Amity Business School

MBA M&S
Revision of Rural Marketing
Dr.Garima Malik

1
 Rural Marketing
Rural Marketing has been defined as the process of
developing, pricing, promoting, distribution rural specific
goods and services leading to exchange between urban and
rural markets which satisfies consumer demand and also
achieves organizational objectives.

As per the National Commission on Agriculture, Rural

marketing is a process which starts with a decision to produce
a saleable farm commodity and involves all aspects of market
structure or system, functional and institutional based on
technical and economic considerations and includes pre and
post harvest operations, assembling, grading, storage,
transportation and distribution.
(Rural marketing in simple words, is planning and
implementations of marketing functions for the rural areas).
Classifications of Rural Market

Urban Rural

Rural Urban

Rural
Rural
 Rural Marketing Vs Urban Marketing

Factors Differentiating Rural Marketing from Urban Marketing

1. Infrastructure Availability: Electricity supply, availability of
finance facility, education level, roads connectivity. In these
infrastructural aspects, the rural market varies widely from
the urban market.

2. Income Streams: The patterns of income generation areas

based on agricultural is seasonal and highly unreliable unlike
the fixed monthly income in the urban areas. This creates a
consumption pattern that is quite different from the urban
one.
3.Lifestyle: The lifestyle and daily routine of consumers in two
markets is markedly different. This cerates significantly
different profiles of urban and rural consumers for the same
product.

4. Social Cultural Background: Value system and thus

perception towards goods/ services and consumption in
general is quite different in the two markets.

5.Accessibilty: The cost and logistics of accessing consumers in a

highly widespread and heterogeneous rural market are very
different from those involved in reaching urban consumers
concentrated in good number in a single location. It demands
two distinct marketing approaches.
 Media reach and habits: The reach of media vehicle
and media habits, varying widely in rural an urban
markets, requires different types of promotional
strategy in these two markets.

Nature of Competition : The nature and intensity of

competition amongst the brands is very different in
the two markets.

Consumer Behavior: The consumers response to

marketing stimuli differs widely in two markets. The
rural consumer's behavior is quite different from that
of the urban buyers behavior.
 Evolution of Rural Marketing

Phase I (Before the 1960s).

Phase II( 1960s-1990s).

Phase III( 1990s to Present)

 Phase I (Before the 1960s)

Rural marketing referred to marketing of rural

products in rural and urban areas and agricultural
inputs in rural markets.
Agricultural produces like food grains and industrial
inputs like cotton , sugarcane etc.
The scope of farm mechanization equipment
(tractors, pumps sets) and agricultural inputs like
fertilizers seeds and pesticides was very limited.
 Phase II (1960s-1990s)
The green Revolution changes the face of rural India, ushering
in scientific farming practices with the advent of agricultural
inputs and implements.
During this phase , apart from conventional agricultural
marketing, a new area marketing of agricultural inputs
emerged . This period saw the emergence of companies such
as Mahindra & Mahindra , Escorts, Sriram Fertilizers and
IFFCO.
During this period the marketing of rural products received
considerable attention through agencies like KVIC( Khadi and
Village Industries Commissions) and handicrafts emporiums.
 Phase III (1990s to the Present

The objective of rural marketing in the current

phase is the improvement of the quality of life
.
This approach has been demonstrated
successfully by HLLs Project Shakti, ITC e-
choupal, AMARON Batteries.
 population ( in Crore)

2001 2011 Difference

India 102.9 121.0 18.1
Rural 74.3 83.3 9.0
Urban 28.6 37.7 9.1

For the first time since Independence, the absolute increase in population is
more in urban areas that in rural areas.

Rural Urban distribution: 68.84% & 31.16%

Level of urbanization increased from 27.81% in 2001 Census to 31.16% in
2011 Census
The proportion of rural population declined from 72.19% to 68.84%
 4 Ps of Rural Marketing

Every Product and promotion, which is a hit in

cities , might not work in rural areas
Product
Price
Place
Promotion
 Additional Ps of Rural Marketing

Passion
Passion to earn Goodwill for the company.
Passion to serve and educate the consumer
Passion to give 100% to the rural marketing
effort
Pace
 4 As of Rural Marketing Mix
Affordability
Availability
Awareness
Acceptability
 Rural Distribution

Physical Distribution Channels of Distribution

 Physical Distribution
Physical Distribution is the process of delivering
products to the marketing channels and consumers.

Transportation

Warehousing Communication
 Channels of distribution

O Level 1 Level 2 Level 3 Level 4 Level

Manufacturer Manufacturer Manufacturer Manufacturer Manufacturer

Distributor C&F Agent C&F Agent

Consumer Distributor Distributor

Retailer Retailer

Retailer Stockist

Consumer Consumer
Retailer
Consumer

Consumer
 Ghari Distribution System

Company

C&FA Depot

Distributor

Wholesaler

Retailer Retailer
 Distribution Models

Nirma Distribution System

Nirma Ahmedabad

Hyderabad, kolkata,
Depot
Kanpur
Distributor
At the district level
Covers 300-400 outlets
Sub-distributor/Big directly
wholesalers
At the tehsil level

Retailer
Wholesaler Retailer wholesaler
 LG

Depot
New Rural District Office

Warehouse
C&F Agent

Exclusive Dealers
Multiple Dealers

Consumer
 Phillps

Depot

Urban Rural Stockiest

Distributor

Retailer Retailer

Consumer
 Rural Centric Distribution Models

Haats/Shandies

Total number of haats 43,000

Average Annual Sales INR 5,000 billion

 Modern Distribution Models

SHG
The Youth Entrepreneurship Model
Vans
PDS
Cooperative Societies
NGOs
Rural Mobile Trader
 Overview

Rural consumers are becoming well informed of new variants and models available
in the urban markets. In this scenario companies should not look at the rural
markets as a dumping ground for phased out/ failed concepts in the urban
markets. Rather, businesses need to out innovative their competition in different
aspects of marketing mix in order to gain the competitive edge

India's rural innovators have proved that ordinary people are indeed capable of
extraordinary inventions. Despite many constraints -- lack of education and severe
cash crunch -- most of them have succeeded in using technology cost-effectively to
build ingenious products
 Reasons for Innovation

As the competition increases in the rural market there might be the need for
competitively priced products that are developed as per the needs of the rural
consumers.
Developmental marketing effort of the organization can increase disposable
income in the hand of villagers, which can spur the Indian rural market.
 Basis of Innovation

Process Innovation
Process Innovation just as critical in rural markets as product
innovations. Innovation must focus on building a logistics
infrastructure, including manufacturing that is in accordance
with the prevailing conditions and can deliver solutions in a
cost effective manner
 Examples

ITCs e-Choupal
HUL i-Shakti
Gaon Chalo By Tata Tea : Gaon Chalo is a distinctive rural marketing
inititative startd in the year 2006 in the Uttar Pradesh by Tata tea. For
penetrating the rural market, the company partnered with NGO with wide
reach among the UP rural masses. The Gaon Chalo project has created
employment opportunities to the youth villages and small towns. It has
brought steady income to those who are distributors of Tata Tea. Tata tea
consolidated market share from rural areas rose from 18% to 26.6%.
 Product Innovation

Product Development must start form a deep understanding

of funtionality form. Marginal changes to products developed
for customers in the towns might not be that effective in rural
market. The infrastructure and environment, in which the
rural consumers live and work in, demand rethinking of
functionality a new.
 Examples

Solar Invertors
Solar mosquito killer
Portable smokeless stove
Solar Mobile charging
Solar operated ATMs.
Light Alarms
Single use packets
 Price Innovations

Conserving resources is the mantra; the products

meant for rural market must eliminates or reduce,
the various recurring costs and thus should reduce
resources intensity. The option of reuses, refill and
recycle are critical principles in product development
for rural market as they reduce the overall cost of
products
 Examples

Organization have to focus on price

performance of products and services creating
a new performance point.

Rs.5 strategy of Coca Cola is an example of

such innovations
 Examples

Rs.5 strategy of Coca Cola is an example of

such innovations
HDFC Standard LIFE joined hands with NGOs
and offered affordable policies including group
insurance covers
 Promotional Innovations

Changing demographics and spending profiles

present countless opportunities for a creative
response by the corporate sector. Marketers
see hints of change with the kids under twelve
asking for brands by name. Promotion
campaigns have to be innovative to target the
youngsters by engaging them through
combination of media options.
 Examples

Gori Gunvati Pratiyogita

Baa Bhui Beti
Ghar Ghar Me Maruti: Mera Sapna Meri Maruti is targeted at the customer
segment consisting of village panchayat members whoe are highly influential and
respected in rural areas and nearby towns. This scheme increased Maruti sales by
16600 units. Other schemes Maruti are steel wheels for steel industry employees,
1 class officer for Indian Railways employees and Teacher Plus schemes for
teachers. All these schemes have yielded good results.
"Atoot bandhan. Atoot Network."Airtel has unveiled its latest campaign
highlighting its network services. Rediffusion Y&R has created the campaign,
which is targeted mainly at rural audiences. Commenting about the campaign,
Deepesh Jha, creative head (Airtel), Rediffusion Y&R said, "The brief was to
continue the network message in the mass/ rural context. The Airtel platform on
network has been billed as "Atoot bandhan. Atoot Network.""
 Decisions Actions

Identifying various bases for

Segmentation segmenting markets.
Developing profiles of market segment

Evaluating the market segments for their

attractiveness.
Targeting Deciding the market coverage strategy

Identifying a set of possible competitive

Positioning advantages of the brand.
Communicating the chosen competitive
advantage to the target groups
 Conditions for Effective Market Segmentation

1.Measurable
Customer Oriented Philosophy

2.Accessible

Enables Tailoring of marketing

Programme

3.Profitable

Enables Development of strong

positioning of Brand
4.Data
Availability
Zero >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Complete

Mass Segment Niche Micro

Marketing marketing Marketing Marketing

Serves Focuses on
Consider all Identifies selectively one individuals
customers customers as or a few or very
homogenous different customer small
groups groups groups

Examples Examples Examples Examples

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 Mass Marketing

Colgate Palmolive successfully marketed the

same Colgate toothpaste to all consumers in
urban and rural market till recently.

Back

47
 Segment Marketing

Hindustan Unilever uses two different

approaches to market its two different brands-
Hamam and Lifebuoy. On the one hand it tries to
reach the whole market in one go by using the
mass marketing approaches for its brand
Hamam; on the other, it has introduced four
variants of its brand Lifebuoy-Active Red, Active
Orange,Plus and Gold- to reach four different
segments of the Indian market.
Back
 Niche Marketing

The GoldPlus brand of jewellery from Tata Group is an

interesting case in point. Targeted at meeting the requirement
and aspirations of rural and semi-urban populations in India.
The Jeevan Sadhan service of Nokia launched in 2009,
specifically targets rural India consumers. It is an ambitious
programme that bundles of the handset along with service
like providing agriculture inputs.

Back
 Micro Marketing

Daburs Anmol hair oil , a mustard amla

based oil launched for northern Indian market
at INR 10 for a 50-ml pack, targeted at rural
consumers using loose mustard oil.
 Mass Marketing or Undifferentiated Marketing
e.g. Ruf & Tuf Jeans,

Segment Marketing - Cars

Niche Marketing specialize to a narrowly defined

customer group Temple jewellery for South Indian
women wanting to take part in cultural programmes

Levels of Market
Segmentation
Local Marketing Market around sector 44

One to One Marketing

Individual Marketing
Mass customization
ability to prepare on a
mass basis individually
designed products
 Geographic Region: East, West, North & South
Village size, Density of population, climate
Culture:56 socio-cultural regions (Avadh, Rohilkhand etc.)

Demographic Age, Family Size (nuclear or joint ), Gender,

Income, Occupation, Education,, religion

Bases Psychographic Social class; upper, middle, lower.

Lifestyle: Trendsetters, Followers/adopters, Traditionalist
Personality

Behavioral Segmentation occasions, benefits saught

User status, usage rate, loyalty status, places of purchases
Targeting involves evaluating
various segments and selecting
how many and . which ones to
target

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 Process of targeting

Evaluation of Segments
Selection of Segments
Coverage of Segments
Choosing a Coverage Strategy
Positioning is the act of designing the
companys offering and image to occupy a
distinctive place in the mind of the target
segments.

ICICI Bank
CLip
 Segmenting the Market: Nirma vs HLL

Until about twenty ago, the rural market in India was considered a
homogenous decade of the 1980s was a significant one for
Hindustan Level Ltd (HLL), when the giant and undisputed market
leader in detergent (Surf) in Indian Suffered significant losses at the
hands of a new and small firm , Nirma Chemicals . Nirma immediately
caught th fancy of the middle and lower-income customers, who were
finding it difficult to make both ends meet with their limited monthly
income.
Nirma was the lowest priced branded washing powder available in
grocery and co-operatives stores. The middle class house wife was
happy as she could choose a lower priced washing powder against
Surf, Which was beyond her budget
Around 1984 , HLL decided to take a fresh look at the market.
Research conducted across the country revealed that different income
groups of consumers had varying expectorations from detergent and
washing powder. Thus, to counter the attack from Nirma, HLL
launched Sunlight (Yellow), Wheel (green) and Rin (blue) detergent
powders for different market segments. This strategy of segmenting
the market helped HLL win back part of its lost market.
 Segmenting the Markets
T-Series introduced audiocassettes at unbelievably
low price and took away a huge share from the
market leader HMV.
Cavin Kare studied the Shampoo market and came
out with Chik Shampoo priced at 50 paisa per sachet
and the brand became an instant hit in rural areas.
Titan has introduced Sonata brand watches; priced
between Rs 350/- and Rs.800/- to meet the
requirement of price sensitive rural and semi urban
consumers.
 Utsav Time
Asian Piants Ltd(APL) is Indias largest paints company and ranks
among the top ten decorative coating companies in the world today.
The company has come a long way since its small beginning in 1942.
APl was the first Indian company to go rural In 1999 It launched
Tractor enamel paint in rural markets, rural customers started using it
to paint the horns of their bullock. APL survey the rural markets
extensively with the able support of its advertising agency Ogilvy
outreach. They found that there was a gap in demand in the market
for paints used for houses. These were two choice available for rural
people : the traditional chuan powder, which cost around Rs9 per kg
and enamel paint which cost around Rs 50 per liter was very
expensive for most rural customers. Chuan powder however was not
long lasting .
Hence APL launched Utasv distemper exclusively for rural markets in
1999. Utsav is good example of brand that used excellent STP for rural
markets.
 Approaches for segmentation the rural market of India

Based on Size of Village Population

(The size of population residing in a village is a significant factor which determines
the overall potential demand for a product or service in that village)
Population No.of Villages % of total Villages
Less than 200 114,267 17.9*
200-499 155,123 24.3*
500-999 159,400 25.0
1,000-1,999 125,758 19.7
2,000-4,999 69,135 10.8**
5,000-9,999 11,618 1.8**
10,000& above 3,064 0.5**
Note:* Hardly any shop in these 2.7 lakh village
** 13% of villages falling in the last three categories account 50% rural population and
60% rural wealth.
 Based on Location with Respects to Nearby
Town

Villages Near Urban Centers.

Villages in Developing Districts
Immobile and self sufficient Asiatic Villages
 Based on Size of Farmland

1. Marginal Farmer :holding upto 1.0 hectare

2. Small Framer :holding 1.0-2.0 hectare
3. Semi-medium :holding 2.0-4.0 hectare
Farmer:
4. Medium Farmer : holding 4.0-10.0 hectare
5. Large Farmer :holding 10.0 hectares and above