Rural Marketing

Rural marketing is promotion of a company’s products in the rural markets by using strategies which differ from that of the urban market. The rural market is more price-sensitive. Nature of Rural market:- 1. Large, diverse and scattered market:- Rural marketing in India is large and scattered into a number of regions. There are not many shops available to market products. 2. Major income of rural consumers is from agriculture:- Rural prosperity is interlinked with agricultural prosperity. In the event of crop failure, rural income is directly affected. 3. Traditional outlook:-

Villages develop slowly and have a traditional outlook. Change is a continuous process but rural people accept it gradually. This is changing but it is changing, although slowly, due to literacy especially in the youth who have begun to change the outlook in the villages. 4. Standard of living and rising disposable income of the rural customers:- It is known that majority of the rural population lives below the poverty line and has low literacy rate, low savings etc. Today, rural customers spend money to get value and are aware of the happenings around them. . Rising literary levels:- It is a well documented fact that approximately 45% of rural Indians are literate. Awareness has increased and farmers are well informed about the world around them. They are also educating themselves on the new technology for a better life style. 6. Diverse socio economic background:- Due to differences in geographical areas and uneven land fertility, rural people have different socio- economic backgrounds, which ultimately affect the rural markets. 7. Infrastructure facilities:-

Infrastructure facilities like warehouses, communications systems and financial facilities are inadequate in rural areas. Physical distribution is a challenge to marketers who have found innovative ways to market their products. Scope of marketing:- 1. Large population:- According to the 2011 census, 72% of the total population is rural population and it is scattered over a wide range of geographic area. 2. Rising rural prosperity:- Average income level has improved due to modern farming practices, contract farming, industrialization, migration to urban areas etc. . Growth in consumption:- There is a growth in purchasing power of rural consumers. The average per capita house hold expenditure is Rs. 382. 4. Change in lifestyle:- The Lifestyle of rural consumers has changed considerably. 5. Market growth rate higher than urban:- The growth rate of fast moving consumer goods [FMCG] market and durable market is high in rural areas. The rural market share is more than 50% for products like cooking oil, hair oil etc. 6. Life cycle advantage:-

The products which have attained the stage of maturity in the urban market are still on their stage of growth in the rural market. 7. Rural marketing is not expensive:- Promotion of consumer durables inside a rural market, it costs Rs 1 crore whereas in urban areas it runs into millions. What is rural market? Importance of rural marketing ? Ans:Meaning of rural market:- On account of the green revolution, rural areas are consuming a large quality of industrial and urban manufactured products. In this context a special arketing strategy namely rural marketing has emerged. But often, rural marketing is confused with agricultural marketing – The latter denotes marketing of produce of rural areas to the urban consumers or industrial consumers, whereas rural marketing involves delivering manufactured or processed inputs or services to rural producers or consumers. Importance of rural market:- 1. Large market:- Approximately 75% of India’s population resides in around 6, 38,365 villages of India spread over 32,00,000 Sq. kilometer. 41% of India’s middle class resides in rural areas.

The Indian rural consumer lives in 6,00,000 villages spread across the country and they account for over 70% of population of the country. For several product categories, rural markets account for over 60% of the national demand. 2. Higher purchasing capacity:- According to a study conducted by “NCAER” [National Council for Applied Economic Research], there are as many middle income households in the rural areas as there are in the urban areas. There are almost twice as many lower middle income households in rural areas as there are in the urban areas.

Because of this purchasing power of power of rural people is on the rise. 3. Market growth:- “Hariyali kissan bajar” was set up by Sri Ram Consolidated Limited to facilitate scale of agriculture inputs such as fertilizers, pesticides farming equipment, seeds etc. Shakti- through the state governments and NGOs involved in microfinance women entrepreneurs in villages are identified to act as local distribution and sales point for HUL products. 4. ITC:- ITC’s internet enabled rural interface to help scale of agricultural outputs is presently operational in the markets of 6 states and is growing at the rate of 3-4% p. . Define size of rural market and discuss? Ans: According to the census of India, areas that would qualify as being rural must have clear surveyed boundaries without a municipality, corporation or board, and with density of population not more than 400 Sq. km and with at least 75% of the male working population engaged in agricultural activities. According to this definition there are 6,38,000 villages in the country. Of these villages, 0. 5% have a population of about 10,000 and 2% have a population between 5,000 and 10,000 around 50% have a population which is less than 200.

Interestingly, the FMCG and consumer durable companies, any territory that has more than 20,000 & 50,000 population respectively do not qualify as being a rural market! According to the census of India 2001, there are more than 4000 towns in the country. It has classified them into 6 categories. Around 400 class-I to towns with 1,00,000 and above population, 498 class-II towns with 50,000-99,999 population, 1,368 class-III towns with 20,000-50,000 population, 1,560 class –IV towns with 10,000-19,999 population It is mainly the class-II & class-III towns that markets term as rural.

Demographical details of Indian rural market • About 285 million people live in urban India where as 742 million people reside in rural areas. • The No. of middle income & high income households in rural India is expected to grow from 46 million to 59 million. • Size of rural market is estimated to be 42 million households and the rural market has been growing at 5 times the rate of the urban market. • More government based rural development programs. • Increase in agricultural productivity leading to growth of rural disposable income. Lowering of difference between taste of urban and rural customers. The Indian rural market with its vast size and demand offers great opportunity to marketers. Our nation is classified in around 450 districts & approximately 6, 38,000 villages which can be stored in different parameters such as literacy level, accessibility, income levels, distance from nearest town etc. The rural market accounts for half of the total market for TV sets, fans pressure cookers, bicycles, washing soap, tea salt & tooth powder. In fact, the rural market for FMCG products is growing much faster than the urban market.

Explain the distinction between rural market & urban market? Ans: Definition:- Rural marketing is similar to simple marketing. Rural marketing differs only in terms of buyers. Here, the target market consists of customers living in rural areas. Thus rural marketing is application of marketing fundamentals {concepts, principles, theories etc} to rural marketers. Rural marketing is a process of developing, pricing, promoting and distributing rural goods and services leading to desired exchange with rural customers to satisfy their needs and wants, and also to achieve organizational objectives.

Differences between rural marketing & urban marketing:- Although rural marketing offers immense potential, marketers used to recognise the fact that there are considerable differences in many aspects including the nature, characteristics, buying patterns & behavior of rural consumers when compared to urban consumers. While the urban economy thrives mainly on secondary and tertiary activities such as manufacturing & services, the rural economy is driven mainly by primary activities such as agriculture, fishing & forestry.

The consumer demand and consumption patterns also differ across rural and urban areas. In many products, rural consumption now accounts for a larger share than the urban market. In washing soaps the rural share is over 60%. In popular bath soaps it is more than 50% and in batteries it is more than 56% and it is the same case with packed tea and hair oils What are the problems of rural marketing? Ans: The problems of rural marketing are continuing in spite of efforts to improve in the 9th five year plan. The position is improving but slowly. The rural marketer has many challenges.

But the vast & expanding markets call for good marketing strategists to create win-win situations to all parties in the chain of rural marketing. The problems of rural marketing are as follows:- Under-Developed Population Under-Developed market Improper communication facilities Many Languages Vast & uneven spread Low Per-Capita income Poor Infrastructure Facilities Seasonal Demand Fewer distribution channel 1. Under-Developed Population:- Rural society is bounded by tradition, old customs and practices. The impact of modern science & technology has made very few changes as the old beliefs are still continuing. . Under-Developed Market:- Rural markets are not developing as much as they should owing to inadequate banking & credit facilities. Rural market needs banks to enable remittance, to transact on credit basis and to obtain credit support from the bank. At present every 48th village in India has a bank. 3. Poor or Improper Communication Facilities:- Most villages even today largely depend on telegrams and phones for their communication needs. Print media and visual media [Television, cinema, etc] reaches only about 20% of rural Indians. 4. Many languages:- India is a country of many languages.

Language becomes a barrier in effective communication in the marketing efforts. The languages vary from state to state, place to place, district to district, etc. There are now 18 scheduled national languages. 5. Vastness & unevenly spread:- Rural market consists of approximately 75 crore rural consumers spread across approximately 6,38,365 villages. Despite urban migration, the rural areas still have a sizeable population. 6. Low per capital income:- Most farmers have small lands. This results in low per capita income. And low per capita income results in low consumption pattern as compared to the urban population.