RURAL MARKETING (Sub Code: 10MBAMM415)

Module 1 - Introduction
Learning objectives

Definition,
scope of rural marketing,
concepts, components of rural markets,
classification of rural markets,
rural vs. urban markets
Definition
What is Rural
Government agencies like IRDA (Insurance Regulatory And Development Agency and NCAER
(National Council for applied Economic Research) define Rural as villages with a population <5000 with
75% male population engaged In agriculture etc
Concept of Rural from the perspective of marketing has Indeed been dynamic.- gradually changed over
the times Was not India a so called Village/Rural for the world a couple of decades back
Towns are actually rural areas but satisfy the following criteria
Minimum Population>=5000 75% of the mail population engaged in Non agricultural activity
What is Rural Marketing
Developing of the market in the area as defined as Rural.
Hence it could be aptly said that it encompasses the Activities such as developing the process to meet this
Objective Right product at the right price to the right people at the right time.
Exchange between rural and Urban is a Factor .
Could be Urban to Rural:
Rural to Urban,
Rural to Rural
It involves the process of developing, pricing, promoting, distributing rural specific product &
service leading to exchange between rural and urban market which satisfies consumer demand
and also achieves organizational objectives.
It is a two-way marketing process where any of the following transactions may take place :
(1). Urban to Rural : It involves selling of products & services by urban markets in rural areas.
These include Pesticides, FMCG products, Consumer Durables etc.
It is major part of rural marketing.
(2). Rural to Urban : This is basically agricultural marketing where a rural producer seeks to sell
his products in Urban Market seeds, fruits & vegetables, milk and related products, forest
produce , spices etc.
(3). Rural to Rural : It involves selling between two villages close to each other. Transactions
relate to areas of expertise the particular village has. These include agricultural tools, cattle, carts
and other goods to another village nearby.
Rural marketing scientists term it as Developmental marketing as it involves concern for profit
along with the concern for society.
Participants include-- input manufacturers, dealers, farmers, opinion makers, govt. agencies and
traders.
Reasons for Going Rural
Size of the market
Largely Untapped
Too crowded Urban Market
Income on the rise/disposable income
Income from other than agriculture
Income flow from urban /abroad
Better exposure - media

Great success stories
HLL 50%
Colgate 50%
LG 50%
Asian Paints 60%
Dabur 40%
Videocon 40%
Cadburys 25%
Hero Honda 40%

Points to Note with Regard to Rural Markets
Extremely Diverse Market
Villages Size,
Population,
Spread,
Income
Literacy levels ,
awareness level,
languages
Urban Market scope and saturation
Flow of funds from Urban National /International
Literacy levels on the rise
Media Penetration
Encouraging Indicators/Initiatives for Rural Market Growth
Scientific methods major impetus to Production of food grains
Export on the rise Increase in agriculture and handicrafts
Initiatives taken by banks for more branches and Kisan credit card to buy seeds, fertilizers,
consumer goods on installment basis
Reputed Companies helping in changing lifestyles Levers Britania ,Dabur, LG, onda,Videocon
Media creating an impact-creating awareness levels
Government Policies White Revolution Milk products , Yellow Revolution (poultry and
edible oils), Blue Revolution Aqua culture
Employment Schemes JRY(Jawahar Rojgar Yojna, PMRY,Small Industries Training,
Rural Electrification, Spend on Health and Sanitation, Medical and Health, Primary Education,
Credit card for farmers
Waiver of Loans
Initiatives by leading organization in spreading awareness , Hindustan Levels Shakti, ITC
Reliance etc
Move to Rural Market encouraging Data

Rural India buys
Soft Drinks approx 45% of all soft drinks
Almost 50% motor cycles
Approx 55% of cigarettes

Half the total market for TV, Fans, pressure cooker, bicycles, Washing soap, tea, lades, salt,
toothpowder

Coca Cola is growing over 35% in Rural areas compared to Over 22 % in Urban
According to Hasna Research, a market research firm that Has published a Guide to Indian
Markets 2006, Consumer durables in Indian Villages rose sharply

TV Sales up by 200%
Motorcycle by 77%
There are 3000 households in rural area that earn > 50 lakhs

We have come some way ahead but there is a long way to go
Evolution of Rural Marketing
It consists of following phases:
Phase I From Independence to Mid-sixties
Agricultural Produce Food grains , and Industrial inputs cotton, oilseeds, sugarcanes etc. --
main focus.
The marketing action of firms supplying agricultural inputs fertilizers, seeds & pesticides and of
artisans in rural areas- supplying bamboo baskets, ropes, window & door frames, tools like
ploughs by sellers like blacksmiths, carpenters, cobblers & pot makers-- received secondary
attention .
Market for Tractors, harvesters, thrashers, pump sets etc. was miniscule.

Phase II From mid-sixties (Green Revolution) to mid-nineties
Green revolution scientific farming practices, transformed villages into prosperous business
centers.
Demand for agricultural inputs went up.
Better irrigation facilities, soil testing, use of high yield variety of seeds , fertilizers, pesticides,
and employment of machinery like power tills, harvesters, thrashers etc. changed the rural
scenario.
Marketing of agricultural inputs assumed significance. Two separate areas of activities emerged:
Conventional Agricultural Marketing &
Marketing of Agricultural inputs -- Urban to rural.
Marketing of rural products received considerable attention.
Formation of agencies like Khadi & Village Industries Commission (KVIC), Girijan Co-
Operative Societies & APCO Fabrics (in AP) and special attention of govt. to promote these
products.
Village industries flourished and products like Handicrafts, Handloom textiles, soaps, safety
matches, crackers etc. were sold in urban markets on large scale.

Phase III Mid Nineties to 20
th
century
Marketing of household Consumables and Durables, not considered in earlier phases.
Earlier the rural market for these products was not large enough.
They were inaccessible.
Small villages were widely scattered making reach difficult & expensive.

Phase IV 21
st
Century :
Developmental marketing
The objective of rural marketing in current phase is the improvement of quality of life by
satisfying the needs and wants of customers, not through stand -alone products or services but by
presenting comprehensive and integrated solutions which involve a set of interrelated products &
services.
Accelerated development in Rural India, coupled with increase in purchasing power because of
scientific farming, changing lifestyle and consumption patterns, increase in education, social
mobility, improved means of transportation & communications and other penetrations of mass
media like TV and its various satellite channels have exposed rural India to outside world and
hence their outlook to life has changed.
Increase in competition, saturated urban markets, more& more new products, demanding urban
customers have made companies to think about new /potential markets thereby increasing focus
on rural marketing.
Nature of Rural Markets
1. Large, diverse and scattered.
2. Major income of rural customer is through agriculture.
3. Standard of living
4. Traditional Outlook
5. Rising literacy level.
6. Diverse socio economic background.
7. Infrastructure

Is it Developmental or Transactional?
It has become an attractive proposition to commercial organization, yet the role of rural
marketing is more developmental than transactional.


Classification of Rural Markets
(A). Consumer Markets
Constituents : Individuals & households.
Products: Consumables Food Products, toiletries, cosmetics, Textiles & Garments, Footwear
etc.
Durables Watches, Bi-cycles, Radios, TV, Kitchen appliances, furniture, sewing machines, Two
wheelers and so on.
(B). Industrial Markets:
Constituents : Agricultural & Allied activities, Poultry farming, fishing, animal husbandry,
Cottage industries, Health Centers, Schools, Co-operatives, Panchayat Office etc.
Products : Consumables : Seeds, Fertilizers, Pesticides, Animal Feeds, Fishnets, Medicines,
Petrol/Diesel etc.
Durables : Tillers, Tractors, Pump Sets , Generators, Harvesters, Boats etc.
. Services Markets:
Constituents : Individuals, Households, Offices & Production firms.
Services : Repairs, Transport, Banking, Credit, Insurance, Healthcare, Education, Communication
and Power etc.
Attractiveness of Rural Markets
1. Large Population
2. Rising Prosperity
3. Growth in consumption
4. Life-style changes
5. Life-cycle advantages
6. Market growth rates higher than urban.
7. Rural Marketing is not expensive
8. Remoteness is no longer a problem.

Problems in Rural Markets
Low per capita income
Low disposable income
Inadequate fixed income (daily wages)
Majority depends on Agricultural Income
Acute dependence on monsoon
Infrastructure problems
Low awareness
Communication- difficult & expensive
Too many languages
Geographic Spread

Urban & Rural Markets Key Differences
Per capita Income
Disposable Income
Literacy levels
Infrastructure
Communication
Geographical Spread
Customer has many choices

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