RURAL MARKETING

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INTRODUCTION

 Rural market-
Definition differs for each sector.
Maximum Population > 2000,- >5000 ,>10000 per villages
, its density 400/sq km, occupation , social governance and
basic infrastructure like sanitation etc
 Definition of Rural Markets

 Rural Markets are any habitation with population

density of less than 400 sq km with 75 % of male working
population engaged in agriculture and a population not
more than 10,000.

 Most corporate treat all other market other than metros 2

as Rural Markets
RURAL MARKETS

RBI
CLASSIFICATION
• Rural: population less than 10,000
• Semi-Urban: 10,000 and above and less than 1 lakh
• Urban: 1 lakh and above and less than 10 lakh
• Metropolitan: 10 lakh and above
 IMPORTANCE OF RURAL MARKET

• HUGE POPULATION ABOUT 83 CRORE PEOPLE

• MORE THAN EUROPE POPULATION
• MORE THAN DOUBLE THE US POPULATION
• INCREASING LITERACY
• INCREASING INCOME
• CHANGING LIFESTYLE
• IMPROVED INFRASTRUCTURE [ROADS, ELECTRICITY,
COMMUNICATIONS]
• GOVERNMENT FOCUS AND EMPHASIS.
• Intense competition in urban markets
RURAL MARKETS
DIFFERENCE BETWEEN RURAL AND URBAN MARKETS for Marketers

CHARACTERISTICS URBAN RURAL

Infrastructure Good Underdeveloped
Economy Better Half of urban
Lifestyle Developed Basic
Socio cultural Homogeneous, Heterogeneous
background
Availability of reach Integrated Scattered
Habits Developed Basic
Competition Brands /Severe Dealer /channel
Partner
Consumer Behaviour Developed Basic,developing
 Rural marketing-definitions
1- “A function that manages all activities involved in
assessing, stimulating, and converting the purchasing
power of rural consumers in to effective demand for
specific products and services and moving these
products and services to the people in rural areas to
create satisfaction /value and better standard of
living and thereby achieving organizational goals.”

2- The process of developing, pricing, promoting,

distributing, rural specific goods & services leading to
exchange between urban & Rural markets, which
satisfies consumer demand & also achieves
organizational objectives.
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AN OVERVIEW
 Rural Population
From 866 millions in 2015 to 935 millions estimated in 2021.
 Rural households
From 168 million of 2011 to 205 million estimated in 2021.
Therefore, market size of rural India expected to increase from
USD 0.5 trillion to USD one trillion by 2020
 Occupation

Increasing non- agri + commercial agri,

agri labour reduces to 12% in 2010 from 27% 10 years back
leading to mechanized farming.
 Income-

rural income accounts for 56 % of India's total income, 64% of total

expenditure and 33% of savings.
Majority of rural population will be earning between 1 to 5 usd per
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day. Moving from poverty to prosperity

 OVERVIEW CONTD
 Literacy
65% in 2011 vs 53% in 2000, now estimated at 74% through the
elearning initiative.
 Increased Consumption
27 million mobile internet users in 2013 has now doubled and likely
grow fast with bharat jodo.
DTH subscribers growing fast
FMCG growing at 18 % vs. 12 in Urban & FMCD at 25% vs. 10 in
urban
 Lifestyle changes-

Psychographics change due to media explosion, income & education

Decision making shifts- women empowerment, youth- more open to
changes-kitchen wares
 Increasing Demand

Increasing usage and demand for branded products

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tooth powder to toothpaste, mosquito repellents, premium
detergents and so on
OVERVIEW CONT-
 Distribution facilities-
growing thru 1,38,000 rural post offoces,
42,000 weekly haats, 25,000 melas,
7,000 mandis, APMC’s
3,80,000 public distribution shops,
32,000 bank branches+ mobile banking and internet
banking
, 5,00,000 + village primary cooperative societies.
 Infrastructure-

90% villages electrified, P.C. and smart phone

penetration growth in 2008 -24% in r vs. 7 in u,
laptops in schools , corporates in Organized retailing 9
BENEFITS

Marketers Rural
- Expansion Consumers

-Career Growth - Product/Services

Knowledge
-Entrepreneurship
-Awareness
- Market Dev - Better Lifestyle

Country
Companies
- Creation of a -Socio Economic
market place for Development
profit and growth

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MYTH 1:
RURAL TO URBAN MIGRATION
 Contrary world bank estimates-Accenture report
shows a growing trend
- India - 762 million in 2001 to 853 m in 2011
- China -809 m to 665 m
- Brazil- 33m to 30 m
- Russia- 39m to 37 m.

TWO THIRD’S OF THE COUNTRY’S POPULATION 11

WILL STILL CONTINUE TO LIVE IN VILLAGES

MYTH 2: AGRARIAN – RURAL
ECONOMY
Growing Non Farm income

Better earning opportunities thru NREGA, MUDRA , contract

farming , corporate and government initiatives etc , migration may
continue only for short span during agri lean month
Increased institutional agro credit, NABARD role, MFI roles
,commercial farming creates related non farm activities and
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reducing subsistence farming.
MYTH 3:
RURAL MARKETS MORE
HOMOGENEOUS…

 Actually Heterogeneous
 Branded product consumption increasing but not too
high
 look for more value for money products and services
rather than cheap/ duplicates

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WHAT MAKES THE RURAL MARKET
A PROMISING PLACE
 Rural per capita consumption growth of 19% between 2009 and
2012 two percentage points higher than urban
 Nelson estimates US$ 100 B FMCG consumption in 2025 up from
12 b US$ currently
 As incomes grow rural consumption shifts from necessities to
discretionary and lifestyle products and services
 Fast reforms, initiatives from government and corporates -
attracting FDI , domestic investments.
 Increasing rural share in GDP contribution.
 Increasing market potential > 800 million rural consumers . Fast
growing purchasing power/per capita expenditure.
 Improved infrastructure – PMGSY + ICT
 Commercial focus on agriculture 14
 Premium products are replacing entry level versions
 Industry classification penetrating in rural – banking
fallowed by FMCG, consumer durables, automotive,
pharmaceuticals , Insurance etc.
 Fast media penetration
 Print and TV ads are almost as popular
 Influencers playing a role to help brands build trust
and product awareness

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CHARACTERISTICS OF THE RURAL MARKET PLACE
Low Per Capita Income

Limited infrastructure for distribution

Multiple dialects languages, cultural

diversity

Dispersed large spread

Low literacy, conservative attitudes

Narrow consumption basket

Spurious products
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Long Payback, high marketing costs

URBAN MARKETING RURAL MARKETING

 Individual consumer
 Societal orientation
orientation
 Catalytic, transformational
 Process-stimulating and
mktg
conversional mktg.
 Beneficiaries & buyers
 Focus- market fit
 Social change-
 Key task- product
innovation and  Social innovation and
communication communication. CSR activities
 Nature of activity- more  Socio-cultural, economic
commercial  Govt - agencies, NGOs,
 Participants- corporates, Corporate collaborations,
and sellers cooperation
 Time frame - short,  Medium to long duration
medium strategy frame
 Offer-products/services  More Development schemes, 17
projects
 Distributions –
Retailors/Supermarkets  Small outlets/Hats, Jatras
 CHALLENGES FOR MARKETERS
 Accessibility
 Market expansions / Channel Mix and relationships

 Customer Acquisitions

 Creating Trust, relevance with stakeholders

 Defining value proposition

 Engaging the right influencers

 Customer Retention

 Cost economization, with Low cost models of after sales

supports
 Attracting and retaining talent

 CSR Initiatives

 Use of technology for communication reach 18

 Competition- local/regional players/spurious brands

THE 4A’S OF RURAL MARKETING MIX AND RELATED
CHALLENGES

AFFORDABILITY AVAILABILITY

AWARENESS ACCEPTABILITY

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GO TO RURAL DECISION
SUMMARY OF MANY AND DIVERGENT FACTORS THAT INFLUENCE THE GO RURAL DECISION

Urban push factors Rural pull factors Rural inhibiting factors

Saturation stage Rising affordability Uneven development

Fierce competition Growing acceptance Fragmented market
Changing lifestyles Increasing availability needs Diversity in occupations
Improving accessibility Heterogeneity in lifestyles
Success stories of Low-income streams
corporations Lack of steady and sustainable
consumption
Promotional agencies lack
marketing skills
Access difficulty
Limited awareness and acceptance
Low level of education
Low budget for promotion
Intensifying competition
Failure of some companies
SCOPE FOR MARKETING OF PRODUCTS
 Marketing of Agro inputs
 FMCG Marketing
 FMCD Marketing
 Rural Handicrafts
 Agri Products
 Services – Agri operations- Tractor harvesting
,sowing, tilling , rural transportation logistics,
Retailing, personal banking etc

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 Inhibiting factors-
1- unevenness,
2- disparity, fragmented, diversity, heterogenity
3-low income streams,
4-lack of steady and sustainable consumption,
5-limited skills with ad /promotion agencies,
6-limited awareness and acceptance,
7-low education,
8-low budgets for promotion,
9-local /regional competition,
10- failed initiatives by co’s
 Strategic approaches-
1-Trickle down-as csr,+ extended sales thru feeder towns, nike,
2-undifferentiated, -4 a’s for fmcg products-colgate
3-differentiated,- 4 a’s+ specific design as per price sensitivity,
electrification levels, running water, more developmental vs
transactional marketing
4-BOP-developmental mktg +csr,new opportunity, demand 22
innovations
 Integrated, innovative and inclusive marketing models
works
 -Developmental + Transactional ,social process, win win,
fast growing, flexible
 Implementation issues-
McKinsey 7 –S frame model –
1-strategy- long term with suitable STP ,innovations
2- structure- for sales force org , distribution etc suitable
3-Systems- for M.R.,M.I., M.C. Manpower training etc
4-Shared values- top to bottom value delivery
5- Staff- selection, background
6-Skills - social skills, suitable like demos etc
7-Style- participative, collaborative, MFI, ngo
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 More of a Evolutionary and not revolutionary
marketing
 Marketers need to understand
rural market environment, rural consumer
behavior, STP process ,marketing mix
applications, Competition,Innovations, role of
ICT, Influencers - opinion leaders, agriculture
products and its marketing- emerging
marketing- organized retail , cooperatives,
contract farming, corporate farming etc
 Evolving Rural consumer-
Greater changes among rural youths , rapidly
getting exposed to urban products and Apid
services. thru ICT and education. ltetti
ng g
Cultural norms are changing
 Women empowerment
 Exploding middle class in rural India

 Emerging rural India.

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SUCCESS STORIES

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