the subject in management schools in India. An analysis
of the content of a number of textbooks written on the subject reveals that the
meaning of rural marketing has changed over the past few decades.

According to Thompson: The study of rural marketing comprises all the

operations & the agencies conducting them, involved in the movement of farm
produced food, raw materials & their derivatives, such as textiles, form the farm to
the final consumers & the effects of such operations on producers, middlemen and
consumers.

According to Ramkishen.Y : Rural marketing is the process of developing,

pricing, promoting, distributing rural-specific goods and services, leading to
exchange between urban and rural markets which satisfies consumer demand and
also achieves organizational objectives. Thus, rural marketing is a two way
marketing process that includes the flow of goods and services from rural to urban
areas & the flow of goods & services from urban to rural areas, as well as the flow
of goods & services within rural areas.

Jha (1988) has proposed a domain of rural marketing, which has found wider
acceptance in the current literature. He visualized the domain of rural marketing as
the flow of goods between rural and urban areas. As per Jha‘s framework, rural
marketing broadly represent the domain of rural marketing—the flow of goods
from rural to rural, rural to urban, and urban to rural areas. Kashyap and Raut
(2006) have listed three distinct phases in the evolution of rural marketing during
which the term changed its meaning and connotation. During the first phase, pre-
1960s, rural marketing was synonymous with agriculture marketing. In the second
phase, from 1960s to 1990, the marketing of agricultural inputs and marketing of
nonfarm rural produce was considered as rural marketing. In the post liberalization
period, rural marketing refers to predominantly refers to the marketing of fast
moving consumer goods (FMCG) and consumer durables in rural areas.

Pratik Modi (2009) proposed rural marketing as any marketing activity whose net
developmental impact on rural people is positive. His definition of rural marketing
provides a criteria for identifying a rural marketing activity from amongst various
marketing activities that take place in rural areas.

CHARACTERISTICS OF RURAL MARKETING

Some of the important features or characteristics of rural marketing are being listed
below:
Large and scattered market The rural market is very large in size and mostly
scattered. As these markets are of diverse nature, the people living in those rural
areas are from diverse cultural, linguistic and religious background. No two
markets are alike and it is dispersed across India. Here in India, the rural market
consists of over 63 crore consumers from 6, 20,000 villages spread throughout the
country. Therefore a large population gives an opportunity for marketing a variety
of goods and services. However income and purchasing power play a major role in
determining the demand in rural areas. Occupation Pattern Agriculture and related
activities continue to be the main occupation for majority of the rural population.
Land is the major source of income for about 77% of the population. Others are
engaged in business (10%), non-agriculture labour (9%), and salary earners (2%)
and not gainfully employed (2%). It is evident that rural prosperity depends upon
growth and development of agriculture. Low standard of living The consumer in
the village area do have a low standard of living because of low literacy levels, low
per capita income, social backwardness, low savings, economic backwardness,
lack of exposure to the media, etc. In general a rural consumer spends less on non-
food items.
Traditional outlook The rural consumer values old customs and tradition. They do
not prefer changes. In other words, the adaptability to change is lethargic and
hence the problem of marketing of goods is much prevalent.
Diverse socio-economic backwardness Rural consumers have diverse socio-
economic backwardness. This is different in different parts of the country. There
exists tremendous variation in culture, life style, tastes, preferences, culture, etc of
the rural consumers.

Infrastructure facilities: The infrastructure facilities like roads, warehouses,

communication systems, and financial systems are inadequate in rural areas. Most
of rural markets are not connected by roads. Most of the roads are kuchha and
become unusable during rainy season. Many farmers use bullock cart for
transporting their produce from village to the market. This means of transport is
time consuming. And same is the problem with transporting the goods from urban
markets to rural areas. Hence physical distribution is hampered. Prevalence of
spurious brands Most rural markets are inundated with local brands or spurious
brands, which are quite cheaper and therefore affordable to the people. Seasonal
demand The rural markets are characterized by seasonal demand for products,
especially costly products. This is due to the fact that agriculture is their main
source of income and once it is harvested, then and only they would be able to buy
products. Media Reach The media reach in rural household is low. Statistics
indicates that the reach of Print media is 10%, followed by TV 31%, Radio 32%
and Cinema 36%. Therefore the marketer has to consider rural specific promotion
media and methods to reach the villagers.

RURAL MARKETING ENVIRONMENT

An environment is that which surrounds an organization. It is sum total of external
factors and made up of tangible and intangible factors, both controllable and
uncontrollable. Rural marketing is basically focused marketing activity of an
organization. The environment includes threats and opportunities in the rural
market. The Rural marketing environment is complex and is changing
continuously. The marketing organization should foresee and adopt strategies to
change in requirements in the market. One which doesn‘t change perishes. An
adaptive organization can stand competition or have a modest growth. An
organization which makes its effective marketing plans and its own strategies or a
creative one will prosper and creates opportunities in the change in environment.
Rural marketing environment changes will be in the area of
a) Social changes
b) Economic changes
c) Ethical changes
d) Political changes
e) Physical changes
f) Technological changes

1. SOCIAL CHANGES:-
The social factor consists of three sub-factors,
1) Sociological factor:-
Consumer society or the community is an important consideration while devising
rural marketing strategy. The rural consumer life style is largely influenced by the
social setup. The sociological changes influence rural customer habits, taste, and
lifestyles.

2) Anthropological factors:-
The cultures, subcultures and living patterns influence advertising, sales
promotion, selling and packing strategies of the marketing organizations. The rural
consumers living in east India have different taste whereas those living in western
India have totally different.

3) Psychological factors:-
Consumer behavior, attitudes, personality and mental make ups are unique. The
study of rural consumer behavior is vital to evolve marketing mix.

2. ECONOMIC FACTORS:-
1) Competition:-
A good and healthy competition brings in good and overall improvement in
economic activities. It also brings good quality, good quantity and price.
Considering rural marketing, there exist less or minimal competition. The presence
of local brands in the rural markets has great impact on competition.

2) Consumers:-
Rural lifestyles and behavioral trends are increasingly coming to resemble urban
patterns, in both form and variety. Like urban consumers, the rural middle class is
buying more fairness creams, whereas many of the rural poor are keen to invest in
a mobile phone connection. The consumer today is quite knowledgeable. The rural
folks are even choosy than their urban counter parts because they are ready to
spend only when they are assured of getting value for their money. Therefore their
progress and well being should be the aim of any economic activity.

3) Price:-
Pricing is a delicate issue where it should be market friendly, not too high or too
little. The marketer has to keep in mind to get descent returns on investment and
effects of producers and marketers. But pricing becomes more important when the
target segment is rural population. Even the marketers have to introduce smaller
packs for their products to these rural population owing to their low purchasing
power.

4) ETHICAL FORCES:-
Business minus ethical values brings degeneration. In the long run it creates
several problems. Sub- standardization, exploitation and falsification are main
ethical values in such organization. The marketers have to take proper care while
designing their products for rural segments as the rural people are largely
uneducated and are quite sensitive. A slight unethical practice may result in huge
boycott of their products.

5) POLITICAL FORCES:-
The government policy towards trade and commerce, internal taxation and
preferential treatments, have great influence on the rural marketing strategies. The
marketing environment has to meet the political frame work in which a
government is made to work. Thanks to rural supportive initiatives by Indian
government, more and more companies are making their presence felt in these
rural areas. The government has increased spending in rural areas, from US$9
billion for the financial year ending March 2007 to an anticipated US$16billion for
the financial year ending March 2010.

6) PHYSICAL FORCES:-
The infrastructure availability for movement and storage of goods play an
important role in the physical distribution of goods and reaching the rural
consumers. Efficient and cheaper logistics helps the market in a big way. But there
is dearth of infrastructure facilities with respect to rural areas of India. The
marketer has to bear the brunt of this dearth and still have to promote their
products in those areas so as to increase their sales. This in turn is possible only
when the remote places become easily accessible.

7) TECHNOLOGICAL FORCES:-
The fast changing science and technology gives a cutting edge to the marketing of
products. The changes warrant changes in marketing inputs and strategies. Faster
and efficient communication and transport systems have speeded up marketer. The
capital is made to work faster and harder. So the marketer has to use these new
marketing tools and facilities in designing and implementing his marketing
strategies which are adaptive to the change in environment and ensure success.
Even the rural folks are eager to adopt the faster changing technology. They are
now ready to spend a handsome amount for purchasing the latest gadgets and
durables.

RURAL MARKETING STRATEGIES

The rural market in India is undergoing a silent revolution on the back of enhanced
purchasing power of rural consumers, the changing consumption patterns and
increasing overall value of consumption of goods and services. The sheer size of
the rural market which has witnessed tremendous growth in the recent years as
large sections of rural population transformed into discerning consumers has
caught the imagination and incited business interest of the top conglomerates in the
country. Competition does not exist to that much extent in the rural areas as it is in
the urban market. Brands rarely compete amongst each other in the hinterlands.
While the rural markets certainly offer a big attraction to the marketers, it would be
totally naïve to assume that any firm can have easy access to these markets and can
walk away with a sizable share of it.

A dramatic and considerable change is observed among the Indian villagers. This
change is with respect to the behavior and buying habits of the rural people.
Villagers who used to crack open peanut candies, eat the nut and throw away the
shell are now demanding chocolate candies that will melt in their mouths, not in
their hands. Charcoal, Neem twigs and twigs of Babool tree to cleaned teeth are
replaced by toothpaste.
Today, the ultra bright shine of Colgate or some other international brand of
toothpaste holds more appeal than the traditional methods of cleaning teeth.
Needless to say that consumerism and globalization is invading parts of India
where time seems to have ceased for centuries. While taking the buying decision,
urban individual involves family, husband, wife, and children whereas in rural
areas it is the men who make the purchase decision primarily because of lack of
mobility amongst rural women and their awareness level about the market. Rural
consumer is also influenced by strong social interaction and community decision
making is quite common. Rural marketing cannot succeed if the strategies and
action plan are merely extension to urban marketing strategies and plans. In order
to make the most of the untapped rural market in India, companies need to
understand the dynamics of rural consumer behaviour in order to design strategies
for rural consumers and to be successful (Kashyap Pradip, 2005).
The biggest challenge today in rural marketing is to develop a scalable model of
influencing the rural consumers‘ mind over a large period of time and keep it
going. This needs to be achieved in a limited or a reasonable budget. That‘s where
the marketers who really understand rural markets and advertising agencies can
make a difference and develop a suitable communication model.

RURAL MARKETING MIX – 4 A’s

The rural market with its vast size and consumer base form an important part of the
total Indian market. The urban markets for large firms have become saturated
enough to capture. Adding to their woes, the market environment has become
complex due to increased competition and it is forcing marketers to go rural. To
minimize the urban and rural gap and reaching to the rural masses can be
addressed by falling back on the Bottom of the Pyramid marketing strategies as
advocated by Prahlad (2004) and the 4 A‘s Availability, Affordability,
Acceptability and Awareness (Anderson and Biliou, 2007, Kashyap and Raut,
2005). The dimensions in rural marketing mix are availability, affordability,
acceptability and awareness as compared to the 4 P‘s of traditional marketing.
Marketing mix indicates an appropriate combination of 4 P‘s from the marketer‘s
point of view. Considering dynamics of rural market and the challenges in
exploring the rural markets, a practical approach would only be to use the model
based on 4 A‘s.
Table: Traditional 4 P’s Vs 4 A’s of marketing

Availability
Availability is the first A is about making the product reach the consumers. This is
to ensure availability of the product or service. Rural people are more concerned
with the utility of the products rather than their appearance. This is why the firms
have designed sturdy and utility based products for the rural consumers. For
example Philips free power radio, Nokia‘s mobile phone with an in built torch,
LG‘s Sampoorna television, Hero Honda motorcycles are still popular in rural
areas due to the aforesaid reasons.
It has been acknowledged by many that distribution systems are the most critical
component and a barrier which needs to be overcome for success in marketing in
rural areas. The task of distribution in these areas is considered to be more difficult
than in urban areas, low density of population and inaccessibility makes the
problem of servicing villages individually difficult and often uneconomical. Direct
delivery of goods even to the top one percent of villages cost twice as much as
servicing urban markets .Villages are spread over hundreds of kilometres; where
majority of population dwells and finding and then segmenting them is not easy.
However, given the poor state of infrastructure in rural areas, it is an even greater
challenge to regularly reach products to the far‐flung villages. Marketers must
trade off the distribution cost with incremental market saturation. In the
distribution the importance of small town markets cannot be ignored and need to
be given importance as besides being a point of distribution they can also be used
for promoting products as villagers tend to come to the town frequently for either
purchase of agricultural inputs or sale of their produce. Coca cola, which considers
rural India as a future growth driver, has evolved a hub and spoke distribution
model to reach the villages. LG Electronics define all cities and towns other than
the metro cities as rural and semi-urban markets. To tap these unexplored markets,
LG has set u 45 area offices and 59 rural area offices.

Affordability
The next challenge in rural marketing is to ensure affordability of the product or
service. While rural income level has gone up in recent years, the lower income group
constitutes about 65% of th rural population. The major source of income for the
people of rural regions is still by and large, agriculture and agriculture related
activities. The cost component needs to be tailored according to the needs of rural
masses. The availability of disposable income in rural areas is cyclical relate to
agricultural cycles. Some companies have addressed the affordability problem by
introducing small unit packs. Most of the shampoos are available in smaller packs. It
has been shown through the success of single use small packs that the cost per-use is
more important than the cost of the overall product or service. Fair and lovely was
launched in a smaller pack. Colgate toothpaste launched its smaller packs to cater to
the travelling segment and the rural consumers. Godrej recently introduced three
brands of Cinthol, Fair Glow and Godrej in 50‐gm packs, priced at Rs 4‐5 meant
specifically for rural areas. Hindustan Lever, among the first MNC‘s to realize the
potential of India's rural market, has launched a variant of its largest selling soap
brand, Lifebuoy at Rs 2 for 50 gm. The move is mainly targeted at the rural market.
Coca‐Cola has addressed the affordability issue by introducing the returnable 200‐ml
glass bottle priced at Rs 5. The initiative has paid off:
Eighty per cent of new drinkers now come from the rural markets. Coca‐
Cola has also introduced Sunfill, a powdered soft‐drink concentrate.

Acceptability
The third challenge is to gain acceptability for the product or service. Therefore,
there is a need to offer products that suit the rural market. Acceptability includes
issues needed to be addressed to improve the willingness to consume, distribute or
sell a product. It also includes how the product or service could be made more
acceptable to the rural consumers by incorporating features which would make it
attractive to them. The rural population where illiteracy is very high needs to be
taken into consideration before coming out with the product and the feature which
would be included in the product need to be rethought; the needs of rural consumer
need to be taken into consideration. One company which has reaped rich dividends
by doing so is LG Electronics.
However, the rural consumer expressions differ from his urban counterpart. Outing
for the former is confined to local fairs and festivals and TV viewing is confined to
the state‐owned Doordarshan. Consumption of branded products is treated as a
special treat or luxury.

Awareness
Brand awareness is another challenge. Fortunately, however, the rural consumer
has the same likes as the urban consumer — movies and music — and for both the
urban and rural consumer, the family is the key unit of identity. However, the rural
consumer expressions differ from his urban counterpart. Awareness is also linked
to the issues of promotion in rural areas. The promotion of the services also needs
to be adapted to the village environment; the language and means of
communication used should be in the local language. The best places to promote
the services could be the local haats and melas which is frequented by the villagers,
the local festivals should also be included in the promotional plan, so should be the
agricultural cycles. Outing for the villagers is confined to local fairs and TV
viewing was confined to the state‐owned Doordarshan, in most of Indian rural
regions. Consumption of branded products is treated as a special treat or
indulgence.
Hindustan Lever relies heavily on its own company‐organized media.
. The company uses local language India uses wall writing and radio advertising to drive its growth
dilemma for MNC‘s ready to tap the large and fast‐ growing r uinr arul rmaal arkreeta sis.
Twhhee tkheeyr they can do so without hurting the company's profit margins.

STRATEGIES FOR RURAL MARKETING

Product strategy
In India, rural market is relatively special, which has the different consumer
community, located in the different physiographic region and the different
consumer community, has the difference consumer demand. Therefore, when a
company launches product for the rural market, they should pay great attention to
meet the rural consumer's need, emphasizing difference research. The company
needs to take meet farmer's expense demand as the guidance, then adjusts product
structure, increasingly improves product quality, ameliorates product function and
develops practicable, solid which are suitable for the rural market. At the same
time, product packing and brand also should conform to farmer's consume
psychology and the consumer custom. The most important aspect that the company
must focus is on the enhancement of product's basic function and the reduction of
unpractical accessional function, which can not only reduce the product cost and
price, but also can help the dissemination of company‘s brand effect.

Positioning:
Product positioning plays a crucial role in marketing of rural products. Marketer
has to position their products after understanding the unique characteristics of the
rural market environment. Positioning involves three tasks- — Identifying the
unique features of the company‘s offer with respect to the competitor‘s offers. —
Selecting the differences that have greater competitive advantage. —
Communicating such advantages effectively to the target audience. Companies can
reposition their existing products in rural markets. For example, refrigerator
manufacturing companies can launch a refrigerator of bigger size because most of
the families in rural areas are joint, big families and they require big refrigerators
having bigger storage capacity. Secondly in India most of the villages are facing
acute shortage of water; here companies can reposition their washing machine,
which require less water than any ordinary washing machine.

Segmentation And Targeting

Right segmentation and targeting principles are key to achieve faster success in
rural market. Most firms assume that rural markets are homogeneous. It is unwise
on the part of these firms to assume that the rural market can be served with the
same product, price and promotion combination. Segmentation can be done based
on one or more variables like demographic, geographic, psychographic and
behavioral aspects.
a) Geographic: As the rural market is spread over a large area, companies can
divide the market area into small sectors having some geographic similarity to
consolidate their distribution network.
b) Demographic: The market can be divided on the basis of demographic
variables like income, education, lifestyle, gender, marital status, family size,
occupation and religion. Due to unequal distribution of income, the Indian market
for detergents is structurally shown like a pyramid.

c) Psychographic: Market is divided into different segments based on

psychographic factors like social class, life style and personality. E.g. in some parts
of Gujarat, it is reported that farmers are going in for big, 50 hp (horse power)
tractors, when there need was for much smaller, typically 25 hp to 30 hp ones. The
reason, when asked was the compulsion to ―keep up with the neighbors and to
replicate their lifestyle.

d) Behavioral: The following factors play important role to segment the market;
occasions, benefit sought, user status, usage rate, loyalty status, place and product
possession category.

Branding:
The brand is the surest means of conveying quality to rural consumers. Day by
day, though national brands are getting popular, local brands are also playing a
significant role in rural areas. This may be due to illiteracy, ignorance and low
purchasing power of rural consumers. It has been observed that there is greater
dissatisfaction among the rural consumers with regard to selling of low quality
duplicate brands, particularly soaps, creams, clothes, etc. whose prices are often
half of those of national brands, but sold at prices on par or slightly less than the
prices of national brands. Therefore, national and international brands should focus
more on satisfying the needs of the rural consumer by providing the same branded
products, which these rural folks lure for.

Packaging:
As far as packaging is concerned, as a general rule, smaller packages are more
popular in the rural areas. At present, all essential products are not available in
villages in smaller packaging. The lower income group consumers are not able to
purchase large and medium size packaged goods. It is also found that the labeling
on the package is not in the local language. This is a major constraint to rural
consumers understanding the product characteristics. Hence, companies should
take into consideration proper packaging and the size of the packs before diffusing
their products in rural areas. Many FMCG companies, selling products ranging
from biscuits to shampoos, have introduced smaller pack sizes to increase category
penetration. For example, the products like shampoos, soaps, hair-oil, toothpaste,
spices, pickles, jams, ketchups, tea, coffee sachets, confectionery products,
medicated products like Vicks, pain-relieving ointments, etc. are now being offered
in sachets in rural markets. The rural market experts may also practice value
engineering, lowering the input costs by using alternative materials for raw
materials or as packaging alternatives. It is generally believed that markets are
created, not found. This is especially true in case of the rural market, where the
demand is created by promoting urban specific products to rural consumers.

Customized products:
Rural consumers typically define value in terms of the functional focus of a
product or service—its durability, affordability, and fit for multiple uses. Rural
lifestyles and behavioral trends are increasingly coming to resemble urban patterns,
in both form and variety. Growing aspirations are as much a factor in rural markets
as price sensitivity and an acute sense of value for money. Success in those
markets calls for knowing how to balance those factors. Creation and development
of markets in the hinterland involves building consumer understanding, product
customization, relevant pricing, value engineering, and innovative modes of
advertising and promotion—all designed to increase consumption and open up new
markets. A close observation of rural household items indicates the importance of
redesigning or modifying the products. The manufacturing and marketing men can
think in terms of new product designs specially meant for rural areas keeping their
lifestyles in view. People in rural areas are more interested in bright flashy colors
such as red, blue, green etc., and feel that products with such colors are sturdy. The
product meant for rural areas should be sturdy enough to stand rough handling and
storage.

The following strategies could be in line with product customization

strategy –
 i) Straight extension strategy: In straight extension strategy, the same
product could be marketed to the rural customers with minimum or least
modifications; i.e. the contents remain the same but say, the packs may
differ. E.g. the products like FMCG could be marketed in small packs or
sachets like hair oil, toothpaste, washing powder, shampoo, etc.

ii) Product adoption strategy: The product adoption strategy states that the
products are modified to suit the specific need of the corresponding segment. E.g. a
torch provided in the mobile phone marketed among rural customers, promoting
detergent powder in urban markets whereas promoting detergent cakes in rural
markets.

iii) Backward invention strategy :This strategy involves selling less complex and
simple products. E.g. electric sewing machines are introduced in urban markets
and manually operating machines in rural markets.

iv) Forward invention strategy: This strategy includes developing entirely new
products for the rural customers. E.g. Introducing a tractor as a product for rural
customers. Creating new product categories Businesses may need to develop new
products tailored to the unique needs and circumstances of rural consumers. For
example: BP Energy India saw an opportunity to offer a cleaner fuel alternative for
the traditional charcoal- and wood-fired stoves used in the countryside—a move
that the company believed could convert 3.6 billion potential consumers to more
environment friendly energy solutions. The company bought patented technology
from the Indian Institute of Science (IISc) that used fuel pellets made from
agriwaste to run smokeless stoves; it had successfully sold the pellets to nearly
200,000 households by early 2008.

2) Price strategy
Pricing strategies are very much linked to product strategies. With low disposable
incomes, products need to be affordable to the rural consumer, most of which are
on daily wages. Some companies have addressed the affordability problem by
introducing small unit packs. Some of these pricing strategies are mentioned below
–
Income variability: India‘s wide income distribution implies that there exist
multiple segments with very different levels of purchasing power. The challenge
for consumer goods companies is to develop more rural specific products that are
able to capture bigger share of the rural markets.

Focusing on volume not margins: The companies must concentrate on the lower
segment which is quite sizeable in number. A significant portion of the rural
population is paid daily wages. Daily wage earners tend to have little stock of
money, and, therefore, tend to make purchases only to meet their daily needs.
Therefore, the marketing strategies in rural India must be to concentrate on large
volumes over low margins and thus the overall profitability can be maintained.

Lower prices: Many companies tend to bring their existing products at a much
higher price and follow marketing strategies that are not in sync with what is
required to sell to the consumer in rural areas. Hence, they end up serving the high-
end niche players. In reality, consumers in the rural areas are highly price
conscious. They tend to purchase only those products, which are inexpensive in
nature, may it be local brands. This gives the local or regional companies an edge
over the MNCs in the rural areas. Moreover, companies have adopted an unwritten
policy to dump second grade quality products to sell them at lower prices in the
rural market.

Credit facility: This holds true for marketing of consumer durable and
automobiles. As the purchasing power of the rural customer is quite low, they tend
to purchase high ended products on credit. The companies should make use of this
opportunity to sell products. They have started collaborating with banks and other
financial institutions to sell their expensive products on credit. Even, some of the
least expensive products could be sold on daily credit basis such as mixers, iron,
DVD players, DTH players, etc. For selling these products on daily installment
basis, even the rural dealers could be encouraged by the companies apart from
banks so as to avoid cumbersome paper work. But a point of caution exists here.
The rural credit facility may become useless if the connectivity (both infrastructure
and communication) is not developed because the person will not be able to utilize
finance and repay back. Hence all the exercise of providing finance will become
futile.
3) Distribution Strategy
Studies reveal that the bigger villages of above 5000 population are fairly covered
by the marketing people of various companies manufacturing consumable and
durable products. The smaller villages are not fully touched due to various reasons
like accessibility, small markets and far distances from towns and villages.
Strategies for distribution to various rural segments are discussed as under:

Small Villages: In order to reach smaller villages, two types of strategies have to
be adopted i.e., reach all villages above 2000 population and reach all those within
50 km radius of big towns and cities. This will help cover about 50% of the rural
population and even this extent of coverage means approximately 350 million
populations and this is a massive coverage. Very small villages below 500
populations can be ignored at this stage as the output will not compensate the
input. There should be distribution vans to cover villages on fixed period (at least
once a week) so that the shopkeepers us well as the public are sure of supplies
from the feeder centre, which will be nearby a town or city. The village shop
keeper of 2000 population in towns should be used as a distribution channel for
shop keepers of very small villages around it. This is essential as some of the
smaller villages are not having motorable roads.

Agro Input Dealers: Agricultural input dealers have know how and scope to deal
with rural public as they are already in touch with them for essential inputs like
fertilizers, seeds and chemicals. In their transactions, they are managing credit
arrangements and hence are in a better position to take care of consumer goods
also. This method needs to be tried seriously. Some of the farmers from
agriculturally well off states like Punjab, Haryana, Western UP have improved
their per capita income to the level of urban people and can afford to buy more and
more consumer goods. With affluence, their awareness of modern goods and
facilities also has increased. In addition to this, the areas where cooperatives of
sugar and dairy are stronger, the farmers have better income level and cash flow is
steady. It is in such places that the efforts to sell consumer goods give results.
These farmers will set a trend for other farm communities.
Activating Co-operative Societies : Though cooperatives have been started
mainly for input and output of rural produce, there is scope and possibility to use
these premises and offices for marketing of consumer goods to rural people
throughout India, there are more than three lakh cooperative offices working under
different names like ‗marketing cooperatives‘, ‗credit cooperative society‘,
‗farmers‘ service cooperative societies and various local level cooperatives. There
are organizations, some active and some not so active. The premises and
manpower can be better utilized by introducing the consumer, durables and
consumables required by the rural population. The approach has an institution
backing the marketing executives can feel safe 10 keep goods and give credit on
institution and hence basis than on the individual basis. The premises of
cooperatives is also a good place to keep hoardings and display of items kept for
sale.

Utilizing P.D.S Stores and Petrol Pumps: These are two unexplored areas to
develop market. Public Distribution Systems (PDS) are available throughout the
country and even in villages. Similarly petrol pumps are available on all highways,
state highways and link roads to towns and big villages. These are two places
which are not fully utilized. In cities, the petrol pumps are very busy and cannot do
anything other than giving petrol and diesel to hundreds of vehicles coming to
them day and night. In urban and rural areas and less busy roads the petrol pumps
have adequate spare time to attend additional functions. Similarly PDS stores
which are in private hands have ample time three weeks in a month. PDS stores
have now-a-days become least active due t decreasing importance of this scheme
and very little gap between market price and PDS prices. This naturally gives
scope to make better utilization of these outlets.

Towns as Feeder Centers: Towns are frequently visited by rural people for
education, cinema, dramas, purchases, medical treatment and various functions. It
will be convenient if the town market is used as a distribution channel for various
villages surrounding towns. One or two traders in town need to be used as feeders
to village stores and also to sell directly to villagers coming to towns. This method
is already working in many places and can be further strengthened. The
distribution strategy can be changed based on the changing life style,
communication and conveyance facilities. The strategies discussed thus far are the
possibilities for the current situation. Promotion Strategy Various types of
promotion methods work as integrative systems between producers and consumers.
In case of consumer goods, this is done on large scale whereas for rural products, it
is on small scale or specific target wise done. The producers and processors think
in terms of ―How to reach our customers‖ and ―How our customer can reach us‖.
Due to technological innovations people can now communicate through both
traditional and newer methods of media. Both mass communication and / or target
communications can be used as per requirements. Very commonly used media of
communication are newspapers; magazines, radio, TV, telephone, computers, fax,
pagers and mobile phones. These usage proportions differ from product to product.

For five marketing related functions like

(1) Advertising
(2) Sales promotion
(3) Public Relations
(4) Personal selling and
(5) Direct marketing, there is a different way of approach in urban and
rural markets.
The product package, shape, color, pricing and sales persons get up and general
impression are no more monopoly of consumer goods, dealers. Now even for rural
related commodities like dairy products, flour, pickles, high quality grains and
fruits and foods are neatly packed, branded, weight, contents, price are written.
Slowly and steadily, the marketing of rural produce in towns and cities and
marketing of consumer goods in rural sectors is taking a professionalized
approach. The basic difference is in organizational strength, permanent address and
executive to attend any type of call for consumer goods. Such facility is a far cry
for rural products. Since the literary level of rural population is low, it pays to do
promotions through mass media like TV, cinema and radio advertisements. In print
media, mostly hoardings and wall paintings will help more. These promotional
strategies are covered as under:

Cinema: For the last 60 years, cinema continues to be influencing factors in style,
tastes, dress materials and total Indian culture. The effect of cinema is much more
in Southern India than elsewhere. In the South, 76 % rural people view cinema
regularly whereas elsewhere it is around 25 %. This justifies why Tamil Nadu and
Andhra Pradesh had cinema actors as Chief Ministers for a long time. Despite TV
being parallel popular, the hold of cinema on rural sector and urban middle class
and labour class continues. Product advertisements before a movie and during
intervals get good publicity. All the theaters do this with the help of slides and 1 or
2 minutes movie type advertisements to highlight the product performance and
utility. This method will continue to be popular as many villagers like to see
movies in theatres than on TV.

Television : Since the last two decades, TV viewing has been a regular pastimefor
all Indian public. The TV serials like ‗Mahabharat‘, ‗Ramayan‘, ‗Humlog‘ and
cricket matches have made TV very popular. Infact, Doordarshan covers 85 % of
India and private channels have started operating at continental, national and
regional levels. The advertisers have choice of segment to be touched. For all India
coverage, important and popular serial intervals are best to advertise on TV.
Further, DD has special programmes on specific days and time for farmers.
Advertising before and in between this programme also gets good effect. The only
constraint is that such prime time advertisements cost more. Only products which
can absorb such high costs can afford this.

INNOVATIVE MARKETING STRATEGIC DECISION

Product: Product plays an important role in strategic marketing decisions. Product

innovation is in fact key to success in rural market, developing indigenous products
that cater to the needs of rural consumers who demand quality products at an
affordable cost. This requires substantial R & D and marketing research to better
understand consumer behaviour and preference.

Lack of formal sales and distribution network: Developing the distribution

network in the rural market is not an easy task, due to low per capita income
compounded by the need to maintain low operating costs. In a rural market formal
sales and distribution networks are largely nonexistent and difficult to obtain without
substantial capital or local guidance unlike developed market where large retail
distribution chains are commonplace. This poses a tremendous challenge to consumer
goods companies, which have traditionally used large retailers as their primary
channel of distribution. Retail chains have not flourished in rural areas of India
economies of scale do not exist. Rural consumers live in small homes with little
storage space, lack refrigeration and do not own vehicles. As a result, daily
purchases at the neighborhood store are frequently preferred by consumers and
may be the only avenue to buy goods in smaller rural towns. To compete
successfully with incumbents, new consumer goods companies are forced to build
an extensive distribution network to reach India‘s rural population. This
distribution network relies first, on gaining shelf space in the small independently
owned stores that drive the majority of retail sales and then on establishing a
relationship with wholesalers and distributors to further expand the distribution
network. Notwithstanding the direct sales force and working capital costs, some
companies have succeeded in building a distribution network, and in doing so,
created a substantial barrier to entry.

Retailer Power: While independent retailers are a fragmented group, they have a
substantial amount of power in driving consumer purchases, particularly in rural
areas. Most rural stores are cramped, providing little opportunity for consumers to
browse. The consumer interacts directly with the retail salesperson (usually the
owner) and services often include informal lines of credit and home delivery in
addition to personal opinions on goods. In rural areas, retailers tend to carry only a
single brand in a product category. In such a retailing environment, being first on
the shelf and developing a privileged relationship with the retailer is extremely
important and a competitive advantage to consumer goods companies.

Relatively low cost of labour: The low cost of labour in rural areas has
implications on the consumer goods industry. Unlike developed markets where it
has been cost-efficient to replace human labour with machines, labour intensive
manufacturing and distribution remains economical in rural areas.

Improving access: Many consumers in Tier 4 are in locations that make

distribution extremely difficult. To make sure that the consumers in the tire 4
segment have access to the products, the distribution system followed by the
companies should be different from that of their existing systems. Lack of tar roads
in India makes the distribution costs high and reach low.