Rural marketing is the process of developing the marketing mix (product, price, place and promotion) for a product or service which involves interaction between rural and urban market, satisfaction of consumer demands and achievement of organisational targets. Rural marketing is subjected to complexities and distinctiveness of its own. There has been a remarkable growth of agricultural industry in India due to which rural consumers are now using numerous urban products and services. The development in the process Of rural agricultural consumption and production has led to the growth of a new process called rural marketing. This significantly fosters the growth of Indian economy.
Rural marketing is still not a developed process in India as many challenges in the areas of product design, pricing, promotion, and distribution prevail in the rural sectors. Organisations need to develop a perspective Of rural marketing not only to expand their business but also to get greater understanding Of the rural economy and its functioning. For this purpose, they need to develop a strategic perspective of the rural market. The rural marketing has to be understood in terms of its unique marketing mix and how it has to be conceptualised so that the organisations attain their marketing objectives. The product usage is the most important aspect Of rural marketing and governs Other parameters like price, promotion, branding, image Of the organisation, etc. Better understanding of the product usage allows the organisation to effectively manage and organise the elements of marketing mix in a way that achieves overall success.
Characteristics of Rural Market
- The characteristics of rural market are as follows:
- Large and Scattered Market
- Improvements in Agricultural Productivity
- Traditional Outlook, But no Stereotype Consumer
- Infrastructure Facilities
- Innovation-Driven
- Major Income from Agriculture
- Improvements in Standard of Living Backgrounds
- Win-Win Process
Large and Scattered Market: The rural market in India is huge in terms of its size as it consists of more than 700 million customers. It is also very scattered region With a geographic spread of about villages across the country It also generates a business of more than Rs. 22,000 Cr of non-food consumer products every year.
Major Income from Agriculture: A major part of rural income (approximately 60 per cent) is derived from agriculture. At present, there is a greater growth in rural incomes and prosperity in the rural areas of India as their household incomes are increasing. The percentage of lower income households has come down from the earlier 60 per cent _ There is also an increase in the upper income households of rural areas.
Improvements in Agricultural Productivity: Agricultural productivity in India has increased significantly due to the following reasons:
- Better Land Use pattern: Farmers are increasingly focussing 011 cash crops.
- More Use Of High Yielding Varieties: Farmers have been helped by agricultural universities to obtain crops of high yields.
- Irrigation: The facilities for irrigation have been improved significantly. However, there is still room for further improvement.
Improvements in the Standard of Living: The rural consumers have been plagued by poor standard of living, low per capita incomes, poor savings culture, etc. This has often been called as the vicious cycle of poverty. However, the living conditions in rural India are now changing rapidly. Moreover, there has been an explosion of demand in the rural FMCG market.
Traditional Outlook, But no Stereotype Consumer: The Indian rural customer base is bound by traditions and customs. It is tempting for the organisations to target rural markets as low purchasing power, high illiteracy rates, strongly influenced by traditions and cultures. The general perception is that the rural consumers are bound by traditional values that influence their consumer behaviour. However, in the real picture, all such perceptions are partially correct, as many rural consumers are entirely different in their behaviour. The stereotyping of rural consumers is therefore erroneous and sufficient bases exist to segment the rural market.
Diverse Socio-Economic Backgrounds: Rural consumers are not a homogeneous group but belong to different socio-economic backgrounds.
Infrastructure Facilities: There is insufficient infrastructre development in the rural areas as there are limited roads, warehouses, financial facilities and communication system. In such conditions, physical distribution of goods becomes difficult, which increases the cost of distribution.
Dynamic: Rural marketing has undergone a lot of changes over time. It has changed from a very transactional behaviour to developmental one and is now increasingly based on sustainable relationships. Further, it has gained immensely from the developments in information technology.
Innovation-Driven: Innovation has now become a keystone for rural marketing. Innovation-oriented techniques of social change have successfully transformed the traditional outlook of the society and have increasingly reduced the gap between rural and urban markets.
Win-Win Process: The process of rural marketing plays the role of both catalyst and of the overall growth of rural areas. The growth of the rural market is a win-win process. The basis of rural marketing process is initiating and managing socio-economic change in the rural sectors.
Scope of Rural Marketing
There is a potential scope for rural marketing in the following areas:
Agricultural Consultancy: For selling the agricultural produce, the rural customers require proper consultancy services regarding the most effective methods, pricing, seasons, tools and technologies.
Banking, Microfinance and Loan Facilities: In recent times, there has been an explosion in the market for rural finance and micro-finance. Loans are required in the forms of agricultural loans, housing loans, savings accounts, personal loans, and deposits.
Healthcare: Since rural areas are underserviced by existing medical facilities which are far and scattered, the location and availability Of healthcare services is of paramount importance in rural areas.
Telecom Services: The various telecom policies of the government like attractive tariffs, validity plans, cheap handsets, enhanced technological features, etc., have led to the explosion of demand for telecom services in the rural market.
Automobile Services: The growth in prosperity and income levels in rural India has led to the growth in demand for two wheelers and four wheelers in these markets. There has also been a growth in the provision of allied services like maintenance and repairs.
T.V. Channels Services: The growth in prosperity, income levels, aspiration levels and the bridging of urban-rural gaps has also led to the growth of leisure requirements in rural markets. A number of avenues have arisen to fulfil this demand. Growth of TV channels and cable TV is one such option. Many companies like Airtel (Dish TV) and Tata Sky have gained larger market share by aggressively targeting the rural consumers.
Event Management: The rural population is engaged in the celebration of many festivals and events. This requires lighting arrangements, decorators, tent providers, lodging, transportation, catering, etc. Various occasions for events include:
i) Family gatherings like marriages, engagements, birthday parties, etc.
ii) Local festivals like Diwali, Holi, Bihu, Onam. Pongal, Durga Puja, Baisakhi, etc.
Beauty Parlours: An increase in the income levels With better lifestyle has also increased the beauty awareness of rural consumers (especially females). Thus, there has been a growth in the demand for beauty products and services. At present, this market is dominated with unorganised and localised players who do not have the skill and expertise nor the technology and products to match the requirements.
Importance of Rural Marketing
The following points explain the importance of rural marketing:
Large Market: The rural areas of India include 78 per cent of the total population. The growth of the rural population has been 12 per cent in the last decade and the share of rural economy is 40 per cent in the national economy. The rural consumer market is heterogeneous and contributes to more than 50 per cent of the total customer base in India.
Less Expensive: The promotional expenditure in urban markets is almost twice Of rural markets. According to an estimate, it costs 1 Cr to promote a consumer durable in a particular state. This includes many modes of promotion like newspapers, radio and television spots, cinema slides, cable scrolls, mobile and van promotions, point-of-purchase promotions, etc. Such campaigns can cost twice for urban regions.
Increasing Competition in Urban Markets: The level of competition in urban markets is increasing and companies are finding it difficult to expand their business as the urban markets are becoming saturated. In these circumstances, rural markets are emerging as a great alternative for urban markets. This can be seen in the growth of FMCG companies like Coke and Pepsi which have an increasing rural focus. Even auto major Mahindra and Mahindra is receiving a greater percentage of sales coming from the rural markets, especially for products like tractors.
Socio-Economic Changes in Rural India: The socio-economic changes that have taken place in rural India can be connected to the increasing productivity of the rural markets. The yield per hectare in rural areas has gone up immensely. Various agricultural revolutions like the Green Revolution and the White revolution have immensely contributed towards the growth Of the rural market. The co-operatives in India have also contributed to the growth of rural markets which has increased the fanners’ incomes. Further, various Government schemes like rural electrification scheme, irrigation and rural work programmes have also contributed to the increase in rural productivity and income.
Difficulties in Rural Marketing
The difficulties in rural marketing are as follows:
Barter System: Many parts of Indian rural areas are still under a barter system of operations, i.e., exchange of goods for goods. This is a major obstacle in the growth and development of rural markets.
Underdeveloped People and Markets: The rapid use Of technology has helped the growth Of the rural economy. However, the benefits have not uniformly benefitted to all the people in the sector as there are still many underdeveloped people.
Lack Of proper Physical Communication Facilities: The rural sector in India still suffers from lack of adequate infrastructure. Nearly 50 per cent of the villages in India do not have access to proper roads. In the monsoons, many large areas of rural India are cut-off from the rest of the country.
Diverse Languages: The rural markets in India are heterogeneous and have diverse languages, cultures, and traditions. This creates a complexity for marketers in designing a communication message as it has to be tuned to local and linguistic differences.
Low Levels of Literacy: The rural areas of India suffer from low levels of literacy and education. This complicates the communication problems in this medium. Further, the print media becomes largely ineffective as many people cannot even read.
Seasonal and Irregular Demands: The demand pattern in rural markets is largely irregular and highly unpredictable. The demand in rural markets is linked to the monsoon and is directly proportional to good/bad climatic conditions of the country.
Economic and Social Backwardness: The rural markets are in the grips of tradition and social backwardness. However, this is gradually getting changed as the rural economy is getting exposed to modern thoughts and beliefs.
Prevalence of Spurious Brands: The rural market is also impacted by spurious and duplicate brands. Many times, it becomes difficult to counter their spurious effect as the consumers are illiterate and remain unaware with the communication campaigns of companies.
Different Way of Thinking: Rural consumers are also very different from other consumers in terms of their beliefs, attitudes and perceptions. Their behaviour is governed by their traditions and customs. Rural customers oppose to the new concepts, especially when such concepts or products challenge their dominant beliefs and perceptions.
Problems in Physical Distribution: Physical distribution in ruml areas from the following problems:
i) Transportation Problems: Rural sector suffer from transportation problems as there is shortage of roads and highways. Many parts of the rural economy are still out of bounds with the marketing teams of the company.
ii) Warehousing Problems: The rural areas also suffer from warehousing and logistics problems. There are no public warehouse agencies in the rural vicinity of India.
iii) Communication problems: The elements of communication infrastructure including postal services, telegraph, telephones, etc., are still unavailable in many rural areas of the country.
Other Influencing Factors in Rural Marketing: Other events which impact the rural economy are natural calamities and market conditions. The rural economy is also plagued by unscrupulous middlemen and agents Who charge vicious commissions for marketing the agriculture products and commodities.
Strategies to Cope-up
Following are the strategies which should be considered by the marketers for solving the obstructing issues associated With the rural marketing in India:
Smaller Units and low priced packing: Generally, the rural-based communities have the habit of using sample pouches or small packets of products. They rarely make bulk purchases due to the higher costs incurred in buying the goods in lot. For example, products like biscuits, shampoos, pickles, oils, etc., are purchased in small amounts according to their present usage or consumption. Therefore, the marketers need to use the strategy of rnaking available their priXlucts in small units and at IOW prices in rural InarkeLs. Howewer, this strategy is not applicable in all types Of product, yet wherever possible, the marketer should try to employ this strategy.
New product Designs: The product designs should be based on the rural lifestyles so that it matches with the preferences of the rural customers. For this purpose, the marketer needs to closely analyse the rural household items which clearly depicts the need for redesigning the products. Based on these products, firms can take ideas for new product designs.
Sturdy/l)urable Products: Sturdiness or durability is one Of the important elements which should be considered by the marketer while planning the product. The products designed for rural marketing should be durable enough to deal with the rough handling and storage. Besides durability of the product, the marketer should give focus upon creating appropriate utility of the product for achieving the best results.
Brand Name: The rural people are more aware about the indigenous brands advertised on televisions, radios and Other media. Hence, giving proper consideration to the brand name is another effective strategy for the while dealing with the rural markets. These brand names can be easily remembered by the rural and their future purchase is influenced by it. The logo or brand name printed on the product has much importance in such markets and the marketer should not ignore this factor.
Low Cost/Cheap Products: This is one of the most common strategies used in the rural markets by the marketers. They know that the rural communities give more preference to the products which give them high utility at low cost. Considering this aspect, the marketers sell unit packs of their products at IOW prices.
Avoid Sophisticated packing: The market needs to minimise its total costs incurred while manufacturing the products, One method for this is to cut down the cost involved in packaging by avoiding sophisticated packing. For example, the packaging of biscuits is kept simple by the manufacturers. Therefore, the marketer should use innovations in packing the rural-based products for minimising the total costs.
Refill Packs/Reusable Packaging: This is another effective strategy which can prove to be both cost-effective and helpful in attracting customers. Manufacturing products with reusable packaging proves to be the best product in case of rural customers. For example, the oil sold in small bottles or products sold in usable containers attract the customers to make a purchase.
Communicating Using Mass Media: Besides above strategies, the marketer should also adopt advertising strategies for increasing product awareness among the rural masses. Various mass media such as radios, televisions, newspapers, hoardings, wall paintings, fairs, haats, campaigns, etc., can be used for communicating the information related with the product. Several other mass media such as booklets, pamphlets, posters, stickers, quotes, schemes, etc., can also be used for this purpose. For providing information regarding agriculture and rural industrial products, the government can contact the Panchayati Raj OIT1ce or the local government schools for promotional activities.
Distribution Strategies: Distribution strategies can be used by the marketers for establishing a strong stand in the rural market. Generally, marketers have distribution arrangements which cover around 5000 people in the rural market. However, specific strategy is required to be formulated for effective distribution of the product. The distribution strategies commonly used in the rural markets involves distributing through cooperative societies, multi-purpose distribution centres, public distribution system, distributing in feeder markets, selling products in haats, fairs, mandis, agricultural input dealers, jathras, etc.