Department: Master of Business Administration Unit-Iii Rural Marketing

University School of Business
DEPARTMENT
Master of Business Administration
UNIT-III
RURAL MARKETING
BAB-749
DISCOVER . LEARN . EMPOWER

RURAL MARKETING, BAB-749
To understand the Theories of Retail Development; Global

1 and Indian Retail Scenario;
Information Gathering in Retail.
To understand the Merchandise Management Process, Sales

2 forecasting, Merchandise Budget,
Assortment Plan.
To understand the Store Management & other issues: Store

3 Layout, Design & Visual
Merchandising, Atmospherics, Responsibilities of a Store Manger.
Economic of selling in rural markets
• The concept of Rural Marketing in India Economy has always

played an influential role in the lives of people. In India, leaving
out a few metropolitan cities, all the districts and industrial
townships are connected with rural markets.
• The rural market in India is not a separate entity in itself and it
is highly influenced by the sociological and behavioral factors
operating in the country. The rural population in India accounts
for around 627 million, which is exactly 74.3 percent of the
total population.
Cont..
• The rural market in India brings in bigger revenues in the country,
as the rural regions comprise of the maximum consumers in this
country. The rural market in Indian economy generates almost
more than half of the country's income. Rural marketing in Indian
economy can be classified under two broad categories. These are:
• The market for consumer goods that comprise of both durable
and non-durable goods
• The market for agricultural inputs that include fertilizers,
pesticides, seeds, and so on
Cont..
• Rural marketing determines the carrying out of business
activities bringing in the flow of goods from urban sectors to
the rural regions of the country as well as the marketing of
various products manufactured by the non-agricultural workers
from rural to urban areas. To be precise, Rural Marketing in
India Economy covers two broad sections, namely:
• Selling of agricultural items in the urban areas
• Selling of manufactured products in the rural regions
Cont..
Some of the important features or characteristics of Rural Marketing in India Economy are
being listed below:
• With the initiation of various rural development programmes there have been an upsurge
of employment opportunities for the rural poor. One of the biggest cause behind the
steady growth of rural market is that it is not exploited and also yet to be explored.
• The rural market in India is vast and scattered and offers a plethora of opportunities in
comparison to the urban sector. It covers the maximum population and regions and
thereby, the maximum number of consumers.
• The social status of the rural regions is precarious as the income level and literacy is
extremely low along with the range of traditional values and superstitious beliefs that
have always been a major impediment in the progression of this sector.
• The steps taken by the Government of India to initiate proper irrigation, infrastructural
developments, prevention of flood, grants for fertilizers, and various schemes to cut
down the poverty line have improved the condition of the rural masses.
Rural Market: Areas with high level of expectation
• The Indian growth story is now spreading itself to India’s hinterlands. Rural India, which accounts for more than 70 per
cent of the country’s one billion population (according to the Census of India 2001), 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 boost to the rural economy. This is in addition to the ambitious Bharat Nirman Programme with an
outlay of US$ 34.84 billion for improving rural infrastructure.
• According to a study on the impact of the slowdown on rural markets commissioned by RMAI and conducted by MART,
the rural economy has not been impacted by the global economic slowdown, according to a 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.
• Moreover, the rural consumer market, which grew 25 per cent in 2008 when demand in urban areas slowed due to the
global recession, is expected to reach US$ 425 billion in 2010-11 with 720-790 million customers, according to a white
paper prepared by CII-Technopak. That will be double the 2004-05 market size of US$ 220 billion.
• According to the study, while the durables market shrunk in urban India, the rural market is seeing a 15 per cent growth
rate. Fast moving consumer goods (FMCG) sales are up 23 per cent and telecom is growing at 13 per cent.
FMCG
• According to figures released by market researcher AC Nielsen, demand for

personal care products grew faster in rural areas than urban areas during
the period April-September 2009.
• Several FMCG companies such as Godrej Consumer Products, Dabur, Marico
and Hindustan Unilever (HUL) have increased their hiring in rural India and
small towns in order to establish a local connect and increase visibility.
• GlaxoSmithkline Consumer Healthcare (GSK) and Nestle and are now
launching products specifically for rural markets. Anand Ramanathan, an
analyst from KPMG, said, “Till recently, most FMCG companies used to treat
rural markets as adjuncts to their urban strong holds and rural consumers as
a homogeneous mass without segmenting them into target markets and
positioning brands appropriately.”
Retail
• The rural retail market is currently estimated at US$ 112 billion,

or around 40 per cent of the US$ 280 billion Indian retail market,
according to a study, ‘The Rise of Rural India’, by the Associated
Chambers of Commerce and Industry of India (ASSOCHAM).
• 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.
Pharmaceuticals /Healthcare
• According to a report by McKinsey, the rural and tier-II pharmaceuticals market

will account for almost half of the growth till 2015. The tier-II market will grow
to 44 per cent by 2015, amounting to US$ 8.8 billion.
• The health ministry is setting up a mechanism to screen people in rural areas for
lifestyle diseases such as diabetes. Union Health Minister Ghulam Nabi Azad said
that in the case of diabetes, the government was working out a strategy to
diagnose those in the age group 30-40 years in rural areas, for diseases.
• The multinational drug company, Sanofi-Aventis, has launched ‘Prayas’, a
marketing initiative to market generics in rural areas and small towns. Through
this initiative, the company looks to share medical knowledge with a body of
practitioners and specialists in rural areas through workshops.
Telecommunication
• 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 spend of
around US$ 21.02 million for the financial year 2009-10.
Infrastructure
• The World Bank has said that all-weather roads in villages in India have served to
double the income of rural households, lift the literacy rate and increase land prices.
Meanwhile, the Orissa government had decided to undertake an initiative to improve
roadways in rural areas and upgrade 10,000 km of roads in rural areas. The decision
was taken at a high level meeting chaired by Mr. Naveen Patnaik, Chief Minister of
Orissa in December 2009.
• The National Bank for Agriculture and Rural Development (NABARD) has sanctioned
an amount of US$ 34.4 million to the government of West Bengal under the Rural
Infrastructure Development Fund (RIDF) XV. NABARD has also sanctioned a US$ 26.29
million loan to Karnataka for the construction of infrastructure projects, such as
secondary schools, rural godowns, jetties, minor irrigation structures, roads and
bridges, in rural areas.
Automobiles
• Mahindra and Mahindra Group (M&M) arm, Mahindra First

Choice, has announced that it is to set up sales and service
outlets in rural areas with the target of setting up 100,000
vehicles by 2015, according to M&M President Rajeev Dubey.
• Meanwhile, motorcycle manufacturer TVS Motor Co. Ltd has
said that it is depending on a far-reaching penetration of the
rural market and the launch of new brands to boost the
company’s growth in 2010.
Services Sector
• According to a report based on the 63rd round of survey by the

National Sample Survey Organisation (NSSO), 60 per cent of the
services sector enterprises in the country are located in rural areas.
• Of the 16.5 million services sector enterprises in India in 2006-07, 85
per cent were own account enterprises (OAEs) while the remaining 15
per cent were establishments. Seventy six per cent of the workers
employed in these enterprises were employed in the rural areas of the
country.
Road ahead
• According to international consultancy firm Celent, rural markets in

India will grow to a potential of US$ 1.9 billion by 2015 from the current
US$ 487 million. Rural markets are growing at double the pace of urban
markets and for many product categories, rural markets account for well
over 60 per cent of the national demand.
• The success of the National Rural Livelihood Mission (NRLM), which has
so far trained 100,000 rural youth, has led the rural development
ministry to request an increase in budgetary allocation for the project.
Rita Sharma, Secretary in the Rural Development Ministry, has said that
they had sought US$ 2.29 billion from the Finance Ministry.
References
1. Dogra Balram, Rural Marketing: Concepts and Practices, Tata
Mc-Graw Hill, New Delhi.
2. Krishnamacharyulu Csg, Lalitha Ramakrishnan, Cases in Rural
Marketing, Dorling Kindersley (India) Pvt Ltd.
3. Kashyap, Pradeep, Amp, Raut, Siddhartha, Rural
Marketing,Wiley, New Delhi
4. Krishnamacharyulu, C.S.G and Rama Krishnan Lalitha, “Rural
Marketing – Text and Cases”, Pearson Education, New Delhi.
Assessment Pattern
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University School of Business

DISCOVER . LEARN . EMPOWER

To understand the Theories of Retail Development; Global

To understand the Merchandise Management Process, Sales

To understand the Store Management & other issues: Store

• The concept of Rural Marketing in India Economy has always

• According to figures released by market researcher AC Nielsen, demand for

• The rural retail market is currently estimated at US$ 112 billion,

• According to a report by McKinsey, the rural and tier-II pharmaceuticals market

• Mahindra and Mahindra Group (M&M) arm, Mahindra First

• According to a report based on the 63rd round of survey by the

• According to international consultancy firm Celent, rural markets in

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