Rural Marketing

RURAL MARKETING INTRODUCTION

A silent revolution is sweeping the Indian country side. It has compelled marketing whiz kids to go rural. The marketing battle has shifted from cities to villages. Go rural seems to be the latest slogan. Adi Godrej says

The rural consumer is discerning and the rural markets are vibrant. At the current rate of growth it will soon outstrip the urban market. The rural market is no longer sleeping we are The real India lies in the villages. All smart marketers Indian as well as MNCs have revered this gospel.

Companies like Hindustan lever, Godrej, Colgate Palmolive, Parle Foods, Nirma works, Philips, have made in roads into the countryside. Rural reach is on the rise and it is fast becoming the most important route to growth.

Rural marketing can be seen as a function which manages all those activities involved in assessing, stimulating and converting the purchasing power into and effective demand for specific products and services, and moving them to the people in rural area to create satisfaction and a standard of living to them and thereby achieves the goals of the organization.

Nature of rural market

The big question facing marketers entering the rural sector is whether it needs a transactional or developmental approach. The role of rural marketing is more developmental than transactional. It is more process of delivering better standard of living and quality of life to rural environment taking into consideration the prevailing rural milieu.

Definition of rural marketing

Quite often rural marketing is defined in a narrower sense to include only marketing of agricultural produce. According to National Commission Rural Marketing is a process which starts with a decision to produce a saleable farm commodity and it involves all the aspects of market structure or system, both functional and institutional based on technical and economic considerations and includes pre and post harvest operations, assembling, grading, storage, transportation and distribution. Rural marketing can be defined as a function that manages all activities involved in assessing , stimulating and converting the purchasing power of rural consumers, into an effective demand for specific products and services and moving these products and services to the people in rural areas to create satisfaction and a better standard of living and thereby achieving organizational goals. Rural marketing involves the process of developing, pricing, promoting ,distributing rural specific product and a service leading to exchange between rural and urban market which satisfies consumer demand and also achieves organizational objectives

Definition of rural marketing

1.

It is a two-way marketing process wherein the transactions can be: Urban to Rural: It involves the selling of products and services by urban marketers in rural areas. These include: Pesticides, FMCG products, consumer durables etc.
Rural to Urban: Here, a rural producer (involved in agriculture) sells his produce in urban market. This may not be direct. There generally are middlemen, agencies, government co-operatives, etc who sell fruits, vegetables, grains, pulses and others. Rural to rural: These include selling of agricultural tools, cattle, carts and others to another village in its proximity.

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Scope Of Rural Marketing

Producers and sellers in India focus their selling attention upon the consumers in urban areas instead of focusing their attention on rural areas where 70% of our population lives. Therefore, there is a vast scope for developing markets in rural areas. 1. Higher purchasing power 2. Change in rural markets 3. Media exposure 4. Decision-making units 5. Growing urbanization 6. Infrastructural facilities 7. Rise of alert buyers 8. Opinion leaders

Importance Of Rural Marketing

Today rural markets are providing substantial market share to consumer goods firms due to increase in purchasing power of rural population.

1. Increasing Competition in Urban Markets-Urban

markets are becoming competitive and even getting saturated for eg. toiletries, packaged tea, dry cell batteries and even the electronic entertainment products. In such situation one has to find strategy to find new market for the existing products. Rural markets are the new markets which are opening up for most of these package goods.

Increasing Competition in Urban Markets

Companies which have expanded in these areas are able to ward off competition, generate a new demand and in turn increase their sales or profits. Some famous companies like Hindustan lever, Pepsi, Coca cola etc have long realized the potential that existed for their products in these areas and had gone out to penetrate these markets. They expanded their distribution network and employed staff which could motivate the rural consumers to use the product. Products like T.V. soft drinks and even social products life condoms are also reaching the rural markets.

2.Socio-economic changes in Rural India

The socio-economic changes can be linked to an increase in productivity in the farm sector. Following agricultural revolutions green or white-the yield per acre or animal increased substantially. The increase in productivity helped the farmers to have more income and buy the same products as his / her urban counterpart did. The income generation and better standards of living where accelerated by the companies and banks to adopting villages for an integrated rural development. The Integrated Rural Development Programs has education, health, modern

2.Socio-economic changes in Rural India

farming practices, land development and cooperative marketing of produce as its pillars Development of village industry and craft is also another component of this programs. All these changes mean more income, higher aspirations and changing life-styles in rural India.

3. Accessibility of MarketsThe attraction of a market depends not only on its potential but also on its accessibility. A market that cannot be exploited is a case of sour grapes. The development of infrastructure facilities and marketing institutions has increased the accessibility of these markets.

3. Accessibility of MarketsThe road network has facilitated a systemized product distribution system to villages. In the past, companies relied on a trickle down of stocks to the buyer in interior villages, which resulted from the active participation of channel members. Today, an increasing number of companies are Supplying village markets directly. Increasing direct contact with villages helps product promotion and availability of the product in the village shop. Delivery-cumPromotion vans traversing eight to 10 villages a day and covering haats or mandis(markets) is a widely used method of direct contact in rural areas.

4.Consumer Behavior Changes

Increased literacy and greater awareness in rural markets Create new demands and discriminating buyers. This is observed more in the younger generation. In villages today, this segment of buyers consumes a large variety of products, both durable and non-durable. There is a visible increase in the consumption and use of a variety of products. The younger generation appears to seek variety and is more discriminating. The young adult in a village likes to sport a fashionable watch and the preferred brand of toilet soap for the youth is not necessarily Lifebuoy, the brand preferred by the elders.

5.Risk Reduction
During recession in urban markets, the rural markets help to reduce risk. Companies selling to both urban and rural Markets better withstand fluctuations in demand. The situation faced by the color television industry in 2001 is an example. While the growth in the market for colour televisions in urban India was a low 5 per cent, the growth in the rural markets was 16 per cent as compared to 10 per cent in 2000. The factors that affected the urban Economy the stock market crash or the threat of war did not affect the rural markets. The positive growth in demand for color televisions in rural markets was due to good monsoon rains and increased income levels in the rural areas. The demand for certain products in rural areas is

Size & Structure Of Rural Market

The estimated size of Indias rural market stated as a percentage of world population in 2007 is 12.4 percent.This means that 12.4 percent of the worlds consumers live in rural India. In numbers,this works out to about 120 million households. In India, rural households form about 72 per cent of total households. The rural market consists of 742,706,609 persons out of the total Population of 1,028,830,774 in the country (Central Statistical Organisation,2003). This is a huge market by world standards.

Size & Structure Of Rural Market

The consumption expenditure is higher in rural areas compared to that in urban areas, though slightly less in relation to population size. Rural India accounts for two thirds of the countrys annual private consumption expenditure of over Rs 2,500 billion. The per capita expenditure is slightly less in rural market compared to the urban market. Rural consumers own only 52 percent of available consumer durables, even though they form 72 per cent of total households in India. On an average, a Rural household owns three consumer durables as compared to seven owned by an average urban household The gap clearly indicates the untapped potential in the large number of rural households.

Factors influencing Rural Marketing

1) Socio-cultural factors-Society & polity across country vary between regions and sub regions, as well as between different religion, caste & linguistic groups. Basically villages have many ways been self-sufficient & autonomous. They have a lower standard of living & is employed in small scale agricultural & related occupation. So rural consumers are extremely conscious in their purchase. Individuals are recognized by family, caste & village & their behaviors is governed by custom, tradition & religion. Use of mechanisms of social control is through family, kinship & community. Women have limited freedom of choice of activity or interest. Villages are clustered according to kinship, caste or religious groups for eg.thakur gaon or harijan basti.

2)Population
Rural population forms a major portion of the Indian population which is about 70% of overall population. In other words for 1 urban consumer there are 3 consumer in rural areas . This big size of consumer will require a wide variety of consumable and durable goods & services but at the same time these needs of the rural areas dont guarantee an automatic market , unless backed by rising disposable income & the resultant purchasing power. The villages are also not uniform in size. Nearly 48% of the villages have a population of less than 500 persons or about 100 households, which is probably of no consequence to marketers. Thus the location and size of population of villages throw a challenge to marketers. This phenomenon is not true for the whole country and there

3.Occupation
The main occupation for a vast majority of rural population is agriculture & allied activities. About half of the rural population own or lease land to cultivate it for their livelihood. Another 27% are dependent on these cultivators for jobs as agricultural labourers.The implication of this occupation patteren is that incomegeneration in rural areas entirely depends upon how land is used,what crops are cultivated,how much is marketed,how much is consumed & what arrangements are made to market agricultural produce.This cultivation majorly depends upon adequate rainfall,weather condition,favourable & appropriate technology available.Sme implication can be applied on households also as there are over 100 million households in rural areas,72% cultivators & 15% are agricultural labours.

4 Literacy Level
As pur the distribution of rural & urban population, it has been noticed that the number of literates in rural areas are more than in urban areas. For eg. though in 2001 urban literacy level was high at 80% with adult literates around 200 million people against a population of about 367 million in rural areas. The high literacy rate implies that communication should not prove a hurdle with the rural population,provided appropriate means are chosen. Today television has proved to be an effective mass medium for communication with rural masses .The television network in country today covers nearly 100% of population offering a greater reach when compared to any other medium.

5.Land Distribution
As we know that nearly 75% of rural income is generated by agriculture. The basic resource in agriculture is land and so land distributions is a main factor in deciding the distribution of rural income. The distribution of land is highly skewed nearly 75% of holdings account for 25% of total land cultivated, while the balance 25% of holdings account for 75% of land. Since land distribution is uneven so is the income because land is basic asset for income generation, land holding can be considered as a proxy for income in rural segmentation. The number of families in lower income groups in rural groups is larger when compared to families in higher income groups. This situation is very important for marketing of agricultural inputs. While fertilizers ,pesticides & seeds may be demanded by all holdings, irrespective of level of income, durable inputs like tractors or major agricultural

5.Land Distribution
Machinery may be in demand only with large sized or higher income groups. There were only 71 million holdings in 1970-71 which increased to 89 million in 1980-81 & to 98 million in 1985-86.Now the number of holdings exceed 100 million, due to sub-division & fragmentation is widely prevalent in rural areas, especially when landed property is partitioned among family members. Thus rural areas consist of a large number of small consumers though total of their consumption will exceed the urban consumption. Marketing efforts of a high magnitude are required to cater to approximately 100 million farming families.