24 Rural Marketing

Kulbhushan Chandel

1. Learning Outcome

After completing this module, the students will be able to:

Describe the concept of rural marketing
Explain the environmental components of rural markets.
Explain various rural marketing strategies.
Explain various problems faced in rural marketing.
Suggest how the marketing of goods be done in rural markets?

2. Introduction

Rural India has three-fourth of the total population of India generating 30percent of the total income. This sector is considered as the big storehouse by the marketers as this sector is considered as the most untapped market. The prosperity and income of the rural India grew due to green revolution in farming which lead to development of agricultural sector, white revolution in dairy farming and numerous other developmental activities undertaken by the government for the development of this sector in various five year plans. Initially, the rural market was considered as the market for agriculture only but with the developments this sector is now open and has opportunities for other fast moving consumer goods, consumer durables and services. The development of the rural sector has lead to improvement in the standard of living and lifestyles of people.

Rural India is considered as untapped market for the Fast-Moving Consumer Durables and other consumer durable products and services. Due to this, even multinational companies have started exploring this sector. The rural marketing is two way process consisting of flow of goods from both sides i.e., from urban sector to rural sector like flow of consumer durables and fast moving consumer goods; and from rural sector to urban sector i.e., flow of agricultural produce such as wheat, rice, sugar, cotton, vegetables, fruits and many more things. Thus, rural marketing concept consists of flow of goods from urban sector to rural sector and vice-versa.

3. Environment of Rural Markets

The rural market is considered as untapped market by the marketers as discussed earlier. The development of this sector leads to improvement in standard of living and awareness among the rural people regarding the latest trends and fashion. For best marketing strategy, a marketer has to completely understand the rural marketing environment and various factors involved such as population, occupation, income levels, literacy rate, awareness level, cultures, beliefs, tradition and many more. Some of these are explained as follows:

3.1 Population: The population of India living in rural areas is 70 percent according to the Census of 2011 which is more than the population residing in urban areas.

3.2 Occupation: Most of the population of the rural areas are engaged in the agricultural activities and other related activities. Income generation of the rural population is dependent on agriculture which depends upon the monsoon pattern. There are negligible people who are engaged in the service sector. Mostly people work related to the agriculture.

3.3 Income Level: About seventy-five percent of the rural population is dependent on the agriculture and related activities.

3.4 Land use Pattern: The agricultural land is used for two types of the crops, namely, cash crops and commercial crops. Mainly people are engaged in the cash crops, about 30 percent of the land is used for the commercial crops. This is done due to the substantive farming culture. Most of the crop produce is used for the self consumption. The disposable income of those farmers is more who are engaged in the commercial cropping.

3.5 Rural Infrastructure: The infrastructure of the rural India has also developed due to numerous schemes and programs of the government like roads, transportation, public distribution system and many more. Almost all the rural areas are connected by the Doordarshan and All India Radio. Also mostly villages are connected by the roads. Even the corporate world has now taking advantage of the rural market by establishing various outlets in rural India.

3.6 Literacy Level: The literacy level of rural India is improving. Communication in rural markets is not a big problem as almost all the villages have the televisions which proves helpful for the marketer to advertise its products.

3.7 Expenditure Pattern: The expenditure pattern of rural population is more towards the non-food items.

3.8 Development Programs: Due to implementation of five year plans, various developmental programs have been started by the government of India like IRDP- Integrated Rural Development Programs, HADP- Hill Area Development Programme, HYVP- High Yielding Varieties Programmes and many more.

Due to above mentioned factors the rural India market has a great demand for the consumer durable products.

4. Rural Demand

There is a huge difference in the pattern in the rural and urban demands. Rural consumers have different markets for purchasing different types of products which is called hierarchy of markets. For daily requirements, the rural people buy them from the village shops. And for weekly purpose melas are organised from where textiles, cosmetics, soaps, tools , etc are purchased. There are also primary agricultural market, secondary markets and terminal markets from where agricultural products are purchased and sold. The demand pattern of the rural population is seasonal and also widely scattered. Due to low literacy level the communication is also poor in comparison to rural population.

4.1 Problems in Rural Marketing

Underdeveloped areas and tradition bound people
Underdeveloped markets
Inadequate communication
Widely scattered area
Logistics problem
Low literacy level creates problem in marketing of products
Less awareness
Language problem

5. Rural Marketing Strategy

The marketing strategy of the rural marketing depends upon the type of product sold. Few marketing strategies are as follows:

5.1 Marketing of Agricultural Inputs

Marketing of Agricultural Inputs generally includes marketing consumable inputs and durable inputs. Consumable inputs include fertilisers, pesticides, seeds, oils, cattle, etc. And durable inputs include tractors, pump sets, harvesters, bullock carts, etc. Some of these are explained as follows:

Fertilisers: Due to improvement in agricultural sector, like green revolution and other promotional efforts taken by the government there has been increase in the demand of the fertilisers. Fertilisers consist of nitrogenous, phosphate and potassic variables. As the normal promotional tools cannot be applied to the promotion of fertilisers. Fertiliser demonstration in farm fields, harvest melas, soil testing, farmers training and many more can be done.
Seeds: Central and State seed Corporations were doing seed production, seed multiplication and seed marketing. But now private sector has also entered in the seed marketing. The major seed marketers are Cargil, Pioneer Seeds, ITC, American Hybrid Seeds etc.
Feeds: For Aqua, cattle and poultry feeds MNC’s and Domestic corporations are active in rural
India. Lever and Godrej are the major leading players in this market. With the growth of aqua and poultry farming the seeds have also grown.
Agro-Chemicals: Agro-chemicals are the chemicals used for the control of pests, plant diseases, rodents, viruses, etc., and insecticides, pesticides, fungicides, rodenticides.
Tractors: Around two lakhs tractors are sold every year due to improvement in the farming techniques and modernisation of the farming sectors. Major tractor suppliers are HMT, Escorts, Massey Fergusson, etc.
Irrigation Equipments: Pump sets, motors, pipes and sprinklers are the major irrigation equipments used in the agriculture. These are mainly marketed by the private producers. Pump sets are used by all the farmers but the sprinklers are used by the commercial crop farmers.
Other Machinery and Inputs: Other marketed agricultural equipments are the ploughs, seed drills, winnowers, harvesters, threshers, sickle, spades, etc. Moreover, electricity, diesel and lubricants are also marketed in the rural areas.

Example: the Bank of India issues one lakh ATM enabled Kisan Credit Cards for the farmers. Even the Bank of India has adopted 101 backward villages across the country in 2006 and has planned to transform them into economically developed centres in all aspects.

6. Marketing of Goods

Due to improvement in the income levels, literacy levels and in the awareness level of the rural population, fast moving consumer goods and durables have also gained importance in the eyes of the rural population. Not only these consumer durable products but also agri-produce both needs equal importance to be given on marketing.

6.1 Marketing of FMCG And Durables:

The marketing of consumer durables and fast moving consumer gods have gained due importance in the rural market. Now even the rural population have choice in the fast moving consumer goods, even they can now opt for the branded items, such as in soaps, detergents, food items etc. and also in the durable products, some of the most commonly used durables are battery, torch, pressure cookers, bikes, etc. Now even the shopkeepers of rural areas keep enough stock of these items so that when the agriculturist goes to sell its agricultural produce at the same time he could buy these items also. The marketing of the packaged foods in the rural areas is done by the Hindustan Levers. Mainly sold items in the rural areas are soaps, detergents, toiletries, cosmetics, packaged food items.

Even the manufacturer’s are following policies and making their products more affordable in the rural areas. One such example is of Pepsi, they launched Chhota Pepsi of worth rupees five only in the rural areas. Even imitation has increased in the rural areas. Branded products’ imitation is most common in the rural areas. Various examples of this are Run is sold as Rin, Liteboy as Lifebouy and many more.

Hindustan Unilever Limited has succeeded in the rural marketing. Most commonly sold products in the rural areas are PVC shoes, Royal Enfield Motorcycles, Hawkins Pressure cookers and mopeds. Even the rural credit is provided by commercial banks, co-operatives and rural credit institutions which have enabled the rural population to buy these durable items also.

6.2 Marketing of Agricultural Produce:

The most important is the marketing of the agricultural produce for the rural population. This will generate the disposable income for the rural people. Thus, the need of efficient rural agricultural market where the agricultural produce could be sold by the agriculturist’s at the most effective prices. The main characteristics needed in the agricultural produce which needs to be considered are Perishability, bulkiness, dispersed production, seasonal produce, lack of expertise and wide variety of produce. The produce sold by the farmers is in raw form which is then processed and resold by the middlemen. For the help of farmers, various Primary and Secondary Agricultural Produce Markets have been established by the government. Even the private sector has joined with the farmers for direct purchase of their agricultural produce.

7. Market Segmentation

The rural markets can be segmented on the following grounds:

On the basis of Geographical Location: On this basis, the rural markets can be divided as the states, districts, taluks, cluster of villages, climatic conditions, irrigation facilities and even on the basis of the land holding of the farmer.
On the basis of Socio-economic profile: On this basis, the rural markets can be divided as the proprietors of land, rich farmers, small and marginal farmers, agricultural labour, craftsman, artisans and landless farmers.
On the basis of Demographic Profile: On this basis, the rural markets can be divided as on the base of population concentration, age-wise, literacy level and on the basis of income level.
On the basis of Income Level: On this basis, the rural markets can be divided as buyer behaviour markets as according to the buyer buying behaviour, brand awareness, brand and product preferences.

8. Marketing Communications

The rural marketing environment is totally different from that of urban markets. Thus, the marketing strategies and their communication to the rural people need to be given significant importance. The marketing strategies which are designed by keeping urban population in mind could lead a negative impact on the minds of the rural population if the same are advertised in the rural areas also. Rural people have entirely different mindset than that of urban people. Thus, various challenges are to be faced while communicating to the rural consumers. Some of the main challenges are as follows:

Heterogeneity: The communication in rural areas is a big challenge due to heterogeneity in the nature of the consumers. Moreover the existence of traditions, culture and regional languages also poses to be major a challenging task for the rural marketers. The communication pattern of any rural area is a part of its culture which needs to be given due care and importance while the designing of the effective marketing strategy for rural people.
Limited media reach: The limited reach to the rural people is also a challenge to the rural marketer. If the message delivered by the marketer is not properly communicated to the rural consumers, then this can lead to the negative image of the producer.
Understanding the mindset of rural consumers: Not only the rural communication is hurdle but also the understanding of the nature of the rural consumers is important. The behavioural and psychological features of the rural people are also needed to be carefully understood so that the marketing strategy is decided accordingly.

9. Problems in Rural Marketing

There are numerous problems tackled in the rural marketing, few of them are as follows:

10.1 Transportation: Transportation plays a significant role in the movement of the products from the urban areas to the rural areas. Some remote villages are still not connected with the roads to the urban areas leading to huge problem in the transportation of the goods. Although various villages are connected through kacha roads which also gets destroyed in the monsoon season. Even few remote villages are not connected through the rail transportation. Thus, transportation becomes a factor of consideration for connecting the remote rural areas to the urban areas.

10.2 Communication: The marketing communication in the rural areas is also a problem in the rural areas. As the literacy level of the people is low in rural areas which create a hurdle for communication as the print media cannot be used in these cases. Also the tradition, culture and other economic backwardness becomes a problem in marketing of the products in the rural areas. Mostly, in rural areas local languages are more spoken. Thus, it also creates a hurdle for the marketer.

10.3 Warehousing: The agricultural produce is seasonal in nature but its demand is made in the whole year. Thus, for storage of the perishable produce is a point which needs to be considered. While warehousing the produce time and quantity constraints needs to be considered. The central and state warehousing corporations have not extended in the rural parts.

10.4 Rural Markets and Sales Management: In rural marketing personal selling is more used as compared to the urban marketing. The rural salesman needs more concentration to guide rural customers to buy the product. The distribution channels of the villages are lengthier as it involves more intermediaries which ultimately increase the price of the products.

10.5 Inadequate banking and credit facilities: In rural areas the inadequate banking and credit facilities is a major hurdle. As the distribution, replenishment of stocks and other facilities needs finance. Thus, due to inadequate availability of credit facilities the dealers are not able to provide discounts to the customers.

10.6 Branding: Brand is a way of conveying the quality of the product to the customers. Even in rural areas the local brands are getting popular among the rural people. Due to illiteracy and low awareness level the rural people are not able to differentiate between the national brands and local brands. Even local brands are selling the products to the customers at the rate slightly less than the national level brands.

10.7 Packaging: From packaging point of view, the small packages are more popular in the rural areas. Due to low level of income, people are not able to afford the large packages. Thus, this needs to be considered in formulating strategies for then rural markets.

10. Summary

As the rural India covers three-fourth of the total population of India generating 30percent of the total income, this sector is considered as the big storehouse by the marketers having most untapped market. Initially, the rural market was considered as the market for agriculture only but with the developments this sector is now open and has opportunities for other fast moving consumer goods, consumer durables and services. The development of the rural sector has lead to improvement in the standard of living and lifestyles of people. Due to this, even multinational companies have started exploring this sector. The rural marketing is two way process consisting of flow of goods from both sides i.e., from urban sector to rural sector like flow of consumer durables and fast moving consumer goods; and from rural sector to urban sector i.e., flow of agricultural produce such as wheat, rice, sugar, cotton, vegetables, fruits and many more things. The development of this sector leads to improvement in standard of living and awareness among the rural people regarding the latest trends and fashion. For best marketing strategy, a marketer has to completely understand the rural marketing environment and various factors involved such as population, occupation, income levels, literacy rate, awareness level, cultures, beliefs, tradition and many more. Due to improvement in the income levels, literacy levels and in the awareness level of the rural population, fast moving consumer goods and durables have also gained importance in the eyes of the rural population. The most important is the marketing of the agricultural produce for the rural population. There is need of efficient rural agricultural market where the agricultural produce could be sold by the agriculturist’s at the most effective prices. The produce sold by the farmers is in raw form which is then processed and resold by the middlemen. For the help of farmers, various Primary and Secondary Agricultural Produce Markets have been established by the government. Even the private sector has joined with the farmers for direct purchase of their agricultural produce. The rural marketing environment is totally different from that of urban markets. Thus, the marketing strategies and their communication to the rural people need to be given significant importance. The marketing strategies which are designed by keeping urban population in mind could lead a negative impact on the minds of the rural population if the same are advertised in the rural areas also. Rural people have entirely different mindset than that of urban people. Thus, there is a need of designing the strategies for the rural marketing according to the rural population.

Suggested Readings (Books and Websites)

Ghosh PK, Sales Management- Text and Cases, Himalaya Publishing House, 2010.
Jobber David and Lancester Geoff, Selling and Sales Management, Pearson Education, Sixth Edition.
McCarthy, Jerome E. (1964). Basic Marketing. A Managerial Approach. Homewood, IL: Irwin.
Needham, Dave (1996). Business for Higher Awards. Oxford, England: Heinemann.
Kotler, Philip (2012). Marketing Management. Pearson Education. Kotler, P. and Keller, K. (2006), Marketing and Management, Pearson Prentice Hall, Upper Saddle River, NJ, USA
McCarthy, Jerome E. (1975)”Basic Marketing: A Managerial Approach,” fifth edition, Richard D. Irwin