Opportunity and

Challenges
in

Indian Rural Markets

Presented by :
Group-1

INTRODUCTION
Rural marketing is defined as managing all
the activities involved in assessing,
stimulating and converting the purchasing
power of the rural consumers into effective
demand for specific products and services
and moving them to the people in rural
areas to create satisfaction and a better
standard of living and thus achieving
organizational objectives.

MARKETING MYTHS UNDERMINED

Marketing Myth 1: Rural consumers are not worth
bothering about since they they buy loose , unbranded
products rather than the branded variety.
Marketing Myth 2 :It's okay if you're Nirma. Rural
consumers will only buy really cheap mass market brands.
Marketing Myth 3: Rural consumer will take what's given
to them. Marketers often believe that if they have solid
sales in rural areas, those are secure.

Cont.

Marketing Myth 4: One family, one brand. Marketers

often expect rural households to be homogenous in
consumption - there's one brand for the whole
households.

Myth 5: Distribution drives rural sales. Rural marketing is

only about distribution. Only if you can crack logistics and many companies can't be bothered - well you sell in

rural areas.

WHAT MAKES RURAL MARKET ATTRACTIVE?

Rural India is generating more than half of the national
income.
India's 58% disposable income comes from its rural parts
(source: Rural Marketing By Balram Dogra )

No. of villages in India - 6,40,867 (Census, 2011).

Population in Rural in India -833,087,662(68.84%) (Census,
2011).

53% of all FMCGs and 59% of all consumer durables are

sold in the rural market.
42 million rural households availing banking services in
comparison to urban households.
Indian rural market is almost twice as compared to the
entire market of USA and Russia.

Cont.
50% BSNL mobile connection in small villages.
Estimated annual size of rural market:

FMCG Rs. 75,000 crores

Durables Rs. 6,500 crores
Agri-inputs and Tractors Rs. 55,000 crores
2/4 wheelers Rs. 10,000 crores

46% of soft drinks sales come from rural areas.

49% of motorcycles sales come from rural areas.
Rural India accounts for 59% of cigarettes sales.
In 20 years, rural Indian market will be larger than the
total consumer markets in countries such as South Korea
and Canada and almost 4 times of the size of todays
urban market.
Close to 10% of Maruti Suzukis sale come from rural

OPPORTUNITIES
LARGE POPULATION: 742 million Indians
constituting 138 million households reside in
6,40,867 villages (Census, 2011). The size of rural
market itself speaks of its potential
GROWTH IN MARKET: The market has been growing
at 3-4% per annum adding more than one million
new consumers every year.
TECHNOLOGY USED BY RURAL INDIA: Today's rural
children and youth will grow up in an environment
where they have 'information.

Cont.
INCREASING INCOME AND PURCHASING POWER:
The agricultural development programs of the
government have helped to increase income in the
agricultural sector. These in turn have created
greater purchasing power in rural markets.

The average annual growth in monthly per capita consumption expenditure

(MPCE) between 2005 and 2010 in real terms stood at 1.4% as per the 66th round
of the survey, it grew by around 9% between 2010 and 2012 (NSSO)

Cont.
INCREASE IN LITERACY RATE :Literacy rate is
increasing in rural areas. According to census 2011 it stood
at 68.9% (2001 census 58.7%).

Cont.
INFRASTRUCTURE IMPROVING RAPIDLY : In 50
years only, 40% villages have been connected by roads, in
next 10 years another 30% would be connected. Rural
telephone density has gone up by 30% in the last 10 years.

Post Offices - 1,38,000

Haats (periodic markets) -42,000
Melas (exhibitions) -25,000
Mandis (agri markets) -7,000
Public Distribution Shops -3,80,000

Bank Branches -32,000

Cont.
MARKET SIZE AND POTENTIAL :The size of India s
rural market is stated as 12.2 % of the worlds consumers
leave in rural India . In India, rural household farm about
72% of total household constitutes a huge market by any
standard.

REDUCTION OF RISK DURING RECESSION: It has

been observed that companies which cater both urban
and rural markets tackle the recession in the better way.
The demands for goods in the urban market often follow
a cyclic whereas in the rural market it is steady. So
companies can safeguard themselves from the harmful
effects of recession after entering in the rural market.

Cont.
ACCESSIBILITY OF MARKETS: The road network has
facilitated a systemized product distribution system to
villages. An increasing number of companies are supplying
village markets directly. Increasing direct contacts to villages
helps product promotion and availability of the product in
the village shop.
CONSUMER BEHAVIOUR 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 durables and12
non-durables. There is a visible increase in the consumption
and use of a variety of products , which is easily observed.

Cont.
INCREASE POPULATION AND HENCE INCREASE IN
DEMAND :The Rural market in India is vast and
scattered and offers a plethora of opportunities in
comparison to the urban sector. It covers the maximum
population and regions and thereby. the maximum
number of consumers. More than eighty percent of rural
markets in India still do not have access to any sort of
organized marketing and distribution.

Cont.

FACTOR INFLUENCE BUYING BEHAVIOR

Geographic Location (For example , nearness to feeder towns and

industrial projects influenced the buying behavior of the consumers in respective
cluster of villages)

The way the consumer uses the product

(For example
Lack of electricity automatically increase the purchase of batteries by
rural consumers.: since the rural consumers cannot use washing powders
/detergents powders that much, as they wash their clothes in streams or
ponds , they go is more for washing bars and detergents cakes.)

LOW PENETRATION RATE

COMPETITION IN URBAN MARKETING
LOW PROMOTIONAL EXPENSES
NEW INCOME DUE TO AGRICULTURAL /RURAL
DEVELOPMENT/OTHER SOURCES OF INCOME

CHALLENGES
LIFESTYLE :-The rural consumers are marked by a
conservative and tradition-bound lifestyles. But this
lifestyle of a sizeable segment of rural consumers has
already changed significantly in recent years .The changes
can be attributed to several factors such as:

Growth in income and change in income distribution .

Growth in education.
Enlarged media reach ( particularly television).
Growing interaction with urban communities.

FACTOR INFLUENCE BUYING BEHAVIOR

Rural consumers perception of products are strongly influence
by cultural Factors . (For example-the preference in respect of
colour, size and shape is the result of cultural factors.)
- Tradition ,Family , Media etc.

Cont.
MANY LANGUAGES :India is a country of many
languages. Language becomes barrier in effective
communication in the market efforts. The number of
languages vary from state to state, region to region and
district to district, etc.

SEASONAL DEMAND :Seasonal demand is main

problem of rural market. Agriculture situation plays a
significant role in the demand of commodities in the rural
market because it is the main source of income. Again
agriculture depends on monsoon so buying capacity of
rural consumers varies. Despite this, many rural areas are
not connected by rail transport. Kuccha roads become
unserviceable during monsoon.

Cont.
Segmentation and targeting.
Physical distribution(problem in Transportation and
warehousing )

Channel management.(Distance between

Production point and Rural Market, Poor viability of the
outlets , Non-Availability of Dealers ,Added multiple
cost.)

Marketing communications.(language barrier,

no adequate media coverage )

References

http://censusindia.gov.in/Data_Products/Library/Indian_perceptive_link/Ce
nsus_Terms_link/censusterms.html
http://www.yourarticlelibrary.com/society/10-major-differences-betweenrural-and-urban-societies/23390/
https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&cad
=rja&uact=8&ved=0CDIQFjAD&url=http%3A%2F%2Fwww.answers.com%2F
Q%2FWhat_is_the_Difference_between_rural_and_urban_market&ei=TcF_V
KKLCI6wuATYyoDYAw&usg=AFQjCNFehOm0ws19Dg1uDAKzx31IYirig&bvm=bv.80642063,d.c2E
Rural Development Management - Google Books
Rural Marketing - Balram Dogra - Google Books
A Textbook on Rural Consumer Behaviour in India - A Study of FMCGs - Dr.
A Sarangapani - Google Books
Marketing Management: Text and Cases Indian Context - Tapan K. Panda Google Books
Challenges and Opportunities of Indian Rural Market | Kumar | International
Journal of Marketing Studies

Rural Marketing: Its Potential, Importance, Problems and

Distribution Strategy
Marketing to rural India | Business Standard News.
Rural Marketing - Balram Dogra - Google Books
ZIBEMR VOLUME - 04 ISSUE - 06 (JUNE,2014)
Zenith Research
Rural Marketing 2nd edition by Pradeep Kasyap ,page no. 21 table No.
2.7
A Textbook on Rural Consumer Behaviour in India - A Study of
FMCGs - Dr. A Sarangapani - Google Books
Marketing Management: Text and Cases Indian Context - Tapan K.
Panda - Google Books