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A REPORT ON

“To analyze the marketing of consumer products


(both durable and non durable products) in rural areas”

A Dissertation report submitted to

ASIA-PACIFIC INSTITUTE OF MANAGEMENT STUDIES,


Towards partial fulfillment of the Post Graduate Program in Management

Submitted To:
Prof. Rajesh Verma

Submitted By:
Ram Niwas
Program: PGPM
Roll No.: 2K8/PGPM/H-46
2008-2010

ASIA-PACIFIC INSTITUTE OF MANAGEMENT STUDIES

MATHURA ROAD, NEW DELHI


Acknowledgement
I consider my proud privilege to express deep sense of
gratitude to Mr. Rajesh Verma for his admirable and
valuable guidance, keen interest, encouragement and
constructive suggestions during the course of the project. I
would also like to thank my father Mr. Panna Lal, for their
inspiration and moral support received in completing this
work as for collecting the data I had to visit so many rural
areas or villages.

RAMNIWAS
PGPMH-46
TABLE OF CONTENTS

TOPIC PAGE NUMBER

EXECUTIVE SUMMARY 04

RESEARCH METHODOLOGY O6

REVIEW OF LITERATURE 09

INTRODUCTION 13

FINDINGS AND ANALYSIS 118

CONCLUSIONS 128

SUGGESTIONS AND 131


RECOMMENDATIONS

APPENDIX 132

BIBLIOGRAPHY 138

EXECUTIVE SUMMARY
India’s way is not Europe’s. India is not Calcutta and
Bombay. India lives
in her seven hundred thousand
villages.....................Mahatma Gandhi, 1926

Marketing in developing countries like India have


often been borrowed from the western world. Concepts like
Brand identity, Customer relationship management, 4 Ps of
the marketing mix, Consumer behavior process;
Segmentation, targeting and positioning etc. have often
been lifted straight from the marketing intelligentsia abroad
and adopted in Indian conditions, often with minimal
success. Reason lies not in the fault of such concepts,
but their integration with the Indian ethos and
culture.
The rural India offers a tremendous market potential. Nearly
two-thirds of all middle-income households in the country
are in rural India and represents half of India’s buying
potential. Despite, the strong potential the rural markets are
by and large less exploited. Consider the market, out of five
lakhs villages in India only one lakh have been tapped so far.
According to us if the rural market has to be adequately
tapped, there has to be a change in the way marketing
concepts learnt in B-schools with adequate adoption
according to scenarios prevalent in rural India. The paper
thereby present the modified version of Philip Kotler’s
famous marketing mix consisting of 4Ps. The focus is on its
modification and subsequent customization to Indian rural
markets perspective. The 4Ps have to be modified to include
1P i.e. Packaging and 1R i.e. Retailer as special focus areas.
Further to ensure the sustainability of the marketing mix two
Es i.e. Education and Empowerment have to be at the core
as they help in generating widespread participation from the
rural clientele by enhancing their standard of living. The
Products in the rural market should essentially operate at
the basic and expected level of product classification. They
should essentially meet the basic needs of the consumer and
should be a no-frill product, as the consumer would not be
valuing much any further addition to the product concept.
Companies also face a daunting task in communicating
about their products to the consumer due to lack of literacy
and failure of traditional media to penetrate in the rural
households.

Hence, the advertising mix has to be more towards non-


conventional yet effective medium like Puppetry, Folk
Theater Song, Wall Painting, Demonstration, Posters,
Agricultural Games, NGOs network, etc. Thus overall either
the product or communication or preferably both need to be
customized to target the rural customer. In terms of physical
distribution due to lack of infrastructure the costs are very
exorbitant to reach the rural customer. Thus, mediums like
rural marketing vehicles and melas and haats provide better
opportunities to meet customer needs. Also the existing
distribution would need a transformation to achieve the
required penetration levels as success of Project Streamline
of HLL has shown. Since, the value for money concept is
more important rural customers, there has to be an
approach of treating customer as budget seeking consumer.
Here, fitting the consumer needs into an affordable price
point is pursued first and then other features of product are
fitted in. Similarly, packaging has to meet customer needs of
better brand recall and introducing favorable price points. At
the same time the importance of retailer has to be
recognized where he is one of the most major influencer is
customer’s decision making process. He acts as the friend
and guide in this process and hence, needs to be managed
effectively through promotion programmes and incentives to
promote the brand of a company. In order to bridge the gap
between Philip Kotler and countryside Indian what is needed
the appreciation of unique features of rural India and thus,
responding to them by making adequate improvements in
the application of the marketing concepts learnt in the class.
For achieving the desired results of capturing the rural
customer a comprehensive approach to the traditional
marketing concepts has to be taken. This marketing mix has
to be responsive to customers needs and fit into his life as a
tool of self-enhancement. To be successful the concept of
marketing has to be taken in conjunction with its economic,
psychological and social implications.

RESEARCH METHODOLOGY
OBJECTIVES OF THE STUDY:
Any task without sound objectives is like Tree without roots.
Similarly in case of any research study undertaken, initially
the objectives of the same are determined and accordingly
the further steps are taken on. A research study may have
many objectives but all these objectives revolve around one
major objective which is the focus of the study. In this study,
the focus is on the emergence of rural markets as the most
happening market on which every marketer has an eye. And
so this study will be based on studying the emergence of
rural market in various contexts.

The main objective of the study is to analyze and present the


marketing of consumer products in rural areas. The following
objectives have been set forth. They are to:

• Present a rural marketing perspective.

• Present a profile of Indian Rural market.

• Study and analyze the consumer behavior in rural


areas.
• Examine the product and brand penetration in rural
markets.

• Analyze marketing of consumer product in rural


markets.

• Present marketing strategy frame for marketing


consumer products in rural areas.

SCOPE OF THE STUDY:


The study is restricted to selected districts of Haryana.
Further, product and brand penetration is examined. As
regards marketing of consumer products in rural areas, the
study analyzes products from non durable category (a
bathing soap, detergents, tea, coffee, shampoo) and from
durable category (a wrist watch, television, refrigerator, fan
and bicycle).

Data collection

Sample unit:
1. Working people (including men &women), basically
farmers.
2. College students
3. School students
4. Senior citizen
Sample size:
1. Working people: 32%
2. College students: 29%
3. School students: 23%
4. Senior citizens: 16%

Sampling region:
I have selected, of Haryana as the area of study.

I have chosen Bhuratwala,Poharka , Chilkani Dhab and

Kumthala as areas of research.
The population status of these areas can be shown in a
tabulated manner, which is given as follows:

Area Population

Chilkani Dhab 3500


Kumthala 4000
Poharka 8000
Bhuratwala 7600

Data collection method:


1. Primary data: it will be collected with the help of a
self administered questionnaire. This questionnaire aims to
gather information related to various Branded products.

Questionnaire design:
As the questionnaire is self administrated one, the survey is
kept simple and user friendly. Words Used in questionnaire
are readily understandable to all respondent. Also technical
jargons are avoided to ensure that there is no confusion for
respondents.
2. Secondary data: it will be collected with the help of
books, research papers, magazines, news papers, journals,
Internet, etc.

Review of Literature
Rural market is one of the best opportunities for the FMCG
sector. In some sense we can say that rural market is future
of FMCG.

1. Basu Purba (2004) suggested that the lifestyle of rural


consumers is changing. Rural Indian market and the
marketing strategy have become the latest marketing
buzzword for most of the FMCG majors. She added the
strategies of different FMCG companies for capturing rural
market like Titan’s Sonata watches, Coco Cola’s 200mlbottle,
different strategies of HUL and Marico etc. She takes into
consideration the study of National Council for Applied
Economic Research (NCAER).According to the NCAER
Projections, the number of middle and high-income
households in rural area is expected to grow from 140
million to 190 million by 2007.In urban India, the same is
expected to grow from 65 million to 79 million. Thus, the
absolute size of rural India is expected to be double that of
urban India.
2. Tognatta Pradeep (2003), suggested that, the
economic growth in India's agricultural sector in last year
was over 10%,compared with 8.5%in the industrial sector.
This implies a huge market potentiality for the marketer to
meet up increasing demand. Factors such as village psyche,
Strong distribution network and market awareness are few
prerequisites for making a dent in the rural markets. The
model is of the stolid Anglo-Dutch conglomerate Unilever
Group, which has enjoyed a century-long presence in India
through its subsidiary Hindustan Lever Ltd. It was Hindustan
Lever that several years ago popularized the idea of selling
its products in tiny packages. Its sachets of detergent and
shampoo are in great demand in Indian villages. Britannia
with its low priced Tiger brand biscuits has become some of
the success story in rural marketing.

3. Dr. N. Rajendhiran(MBA, PhD)/ Mr. S. Saiganesh(MBA,


MA, M.Phil)/ Ms. P. Asha(MBA)

Prime Minister Dr. Manmohan Singh recently talked about his


vision for rural India: "My vision of rural India is of a modern
agrarian, industrial and services economy co-existing side by
side, where people can live in well-equipped villages and
commute easily to work, be it on the farm or in the non-farm
economy. There is much that modern science and technology
can do to realise this vision. Rural incomes have to be
increased. Rural infrastructure has to be improved. Rural health
and education needs have to be met. Employment
opportunities have to be created in rural areas."

'Go rural' is the slogan of marketing gurus after analyzing


the socio-economic changes in villages. The Rural
population is nearly three times the urban, so that Rural
consumers have become the prime target market for
consumer durable and non-durable products, food,
construction, electrical, electronics, automobiles, banks,
insurance companies and other sectors besides hundred per
cent of agri-input products such as seeds, fertilizers,
pesticides and farm machinery. The Indian rural market today
accounts for only about Rs 8 billion of the total ad pie of Rs 120
billion, thus claiming 6.6 per cent of the total share. So clearly
there seems to be a long way ahead. Although a lot is spoken
about the immense potential of the unexplored rural market,
advertisers and companies find it easier to vie for a share of
the already divided urban pie.

The success of a brand and in the Indian rural market is as


unpredictable as rain. It has always been difficult to gauge the
rural market. Many brands, which should have been successful,
have failed miserably. More often than not, people attribute
rural market success to luck. Therefore, marketers need to
understand the social dynamics and attitude variations
within each village though nationally it follows a consistent
pattern looking at the challenges and the opportunities which
rural markets offer to the marketers it can be said that the
future is very promising for those who can understand the
dynamics of rural markets and exploit them to their best
advantage. A radical change in attitudes of marketers towards
the vibrant and burgeoning rural markets is called for, so they
can successfully impress on the 230 million rural consumers
spread over approximately six hundred thousand villages in
rural India.

RURAL INDIA…a new dawn


India needs creative solutions to start a
revolution which can take its villages fast
forward in time – converting them into
economically viable units and growth
engines, harnessing the power of the
villagers, and opening up new horizons
with the promise of a better tomorrow.

INTRODUCTION
“India lives in her villages”.
As described by Adi Godrej, Chairman, Godrej
Group – “The rural consumers are discerning and the
rural market is vibrant. At the current of growth, it
will soon outstrip the urban market. The rural market
is no longer sleeping but we are”.
Before gamboling into issues like where the Indian
rural market stands and the opportunities for corporate’s to
explore there... let's look at the definition of urban and rural
India. The Census defined urban India as - "All the places
that fall within the administrative limits of a municipal
corporation, municipality, cantonment board etc or have a
population of at least 5,000 and have at least 75 per cent
male working population in outside the primary sector and
have a population density of at least 400 per square
kilometer. Rural India, on the other hand, comprises all
places that are not urban!"
In our country over 70%of the total population live in
villages. There are states like U.P, M.P, Bihar, Rajasthan and
Orissa where rural population varies form 8 to

9 percent. Agriculture and agriculture related activities


contribute to about 75%of the income in rural areas. The
general impression is that the rural markets have potential
only for agricultural inputs like seeds, fertilizers and
pesticides, cattle feed and agricultural machinery. More than
50%of the national income is generated in rural India and
there are opportunities to market modern goods and
services in rural areas and also market agricultural products
in urban areas. Infact it has been estimated that the rural
markets are growing at fives times the rate of urban
markets. About 70% of bicycles, mechanical watches and
radios and about 60%of batteries, sewing machine and table
fans are sold in rural India. At the same time the sales of
color television, washing machines, refrigerators, shampoos,
face cream, mosquito repellent and tooth paste are very low
and there is tremendous potential for such products in rural
markets.

Now for some facts and figures The Indian rural market
today accounts for only about Rs. 8 billion (53 per cent -
FMCG sector, 59 per cent durables sale, 100 per cent
agricultural products) of the total ad pie of Rs. 120 billion,
thus claiming 6.6 per cent of the total share. So clearly there
seems to be a long way ahead.
Time and again marketing practitioners have waxed
eloquent about the potential of the rural market. But when
one zeroes in on the companies that focus on the rural
market, a mere handful names come to mind. Hindustan
Lever Limited (HLL) is top of the mind with their successful
rural marketing projects like 'Project Shakti' and 'Operation
Bharat'. The lynchpin of HUL's strategy has been to focus on
penetrating the market down the line and focusing on price
point. Furthermore, activating the brand in the rural market
through activities, which are in line with the brand itself, is
what sums up HUL's agenda as far as the rural market is
concerned informs Mindshare Fulcrum general manager R
Gowthaman. Amul is another case in point of aggressive
rural marketing. Some of the other corporates that are
slowly making headway in this area are Coca Cola India,
Colgate, Eveready Batteries, LG Electronics, Philips, BSNL,
Life Insurance Corporation, Cavin Kare, Britannia and Hero
Honda to name a few.
Khaitan fans' ad on a horse Wheel's wall
cart painting

We can safely say that until some years ago, the rural
market was being given a step-motherly treatment by many
companies and advertising to rural consumers was usually a
hit and miss affair. More often than not, the agenda being to
take a short-cut route by pushing urban communication to
the rural market by merely transliterating the ad copy.
Hence advertising that is rooted in urban sensitivities didn't
touch the hearts and minds of the rural consumer. While,
this is definitely changing, the process is slow. The greatest
challenge for advertisers and marketers continues to be in
finding the right mix that will have a pan-Indian rural appeal.
Coca Cola, with their Aamir Khan Ad campaign succeeded in
providing just that.
Lifebuoy's wall painting in rural India

Corporates are still apprehensive to "Go Rural." A few


agencies that are trying to create awareness about the rural
market and its importance are Anugrah Madison, Sampark
Marketing and Advertising Solutions Pvt Ltd, MART, Rural
Relations, O&M Outreach, Linterland and RC&M, to name a
few. Also, the first four agencies mentioned above have
come together to form The Rural Network. The paramount
objective of the Network is to get clients who are looking for
a national strategy in rural marketing and help them in
executing it across different regions.

Interestingly, the rural market is growing at a far greater


speed than its urban counterpart. "All the data provided by
various agencies like NCAER, Francis Kanoi etc shows that
rural markets are growing faster than urban markets in
certain product categories at least. The share of FMCG
products in rural markets is 53 per cent, durables boasts of
59 per cent market share. Therefore one can claim that rural
markets are growing faster than urban markets," says
Sampark Marketing and Advertising Solutions Pvt Ltd
managing director R A Patankar.
"Yaara da Tashan..." McCann Erickson's ads with
Aamir Khan created universal appeal for Coca Cola

Coca-Cola India tapped the rural market in a big way when it


introduced bottles priced at Rs 5 and backed it with the
Aamir Khan ads. The company, on its behalf, has also been
investing steadily to build their infrastructure to meet the
growing needs of the rural market, which reiterates the fact
that this multinational has realised the potential of the rural
market is going strength to strength to tap the same.

In 2000, ITC took an initiative to develop direct


contact with farmers who lived in far-flung villages in
Madhya Pradesh. ITC's E-choupal was the result of
this initiative.

Clearly the main challenge that one faces while dealing with
rural marketing is the basic understanding of the rural
consumer who is very different from his urban counterpart.
Also distribution remains to be the single largest problem
marketers face today when it comes to going rural.
"Reaching your product to remote locations spread over
600,000 villages and poor infrastructure - roads,
telecommunication etc and lower levels of literacy are a few
hinges that come in the way of marketers to reach the rural
market," says MART managing director Pradeep Kashyap.
Citing other challenges in rural marketing, Patankar says,
"Campaigns have to be tailor made for each product
category and each of the regions where the campaign is to
be executed. Therefore a thorough knowledge of the
nuances of language, dialects and familiarity with prevailing
customs in the regions that you want to work for is essential.
The other challenge is the reach and the available means of
reaching out to these markets, hence the video van is one of
the very effective means of reaching out physically to the
rural consumers."
The fact of the matter remains that when compared to the
Indian urban society, which is turning into a consumerism
society; the rural consumer will always remain driven by his
needs first and will therefore be cost conscious and thrifty in
his spending habits. "Decision-making is still conscious and
deliberated among the rural community. But nevertheless,
the future no doubt lies in the rural markets, since the size of
the rural market is growing at a good pace. There was a time
when market predictions were made on the basis of the
state of the monsoon but this trend has changed over the
years; there is a large non farming sector, which generates
almost 40 per cent of the rural wealth. Hence the growth in
the rural markets will be sustained to a large extent by this
class in addition to the farmer who will always be the
mainstay of the rural economy," affirms Patankar.

"Although the melting of the urban - rural divide will take a


while, this is not for want of the availability of the means but
for want of the rural consumer's mindset to change; which
has its own logic, which is driven by tradition, custom and
values that are difficult to shed," he points out.
Satellite dish antennas reach rural India

Fulcrum's Gowthaman says, "The biggest impending factor


or deterrent on rural monies going up is that there is a
general sense of trying to benchmark cost per contact (CPC).
The television CPC is going to anyways be cheaper to rural
CPC and unless and until the volume - value equation turns
the other way round, you will not be able to spend
disproportionate monies in the rural market."

Typical shop in rural India stocked with sachets, etc

For HUL, a one rupee or a five rupee sachet or the Kutti


Hamam (the small Hamam) helps in giving the consumers a
trial opportunity. While it does help in generate volume but
not in terms of values. "Till the time that volume - value
equation is managed better, the CPC is preventing anybody
to look at rural at a large scale activation programme,"
reiterates Gowthaman.

Ultimately, the ball lies in the court of rural marketers. It's all
about how one approaches the market, takes up the
challenge of selling products and concepts through
innovative media design and more importantly interactivity.

INDIA INFRASTRUCTURE
The best barometer of country’s economic standing is
measured by its GDP. India, the second most populated
country of more than 1100 million has emerged as one of
the fastest growing economies. It is a republic with a federal
structure and well-developed independent judiciary with
political consensus in reforms and stable democratic
environment .In 2008-09 India’s economy-GDP grew by 6.5%
due to global recession. In the previous four years,economy
grew at 9%.The Indian economy is expected sustain a
growth rate of 8% for the next three years upto 2012. With
the expected average annual compounded growth rate of
8.5%, India's GDP is expected to be USD 1.4 trillion by 2017
and USD 2.8 trillion by 2027. Service sector contribute to
50% of India‘s GDP and the Industry and agriculture sector
25% each.

Investment Opportunities in Indian Infrastructure

The robust current growth in GDP has exposed the grave


inadequacies in the country’s infrastructure sectors. The
strong population growth in India and its booming economy
are generating enormous pressures to modernize and
expand India’s infrastructure. The creation of world class
infrastructure would require large investments in addressing
the deficit in quality and quantity. More than USD 475 billion
worth of investment is to flow into India’s infrastructure by
2012. No country in the world other than India needs and
can absorb so many funds for the infrastructure sector. With
the above investments India’s infrastructure would be equal
to the best in the world by 2017.

In the next five years planned infrastructure investment in


India in some key sectors are (at current prices):
Modernization of highways -US$ 75 billion, Development of
civil aviation US$ 12 billion, Development of Irrigation
system- US$ 18 billion, Development of Ports-US$ 26 billion,
Development of Railways- US$ 71 billion, Development of
Telecom- US$ 32 billion, Development of Power -US$ 232
billion. Thus in the eleventh five year plan ,investment in the
above sectors (Aviation infrastructure ,Construction
infrastructure, Highway infrastructure ,Power infrastructure,
Port infrastructure ,Telecom infrastructure ) will be US$ 384
billions(Rs 17,20,000 Crores) considering the huge
infrastructure market potential in India. In addition to the
above, investments to the tune of US$ 91 billions have been
planned in other infrastructure sectors like Tourism
infrastructure ,Urban infrastructure ,Rural infrastructure,
SEZs ,and water infrastructure and sanitation infrastructure
thus making the total infrastructure investments in the
eleventh plan period 2007-08 to 2011-12 as US$475 billions.
Domestic and global infrastructure funds have exposure to
Indian infrastructure sectors.
Rural Marketing
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.It is a two-way marketing process wherein the
transactions can be:

• Urban to Rural: A major part of rural marketing falls


into this category. 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: Transactions in this category
basically fall under agricultural marketing where a rural
producer seeks to sell his produce in an urban market.
An agent or a middleman plays a crucial role in the
marketing process. The following are some of the
important items sold from the rural to urban areas:
seeds, fruits and vegetables, milk and related products,
forest produce, spices, etc.
• Rural to Rural: This includes the activities that take
place between two villages in close proximity to each
other. The transactions relate to the areas of expertise
the particular village has. These include selling of
agricultural tools, cattle, carts and others to another
village in its proximity.

Rural marketing requires the understanding of the


complexities. Indian agricultural industry has been growing
at a tremendous pace in the last few decades. The rural
areas are consuming a large number of industrial and urban
manufactured products. The rural agricultural production
and consumption process plays a predominant role in
developing the Indian economy. This has designed a new
way for understanding a new process called Rural Marketing.
The concept of rural marketing has to be distinguished from
Agricultural marketing. Marketing is the process of
identifying and satisfying customers needs and providing
them with adequate after sales service. Rural marketing is
different from agricultural marketing, which signifies
marketing of rural products to the urban consumer or
institutional markets. Rural marketing basically deals with
delivering manufactured or processed inputs or services to
rural producers, the demand for which is basically a derived
outcome.

Rural marketing scientists also term it as developmental


marketing, as the process of rural marketing involves an
urban to rural activity, which in turn is characterized by
various peculiarities in terms of nature of market, products
and processes. Rural marketing differs from agricultural or
consumer products marketing in terms of the nature of
transactions, which includes participants, products,
modalities, norms and outcomes. The participants in case of
Rural Marketing would also be different they include input
manufacturers, dealers, farmers, opinion makers,
government agencies and traders.

Rural marketing needs to combine concerns for profit with a


concern for the society, besides being titled towards profit.
Rural market for agricultural inputs is a case of market pull
and not market push. Most of the jobs of marketing and
selling are left to the local dealers and retailers.

The market for input gets interlocked with other markets like
output, consumer goods, money and labor.

INDIAN RURAL MARKET:


Rural marketing in India is not much developed there are
many hindrances in the area of market, product design and
positioning, pricing, distribution and promotion. Companies
need to understand rural marketing in a broader manner not
only to survive and grow in their business, but also a means
to the development of the rural economy. One has to have a
strategic view of the rural markets so as to know and
understand the markets well. In the context of rural
marketing one has to understand the manipulation of
marketing mix has to be properly understood in terms of
product usage. Product usage is central to price, distribution,
promotion, branding, company image and more important
farmer economics, thus any strategy in rural marketing
should be given due attention and importance by
understanding the product usage, all elements of marketing
mix can be better organized and managed.

Evolution of Rural Marketing


Sourc
Destinat
Pha Major e
Origin Function ion
se Products Marke
Market
t
I Before
Mid-1960
Agricultur Agricultur Rural Urban
(from
al al
independe
Marketing
nce to Produce

green
revolution)
II Mid-
Sixties
Marketing Agricultur Urban Rural
(Green
Of al
revolution
to Pre- Agricultur Inputs
liberalizati al Inputs
on period)
III Mid- Consuma
Nineties bles And
Rural Urban Rural
(Post-
Durables &
liberalizati Marketing
For Rural
on period
on 20th Consumpt

century) ion &


Productio
n

IV 21st Developm All Urban Urban &


century ental products & Rural
marketing & services Rural

• Phase I ( from Independence to Green


Revolution):
Before the advent of the Green revolution, the nature of
rural market was altogether different. Rural marketing
then referred to the marketing of rural products in rural
& urban products.

• Phase II (Green Revolution to Pre-


liberalization period):
During these times, due to the advent & spread of the
Green Revolution, rural marketing represented
marketing of agriculture inputs in rural markets &
marketing of rural produce in urban areas.

• Phase III (Post-liberalization period on 20th


century):
The third phase of rural marketing started after the
liberalization of the Indian economy. In this period, rural
marketing represented the emerging, distinct activity of
attracting & serving rural markets to fulfill the need &
wants of rural households, peoples & their occupations.

• Phase IV (21st century):


Learning from its rural marketing experiences after the
independence, the corporate world has finally realized
the quick-fix solutions & piecemeal approaches will
deliver only limited results in the rural markets. And, if
an organization wants to tap the real potential of the
rural market, it needs to make a long-term commitment
with this market. Its approach & strategies must not
focus in just selling products & services, but they
should also aim at creating an environment for this to
happen.

The objective of rural marketing in the current phase is the


improvement of the quality of life by satisfying the needs &
wants of the customers, not through at and-alone products
or services, but by presenting comprehensive & integrated
solutions which might involve a set of inter-related products
& services.

Till recently, the focus of marketers in India was the urban


consumer and by large number specific efforts were made to
reach the rural markets. But now it is felt that with the
tempo of development accelerating in rural India, coupled
with increase in purchasing power, because of scientific
agriculture, the changing life style and consumption pattern
of villagers with increase in education, social mobility,
improved means of transportations and communication and
other penetrations of mass media such as television and its
various satellite channels have exposed rural India to the
outside world and hence their outlook to life has also
changed. Because of all these factors, rural India is now
attracting more and more marketers.

Increase in competition, saturated urban markets, more and


move new products demanding urban customers, made the
companies to think about new potential markets. Thus,
Indian rural markets have caught the attention of many
companies, advertisers and multinational companies.
According to a recent survey conducted by the National
Council for Applied Economic Research (NCAER), the
purchasing power of the rural people has increased due to
increase in productivity and better price commanded by the
agricultural products. By and large this rise in purchasing
power remains unexploited and with the growing reach of
the television, it is now quite easy for the marketers to
capture these markets.

Rural marketing has become the latest mantra of most


corporate. Companies like Hindustan Lever, Colgate
Palmolive, Britannia and even Multinational Companies
(MNCs) like Pepsi, Coca Cola, L.G., Philips, and Calvin kare
are all eyeing rural markets to capture the large Indian
market.

Coming to the frame work of Rural Marketing, Rural


Marketing broadly involves reaching the rural customer,
understanding their needs and wants, supply of goods and
services to meet their requirements, carrying out after sales
service that leads to customer satisfaction and repeat
purchase/sales.

The Indian growth story is now spreading itself to India's


hinterlands. Rural India, home to about two-thirds of the
country’s 1 billion population, is not just witnessing an
increase in its income but also in consumption and
production. The union budget for 2009-10 hiked the
allocation for the National Rural Employment Guarantee Act
(NREGA) to US$ 8.03 billion, giving a further boost to the
rural economy. This is in addition to the farmer loan waiver
of US$ 13.86 billion and the ambitious Bharat Nirman
Programme with an outlay of US$ 34.84 billion for improving
rural infrastructure. Additionally, the rural economy has not
been impacted by the global economic slowdown, according
to a recent study by the Rural Marketing Association of India
(RMAI). The study found that the rural and small town
economy which accounts for 60 per cent of India’s income
has remained insulated from the economic slowdown.
Moreover, rural incomes are on the rise driven largely due to
continuous growth in agriculture for four consecutive years.
According to a McKinsey survey conducted in 2007, the rural
India market would grow almost four times from its existing
size in 2007, which was estimated at US$ 577 billion.

RURAL INFRASTRUCTURE:
1) 46 percent of villages are connected by all weather roads.

2) 84 percent of villages are electrified.

3) 5700 regulated markets.

In the early 2000s, around 700 million people, i.e. 70% of the
Indian population lived in 6,27,000 villages, in rural areas. Of
this, 90% were concentrated in villages with population less
than 2000.3 According to a study conducted in 2001 by the
National Council for Applied Economic Research (NCAER),
there were as many "middle income and above" households
in rural areas as there were in urban areas. There were
almost twice as many "lower income households" in rural
areas as in urban areas. There were 2.3 million "highest
income" households in urban areas as against 1.6 million in
rural areas. NCAER projections indicated that the number of
"middle income and above" households was expected to
grow to 111 million in rural India by 2007, compared to 59
million in urban India. Gone were the days when a rural
consumer had to go to a nearby town or city to buy a
branded product. The growing power of the rural consumer
was forcing big companies to flock to rural markets. At the
same time, they also threw up major challenges for
marketers.

FMCG
There was a time when the FMCG companies ignores rural
market, they took no any interest to produced or sell
products in rural market in India. It was the initial stage of
FMCG companies in India. As per as the time had
passed, the strategy and marketing style of FMCG
companies had been changed.
The rural market is the one of the best opportunity for the
FMCG sector in the India. It is wider and less competitive
market for the FMCG. As the income level of the rural
consumers increasing, the demand of FMCG is
increasing continuously.
Top Players in FMCG Sector
1. Hindustan Unilever limited (HUL)
2. ITC (Indian Tobacco Company)
3. Nestle India
4. GCMMF (AMUL)
5. Dabur India

6. Asian Paints (India)


7. Cadbury India
8. Britannia Industries
9. Procter &Gamble Hygiene &Health Care
10. Marico Industries

Secondary Players
1. Colgate-Palmolive (India)Ltd.
2. Godrej Consumers Product Ltd.
3. Nirma Ltd.
4. Tata Tea Ltd.
5. Parle Agro

Rural consumers spend around 13 per cent of their income,


the second highest after food (35 per cent), on fast moving
consumer goods (FMCG), as per a RMAI study.

The FMCG industry in India was worth around US$ 16.03


billion in August 2008 and the rural market accounted for a
robust 57 per cent share of the total FMCG market in India.
The FMCG sector saw rural markets post 20 per cent growth,
ahead of the 17-18 per cent growth from urban India, aided
by three years of good monsoon, higher prices of farm
produce and farm-loan waiver.

Most FMCG companies are now working on increasing their


distribution in smaller towns and focusing on marketing and
operations programme for semi-urban and rural markets.

For instance, Godrej Consumer Products intends to increase


revenue from rural areas from 38 per cent to 55 per cent in
the next three years by increasing its distribution network
substantially. The products will reach out to 50,000 villages
in the next couple of years from the present 18,000 villages
while the number of towns covered will double from 3,300 to
almost 6,500 in a year.

Retail
The rural retail market is currently estimated at US$ 112
billion, or around 40 per cent of the US$ 280 billion retail
market. Major domestic retailers like AV Birla, ITC, Godrej,
Reliance and many others have already set up farm linkages.
Hariyali Kisan Bazaars (DCM) and Aadhars (Pantaloon-Godrej
JV), Choupal Sagars (ITC), Kisan Sansars (Tata), Reliance
Fresh, Project Shakti (Hindustan Unilever) and Naya Yug
Bazaar are established rural retail hubs.

Telecommunication
A Gartner forecast revealed that Indian cellular services
revenue will grow at a compound annual growth rate (CAGR)
of 18.4 per cent to touch US$ 25.6 billion by 2011, with most
of the growth coming from rural markets. Also, a joint
Confederation of Indian Industries (CII) and Ernst & Young
report reveals that of the next 250 million Indian wireless
users, approximately 100 million (40 per cent) are likely to
be from rural areas, and by 2012, rural users will account for
over 60 per cent of the total telecom subscriber base in
India.

In a bid to acquire rural subscribers, most Indian telecom


operators have started investing in infrastructure to roll out
their services in these areas. Realising this as a huge
potential, small Indian handset manufacturing companies,
including Micromax, Intex Technologies and Karbonn, have
lined up a marketing spent of around US$ 21.02 million for
the financial year 2009-10.
Automobiles
For the auto industry, semi-urban and rural markets
contribute close to 40 per cent of sales, led by demand for
two-wheelers, entry-level cars and tractors. Significantly, car
sales grew 8.3 per cent in June 2009, aided by rising demand
in semi-urban and rural markets. Mahindra & Mahindra is
bullish on the rural and semi-urban markets, with its utility
vehicle, Scorpio clocking 60-65 per cent sales from the rural
markets as against 20 per cent earlier. TVS Motor also
registered around 50 per cent of its sales from the rural and
semi-urban markets.

Consumer durables
A survey carried out by RMAI has revealed that 59 per cent
of durables sales come from rural markets.

Presently, around 50 per cent of sales in the US$ 5.14 billion


consumer electronics industry come from the urban markets,
30 per cent from tier-II and -III towns and balance 20 per
cent from rural India.
Many leading consumer durable companies are now
increasing their presence in rural India. Recently, LG has set
up 45 area offices and 59 rural and remote-area offices.
Moreover, it has outlined plans to invest around US$ 40
million towards development of entry-level products
targeted at rural markets.

Samsung has also rolled out its 'Dream Home' road show
which was to visit 48 small towns in 100 days in an effort to
increase brand awareness of its products. Samsung expects
that its rural revenues would increase to US$ 287.7 million in
2009 from US$ 164.4 million last year. The company also
plans to expand its sales channel by 25-30 per cent in rural
India.

Whirlpool, is eyeing rural markets in India for its next phase


of growth. The company is set to tap markets with a
population between 100,000 and 500,000 in the first phase,
and in the next phase, will look at expanding the base in
villages with a population of 50,000.
Nature of Rural Market

• Large, Diverse and Scattered Market: Rural


market in India is large, and scattered into a number of
regions. There may be less number of shops available
to market products.
• Major Income of Rural consumers is from
Agriculture: Rural Prosperity is tied with agriculture
prosperity. In the event of a crop failure, the income of
the rural masses is directly affected.
• Standard of Living and rising disposable
income of the rural customers: It is known that
majority of the rural population lives below poverty line
and has low literacy rate, low per capital income,
societal backwardness, low savings, etc. But the new
tax structure, good monsoon, government regulation on
pricing has created disposable incomes. Today the rural
customer spends money to get value and is aware of
the happening around him.
• Traditional Outlook: Villages develop slowly and
have a traditional outlook. Change is a continuous
process but most rural people accept change gradually.
This is gradually changing due to literacy especially in
the youth who have begun to change the outlook in the
villages.
• Rising literacy levels: It is documented that
approximately 45% of rural Indians are literate. Hence
awareness has increases and the farmers are well-
informed about the world around them. They are also
educating themselves on the new technology around
them and aspiring for a better lifestyle.
• Diverse socioeconomic background: Due to
dispersion of geographical areas and uneven land
fertility, rural people have disparate socioeconomic
background, which ultimately affects the rural market.
• Infrastructure Facilities: The infrastructure
facilities like cemented roads, warehouses,
communication system, and financial facilities are
inadequate in rural areas. Hence physical distribution is
a challenge to marketers who have found innovative
ways to market their products.
Some Myths:

• Myth-1: Rural Market Is a Homogeneous


Mass

Reality: It’s a heterogeneous population. Various Tiers are


present depending on the incomes like Big Landlords;
Traders, small farmers; Marginal farmers: Labors, artisans.
State wise variations in rural demographics are present viz.
Literacy (Kerala 90%, Bihar 44%) and Population below
poverty line (Orissa 48%, Punjab 6%).

• Myth-2: Disposable Income Is Low

Reality: Number of middle class HHs (annual income Rs


45,000- 2, 15,000) for rural sector is 27.4 million as
compared to the figure of 29.5 million for urban sector. Rural
incomes CAGR was 10.95% compared to 10.74% in urban
between 1970-71 and 1993-94.

• Myth-3: Individuals Decide About


Purchases

Reality: Decision making process is collective. Purchase


process- influencer, decider, and buyer, one who pays can all
be different. So marketers must address brand message at
several levels. Rural youth brings brand knowledge to
Households (HH).

Is rural marketing transactional or


developmental in its approach?

It is true, rural markets have become an attractive


proposition for commercial business organizations.

The role of rural marketing as such is more developmental


than transactional. It is more a process of delivering better
standard of living and quality of life to the rural environment
taking into consideration the prevailing village milieu.

Transactional Vs Developmental: For better


comprehension of this role let us distinguish development
marketing and transactional marketing. Table brings out the
differences in brief.

Transactional Vs Development Marketing

S.N Aspect Transactional Development


o
1. Concept Consumer Society orientation,
orientation, societal concept
Marketing concept

2. Role Stimulating and Catalytic and


conversional transformation agent
marketing
3. Focus Product-market fit Social change
4. Key task Product Social innovations and
innovations and communications
communications
5. Nature of Commercial Socio-cultural,
activity economic
6. Participants Corporate Government,
enterprises, voluntary agencies,
Sellers corporate enterprises,
benefactors
7. Offer Products and Development,
services projects/schemes/prog
rams
8. Target group Buyers Beneficiaries and
buyers
9. Communicati Functional Developmental
on
10. Goal Profits, Customer Market development
satisfaction
Corporate Image
Brand image
11. Time-Frame Short-medium Medium-Long
12. Motivation Profit-motive Service-motive

Business policy Ideological or Public


policy

Model: The model of rural marketing represents a


combination of the transactional and developmental
approaches.

• Rural marketing process is both a catalyst as well as an


outcome of the general rural development process.
Initiation and management of social and economic
change in the rural sector is the core of the rural
marketing process. It becomes in this process both
benefactor and beneficiary.
• Innovation is the essence of marketing. Innovative
methods of social change for successful transformation
of traditional society are virtual. Such a change narrows
the rural-urban divide.
• The process of transformation can be only evolutionary
and not revolutionary. The growth of the rural market
can be a planned evolutionary process based on
strategic instruments of change rather than constitute
just short-term opportunities for commercial gains.
• The exposure of ruralities to a variety of marketing
transactions during the change process puts them in
the role of beneficiaries than of just `buyers' of modern
inputs and infrastructural services.
• Communication is the vital element of rural marketing.
It should serve to resolve social conflicts, encourage
cooperation and strengthen competitive spirit during
interactions between rural and urban as well as within
rural areas. Another critical point for communication is
the point of conversion of ruralite from an "induced
beneficiary" to an "autonomous buyer".

Classification of rural consumers

The rural consumers are classified into the following groups


based on their economic status:

• The Affluent Group: They are cash rich farmers


and a very few in number. They have affordability but
not form a demand base large enough for marketing
firms to depend on. Wheat farmers in Punjab and rice
merchants of Andhra Pradesh fall in this group.
• The Middle Class: This is one of the largest
segments for manufactured goods and is fast
expanding. Farmers cultivating sugar cane in UP and
Karnataka fall in this category.
• The Poor: This constitutes a huge segment.
Purchasing power is less, but strength is more. They
receive the grants from government and reap the
benefits of many such schemes and may move towards
the middleclass. The farmers of Bihar and Orissa fall
under this category.

Roadblocks of Indian Rural Market

There are several roadblocks that make it difficult to


progress in the rural market. Marketers encounter a number
of problems like dealing with physical distribution, logistics,
proper and effective deployment of sales force and effective
marketing communication when they enter rural markets.
The major problems are listed below.

• Standard of living: The number of people below


the poverty line is more in rural markets. Thus the
market is also underdeveloped and marketing
strategies have to be different from those used in urban
marketing.
• Low literacy levels: The low literacy levels in rural
areas leads to a problem of communication. Print media
has less utility compared to the other media of
communication.
• Low per capita income: Agriculture is the main
source of income and hence spending capacity depends
upon the agriculture produce. Demand may not be
stable or regular.
• Transportation and warehousing:
Transportation is one of the biggest challenges in rural
markets. As far as road transportation is concerned,
about 50% of Indian villages are connected by roads.
However, the rest of the rural markets do not even
have a proper road linkage which makes physical
distribution a tough task. Many villages are located in
hilly terrains that make it difficult to connect them
through roads. Most marketers use tractors or bullock
carts in rural areas to distribute their products.
Warehousing is another major problem in rural areas,
as there is hardly any organized agency to look after
the storage issue. The services rendered by central
warehousing corporation and state warehousing
corporations are limited only to urban and suburban
areas.
• Ineffective distribution channels: The
distribution chain is not very well organized and
requires a large number of intermediaries, which in turn
increases the cost and creates administrative problems.
Due to lack of proper infrastructure, manufacturers are
reluctant to open outlets in these areas. They are
mainly dependent on dealers, who are not easily
available for rural areas. This is a challenge to the
marketers.
• Many languages and diversity in culture:
Factors like cultural congruence, different behaviour
and language of the respective areas make it difficult to
handle the customers. Traits among the sales force are
required to match the various requirements of these
specific areas.
• Lack of communication system: Quick
communication is the need of the hour for smooth
conduct of business, but it continues to be a far cry in
rural areas due to lack of communication facilities like
telegraph and telecommunication systems etc. The
literacy rate in the rural areas is rather low and
consumer’s behaviour in these areas is traditional,
which may be a problem for effective communication.

• Spurious brands: Cost is an important factor that


determines purchasing decision in rural areas. A lot of
spurious brands or look-alikes are available, providing a
low cost option to the rural customer. Many a time the
rural customer may not be aware of the difference due
to illiteracy.
• Seasonal demand: Demand may be seasonal due
to dependency on agricultural income. Harvest season
might see an increase in disposable income and hence
more purchasing power.
• Dispersed markets: Rural population is highly
dispersed and requires a lot of marketing efforts in
terms of distribution and communication.

Attractiveness of rural market

• Large Population: The rural population is large and


its growth rate is also high. Despite the rural urban
migration, the rural areas continue to be the place of
living majority of Indians.

• Rising Rural Propensity:


Income 2000- 2005 2008-

Group 01 -06 09
Above Rs. 1.6 3.8 5.6
100,000
Rs. 77,001- 2.7 4.7 5.8
100,000
Rs. 50,001- 8.3 13.0 22.4
77,000
Rs. 25,001- 26.0 41.1 44.6
50,000
Rs.25,000 & 61.4 37.4 20.2
below

Thus we see that population between income level of


Rs. 25,000- 77,000 will increase from 34.3% in 1994-95
to 67.0% in 2006-07. The rural consuming class is
increasing by about 3-4% per annum, which roughly
translates into 1.2 million new consumers yearly.

• Growth in consumption:
Per capita household expenditure (in
Rs.)

Level N States Expend


o. iture
Punjab 614
Kerala 604
Haryana 546
Rajastha 452
High
n
(Above Rs 7
Gujarat 416
382/-)
Andhra 386
Pradesh
Maharash 384
tra
West 382
Bengal
Orissa 381
Tamil 381
Average
5 Naidu
(Rs. 382/-)
Uttar 373
Pradesh
Karnatak 365
a
Assam 338
Low
Madhya 326
(Below Rs. 3 Pradesh
382/-)
Bihar 289
Distribution household’s income wise
(projection in Rs Crore)

2001 – 02 2006 – 07
Income Rural Rural
groups Tot Tot
No. % No. %
al al
High 0.26 0.0 26 0.52 0.1 23
7 .9 2 .1
Middle 12.0 7.7 64 16.7 10. 61
4 3 .2 2 32 .8
Low 5.7 5.0 88 3.68 3.5 95
9 .7 2 .7
Total 18.0 12. 71 20.9 13. 66
4 89 .4 0 96 .7

Spending pattern (Rural Household’s in Rs.)

Item % Ric Po Avera


h or ge
Food Articles 4 14
73 95
4 7
Toiletries 2
67 33 43
0
Washing 1
43 22 28
Material 3
Cosmetics 1
33 17 21
0
Otc Products 4 13 6 9
Others 9 30 15 19
Total 33
166 215
3

Average rural household spends on consumables


excluding food grains, milk & vegetables are Rs. 215/-.

• Life style changes:


Income vs. usage of packed consumer goods (%
of household using)

Monthly household income


(Rs.)
Goods
Up to 351 – 751 – 150
350 750 1500 1+
Washing 60 78 86 91
Cakes/Bars
shampoos 57 72 89 93
Tooth 22 36 65 85
Paste/Powder
bathing soaps 20 25 41 63
Tea 22 30 48 64
(Packaged)

• Life cycle advantage:


Stages in life cycle
Product Urban Market Rural
Growth

Rate %
Popular Maturit 2 Growth
soaps y
Premium Late 11 Early
soaps growth growth
Washing Late 6 Early
powder growth growth
Skin Maturit 1.1 Growth
creams y
Tea Maturit 4 Growth
y

• Market growth rates higher: Growth rates of the


FMCG market and the durable market are higher in
rural areas for many products. The rural market share
will be more than 50% for the products like toilet soaps,
body talcum powder, cooking medium (oil), cooking
medium (vanaspati), tea, cigarettes and hair oil.
• Rural marketing is not expensive: Conventional
wisdom dictates that since rural consumers are dispersed,
reaching them is costly. However, new research indicates
that the selling in Rural India is not expensive. According
to one research it costs roughly Rs.1 Crore to promote a
consumer durable inside a state. This includes the
expenses of advertising in vernacular newspapers,
television spots, in-cinema advertising, radio, van
operations and merchandising and point of purchase
promotion. Campaign like this, which can reach millions,
costs twice as much in urban area.
Rural Vs Urban Marketing
N Aspect Urban Rural
o.
1 Marketing & Marketing &
Societal Societal
Concepts & Concepts,
Philosophy Relationship Development
Marketing Marketing &
Relationship
Marketing
2 • Market
• Demand High Low
• Competition Among Units In Mostly From
Organized Unorganized
Sector Units
Consumers
Location Concentrated Widely Spread
Literacy High Low
Income High Low
Expenditure Planned, Even Seasonal,
Variation
Needs High Level Low Level
Innovation/Ado Faster Slow
ption
3 Product
Awareness High Low
Concept Known Less Known
Positioning Easy Difficult
Usage Method Easily Grasped Difficult To
Grasp
Quality Good Moderate
Preference
4 Price
Sensitive Yes Very much
level desired Medium-high Medium-low
5 distribution
Wholesalers, Village shops,
stockists, “Haats”
retailer,
supermarket,
channels
specialty
stores, &
authorised
showrooms
Transport Good Average
Facilities
Product High Limited
Availability
6 Promotion
Advertising Print, audio TV, radio, print
visual media, media to some
outdoors, extent. More
exhibitions etc. languages
few languages

Personal Door-to-door, Occasionally

Selling frequently

Sales Contests, gifts, Gifts, price

Promotion price discount discounts


Publicity Good Less
opportunities opportunities

Special Products for Rural Markets:

• Rural Transporter: Mahindra & Mahindra is busy


developing the prototype of what it calls a ‘Rural
Transporter’ – basically a hybrid between a tractor and a
rural transport vehicle. The product at 20-25 HP will be
targeted at those who cannot afford a normal tractor and
would also fulfill the need of family transporter that could
take in the rural roughs but would be much more
comfortable and safer than the conventional tractor-
trolley.
• Sampoorna TV: LG Electronics, the Korean firm has
rejigged the TV to appeal to local needs. It spent Rs. 21
Lacs to develop a set that would have on-screen displays
in the vernacular languages of Hindi, Tamil and Bengali.
The logic, rural consumers unfamiliar with English would
still be able to use the TV without being intimidated.
• Titan Watches: A recent NCAER study revealed that
there is a great potential for watches in rural areas. In fact
it is considered to be a high priority list. It was also found
that a rural consumer looks for the ruggedness of the
watch more than the urban consumer does. He prefers
thick watches than slim watches. The biggest problem
that the Marketers are facing in the Rural Markets is Of
IMITATIONS. Imitations may result in two types of goods
depending upon the purpose, commitment, and
competence of imitator. A poor imitator will end up in
producing deceptive, spurious, fake, copycat products. He
dupes the gullible customer by offering products having
close resemblance with the original. In quality, it is poor
cousin to the original. On the other hand, a poor imitator
may even produce an improved version of the original
product. In this scenario the job of the Marketer becomes
even more difficult in the sense that he has not to fight
other competitors but also the imitated products. The
advantages that these products enjoy in the rural markets
are that the Imitators who are in the villages are making
these and they are offering More Margins & Better credit
Facilities.To solve this problem the Marketer has to
educate the consumer about his product and show him
the benefits of his products over the imitated ones.
Need-Product Relationships and the changes
happening in Rural India
Needs Old Products New Products
Brushing Teeth Neem sticks, Toothpaste, tooth
Charcoal, Rocksalt, powder
Husk
Washing Vessels Coconut fiber, Washing Powders,
Earthy materials, soaps and liquids
Brick Powder, Ash
Transport Bullock Cart, Horses, Tractors, LCVs,
Donkeys Mopeds, Scooters,
Motor cycles
Irrigation Wells, Canals, Water Bore-wells, Motors,
lifters, Wind Mills Power Generators,
Pump Sets
Hair Wash Shikakai powder, Shampoos and
Retha, Besan hair care soaps
CONSUMER BEHAVIOR IN RURAL
MARKETS:
Promotion of brands in rural markets requires the special
measures. Due to the social and backward condition the
personal selling efforts have a challenging role to play in this
regard. The word of mouth is an important message carrier
in rural areas. Infect the opinion leaders are the most
influencing part of promotion strategy of rural promotion
efforts. The experience of agricultural input industry can act
as a guideline for the marketing efforts of consumer durable
and non-durable companies. Relevance of Mass Media is also
a very important factor.

The Indian established Industries have the advantages,


which MNC don't enjoy in this regard. The strong Indian
brands have strong brand equity, consumer demand-pull and
efficient and dedicated dealer network which have been
created over a period of time. The rural market has a grip of
strong country shops, which affect the sale of various
products in rural market. The companies are trying to trigger
growth in rural areas. They are identifying the fact that rural
people are now in the better position with disposable
income. The low rate finance availability has also increased
the affordability of purchasing the costly products by the
rural people. Marketer should understand the price
sensitivity of a consumer in a rural area. This paper is
therefore an attempt to promote the brand image in the
rural market.

Indian Marketers on rural marketing have two understanding


(I) The urban metro products and marketing products can be
implemented in rural markets with some or no change. (ii)
The rural marketing required the separate skills and
techniques from its urban counter part. The Marketers have
following facilities to make them believe in accepting the
truth that rural markets are different in so many terms.

(i) The rural market has the opportunity for.

(ii) Low priced products can be more successful in rural


markets because the low purchasing, purchasing powers in
rural markets.

(iii) Rural consumers have mostly homogeneous group with


similar needs, economic conditions and problems.

(iv) The rural markets can be worked with the different


media environment as opposed to press, film, radio and
other urban centric media exposure.

How reality does affect the planning of marketers? Do


villagers have same attitude like urban consumers? The
question arises for the management of rural marketing
effects in a significant manner so than companies can enter
in the rural market with the definite goals and targets but
not for a short term period but for longer duration. The
Research paper will discuss the role of regard. The strategy,
which will be presented in the paper, can be either specific
or universally applicable.The ultimate objective of all
production is consumption. A free market economy provides
freedom to the consumers to buy and consume goods of
their choice. The buying preferences of consumers send
signals to producers to produce various commodities in
required quantities. Producers, therefore, produces only
those commodities which are desired by the consumers. In
India, consumer behavior has changed in recent years owing
to enhanced awareness, information technology, and, more
importantly, governmental intervention through legislations.
India's rural consumers account for about 73 percent of the
total consumers. In recent years, the lifestyle of a large
number of rural consumers in India has changed
dramatically and continues to do so. The buying behavior of
the rural consumers is influenced by several factors, such as
socio-economic conditions, cultural environment, literacy
level, occupation, geographical location, efforts on the part
of sellers, exposure to the media, etc. This book examines
the buying behavior of India's rural masses and the diverse
factors which influence their choices. The work is useful for
understanding the Indian rural consumer psyche in order to
formulate an appropriate marketing strategy. It includes:
• Media
• Newspaper brand
• Sources of information.

RURAL CONSUMER PREFERENCES:


In order to assess the buyer behavior towards certain
critical aspects of marketing, the preferences of the
consumers is directly related to:
• Price
• Quality
• Credit
• Variety
• Dealer advice
• Specific brand.

PURCHASE BEHAVIOR:
Rural people can buy only from three places includes:
• From the shop in the same village
• Weekly bazaar
• From the shop of nearby town.

Factors influencing buying behavior


The various factors that affect buying behavior of in rural
India are:

• Environmental of the consumer - The


environment or the surroundings, within which the
consumer lives, has a very strong influence on the
buyer behavior, egs. Electrification, water supply
affects demand for durables.

• Geographic influences - The geographic


location in which the rural consumer is located also
speaks about the thought process of the consumer.
For instance, villages in South India accept
technology quicker than in other parts of India. Thus,
HMT sells more winding watches in the north while
they sell more quartz watches down south.

• Family – it is an important buying decision making


organization in consumer markets. Family size & the
roles played by family members exercise
considerable influence on the purchase decisions.
Industry observers are increasingly realizing that at
times, purchase of durable has less to do with
income, but has more to do with the size of the
family & that’s where rural India with joint family
structures, becomes an attractive proposition.

• Economic factors – The quantum of income &


the earning stream are one of the major deciding
factors, which determine to a great extent, what the
customer will be able to buy. Many people in the
rural market are below poverty line & for large
number of people, agriculture is the primary
occupation. More than 70% of the people are in
small-scale agricultural operation. These factors
affect the purchase decision.

• Place of purchase - (60% prefer HAATS due to


better quality, variety & price) Companies need to
assess the influence of retailers on both consumers
at village shops and at haats.

• Creative use of product - ex Godrej hair dye


being used as a paint to colour horns of oxen,
Washing machine being used for churning lassi. The
study of product end provides indicators to the
company on the need for education and also for new
product ideas.

• Brand preference and loyalty - (80% of sale


is branded items in 16 product categories)

Cultural factors influencing consumer behavior


Cultural factors exert the broadest and deepest influence on
consumer behaviour. The marketer needs to understand the
role played by the buyer’s culture. Culture is the most basic
element that shapes a person’s wants and behaviour. In
India, there are so many different cultures, which only goes
on to make the marketer’s job tougher. Some of the few
cultural factors that influence buyer behaviour are:
• Product (colour, size, design, and shape): There
are many examples that support this point.

• For example, the Tata Sumo, which was launched


in rural India in a white colour, was not well
accepted. But however, when the same Sumo was
re-launched as Spacio (a different name) and in a
bright yellow colour, with a larger seating capacity
and ability to transport good, the acceptance was
higher.

• Another good example would be Philips audio


systems. Urban India looks at technology with the
viewpoint of ‘the smaller the better’. However, in
rural India, the viewpoint is totally opposite. That
is the main reason for the large acceptance of big
audio systems. Thus Philips makes audio systems,
which are big in size and get accepted in rural
India by their sheer size.

• Social practices: There are so many different


cultures, and each culture exhibits different social
practices.

For example, in a few villages they have common


bath areas. Villagers used to buy one Lifebuoy
cake and cut it into smaller bars. This helped
lifebuoy to introduce smaller 75-gram soap bars,
which could be used individually.

• Decision-making by male head: The male in


Indian culture has always been given the designation of
key decision maker.

For example, the Mukhiya’s opinion (Head of the


village), in most cases, is shared with the rest of
the village. Even in a house the male head is the
final decision maker. In rural areas, this trend is
very prominent.

• Changes in saving and investment


patterns: From gold, land, to tractors, VCR’s, LCV’s

4 A’s approach of Indian Rural Market


The rural market may be appealing but it is not without its
problems: Low per capita disposable incomes that is half the
urban disposable income; large number of daily wage
earners, acute dependence on the vagaries of the monsoon;
seasonal consumption linked to harvests and festivals and
special occasions; poor roads; power problems; and
inaccessibility to conventional advertising media.
However, the rural consumer is not unlike his urban
counterpart in many ways. The more daring MNC’s are
meeting the consequent challenges of availability,
affordability, acceptability and awareness (the so-called 4
A’s)

• Availability
The first challenge is to ensure availability of the product or
service. India's 627,000 villages are spread over 3.2 million
sq km; 700 million Indians may live in rural areas, finding
them is not easy. However, given the poor state of roads, it
is an even greater challenge to regularly reach products to
the far-flung villages. Any serious marketer must strive to
reach at least 13,113 villages with a population of more than
5,000. Marketers must trade off the distribution cost with
incremental market saturation. Over the years, India's
largest MNC, Hindustan Lever, a subsidiary of Unilever, has
built a strong distribution system which helps its brands
reach the interiors of the rural market. To service remote
village, stockiest use autorickshaws, bullock-carts and even
boats in the backwaters of Kerala. Coca-Cola, which
considers rural India as a future growth driver, has evolved a
hub and spoke distribution model to reach the villages. To
ensure full loads, the company depot supplies, twice a week,
large distributors which who act as hubs. These distributors
appoint and supply, once a week, smaller distributors in
adjoining areas. LG Electronics defines all cities and towns
other than the seven metros cities as rural and semi-urban
market. To tap these unexplored country markets, LG has
set up 45 area offices and 59 rural/remote area offices.

• Affordability

The second challenge is to ensure affordability of the


product or service. With low disposable incomes, products
need to be affordable to the rural consumer, most of who are
on daily wages. Some companies have addressed the
affordability problem by introducing small unit packs. Most of
the shampoos are available in smaller packs. Fair and lovely
was launched in a smaller pack. Colgate toothpaste launched
its smaller packs to cater to the travelling segment and the
rural consumers.Godrej recently introduced three brands of
Cinthol, Fair Glow and Godrej in 50-gm packs, priced at Rs 4-
5 meant specifically for Madhya Pradesh, Bihar and Uttar
Pradesh — the so-called `Bimaru' States. Hindustan Lever,
among the first MNC’s to realize the potential of India's rural
market, has launched a variant of its largest selling soap
brand, Lifebuoy at Rs 2 for 50 gm. The move is mainly
targeted at the rural market. Coca-Cola has addressed the
affordability issue by introducing the returnable 200-ml glass
bottle priced at Rs 5. The initiative has paid off: Eighty per
cent of new drinkers now come from the rural markets.
Coca-Cola has also introduced Sunfill, a powdered soft-drink
concentrate. The instant and ready-to-mix Sunfill is available
in a single-serve sachet of 25 gm priced at Rs 2 and multi
serve sachet of 200 gm priced at Rs 15.

• Acceptability

The third challenge is to gain acceptability for the product or


service. Therefore, there is a need to offer products that suit
the rural market. One company which has reaped rich
dividends by doing so is LG Electronics. In 1998, it developed
a customized TV for the rural market and christened it
Sampoorna. It was a runway hit selling 100,000 sets in the
very first year. Because of the lack of electricity and
refrigerators in the rural areas, Coca-Cola provides low-cost
ice boxes — a tin box for new outlets and thermocol box for
seasonal outlets. The insurance companies that have tailor-
made products for the rural market have performed well.
HDFC Standard LIFE topped private insurers by selling
policies worth Rs 3.5 crores in total premium. The company
tied up with non-governmental organizations and offered
reasonably-priced policies in the nature of group insurance
covers. With large parts of rural India inaccessible to
conventional advertising media — only 41 per cent rural
households have access to TV — building awareness is
another challenge. Fortunately, however, the rural consumer
has the same likes as the urban consumer — movies and
music — and for both the urban and rural consumer, the
family is the key unit of identity. However, the rural
consumer expressions differ from his urban counterpart.
Outing for the former is confined to local fairs and festivals
and TV viewing is confined to the state-owned Doordarshan.
Consumption of branded products is treated as a special
treat or luxury.

• Awareness

Brand awareness is another challenge. Fortunately, however,


the rural consumer has the same likes as the urban
consumer — movies and music and for both the urban and
rural consumer, the family is the key unit of identity.
However, the rural consumer expressions differ from his
urban counterpart. Outing for the former is confined to local
fairs and festivals and TV viewing is confined to the state-
owned Doordarshan. Consumption of branded products is
treated as a special treat or indulgence. Hindustan Lever
relies heavily on its own company-organized media. These
are promotional events organized by stockiest. Godrej
Consumer Products, which is trying to push its soap brands
into the interior areas, uses radio to reach the local people in
their language.

Coca-Cola uses a combination of TV, cinema and radio to


reach 53.6 per cent of rural households. It doubled it’s spend
on advertising on Doordarshan, which alone reached 41 per
cent of rural households. It has also used banners, posters
and tapped all the local forms of entertainment. Since price
is a key issue in the rural areas, Coca-Cola advertising
stressed its `magical' price point of Rs 5 per bottle in all
media. LG Electronics uses vans and road shows to reach
rural customers. The company uses local language
advertising. Philips India uses wall writing and radio
advertising to drive its growth in rural areas.

The key dilemma for MNC’s ready to tap the large and fast-
growing rural market is whether they can do so without
hurting the company's profit margins.

Evolving a New Marketing Mix for Selling to


Rural Indians
The marketing mix in the case of Indian rural markets
consists of 4P’s i.e.
Product, Price, Promotion, Place combined with 1 P that is
Packaging and one R i.e. Retailer as special focus areas.
However, at the base of this marketing mix will be 2 E’s of
Education and Empowerment.
EMPOWEREMENT

EDUCATION

CUSTOMIZATIONN

The traditional marketing hypothesis tends to ignore the


requirement of a developing country’s rural needs. The
concept of marketing has to be taken in conjunction with
economic, psychological and social implications. Hence, the
concept of Mega-Marketing where all such factors are taken
into consideration while developing the Marketing Mix is
more relevant to succeed and build enduring brands. In rural
India’s case the two most important considerations are
Education and Empowerment opportunities which traditional
approaches of marketing fail to acknowledge. Then only the
opportunity provided by the rural market can be fully
tapped. 12.2% of the world lives in Rural India. Put in a
different context, this works out to 1 in 8 people on Earth.
Being able to successfully tap this growing market is every
marketer’s dream. However, myths abound. India’s rural
markets are often misunderstood. A clear distinction needs
to be made with regard to the reality versus the image of
rural India. If such a distinction is not made, we will be
unable to distinguish between the serpent and the rope and
the rope and the serpent.
The rural market is not homogeneous. Though the aggregate
size is very large, individual subsets of this market tend to
be rather small and disparate. Geographical, demographical,
statistical, logistical differences are very apparent.
Positioning and realities regarding the potential of each of
these market segments differ and lie at the very core of
forming the strategy for the rural markets.

The face of Indian agriculture is changing from dry land and


irrigated agriculture into high-tech and low-tech agriculture.
Farmers in states like Maharashtra and Andhra Pradesh have
reaped the benefits of adopting new age farming practices,
including green house cultivation, fert-irrigation and
hydroponics. This has radically changed the economics of
farming, with the investment in these systems lowering the
cost of cultivation, increasing yields due to integrated crop
management practices and reducing the dependence on
rainfall. As a result, disposable income has grown sharply.
The aspirants are becoming climbers showing a sustained
economic upturn as purchasing power is increasing in the
rural markets. The proportion of very rich has increased five-
fold. The growing incomes have modified demand patterns
and buyer behaviour. Moreover, the need for a product or
service is now adequately backed up with the capacity,
ability and willingness to pay.However, the market still
remains largely unexploited. At most times, potential
markets need to be found and at times, even created. Such
creation of demand needs efficient management of the
supply chain. To increase market share, behavioural change
needs to be at the forefront of any strategy. Further, due to
the diversity of this market, marketers need to think, plan
and act locally. It is therefore essential to develop an
accurate Marketing Mix for selling to rural Indians.

Product

“Authentic marketing is the art of identifying and


understanding customer needs and creating solutions
that deliver satisfaction to the customers, profits to
the producers and benefits for the stakeholders.”
Philip Kotler

The product offerings have to be not only customized but


also at a different plane altogether in case of rural markets.
The various product levels as outlined by Philips Kotler,
namely Core Benefit, Basic Product, Expected product,
augmented product and Potential Product should be
adequately taken into consideration and the product
offerings should be henceforth customized according to the
needs.The rural market is not a homogenous set of
customers with preferences frozen in time. When developing
products in any category, marketers must identify the typical
rural specific needs. Urban products cannot be dumped onto
rural markets without modifications. Tailor-made products
are better received by the rural audience as the consumers
feel empowered and tend to identify with the offering. Most
of the times in the urban market the product is offered at
the augmented product level where the objective of the
product offering is to exceed the customer expectation. But
in the rural markets of India which have been till date
characterized by the absence of the choice, sub-standard
products and cheap clones of their urban counterparts; the
immediate level to be operated is the Expected product
where his expectations are met. Also, due to the low level of
incomes and literacy levels, it is imperative that the basic
needs of the consumer are met. For instance, shampoos or
soaps with distinctive, strong rose or jasmine perfumes are
very popular with the rural women in South India. The urban
women do not identify as strongly with these perfumes.
Sachetization is also a distinctly rural-driven phenomenon.
As demand in several categories is being created, intensity
of use is quite low. On average, rural folk would use a
shampoo only once a week. Habits take time to change and
making unit sachet packs affordable is the key to inducing
trial and purchase.
Systematic, in-depth research that can help understand the
depths of the mind of the villagers, their buying criteria,
purchase patterns and purchasing power are an essential
input while developing rural specific products or services. A
common error has been to launch a completely stripped
down version of the urban product in the rural market, with
the objective of offering the lowest possible price. This is not
what a rural consumer wants. What is required is to
introduce a product with ‘essential’ features, whose needs
are recognized and for which the consumer is willing to pay
(value-adding features). Product developers should aim at
eliminating all the cost-adding features, i.e., features which a
consumer is unwilling to pay for as he sees no obvious
utility. This would “redefine value” in the minds of the
consumer and tremendously increase product acceptability.

Product development is severely constrained by legislation


in the case of agricultural inputs like fertilizers, insecticides
and pesticides. In the case of fertilizers for instance, though
levels of deficiency of nutrients have increased significantly
over the past decade, no significant changes in formulations
notified under the Fertilizer Control Order have taken place.
This has severely restricted the availability of cost effective
specialty fertilizers of global standards to Indian farmers.
Technological know-how for manufacture of such fertilizers
exists within the country. However, farmers using modern
farming practices are unable to get an assured supply of
such farm inputs due to draconian legislation. A move to
liberalize the sector could perhaps consider the accepted
worldwide norm of allowing manufacturers with a strong
R&D base to decide their own formulations with the
government machinery conducting checks on market
samples of finished products to ensure that they live up to
the labelled specifications. This would be a major policy
initiative that would give a huge impetus to innovative
product development in the farm sector. Product life cycles
as are becoming shorter and these are having their impact
on company life cycles. Thus for any company wishing to
develop its product portfolio, allegiance to the classic
American P-A-L Principle of Partnership - Alliances - Linkages
is a basis for survival.

Pricing

A significant portion of the rural population is paid in daily


wages. Daily wage earners tend to have little stock of
money, and therefore tend to make purchases only to meet
their daily needs. The implication is that pack sizes and price
points are critical to sales, and importantly, that rural
consumers view the purchase-tradeoff dilemma across a
much wider range of product categories. As a result, the
nature of competition is much greater; a beverage
manufacturer is not only competing with other
manufacturers in its category, but also other products that
consumers may consider one-off luxury purchases such as
shampoo. So marketer will have to examine method by
which he can make the product more affordable. In the case
of consumer durable one way is to work through rural bank
and offer higher purchase terms to consumer. In short, the
Value for money is the most important concept that will
differentiate the successful brand from the rest.

BUDGET CONSCIOUS CONSUMER


STATUS SEEKING CONSUMERS

Every marketer must realize that the rural consumer is not a


miser. He is not simply looking for the cheapest product in
every category. He understands and demands value for
money in every purchase that he makes. Pricing therefore is
a direct function of factors including cost-benefit advantage
and opportunity cost. Pricing offered to consumers should be
for value offerings that are affordable. Price sensitivity is
extremely high and comparison with competitive prices is
common. Consumers seem to create narrow psychological
price bands in their minds for product groups and price
elasticity beyond the extreme price points is very high. The
perceived utility or value of the product or service is the
ultimate decision making factor. It is certain however, that
buying cheap is not the primary objective. Rather, it is
“buying smart”. A study revealed that the average rural
consumer takes approximately 2 years to decide on buying a
watch! He will not do so unless he is totally convinced that
he is getting value for Money. Impulse buys and purchases
for conspicuous consumption are also extremely few and far
Between considering the “value for money” factor that
reigns supreme in most rural purchase decisions.
It must be remembered that the rural consumer does not
have a budget problem. He has a cash flow problem. This is
because the village folk receive funds only twice a year. At
these times, he is capable of making high volume purchases.
At all times, however, the unit price is critical and so is the
pack size. Because of this, in the lean season when there is a
cash flow crunch, marketers need to provide financial
products, schemes or solutions that suit the needs of the
rural population.

Promotions & Advertising

There are a lot of barriers that militate against homogenous


media and message delivery. These barriers stem from the
fact that rural markets vary immensely in

Terms of tastes, habits and preferences leading to different


expectations of every segment of the population. However,
one fact is certain across all areas. The rural consumer likes
to touch and feel a product before making a choice.
Demonstrations are undoubtedly the most effective
promotional tool that shapes purchase decisions of the rural
population. Demonstrations establish the credentials of any
new technology used in developing the product.

In today’s information era, it is very important for companies


to wise-up on emerging technologies. It has in fact become a
medium to attract larger audiences for a product
demonstration. Technology must be used to prepare a
database of customers and their requirements. The use of
video using mobile vans and even large screen video walls at
events should be arranged.

The classic conundrums of reach and coverage of the media


are shattered. Several creative communication media have
been used by various companies to tackle the problem of
having to use visual communication and non-verbal
communication to reach the rural audience. This is required
because a large proportion of the rural population cannot
read or write. Alliances with cottage industries, dharmsalas,
panchayats, post offices and police stations for advertising
have also helped immensely. More importantly, in rural
India, experience has proved time and time again that word
of mouth is the key influencer.
Intermediaries are the foundation to rural distribution. If the
intermediary understands and is constantly reminded about
your product, then the end user will not be allowed to forget.
The companies must reinforce this highly effective medium
and use all their innovation and money tom develop more
dramatic point of sale and point of contact material. This
becomes all the more important when in rural India, more
often than not, the overlap between the product categories
sold in a single outlet in tremendous. For instance, a store
may call itself as a grocery store but will stock everything
from groceries to vegetables to fertilizers and may at times
even stock medicines. In such cases, the point at which the
customer actually comes in contact with a product may not
be the point at which the sale is affected.

The re-use capacity and colour of the container in which the


product is packed is also a crucial factor. In fact, reusable
packaging is considered a major aid in promoting sales for
products in the rural market. Consumer and Trade schemes
that Incentivise Spending using discount coupons, off season
discounts, free samples, etc. encourage spending. Lucky
draws and gift schemes are a major hit in most states.

The use of local idioms and colloquial expressions are an


excellent way to strike a rapport with the rural consumer and
must be borne in mind when developing media plans and
public relations programmes. No high voltage publicity is
required. The rural consumer is very down to earth but
equally discerning and

marketers need to step into the shoes of the rural folk while
creating product promotion campaigns. Another unique
feature of rural markets is that the Decision making process
is collective. The persons involved in the purchase process -
influencer, decider, buyer, one who pays can all be different.
So marketers must address brand messages in their
campaigns at several levels. Apart from regular household
goods, several agribusiness companies have also started
providing gift schemes with offers for free jewellery that
influences the ladies to pressure the farmers to purchase
agricultural inputs from select companies. This promotion
strategy thus makes women influence purchase decisions
that they would ordinarily not be involved in.

Youth power is becoming increasingly evident in villages.


Rural youth bring brand knowledge to the households. This
has forced several companies to change the focus and
positioning of their products and services towards this
segment that is growing in absolute number and relative
influence.

There are other attributes in the promotion strategy which


are explained as under:
1. Mass media: In the present world mass media is a
powerful medium of communication. The following are the
mass media generally used:

• Television.

• Cinema.

• Radio

• Print media: Handbills and Booklets, posters, stickers,


banners, etc.

2. Personal selling and opinion leaders: In


personal selling it is required that the potential users are
identified and awareness is created among them about the
product, its features, uses and benefits. This can be
achieved only by personal selling by highly motivated sales
person. In fact the word of mouth information holds lot
validity in rural areas even today. This is the reason why
opinion leaders and word of mouth are thriving among rural
consumers. An opinion leader in rural areas can be defined
as a person who is considered to be knowledgeable and is
consulted by others and his advice is normally followed. The
opinion leaders may be big landlords or politicians or
progressive farmers.

3. Special campaigns: During crop harvest and


marketing seasons it is beneficial to take up special
promotion campaigns in rural areas. Tractor owners (tonee)
conducted by MRF Limited is one such example. Brooks Bond
carries out marches in rural areas with band, music and
caparisoned elephants to promote their brand of tea.

Mandi and Mela magic

At last count, India witnessed over 50,000 melas. Of these


25,000 meals are held to signify religious, cultural festivals
as well as local fairs and events. On an average, visitors at
these melas spend between Rs. 5,000 to Rs. 50,000 a day.
For

example, 3 lakh people visited the annual mela at Navchadi


which lasts for 7 days in Meerut. The largest such mela is the
Maha Kumbh Mela which is visited by an average of 12 crore
people.

There is however, a caveat when an organization is


considering using mela for marketing their products. Is the
audience at this mela fit for promotion of the product at
hand? What are the psychographics of this audience? What
is the motivational and behavioural impetus that brings
visitors to each of these melas. On considering these
questions, it has been observed that melas are fit to
generate product exposure, package familiarity, brand
reminder and word of mouth. However, for products that
need concept marketing and those that have high prices,
such melas are not suitable promotion media. This is
because the time and the mood of the people that visit these
melas are not right to digest technical information or for
making large purchases. People come to melas to have a
good time and are not reminded of such high technology or
high priced products when they return home. In the words of
Mr. Neville Gomes, Managing Director of Multimedia
Aquarius, promotion at melas is like a “one night stand”.
There will be no reminder later. Thus, a large amount of
qualitative judgment is indeed in planning promotions at
melas by media planners.

Place

Place is the major reason behind the evolution of rural


marketing as a distinct discipline. A village as a place for
promotion, distribution & consumption is very different from
a town or city, thus the general marketing theories can’t be
applied directly in rural markets. Reaching the right place is
the toughest part in today’s rural marketing, as most of the
products reach up to the nearest townships of any village,
but due to higher distribution costs, these products fails to
reach the village as the distribution channel fails to put in
the required efforts. Most of the times, the rural retailers
themselves go to the urban areas to procure these goods.
Rural markets imply complex logistical challenges that show
up as high distribution costs.

Significance of Distribution
No matter how well devised a company’s product, pricing or
promotion strategy, the most crucial link in ensuring the
success of rural marketing efforts is distribution. Distribution
must be strengthened and this would raise investment cost
barriers for new entrants. In Rural India, the selection and
use of distribution channels is a nightmare. The reason for
this is very clear when we consider that on an average,
Urban and Rural India both have approximately 3 million
retail outlets. However, Urban India has only 4,000 towns
where these outlets are located. On the other hand, Rural
India’s 3 million outlets are located in 6.3 lakh villages. Thus,
marketers are faced with the problem of feeding 3 million
shops located in vastly diverse areas each of which records
an average sale of only Rs.5,000 per outlet. Further
compounding this problem is the fact that even this meager
sale is mostly on credit. The diversity in the distribution of
shops is the self-limiting factor in terms of servicing the rural
distribution network.
The distribution of outlets however shows that a marketer
need not be present in all markets at all times. Being present
in 6 lakh villages is virtually impossible for an organization of
any size. Rural wealth and demand is concentrated typically
at satellite towns, district headquarters, assembly markets
and such central locations. Rural distribution has a rigid
hierarchy of markets that make channel decisions relatively
structured.
It is essential for rural marketing companies to understand
this hierarchy. Rural folk are habituated to traveling once a
week for their weekly purchases to a satellite town. They do
not expect such items to be present in every village. For
durables where the outlay involved is typically large, the
purchase would be made in an assembly market for reasons
of choice and availability of adequate cash flow. This is due
to the fact that it is at assembly markets that auction yards
are present where the farmers congregate to sell their
output. After such sale of produce, they are cash rich and
can afford to make such purchases. It is therefore not
necessary for a marketer of TV sets to take their distribution
channel all the way down to the village shop. A TV will not be
sold there as the cash flow does not exist at that point in the
hierarchy of markets. A television distributor must be
present at assembly markets which are much smaller in
number, more controllable, easier to reach and service.
Keeping the hierarchy in mind will help decide the optimum
level of penetration required to reach a critical mass of rural
consumers.

MARKETING STRATEGIES TO CAPTURE


RURAL INDIA

• SEGMENTATION OF RURAL MARKET


The first step is to develop & implement any strategy for the
rural market should include the appropriate segmentation of
the rural market. The important thing is that appropriate
segmentation basis need to be applied. Different product
categories have different rural markets to cater to & these
can be selected by applying different criteria of
segmentation. The organization can do the following thing to
start with:
• Focus on select markets.
• Focus on select villages.

• BY COMMUNICATING AND CHANGING


QUALITY PERCEPTION
Companies are coming up with new technology and they are
properly communicating it to the customer. There is a trade
of between Quality a customer perceives and a company
wants to communicate. Thus, this positioning of technology
is very crucial. The perception of the Indian about the
desired product is changing. Now they know the difference
between the products and the utilities derived out of it. As a
rural Indian customer always wanted value for money with
the changed perception, one can notice difference in current
market scenario.

• BY PROPER COMMUNICATION IN INDIAN


LANGUAGE
The companies have realized the importance of proper
communication in local language for promoting their
products. They have started selling the concept of quality
with proper communication. Their main focus is to change
the Indian customer outlook about quality. With their
promotion, rural customer started asking for value for
money.

• BY TARGET CHANGING PERCEPTION


If one go to villages they will see that villagers using
Toothpaste, even when they can use Neem or Babool sticks
or Gudakhu, villagers are using soaps like Nima rose, Breeze,
Cinthol etc. even when they can use locally manufactured
very low priced soaps. Villagers are constantly looking
forward for new branded products. What can one infer from
these incidents, is the paradigm changing and customer no
longer price sensitive? Indian customer was never price
sensitive, but they want value for money. They are ready to
pay premium for the product if the product is offering some
extra utility for the premium.

• BY UNDERSTANDING CULTURAL AND


SOCIAL VALUES
Companies have recognized that social and cultural values
have a very strong hold on the people. Cultural values play
major role in deciding what to buy. Moreover, rural people
are emotional and sensitive. Thus, to promote their brands,
they are exploiting social and cultural values.

• BY PROVIDING WHAT CUSTOMER WANT


The customers want value for money. They do not see any
value in frills associated with the products. They aim for the
basic functionality. However, if the seller provides frills free
of cost they are happy with that. They are happy with such a
high technology that can fulfil their need. As "Motorola" has
launched, seven models of Cellular Phones of high
technology but none took off. On the other hand, "Nokia" has
launched a simple product, which has captured the market.

• BY PROMOTING PRODUCTS WITH INDIAN


MODELS AND ACTORS
Companies are picking up Indian models, actors for
advertisements as this helps them to show themselves as an
Indian company. Diana Hyden and Shahrukh Khan are
chosen as a brand ambassador for MNC quartz clock maker
"OMEGA" even though when they have models like Cindy
Crawford.

• BY ASSOCIATING THEMSELVES WITH INDIA


MNCs are associating themselves with India by talking about
India, by explicitly saying that they are Indian. M-TV during
Independence Day and Republic daytime make their logo
with Indian tri-colour. Nokia has designed a new cellular
phone 5110, with the India tri-colour and a ringing tone of
"Sare Jahan se achcha".

• BY PROMOTING INDIAN SPORTS TEAM


Companies are promoting Indian sports teams so that they
can associate themselves with India. With this, they
influence Indian mindset. LG has launched a campaign "LG ki
Dua, all the best". ITC is promoting Indian cricket team for
years; during world cup they have launched a campaign
"Jeeta hai jitega apna Hindustan India India India". Similarly,
Whirlpool has also launched a campaign during world cup.
• BY TALKING ABOUT A NORMAL INDIAN
Companies are now talking about normal India. It is a normal
tendency of an Indian to try to associate him/her with the
product. If he/she can visualize himself/herself with the
product, he /she become loyal to it. That is why companies
like Daewoo based their advertisements on a normal Indian
family.

• BY DEVELOPING RURAL-SPECIFIC
PRODUCTS
Many companies are developing rural-specific products.
Keeping into consideration the requirements, a firm develops
these products. Electrolux is working on a made-for India
fridge designed to serve basic purposes: chill drinking water,
keep cooked food fresh, and to withstand long power cuts.

• BY GIVING INDIAN WORDS FOR BRANDS


Companies use Indian words for brands. Like LG has used
India brand name "Sampoorna" for its newly launched TV.
The word is a part of the Bengali, Hindi, Marathi and Tamil
tongue. In the past one year, LG has sold one lakh 20-inch
Sampoorna TVs, all in towns with a population of around
10,000.

• BY ACQUIRING INDIAN BRANDS


As Indian brands are operating in India for a long time and
they enjoy a good reputation in India. MNCs have found that
it is much easier for them to operate in India if they acquire
an Established Indian Brand. Electrolux has acquired two
Indian brands Kelvinator and Allwyn this has gave them the
well-established distribution channel. As well as trust of
people, as people believe these brands. Similarly Coke has
acquired Thumps up, Gold Spot, Citra and Limca so that they
can kill these brands, but later on they realized that to
survive in the market and to compete with their competitor
they have to rejuvenate these brands.

• BY EFFECTIVE MEDIA COMMUNICATION


Media Rural marketing is being used by companies. They can
either go for the traditional media or the modern media. The
traditional media include melas, puppetry, folk theatre etc.
while the modern media includes TV, radio, and e-chaupal.
LIC uses puppets to educate rural masses about its
insurance policies. Govt of India uses puppetry in its
campaigns to press ahead social issues. Brook
Bond Lipton India ltd used magicians electively for launch of
Kadak Chap Tea in Etawah district. In between such a show,
the lights are switched of and a torch is flashed in the dark
(EVEREADYs tact).

• BY ADOPTING LOCALISED WAY OF


DISTRIBUTING
Proper distribution channels are recognized by companies.
The distribution channel could be big scale Super markets;
they thought that a similar system can be grown in India.
However, they were wrong; soon they realized that to
succeed in India they have to reach the nook and the corner
of the country. They have to reach the "local Paan wala,
Local Baniya" only they can succeed. MNC shoe giants,
Adidas, Reebok, and Nike started with exclusive stores but
soon they realized that they do not enjoy much Brand Equity
in India, and to capture the market share in India they have
to go the local market shoe sellers. They have to reach to
local cities with low priced products.

• BY ASSOCIATING THEMSELVES WITH


INDIAN CELEBRITIES
MNCs have realized that in India celebrities enjoyed a great
popularity so they now associate themselves with Indian
celebrities. Recently Luxor Writing Instruments Ltd. a JV of
Gillette and Luxor has launched 500 "Gajgamini" ranges of
Parker Sonnet Hussain special edition fountain pens, priced
at Rs. 5000. This pen is signed by Mr. Makbul Fida Hussain a
renowned painter who has created "Gajgamini" range of
paintings. Companies are promoting players like Bhaichung

Bhutia, who is promoted by Reebok, so that they can


associate their name with players like him and get
popularity.

• MELAS
Melas are places where villagers gather once in a while for
shopping. Companies take advantage of such events to
market their products. Dabur uses these events to sell
products like JANAM GHUTI (Gripe water). NCAER estimates
that around half of items sold in these melas are FMCG
products and consumer durables. Escorts also display its
products like tractors and motorcycles in such melas.

• PAINTINGS
A picture is worth thousand words. The message is simple
and clean. Rural people like the sight of bright colors. COKE,
PEPSI and TATA traders advertise their products through
paintings.

Product Strategies
The specific strategies, which can be employed to develop or
modify the products to targets the rural market, can be
classified as follows:

1. Small unit packing: Given the low per capita income


& purchasing habits of the rural consumers, small unit
packages stand a good chance of acceptance in rural
market. Single serve packets or sachets are enormously
popular in India. They allow consumers to buy only what
they need, experiment with new products, & conserve cash
at the same time. This method has been tested by products
life shampoos, pickles, biscuits, Vicks cough drops in single
tablets, tooth paste, etc. Small packing stands a good
chance of acceptance in rural markets. The advantage is
that the price is low and the rural consumer can easily afford
it. Also the Red Label Rs. 3.00 pack has more sales as
compared to the large pack. This is because it is very
affordable for the lower income group with the deepest
market reach making easy access to the end user satisfying
him. The small unit packing will definitely attract a large
number of rural consumers.

2. New product designs: Keeping in view the rural life


style the manufacturer and the marketing men can think in
terms of new product designs. The rural product usage
environment is tough because of rough handling, rough
roads & frequent power fluctuations. Thus, all these
environmental factors must be considered while developing
the products meant for rural audience.

Nokia’s 1100 model is a very good example of a customized


model for rural markets. Its design has been modified to
protect it against rough usage in rural environment; it is dust
resistant & has a small torch light in view of the frequent
power cuts in rural India. It is also introduces messaging in
Hindi language now, in some of the economically priced
models in order to cater to the semi-urban or rural
consumers. This is in real terms, thinking global & acting
local.

3. Sturdy products: Sturdiness of a product is an


important factor for rural consumers. The product should be
sturdy enough to stand rough handling, transportation &
storage. The experience of torch light dry battery cell
manufacturers supports this because the rural consumers
preferred dry battery cells which are heavier than the lighter
ones. For them, heavier weight meant that it has more over
and durability. Sturdiness of a product either or appearance
is an important for the rural consumers.

4. Utility oriented products: The rural consumers are


more concerned with utility of the product and its
appearance Philips India Ltd. Developed and introduced a
low cost medium wave receiver named BAHADUR during the
early seventies. Initially the sales were good but declined
subsequently. On investigation it was found that the rural
consumer bought radios not only for information and news
but also for entertainment.

5. Brand name: For identification, the rural consumers do


give their own brand name on the name of an item. The
fertilizers companies normally use a logo on the fertilizer
bags though fertilizers have to be sold only on generic
names. A brand name or a logo is very important for a rural
consumer for it can be easily remembered. Many a time’s
rural consumers ask for peeli tikki in case of conventional
and detergent washing soap.

Nirma made a peeli tikki especially for those peeli tikki users
who might have experienced better cleanliness with the
yellow colored bar as compared to the blue one although the
actual difference is only of the color. e.g.: Coca-Cola
targeted the whole Indian rural market with the positioning
of “Thanda Matlab Coca-Cola” advertisements because most
of the villagers say when wanting a drink refer to it as
Thanda…… so Coca-cola used that word.

Pricing strategies
1. Low cost/ cheap products: This follows from the
product strategy. The price can be kept low by low unit
packaging’s like paisa pack of tea, shampoo sachets, vicks 5
grams tin, etc. this is a common strategy widely adopted by
many manufacturing and marketing concerns.

2. Refill packs / Reusable packaging: In urban areas


most of the health drinks are available. The containers can
be put to multipurpose uses. Such measures can a
significant impact in the rural market.

For example, the rural people can efficiently reuse the


plastic bottle of hair oil. Similarly the packages of edible oil,
tea, coffee, ghee etc can be reused. Pet jars free with the
Hasmukhrai and Co Tea, Ariel Super Compact.

3. Application of value engineering: in food


industry, Soya protein is being used instead of milk protein.
Milk protein is expensive while Soya protein is cheaper, but
the nutrition content of both is the same. The basic aim is to
reduce the value of the product, so that a larger segment
can afford it, thus, expanding the market.

4. Large volume-low margins (Rapid or slow

penetration strategy): Marketers have to focus on


generating large volumes & not big profit margins on
individual products. If they price their product at a level
which can lead to good volumes, then they can still generate
good returns on the capital employed.

5. Overall efficiency & passing on benefits to


consumers: For rural products, the strategy should be to
cut down the production, distribution & advertising costs &
passing on these benefits to the customers to further
increase the turnover. Most often, it has been observed that
advertising has less to do with product sales in the rural
areas. If an organization gets the price point right, then it
can work in rural market.

6. Low volume-low price strategy: This strategy of


reducing prices by reducing the package size in order to
make it appear more affordable, is delivering very good
results for a large number of FMCG product categories, in the
rural markets of India. In categories where maintaining the
price point is extremely critical, this strategy is delivering
very good results.

7. Ensuring price compliance: Rural retailers, most of


the times, charges more than the MRP. The manufacture has
to ensure price compliance either through promotional
campaigns, as was done by Coca Cola, or by ensuring the
availability of products at the retail outlets directly.
Promotion strategies
Customized promotional media & messages need to be
developed by the organizations to effectively target the rural
market. The following strategies can be considered while
developing promotional campaigns for the rural markets:

• Think Global Act Local


Rural population is diverse, but the commonalities of
their ethos & simple living habits need to be understood
for advertising to succeed. For that, the theme of the
advertisement needs to revolve among universal
themes, such as family-love. But the context, storyline,
language & idioms should be such that the rural
audience of different rural market segments can relate
to.

• Think in Local Idiom


This is the need of the advertising professionals who
can think like the rural people. The only we can have
insights like ‘Thanda matlab Coca Cola’. There should
be the use of language writers who understands the
rural & regional pulse better.

• Simplicity & Clarity


All promotional messages targeted at rural audience
need to be simple & clear, which can be easily
understood, & they should not include any confusing
elements. It is preferable that it has only a few
propositions at a time. Bombarding rural consumers
with too much, in less time can easily confuse them &
leave them bewildered. Promotional message should
highlight only the functional values of the product &
explains how those values can make the consumer’s
life even better & solve any of his problems.

• Narrative Story Style


The promotional message can be delivered in the form
of an entertaining story with a message depicting how
the brand delivers “larger good” to the family & society.
The theme of the story line can be about how the
product can solve the problems of the rural consumers.

• Choice of Brand Ambassador


Brand Ambassador for the rural markets need to be
picked carefully as urban successes might not get
replicated in the rural markets. That is why Govinda in
the Mirinda as boosted the sales of the drink in the rural
markets. An organization might spend a lot of money in
hiring a brand ambassador only to find out later that it
had little impact on the rural consumer.
Distribution Strategy
Many companies view the rural markets as great opportunity
for expanding their sales but find distribution as a major
problem. Unfortunately, it is almost impossible to transplant
strategies which work successfully in urban markets onto
rural markets, namely, extensive retailing and sustained pull
generation through mass media advertising.

The road blocks to reach the rural customers are:

• Lack of adequate transport facilities.


• Large distances between villages.
• Lack of roads connecting villages to nearest townships.
• Lack of proper retail outlets
• Lack of mass media infrastructure.

The marketers were of the opinion that the villagers would


come to nearby towns and buy the products that they want.
What has been found is that if we have to serve the rural
consumer we will have to take our products to him through
the channels that he is using and some innovative ways of
getting to him.

The following distribution strategies formulated for the rural


category.
1. Coverage of villages with 2000 and above
population: Ideally, coverage of villages with up to 2000
and above population could be the break-even point for a
distribution setup. By doing so the percentage of villages
covered comes to only 10% of all the villages, but the rural
population covered will be substantial, to the extent of about
40 to 45 percent. With a distribution network in about
55,000 villages, which have a population of 2000 persons &
above each, one can cover about 25 crores rural consumers.
This strategy is good to begin with & then subsequently,
villages with lesser populations can be added.

2. Segmentation: the number of villages in India is huge


& it is not viable to contact & serve all villages directly.
Therefore, companies or distributors can carefully examine
the market potential of different villages & target the
villages that can be served in a financially viable manner
through an organized distribution effort.

3. Use of co-operative societies: There are over 3


lacks co-operative societies operating in rural areas for
different purposes like marketing cooperatives, farmer’s
service cooperatives and other multipurpose cooperatives.
These cooperatives have an arrangement for centralized
procurement and distribution through their respective state
level federation. Such state level federation can be
motivated to procure and distribute consumables items and
low value durable items to the members to the society for
serving to the rural consumers. Many of the societies extend
credit to the members for purchases.

4. Utilization of public distributory system: The


PDS in the country is fairly well organized. The revamped
PDS places more emphasis on reaching remote rural areas
like the hills and tribal’s. The purpose of PDS is to make
available essential commodities like food grains, sugar,
kerosene, edible oils and others to the consumers at a
reasonable price. The shops that distribute these
commodities are called fair price shops. These shops are run
by the state civil Supplies Corporation, co-operatives as well
as private entrepreneurs. Here again there is an
arrangement for centralized procurement and distribution.
The manufacturing and marketing men should explore
effective utilization of PDS.

5. Utilization of multipurpose distribution


centers by petroleum/oil companies: In order to
cater to the rural areas the petroleum/oil companies have
evolved a concept of multipurpose distribution centers in
rural areas. In addition to petrol/diesel, lubricants, these
outlets also stock consumables agricultural inputs like
fertilizers, pesticides and seeds. It is estimated that there
are about 450 such outlets in operation in the country. The
rural consumer who has tractors, oil-engine pump sets and
mopeds frequent these outlets for their requirement. These
outlets can be profitably utilized for selling consumables and
durable items also.

6. Distribution up to feeder markets/mandi


towns: Keeping in view the hierarchy of markets for the
rural consumers, the feeder markets and mandi towns offer
excellent scope for distribution. The rural customers visit
these towns at regular intervals not only for selling the
agricultural produce but also for purchasing cloth, jewelry,
hardware, radios, torch cells and other durables and
consumer products. From the feeder markets and mandi
towns the stockiest or wholesaler can arrange for distribution
to the village shops in the interior places. This distribution
can be done by mopeds, cycles, bullock-carts, camelbacks
etc. depending upon the township.

7. Shandies/Haaths/Jathras/Melas: These are places


where the rural consumers congregate as a rule. While
shandies/heaths are held a particular day every week,
Jathras and melas are held once or twice a year for longer
durations. They are normally timed with religious festivals.
Such places attract large number of itinerant merchants.
Only temporary shops come up selling goods of all kinds. It
can be beneficial for companies to organize sales of their
product at such places. Promotion can be taken, as there will
be ready captive audience. For convincing the
manufacturing and marketing man with regard to the
importance of these places from rural marketing point of
view a visit to such places is necessary. It is estimated that
over 5,000 fairs are held in the country and the estimated
attendance is about 100 million rural consumers. Biggest fair
‘Pushkar Mela’ is estimated to attract over 10 million people.
There are 50 such big rural fairs held in various parts of
country, which attract urbanite also like ‘Mankanavillaku’ in
Malappara in Kerela, Kumbh Mela at Hardwar in U.P. ‘Periya
Kirthigai’ at Tiruparunkunaram in Tamil Nadu.

Merits:

• Convenience: The entire market can be related to


large departmental stores in cities, where the
advantage is a one-stop shopping exercise. These
outlets crop up every week, providing consumers
immense choice and prices.
• Attractive: The weekend shopping is not only
convenient but also entertaining. The markets start
early and will be over by lunch. Afterwards, there will
be entertainment. In respect of transactions, it is an
attractive place to those who want to buy second hand
durables and to those who prefer barter transactions.
Further the freshness of the produce, buying in bulk for,
a week and the bargaining advantage attract the frugal
and weeklong hard working rural folk.
• Availability: It is a market for everyone and for
everything. Household goods, clothes, durables,
jewellery, cattle, machinery, farming equipment, raw
materials and a host of products are available.

8. Agricultural Input Dealers: Fertilizers should be


made available to the farmers within the range of 4-5 km
from their residence, as per the essential commodities act.
This is why there are about 2 lakh fertilizer dealers in the
country, both in cooperative & private sector. Example of
Varana Nagar in Maharashtra proved an eye opener in this
regard where the sugar and milk co-operatives have totally
changed the life style of people. The supermarket in Varana
Nagar caters exclusively to rural consumers. Similarly a co-
operative supermarket called ‘Chintamani’ in Coimbatore
(T.N) arranges free transit of rural consumers to the
supermarket of their purchases.

9. Joint distribution by Non-competing

Companies: As the cost of distributing the products in


the rural market through distribution vans can be unviable
for a single company, different non-competing companies
can come together to jointly operate distribution vans for the
rural market. This will enable them to share the cost of
operating the van & on account of the sharing of the cost by
four or five companies; the entire operation can become
financially viable for all the players.
10. Personal Selling Network: It is very successful
distribution channel being developed by companies like HUL.
It adds a personal touch to the marketing, as the salesmen
are the resident of the village or community itself, making it
easier to sell the product & maximise sales for the company.

THE OLD SETUP

The historically available people & places for distribution


include: - Whole seller, Retailer, Vans, and Bazaars &
Shadies.

• Wholesalers
The Indian wholesaler is principally a Galla – Kirana (food-
grain) merchant who sustains the belief that business is
speculative rather than distributive in character.

He is a trader / commodity merchant rather than a


distributor and therefore tends to support a brand during
boom and withdraw support during slump.

The reason for this speculative character and dormant


role of wholesalers are:-

• Indian market was largely sellers market. There was


no need for active sales growth.
• Companies laid more emphasis or retailers in urban
areas, who are very large in number. As a result of
retail based distribution was weakened.
• Rural markets were neglected by many. The
occurrence of retail outlets was low. Therefore many
companies were dependent on whole sellers.
The current need is to activate and develop wholesaler
of the adjoining market as a distributor of products to
rural retail outlets and build his loyalties to the company.

• Retailers
There are different kinds of retailers.

• Shops within the village

• Shops located on the main road and not exactly


within the village

• Kasba market or the tahsil market.

Village retailers have traditionally been among the most


mobile of rural residents.

• CREDIBILITY: -
He enjoys the confidence of the villagers.
His views are accepted and followed by the rural
people whose awareness and media exposure
levels are low.
The urban retailer is not trusted.
He is seen as a businessman with profit motto.
His view points are evaluated with other sources of
information.)
• INFLUENCE LEADER: -

His role as influence leader is indisputable. From


tender twig of neem to washing powder retailer
testimony has been vital part of the product
adoption process.
The role of urban retailer is weak.
The urban consumers have numerous sources of
information.
Although retailer’s opinion is sought it may not be
100% believed and followed.
• BRAND PROMOTER: -

In rural market retailers remains the deciding


factor to sell particular brand.
Retailers helps in identification and selection of
brands, there is less influence of shelf displays and
point of purchase promotion.
Presence of spurious brands is an ample testimony
to this view.

The urban retailer has a limited role as a brand


promoter.

- He cannot directly, recommend the brands.

- He is to intelligently drive home his


recommendations, as
urban consumers do not trust him completely.

It is through shelf displays and incentive offers


that he has to push the brands.)

• RELATIONSHIP MARKETER
Village retailer practices relationship marketing.
He caters to a set of buyers who have income from
immovable land resources and would be static
over a much longer time span.
The relationship could extend beyond three
generations, backed by historical credibility of the
retailer as a product referral.

• HARBINGER OF CHANGE
In an environment relatively isolated from
external developments, he has been harbinger of
change.
He is one of the main sources of information and
opinion as well as supplier of product and
services.
(As against this, we find urban retailer, wielding
limited influence in changing the product choices
and quality of life of consumers.)
• Vans
Mobile vans long since, have an important place in
distribution and promotion of the products in villages.

Media Vehicles

Through the rural markets offer big attractions to the


marketers, one of the most important questions frequently
asked is “How do we reach the large rural population
through different media and methods?

Mass Media Local Media Personalized


Media
Radio Haats, Melas, Fairs Direct
Communication
Cinema Wall Paintings Dealers
Press Hoardings Sales Persons
TV Leaflets Researchers

Video Vans

Folk Media

Animal Parade

Transit Media
• Formal media
It includes Press and print, TV, Cinema, Radio, and Point of
purchase and Outdoor advertisement. Reach of formal media
is low in rural households (Print: 18%, TV: 27%, Cinema:
30%, and Radio: 37%) and therefore the marketer has to
consider the following points:

• Newspapers and magazines:

English newspapers and magazines have


negligible circulation in rural areas. However local
language newspapers and magazines are becoming
popular among educated facilities in rural areas.
Examples: Newspapers: Eenadu in A.P., Dina Thanthi in
Tamil Nadu, Punjab Kesari in the North, Loksatta in
Maharashtra and Tamil magazine Kumudam are very
popular in rural areas.

• Television:
It has made a great impact and large audience has been
exposed to this medium. HLL has been using TV to
communicate with the rural masses. Lifebuoy, Lux, Nihar
oil etc are some of the products advertised via television.
Regional TV channels have become very popular
especially in Southern states. Examples: SUN TV is very
popular even in rural areas in Tamil Nadu and Asianet is a
preferred regional channel in Kerala. Many consumer
goods companies and fertilizer companies are using these
TV channels to reach the rural customer.

• Radio:
Radio reaches large population in rural areas at a relatively
low cost. Example: Colgate, Jyoti Labs, Zandu Balm, Zuari
industries are some of the companies using radio
communication programme. There are specific programmes
for farmers like Farm and Home/Krishi Darshan in regional
languages. The farmers have a habit of listening to regional
news/agricultural news in the morning and the late evening.
The advertisement has to be released during this time to get
maximum coverage in rural areas. Another advantage is that
the radio commercial can be prepared at short notice to
meet the changing needs of the rural folk. Example: Release
of a pesticide ad at the time of outbreak of a pest or disease
in crops.

• Cinema:
About 65% of the earnings from cinema are from rural
markets. Film viewing habits is high in certain states like
Tamil Nadu, Karnataka and Andhra Pradesh. Village
theatres do roaring business during festivals by having
four shows per day. The monthly charge for showing an ad
film is within Rs.500. Local distributor or dealer who has
good contacts with cinema houses in villages can easily
monitor this activity. Examples: Films on products like
Vicks, Lifebuoy and SPIC fertilizers are shown in rural
cinema halls. Apart from films, Ad slides can also be
screened in village theatres.

• Outdoor advertisements:
This form of media, which includes signboards, wall
painting, hoarding, tree boards, bus boards, dealer
boards, product display boards etc, is cost effective in
rural areas. Symbols, pictures and colours should be used
in POPs meant for rural markets so that they can easily
identify the products. Generally rural people prefer bright
colours and the marketer should Utilize such cues.

• Point of purchase:
Display of hangings, festoons and product packs in the
shops will catch the attention of prospective buyers.
However a clutter of such POP materials of competing
companies will not have the desired effect and is to be
avoided.

• Direct mail advertising:


It is a way of passing on information relating to goods or
services for sale, directly to potential customers through
the medium of post. It is a medium employed by the
advertiser to bring in a personal touch. In cities lot of junk
mail is received by all of us and very often such mails are
thrown into the dustbin whereas a villager get very few
letters and he is receptive to such mailers.

• Wall paintings:
It is an effective and economical medium for communication
in rural areas, since it stays there for a long time depending
upon the weather conditions. The cost of painting one
square foot area is just Rs.10. Retailers welcome painting of
their shops so that the shop will look better. Walls of farm
houses, shops and schools are ideal places for painting and
the company need not have to pay any rent for the same.
The walls have to be painted at least one or two feet from
ground level. It is better to take permission of the owner.
Very often the owner takes responsibility for taking care of
the wall painting. Painting to be avoided during election time
and rainy season. The matter should be in the form of
pictures, slogans for catching the attention of people.
Companies marketing TV, fans, branded coffee/tea,
toothpaste, pesticides, fertilizers etc. use wall painting as
promotion medium in rural areas.

• Tree boards:
These are painted boards of about two square feet in
dimension having the picture or name or slogan of the
product painted on it. The cost of such a painted board is
about Rs.80. These boards are fixed to the trees on both
sides of the village road at a height of about 10 feet from
ground level. These boards attract the attention of slow
moving vehicles like cycles, bullock carts and tractors and
people walking on the road. Considering the poor condition
of roads, even the buses move at slow speed through village
road. Fertilizer and pesticide companies in rural areas
extensively use tree boards. These are low priced promotion
items and can be used by consumer goods companies too.

• Informal/Rural specific media


These media with effective reach and personalized
communication will help in realizing the promotional
objectives. Companies to suit the specific requirements of
rural communication are using a variety of such media
effectively and some of the more important media and
methods are given below.
• Farm-to-Farm/House-to-House visit:
Rural people prefer face-to-face communication and farm
visits facilitate two-way communication. The advantage is
that the sales person can understand the needs and wants
of the rural customer by directly discussing with him and
answer his queries on products and services. Potential
customers in the village are identified and the
company’s/distributor’s representative makes farm-to-
farm visits and highlight the benefits of the products. The
person carries with him literature in local language and
also samples of products. The person does not sell the
product but only promotes the use of the product. Very
often the local dealer also joins the representative in
making farm-to-farm visits. The dealer clarifies the terms
and conditions of sale and also makes independent follow
up visits for securing orders. Example: This approach has
been found to be very effective for agricultural machinery,
animal health products and agricultural inputs. Many LIC
agents and companies dealing with high value consumer
durables have tried this method with success in rich rural
areas.

• Group meeting:
Group meetings of rural customers as well as prospects are
an important part of interpersonal media. The company is
able to pass on the message regarding benefits of the
products to a large number of customers through such
meetings. Group meeting of key customers are conducted by
banks, agricultural inputs and machinery companies in rural
areas. The bankers visit an identified village, get the village
people in a common place and explain the various schemes
to the villagers. Such meetings could be organized in
prosperous villages for promoting consumer durables and
two wheelers also. Example: MRF Tyres conduct tractor
owners meet in villages to discuss repairs and maintenance
of tractors.

• Opinion leaders:
Villagers place more emphasis on the experience of
others who have used a product/brand to make purchase
decision. Opinion leader is a person who is considered to be
knowledgeable and is consulted by others and his advice is
normally followed. Such opinion leaders could be big
landlords, bank official, panchayath-president, teachers,
extension workers etc. Examples: a) Mahindra Tractors use
bankers as opinion leaders for their product. b) Asian Paints
promoted its Utsav brand of paint by painting the village
Sarpanch’s house a few months prior to the launch if the
branch to demonstrate that the paint does not peel off.

• The Melas:
Melas are of different types i.e. commodity fairs, cattle fairs
and religious fairs and may be held only for a day or may
extend over a week. Many companies have come out with
creative ideas for participating in such melas. Examples: a)
Britannia promotes Tiger Brand Biscuits through melas. b)
The mahakumbh at Allahabad is the biggest mela in India.
HLL has put up 14 stalls in the mela grounds for promoting
Lifebuoy. Handcarts have been deployed for increasing
access.

• Folk dances:
These are well-appreciated form of entertainment
available to the village people. The folk dance “Kuravan
Kurathi” is popular in Tamil Nadu. The troupe consists of
dancers, drummers and musicians and they move in a
well-decorated van from one village to another village
singing and dancing. In a day the troupe covers about 8-
10 villages. As soon as the van reaches a village, film
songs are played to attract the attention of the villages.
This is followed by folk dances. Mike announcement is
made about the company’s products and leaflets are
distributed. After the dance programme, queries, if any,
about the products are answered by the sales person. Folk
dance programme costs about Rs.5000 per day and
therefore these programmes are conducted during the
peak season in selected villages. Examples: Fertilizer and
pesticide companies organize folk dance programmes
during peak season in selected markets. Thumps Up has
sponsored Lavnis, the folk dance programme of
Maharashtra and over 30 programmes have been
arranged in selected rural markets.

• Audio Visual Publicity Vans (AVP Vans):


AV unit is one of the effective tools for rural communication.
The van is a mobile promotion station having facilities for
screening films slides and mike publicity. The sales person
makes a brief talk about situation in the village, the products
and the benefits. The ad film is screened along with some
popular film shots and this continues for about 30 minutes.
At the end of the film show, he distributes handbills and
answers queries of the customers. The whole operation
takes about 1-2 hours depending upon the products under
promotion, number of participants in the meeting and time
taken for question and answers. The vans move to the next
village for the second show. The cost of running a fully
equipped AVP unit is about Rs.4000 per day and AVP van
operation has to be considered as an investment for
business development in rural areas. Example: Companies
such as HLL, Colgate, and Phillips have made effective use of
AVP vans for popularizing their products in rural areas.

• Product display contests:


Package is an integral part of the product. Its main purpose
is to protect the product during transit, to preserve the
quality and to avoid any loss in quality and quantity. The
main purpose of this contest is to remind the customer to
buy the product as soon as he enters the shop. Another
objective is to influence the dealer to stock the product and
support the company in increasing the sales. The display
contest has to be announced well in advance and
promotional materials to be distributed to all the selected
dealers in a geographical area. Prizes for best displays are
announced to motivate the dealers; the contest lasts for
about a month. A well-planned product display contest not
only increases the involvement of dealers in the company’s
products but also increases the sales during the contest
period. This is used for promoting consumer goods such as
shampoos, soaps and toothpaste.

• Field demonstration:
This is based on the extension principle “seeing is believing”
and is one of the most effective methods to show the
superiority of the company’s products to the customers. A
progressive farmer who is an opinion leader is selected and
the demonstration is conducted in his field in the presence of
a group of farmers in the village. The farmers observe the
results in the field and the local dealer calls on them in their
farms and persuades them to buy the particular brand of
pesticide or fertilizer. Examples: a) Spraying a particular
brand of an insecticide against insect pests and showing the
farmer how effectively the insects are controlled. b)
Demonstrating the use of tractor/implements for different
agricultural operations. c) Hawkins pressure cooker has
demonstration representatives who carry out demos in rural
households. The representative receives 1% commission for
every customer who approaches the dealer via
demonstrations. e) Similarly effectiveness of detergents,
pressure cookers, vacuum cleaners and mosquito coils could
be promoted by demonstrations in selected markets.

• Field days:
These are extension of field demonstrations. One of the main
objectives of following modern agricultural practices is to
increase the yield. The company organizes demonstrations
in a piece of land belonging to progressive farmers. All the
fertilizers, pesticides, nutrients etc. are applied after making
field observations. Just before harvest, all the important
farmers are invited to see demonstration plot and see for
themselves how the yields are better in the plot compared to
other fields. Field demonstrations/field days consume lot of
time and efforts and therefore have to be planned well.

• Information centers:
They provide latest information on cultivation of crops,
fertilizer application, weed, management and control of
pests and diseases. Experienced agricultural graduates who
make frequent visits to the field and advice farmers on
modern agricultural practices manage the centers. They also
provide information on farm implements, seeds, fertilizers,
pesticides, diesel engines, sprayers and tractors etc. Many
consumer goods companies have opened show rooms in
prosperous rural areas. Example: Hero Honda has opened
extension counters with show room facilities in major rural
markets.

• Life-style marketing:
Each rural market segment has certain special features i.e.
they share common life-style traits. They include village
sports, religious events, prominent personalities and role
models. Examples: Textile mills maintaining community
gardens, Mineral water companies supplying clean drinking
water during summer festivals in villages and Consumer
goods companies sponsoring Kabaddi.

Choosing media vehicles


The choice of different media vehicles for any market is
based on an analysis of the standard features like: reach,
frequency, cost & availability. Depending on the factor of
reach & frequency, the different media can be classified into
the following categories. This categorization can help the
marketer to make a decision about which type of media
would be more suitable to the product & the organization.

High reach High frequency


• Jeep based advertising
• Wall painting
• Bus stand & bus panels
• Haats
• Hoardings
• Postal branding
Low reach High frequency
• Co-operative notice board
• Shop front painting
• Tin plating – house
• Dealer boards
• Village boards
• Well tiles
• Calendars/labels
High reach Low frequency
• Van based advertising
• Melas
• Direct to home
• Folklore group
• Exhibitions/created events
Low reach Low frequency
• Tin painting – tree/shops
• Leaflets
• Posters & banners
• Streamers
• Danglers

FINDINGS AND ANALYSIS


Which soap u prefer to use

The reaction of people towards various SOAP brands


can be tabulated in the following manner:

BRANDS LUX DETTOL LIFEBUOY OTHERS


PERCENTA 36 18 22 24
GE

In the survey, it could easily be concluded that LUX, the


product of HUL was highly in demand. LUX, the product of
HUL covers 36%of the market share. After LUX, the other
brands (EXCEPT LUX, DETTOL, LIFEBUOY) covers 24%of the
market share. This is then followed by LIFEBUOY, the product
of HUL with a market share of 22%,which is then followed by
DETTOL, the product of RECKITT BENCKISER with a market
share of 18%.

This data can be graphically explained with the help


of the following bar graph:

Which pack u prefers to use?

In order to determine the income pattern of the


consumers, it was necessary for the researcher to distribute
the consumers on the basis of their demand for the various
packs of SOAP brands available in the market. However, the
reaction of people towards various packs of SOAP can be
tabulated in the following manner:

PACK OF SOAPS SINGLE PACK FAMILY PACK ( 3 IN


1)
PERCENTAGE 56 44

In the survey, I tried to differentiate amongst people with


below average
household income, average household income &above
household income. This classification can be done on the
basis of the daily expenditure that people make.56%
consumers demand single pack.44% consumers demand
family packs i.e.3 in 1 pack.
This data can be graphically explained with the help
of the following bar graph:

Which tea u prefers to use?

The reaction of people towards various TEA


brands can be tabulated in the following manner:

BRANDS TATA TEA BROOKE TAJ MAHAL OTHERS


BOND
PERCENTA 32 28 18 22
GE

In the survey, it could easily be concluded that TATA TEA,


the product of TATA has a market share of 32%.This is
followed by, BROOKE BOND, with a market share of
28%.Followed by other brands (EXCEPT TATA TEA,BROOKE
BOND,TAJ MAHAL)with a market share of 22%.This is finally
followed by TAJ MAHAL, the product of HUL which
holds18%of the market share.

This data can be graphically explained with the help


of the following bar graph:

Which tea pack u prefers to use?

In order to determine the income pattern of the


consumers, it was necessary for the researcher to distribute
the consumers on the basis of their demand for the various
packs of TEA brands available in the market. However, the
reaction of people towards various TEA packs can be
tabulated in the following manner:

TEA PACKS SACHET MEDIUM PACK LARGE PACKS


PERCENTAGE 48 32 20

In the survey, I tried to differentiate amongst the people,


with below
average household income, average household income &
above household income. This classification can be done on
the basis of the daily expenditure that people make.
However, it can be concluded that sachets are most
commonly used by the people .i.e. 48%consumers demand
sachet packs. 32%consumers demand medium pack.
20%consumers demand large pack.
This data can be graphically explained with the help
of the following diagram:

Which tooth paste u prefers to use?

In the initial years, the rural consumers preferred tooth


powders, datoons etc. But from the last decade, the
preference of consumers towards toothpaste has been
changed. A huge number of toothpastes of
different companies are sold in rural market.However, the
reaction of people towards various TOOTH PASTES can be
tabulated as follows:

BRANDS PEPSODEN COLGATE CLOSE UP OTHERS


T
PERCENTA 27 35 22 16
GE
In the survey that the researcher conducted, it could easily
be seen that COLGATE, the product of COLGATE PALMOLIVE
is the market leader, which covers 35%of the total market.
After that, PEPSODENT, the product of HUL is demanded by
the customers, which covers 27%of the market share.
Followed by CLOSE – UP, the product of HUL is demanded by
the customers, which covers 22%of the market share. Which
is then followed by others brands (EXCEPT PEPSODENT,
COLGATE, CLOSE -UP), which covers 16%of the total market
share.

This data can be graphically explained with the help


of the following bar graph:

Which coffee u prefers to use?

The reaction of people towards various COFFEE


brands can be tabulated in the following manner:

BRANDS BRU NESTLE NESCAFE OTHERS


PERCENTA 26 32 32 10
GE

In the survey, it can be easily concluded that all the brands


are facing tough
competition. NESTLE, the product of NESTLE S.A.& NESCAFE,
another product of NESTLE S.A., shares equal market share
of 32%each.This means that they are in a very tough
competition. This is followed by BRU, the product of HUL
which holds, 26%of the market share. While the other brands
hold only 10%of the market share.
This data can be graphically explained with the help
of the following bar graph:
Which cream u prefers to use?

The reaction of people towards various CREAM


brands can
be tabulated in the following manner:

BRANDS PONDS FAIR & AYUR OTHERS


LOVELY
PERCENTA 28 32 14 26
GE

In the survey, that I conducted, it can easily be concluded


that FAIR &LOVELY, the product of HUL, holds the major
market with a share of 32%.This is followed by, POND ’s,
another product of HUL, which holds 28%of the market
share. This is followed by, other brands (EXCEPT, PONDS,
FAIR &LOVELY &AYUR), which captures 26%of the market
share. This is followed by AYUR, the brand of AYUR
ACADEMY OF NATURAL BEAUTY (AANB) which holds 14%of
the total market share.

This data can be graphically explained with the help


of the following bar graph:

Which hair oil u prefers to use?

The reaction of people towards various HAIR


OIL brands can
be tabulated in the following manner:

BRANDS PARACHUT DABUR DABUR OTHERS


E AMLA VATIKA
PERCENTA 37 29 19 15
GE

In the survey, it can easily be concluded that PARACHUTE,


the product of MERICO captures 37%of the total market
share. This is followed by DABUR AMLA, the product of
DABUR which captures 29%of the total market share. This is
followed by DABUR VATIKA, another product of DABUR which
captures 19%of the market. And after that, followed by
other brands (EXCEPT PARACHUTE, DABUR AMLA, DABUR
VATIKA) captures 15% of the market share.

This data can be graphically explained with the help


of the following bar graph:

Which biscuits u prefers to use?


The reaction of people towards various BISCUITS brands can
be tabulated in the following manner:

BRANDS MARIE GOOD PARLE G OTHERS


GOLD DAY
PERCENTA 24 21 38 17
GE

In the survey, it can easily be concluded that PARLE-G, the


product of PARLE , holds a major market share of 38%.This is
followed by MARIE GOLD, a product of BRITANNIA which
holds 24%of the market share. After that, GOOD DAY,
another product of BRITANNIA, holds 21%of the market
share. This is followed by other brands (EXCEPT MARIE
GOLD, GOOD DAY, PARLE-G) which hold a market share of
17%.

This data can be graphically explained with the help


of the following bar graph:

Which detergent u prefers to use?

The reaction of people towards various DETERGENT brands


can be tabulated in the following manner:

BRANDS SURF RIN TIDE OTHERS


PERCENTA 27 35 22 16
GE

In the survey, it could be easily concluded that RIN, the


product of HUL
captures 35%of the total market share. This is followed by
SURF, the product of HUL which has a market share of
27%.This is followed by TIDE, the product of PROCTER &
GAMBLE which has a market share of 27%.This is finally
followed by other brands (EXCEPT SURF,RIN,TIDE)which
captures 16%of the market share.

This data can be graphically explained with the help


of the following bar graph:

Which shampoo u prefers to use?

The reaction of people towards various SHAMPOO brands


can be tabulated in the following manner:
BRANDS CLINIC SUNSILK HEAD & OTHERS
PLUS SHOULDER
S
PERCENTA 33 25 28 14
GE

In the survey, it can easily be concluded that CLINIC PLUS,


the product of
HUL, captures the major portion of the market with a market
share of 33%.This is followed by HEAD & SHOULDERS, the
product of PROCTER &GAMBLE which holds 28%of the
market share. This is followed by SUNSILK, the product of
HUL which holds 25%of the market share. Finally followed by
other brands (EXCEPT CLINIC PLUS, SUNSILK, HEAD &
SHOULDERS) with a market share of 14%.

This data can be graphically explained with the help


of the following bar graph:

Which pack u prefer to use?

In order to determine the income pattern of the consumers,


it was necessary for the researcher to distribute the
consumers on the basis of their demand for the various
packs of SHAMPOO brands available in the
market.

However, the reaction of people towards various SHAMPOO


packs can be tabulated in the following manner:

SHAMPOO SACHET SMALL MEDIUM FAMILY


PACKS PACK PACK PACK
PERCENTA 23 32 28 17
GE

In the survey, I tried to differentiate amongst the people,


with below
average household income, average household income &
above household income. This classification can be done on
the basis of the daily expenditure that people make.
However, 32%consumers demand SMALL PACK. 28%
consumers demand medium pack.17% consumers demand
large packs.

This data can be graphically explained with the help


of the following bar graph:

Which Television you prefer to use ?


The reaction of people towards various television brands
can be tabulated in the following manner:

BRANDS ONIDA BELTEK CROWN OTHERS


PERCENTA 40 23 33 4
GE

In the survey, it can easily be concluded that TELEVISION of


ONIDA, captures the major portion of the market with a
market share of 40%.This is followed by CROWN, which holds
33%of the market share. This is followed by BELTEK, which
holds 23%of the market share. Finally followed by other
brands (SAMSUNG, LG, SONY etc) with a market share of
4%.

This data can be graphically explained with the help


of the following bar graph:

Which bicycle you prefer to use?


The reaction of people towards various bicycle brands can
be tabulated in the following manner:

BRANDS ATLAS HERO AVON OTHERS


PERCENTA 37 33 22 08
GE

In the survey, it can easily be concluded that the BICYCLE of


ATLAS, captures the major portion of the market with a
market share of 37%.This is followed by HERO, which holds
33%of the market share. This is followed by AVON , which
holds 22%of the market share. Finally followed by other
brands (EXCEPT atlas, hero and avon ) with a market share
of 8%.

This data can be graphically explained with the help


of the following bar graph:

Which refrigerator you prefer to use?

The reaction of people towards various bicycle brands can be


tabulated in the following manner:

BRANDS GODREJ VIDEOCON KELVINAT OTHERS


OR
PERCENTA 38 20 28 14
GE

In the survey, it can easily be concluded that the


REFRIGERATOR of GODREJ, captures the major portion of the
market with a market share of 38%.This is followed by
KELVINATOR, which holds 28%of the market share. This is
followed by VIDEOCON, which holds 20%of the market share.
Finally followed by other brands (LG, SAMSUNG etc ) with a
market share of 14%.
This data can be graphically explained with the help
of the following bar graph:

Which wrist watch you prefer to use?


The reaction of people towards various bicycle brands can be
tabulated in the following manner:

BRANDS HMT MAXIMA TITAN OTHERS


PERCENTA 26 14 40 20
GE

In the survey, it can easily be concluded that the WRIST


WATCH of TITAN, captures the major portion of the market
with a market share of 40%.This is followed by HMT, which
holds 26%of the market share. This is followed by MAXIMA,
which holds 14%of the market share. Finally followed by
other brands (EXCEPT HMT, MAXIMA AND TITAN) with a
market share of 8%.

This data can be graphically explained with the help


of the following bar graph:

Which fan you prefer to use?


The reaction of people towards various bicycle brands can be
tabulated in the following manner:

BRANDS LOCAL POLAR KHAITAN CROMPTO


FANS N FANS
PERCENTA 32 28 22 18
GE

In the survey, it can easily be concluded that the FANS of


LOCAL COMPANIES, captures the major portion of the market
with a market share of 32%.This is followed by POLAR, which
holds 28%of the market share. This is followed by KHAITAN,
which holds 22%of the market share. Finally followed by
CROMPTON with a market share of 18%.
Conclusions
Thus looking at the challenges and the opportunities which
rural markets offer to the marketers it can be said that the
future is very promising for those who can understand the
dynamics of rural markets and exploit them to their best
advantage. A radical change in attitudes of marketers
towards the vibrant and burgeoning rural markets is called
for, so they can successfully impress on the 230 million rural
consumers spread over approximately six hundred thousand
villages in rural India.

The rural market is very large in compare to the urban


market as well as it is more challenging market. The
consumer wants those products which are long lasting, good,
easy to use and cheaper. The income level of rural
consumers is not as high as the income level of urban
consumers that’s why they want low price goods. It is one of
the reasons that the sell of sachet is much larger in the rural
area in all segments. It is necessary for all the major
companies to provide those products which are easy to
available and affordable to the consumers. It is right that the
profit margin is very low in the FMCG products, but at the
same time the market size is much large in the rural area.
The companies can reduce their prices by cutting the costs
on the packaging because the rural consumers don’t need
attractive packaging. Application of 4A* is also a major task
for the major companies in this area.

Rural market has an untapped potential like rain but it is


different from the urban market so it requires the different
marketing strategies and marketer has to meet the
challenges to be successful in rural market.In this report, it
can very easily be concluded that HUL, holds major portion
of the FMCG market. It holds major shares in the soap,
detergent, shampoo & cream ’ s category. HUL’s products
are mainly in demand, because they provide these products
in different packs. They consider the fact that rural
consumers do not have that much money to be spent on
these products. So, they prefer buying the small or the
medium packs. However, large or family packs are still been
bought by few consumers, who are from a well –off families.

In the case of TEA, TATA holds a major share. In


the case of COFFEE, NESTLE & NESCAFE holds the major
share. Rural consumers favor TATA because it is an old
organization &it has gained a lot of BRAND EQUITY which
finally creates BRAND LOYALTY. In these products,
consumers do get brand loyal, because they do not want to
take a risk with their tastes. So they prefer sticking to one
brand. These organizations supply their products in various
packs (small, medium &large), considering the buying
capacity of their consumers.
As in the case of BISCUITS, PARLE-G holds the major
market share. Rural consumers favor PARLE-G because it is
an old organization & it has gained a lot of BRAND EQUITY
which finally creates BRAND LOYALTY. In case of BISCUITS,
consumers do get brand loyal, because they do not want to
take a risk with their tastes. So they prefer sticking to one
brand. Though it is the cheapest biscuit but still the taste is
same and unique. “ACHA, SASTA AND TIKAU”.

In the case of TOOTH PASTES, COLGATE PALMOLIVE


holds a major market share. Consumers are very concerned
about their health, so if any product suits them they prefer
sticking to that product. And this product is also available in
various packs, so rural consumers can se it according to
their buying capacity.

In the case of HAIR OILS, MERICO holds the major


market share. MERICO is a much known organization & its
product PARACHUTE has reached all the places. So it is a
known product, which has created a good amount of
goodwill for the organization. Consumers have confidence &
trust in their product. Therefore, they prefer buying it.

And in the case of durable goods like TV, fan etc. in


rural areas people generally don’t buy the company
products, they prefer to buy local products because of lack
of knowledge and the main factor is because of income
factor, which is quite low in rural areas. Illiteracy is also a
main factor. For them there is no such thing – “status
symbol”. Although, there is a brand loyalty but the
percentage is very low.

Suggestions
&recommendations
The researcher would like to suggest the
following points, so that the organizations can easily sell
their products to their consumers:

1. However, the demand of a product is also affected by its


life cycle. If the product is in the introduction stage, then it
will definitely take some time to capture the market,
because in the introduction stage, consumers are not much
aware about the product. Therefore, it is the responsibility of
the organization to create awareness amongst the
consumers.

2. They should adapt rigorous marketing strategies, in order


to sustain in the market.
3. There is immense competition in this sector. Therefore,
the organizations should try to gain competitive advantage
against their competitor’s.

4. They should try to reach as many people as possible.

5. For the organizations that are not much popular amongst


the consumers should adopt Sales Promotion, as their
marketing strategies.

6. Application of 4A’s has also become an important task for


all the organizations. (*4A=Availability, Affordability,
Acceptability, Awareness)

APPENDIX
1. Some Facts about the rural market
70 % of India’s population lives in 627000 villages in
rural areas. 90 % of the rural population is concentrated in
villages with a population of less than 2000. According to the
NCAER projections, the number of middle and high-income
households in rural India is expected to grow from 80 million
to 111 million by 2007. In urban India, the same is expected
to grow from 46 million to 59 million.

Packaged consumer products: More than Rs. 2000 crores.


Market for Non-food items: Rs. 20000 crores growing at
2.5% p.a.
Consumption of pesticides: 68,000 tonnes, growing at
12%p.a.
Share of Rural market in overall consumption

Toiletries
Safety Razor Blades 48%
Premium Soaps 24%
Tooth Paste 20%
Hair Oil 20%

OTC products
Medicated dress 25%
Cold Analgesic 42%
Antiseptic Creams 28%

2.) Product Adoption: Hair products were introduced to


rural India in an attempt to capitalize on a culture where hair
grooming is taken extremely seriously by women. While rural
women may wear faded saris and little jewelry, few step out
without ensuring that their hair is in place. Consumer goods
companies introduced a transplanted product from
developed markets, the 2-in-1 shampoo/conditioner.
Companies thought that women would be attracted to this
product because it was cost-effective; however, initial sales
were dismal. What companies failed to recognize is that
most rural consumers had previously never used shampoo
and did not value or understand the full benefits of
conditioner. However, several years back, Hindustan Lever
focused on product development strategies for rural
consumers who still did not use shampoo in India. Their
research indicated that a prevailing consumer habit in rural
India was to use soap for hair and body care. Rather than try
to change instilled consumer behavior, product developers
focused on creating an opportunity. Consumers wanted a
product that was convenient and low-cost. The result was a
new 2-in-1 soap, a product that cleans the hair and body,
and is targeted towards consumers in rural areas.

SOME STRANGE FACTS

Amazing innovator
With a queer psychology of purchase and usage, Indian rural
market is still a puzzle to marketers. In many a case, it
stretches its imagination to find surprisingly different uses of
some of the products. And the red-faced marketers admit
that they actually sell their products in areas they would
otherwise find difficult, simply because there are other uses
for them. For instance,

• Buffaloes displayed at the haats for sale are dyed an


immaculate black with
Godrej hair dye.
• Hotlinks is used as a health beverage to fatten up cattle
in Bihar.
• In villages of Punjab, washing machines are being used
to make frothy lassi in
bulk.
• Iodex is rubbed into the skins of animals after a hard
day's work to relieve
Muscular pain.

3.) Communication Adaptation: Both, washing and for


taking bath - one requires water. Now for rural markets there
are three sources of water - wells, hand pumps and ponds.
For the first in the history of advertising - these were
branded. Special stickers were put on the hand pumps, the
walls of the wells were lined with advertising tiles and
tinplates were put on all the trees surrounding the ponds.
The idea was to advertise not only at the point of purchase
but also at the time of consumption. This case shows that
the brand was some how relating to the consumer. It was
right there when the consumer wants it and responds to his
needs when wanted. So the customer could also see the
advertising when he was bathing or washing. Now, the
customers who bought these brands got a sense of
satisfaction by seeing their choice being advertised in these
places while a question was put in the minds of the
customers who had bought other brands.

Questionnaire
• Name:
• Occupation:
• Monthly salary:
• a. less than 10,000
• b.10,000 –25,000
• c.25,000 –50,000
• d.More than 50,000
• Address:

• Which soap u prefer to use?

Lux

Lifebuoy

Dettol

Others

• Which pack u prefer to use?

Medium pack

Family pack

• Which tea u prefer to use?


Taj mahal
Tata tea
Brooke bond
Others

• Which tea pack u prefer to use?


Sachet
Small pack
Medium pack

• Which tooth paste u prefers to use?


Colgate
Close up
Pepsodent
Others

• Which coffee u prefers to use?


Nestle
Nescafe
Bru
Others

• Which cream u prefers to use?


Ponds
Fair and lovely
Ayur
Others

• Which hair oil u prefers to use?


Parachute
Dabur amla
Dabur vatika
Others

• Which biscuits u prefers to use?


Good day
Marie gold
Parle G
Others

• Which detergent u prefers to use?


Surf
Rin
Tide
Others

• Which shampoo u prefers to use?


Sunsilk
Head and shoulders
Clinic plus
Others
• Which pack u prefers to use?
Sachet
Small pack
Medium pack

• Which Television you prefer to use?


Onida
Beltek
Crown
Others
• Which bicycle you prefer to use?
Avon
Atlas
Hero
Others

• Which refrigerator you prefer to use?


Videocon
Kelvinator
Godrej
Others

• Which wrist watch you prefer to use?


Titan
Hmt
Maxima
Others

• Which fan you prefer to use?


Local fans
Khaitan
Polar
Crompton
BIBLIOGRAPHY

• UTTAR PRADESH DEVELOPMENT AUTHORITY

• http://business.mapsofindia.com/rural-economy/state-
development/marketing.html
• http://www.ibef.org/economy/ruralmarket.aspx

• http://en.wikipedia.org/wiki/Rural_markets

• http://www.indianmba.com/Faculty_Column/FC213/fc21
3.html

• http://www.123eng.com/forum/viewtopic.php?p=76117

• http://ezinearticles.com/?Challenges-In-Rural-
Marketing&id=1092597

• http://www.infibeam.com/Books/info/t-p-
gopalaswamy/rural-marketing-environment-problems-
strategies/9788125916178.html

• http://www.naukrihub.com/india/fmcg/

• http://www.naukrihub.com/india/fmcg/overview/

• http://www.naukrihub.com/india/fmcg/consumer-
class/income/

• Aithal K Rajesh, importance &growth of rural markets

• Purba basu,research on living style of rural consumers

• http://toostep.com/idea/challenges-in-rural-marketing
• http://images.google.co.in/images?
hl=en&rlz=1W1ADSA_en&q=%20rural%20marketing
%20indi
a&revid=1994801258&resnum=0&um=1&ie=UTF-
8&sa=N&tab=wi

• http://www.articlesbase.com/marketing-articles/rural-
marketing-a-critical-review-1102352.html

• http://www.marketresearch.com/product/display.asp?
productid=2106282

• http://www.google.co.in/search?
hl=e
n

&

rlz=1W1ADSA_e
n

&

q=india+infrastructure+report+200
9

&

meta
=&aq=2&aqi=g10&aql=&oq=INDIA+INFRA&gs_rfai

• http://www.encyclopedia.com/doc/1G1-162866493.html
• http://business.mapsofindia.com/india-
budget/infrastructure/india-rural-infrastructure-
report.html