module 32: rural marketing in india - e-PG Pathshala

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MODULE 32: RURAL MARKETING IN INDIA

Module details Name Affiliation

Subject Name Social Work Education

Principal Investigators

Prof S Parasuraman and Prof Manish Jha Tata Institute of Social Sciences

Paper Name Rural Development

Paper Coordinator Prof Bipin Jojo Tata Institute of Social Sciences

Module number and title

Module 32: Rural Marketing in India

Module Writer Dr. M. Gangabhusan Assam University, Silchar

Keywords Marketing, Rural Marketing, local purchase, rural development, NGOs

Objectives 1. To Understand the concept and

significance of Rural Marketing

2. To Understand the linkage

between Rural Marketing and

Rural Development

3. To get an insight into Challenges

of promoting Rural Marketing

Content reviewer Prof H Beck Tata Institute of Social Sciences

Language editor Mr Venkatnarayanan Ganapathi Freelancer, Pune

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MODULE 32: RURAL MARKETING IN INDIA

Introduction:

Though rural economy is predominantly agrarian based, however, there has been the depletion of

the agrarian productivity which has indirectly reflecting in the increasing challenges to rural

development. With the advent of this crisis the rural masses are alienating from agriculture and

resorting to migration. Despite of increase in adapting the modern farming techniques with high

yielding variety of seeds, irrigation and increased use of fertilizer, a vast number of farmer still

depended on conventional way of farming and are unable to access to proper marketing of the

agrarian products. In the absence of proper avenues of marketing, the farmers are at the receiving

end of poverty, marginalization and alienation from the agrarian livelihood. Minimum support

system to strengthen the farmers agrarian livelihood from the government is prerequisite to

promote people centered rural development. In addition to the minimum support systems to

promote agricultural productivity coupled with rural marketing will pave a way towards poverty

alleviation of rural farmers.

Rural Marketing:

Rural marketing is defined as a process of pricing, promoting, distributing, developing,

rural specific goods and services which can lead to an exchange between rural and urban markets

that can satisfy consumer demand and organizational objectives. Further more, rural marketing

deals with various projects, inputs and services that are meant for the development of a rural

market and its linkages. Hence, it differs from agricultural marketing which stands for marketing

of rural products or outputs to the urban consumer or to an institutional market (Dogra, 2008).

Every one of us is a consumer and we need a varieties of goods and services right from

our birth and because of marketing we are able somehow to access what we need. Marketing is a

process by which both seller and buyer exchange some things (e.g. money, goods, services and

etc.) with each other for maximum possible optimized satisfaction and profit. Now a days, rural

marketing is gaining huge emphasis and it is on a high demand as numerous companies has

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started engaging and seeking to enter in rural areas for various reasons, one reason mainly goes

to push effect of saturation in urban areas (Gopalswamy, 2007).

The dominion of rural marketing is ominously different from the way marketing is

planned and implemented in urban areas. Most of FMCG (Fast Moving Consumer Goods)

companies such as HUL, Pepsi, Britannia, Coca-Cola, Colgate, Samsung, Palmolive and etc. are

linking their marketing activities in rural markets as well due to major socioeconomic shifts in

rural consumer. Rural consumer has grown enough in quantity and has become well aware about

needs of upgrading of standard of living. Information and communication technologies, various

government policies and initiatives, corporate strategies and etc. are the few major factors for

development of Rural Marketing in India (Iyengar, 2007).

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. The major grounds

which distinguish rural from urban marketing include: Infrastructure availability, Income

Streams, Lifestyle, Context, Socio-cultural background, Accessibility, Media reach and habits,

nature of competition and consumer behavior. Hence rural marketing is a distinct specialization

of the marketing discipline which encompasses a customized application of marketing tools,

tailoring the products to meet such needs and effectively delivering them to enable a profitable

exchange of goods and services to and from the rural market.

Rural Marketing Evolution:

Phase

Origin Function Major products Source

Market

Destination

Market

I Before Mid-960 (from

Independence to green

revolution)

Agricultural

Marketing

Agricultural

Produce

Rural Urban

II

Mid- Sixties(Green

revolution to Pre-

liberalization period)

Marketing

of

Agricultural

Agricultural Inputs Urban Urban

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Inputs

III Mid- Nineties(Post-

liberalization period on

20thcentury)

Rural

Marketing

Consumables And

Durables For

Consumption &

Production

Urban

&

Rural

Rural

Source: Baddi R.V., (2011)

1. Phase I (Independence to Green Revolution):

Before the dawn of the Green revolution, the nature and stance of rural market was overall

different. Rural marketing by then referred to marketing of products from rural areas either in

rural & urban settings.

2. Phase II (Green Revolution to Pre-Liberalization Period):

Throughout the course of this period, due to the introduction& spread of Green Revolution, rural

marketing basically represented marketing of agriculture inputs as well as produces in rural

markets as well as marketing of rural produce in urban areas.

3. Phase III (Post-Liberalization Period on 20th Century):

The third phase of rural marketing in Indian economy started after liberalization of the economy.

During this period, rural marketing represented the evolving, diverse activity of attracting as well

as serving rural markets to accomplish the needs of individuals, rural households and their

livelihoods (Baddi R.V.,2011).

4. 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

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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 stand-alone products or

services, but by presenting comprehensive &integrated solutions which might involve a set of

inter-related products &services.

Rural Marketing and Rural Development:

Generally the word Marketing refers to all those various activities and services related to

marketing, which are responsible for caring the produced goods (final products) or commodities

from the producer to the consumer. These activities and services include assembling, processing,

packing, storage and transportation. All these activities are performed during the period from

production to consumption.

There is a significant relationship between the promotion of rural marketing and rural

development in general and agricultural products in particular. The concept of rural marketing

includes a variety of initiatives which promotes the marketing of agricultural products, rural

industries products and services. The process of rural marketing seeks to take into account the

role of people’s collectives i.e. through various co- operatives with a facilitating role of the state

agencies. The main motto of rural marketing is to promote and strengthen village economy.

Rural marketing is a two way marketing process. The content now encompasses not only

marketing of products which flow to rural areas, but also products which flow to urban areas

from rural areas. Its four-pronged programme creates income-generating capabilities for the

under privileged rural people and empowers the rural community by creating access to relevant

information.

A few years back, the rural market in India was an unknown area due to poor

infrastructure facilities like communication, transportation and less purchasing power of the rural

people. With the advent of changes that took place in terms of basic infrastructure development,

the scope for promoting rural markets and rural marketing has gained pace. Now there is a

possibility of reaching out to the rural areas due to various factors like connectivity between rural

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and urban has increased, there is a change in the agriculture development and changes in the life

style and consumption patter of villagers. The changes in the infrastructure has enhanced rural

people’s access to education, improved means of transportations, social mobility and

communication technologies as well as other penetrations through mass media such as television

and satellite services. These movements have exposed rural India to the outside world and hence

has made their outlook to rural changed.

Stiffed competition, highly saturated urban markets, more new products demands of

urban customers has made corporations and industries to gaze for new potential markets. Indian

rural markets have the largest consumers with higher number of people residing in the rural and

this has caught the attention of numerous companies multinational companies and advertisers. A

survey conducted by National Council for Applied Economic Research (NCAER) revealed that

the purchasing power of the rural people has augmented with the enhancements in productivity

and betterment in the price of commanded agricultural products. Concomitantly, 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 (Murthy, 2014).

Rural marketing has become the modern in to nation of most big corporations.

Companies like Hindustan Colgate Palmolive, Lever, Britannia and including Multinational

Companies (MNCs) like Coca Cola, Pepsi, L.G., Philips and etc. are all looking through rural

markets to gain the vast Indian market. When we come to the framework of rural marketing, it

broadly incorporates understanding their needs and wants, reaching the vast rural customer,

supply of goods and services to meet their necessities, carrying out after sales service which lead

to customer satisfaction as well as repeat purchase/sales (Krishna Moorthy B., 2011).

Challenges of Promoting Rural Marketing

Though there is a tremendous scope of increasing rural marketing, rural areas are still not

sufficiently addressed due to various constraints:

Lack of Transportation and Storage facilities: though the connectivity between the rural and

urban areas has increased, still it will go a long way to address the problems related to

transportation and storage. As far as road transportation is concerned, it has reached to the

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villages through Pradhan Mantri Gram Sadak Yojana, However, the rest of the rural area do not

even have a proper road connectivity which creates a hurdle in reaching out to the villages

especially which are located in hilly areas. Absence of storing facility is another constraint in

promotion of rural marketing avenues. As of now the storage facility in the form of warehousing

is rendered by central warehousing corporation and state warehousing corporations are limited

only to urban and suburban areas.

The rural market in India is quite fascinating and challenging in spite of all the

difficulties existing. The potential is enormous. Even though, these markets have weaknesses

they also have tremendous opportunities which should be availed by the marketers. The

marketers have to come up with innovative ideas through which the villagers also get involved in

getting business from their respective villages.

Low Standard of Living and Low Purchasing Power: IMRB (Indian Market Research Bureau)

and NCAER “(National Council for Applied Economic Research) have made available a few

studies based on which rural consumers profile can be arrived at as scattered nature, low literacy

i.e. 23%, low income than their urban counterpart, low standard of living, low per capita income

and low economic and social positions. Diversity of population has direct bearing on rural

marketing, media habits and consumer behavior. One has to take into account the above

mentioned characteristics of rural people and develop innovative models suiting to the contextual

variations.

Less Bargaining Power: Low per capita disposable incomes and less bargaining power have

direct bearing on the purchasing power of the rural people. The predominant number of rural

people are dependent on agriculture, with acute dependence on the vagaries of the monsoon.

The purchasing power and bargaining power of people are determined by their income. Hence

the marketer has to find ways of making the product affordable to the rural consumer.

Lack of Proper Financial Support System: Financial support is prerequisite to promote

sustainable rural livelihood, in the absence of which rural people tend to become more

vulnerable and get entangle in the vicious circle of poverty. Lack of access to financial

institutions has negative impact on the poor and the vulnerable sections of the society in general

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and rural people in particular. Timely financial assistance will give rise to entrepreneurial skill of

people and address the problem of credit crunch among the less privileged sections of the

society.

Despite India’s potential for rural based financial economy, a majority of the country’s

population still remains unbanked. Banks fails to provide credit in most of the rural area because

rural masses do not fit to the criteria to demand loan from the banks. Where the rural masses are

mostly deprived of the banking services because of rigid criteria to avail banking services, rural

women are the worst sufferer. Rural women are not considered to be adequate to carry out the

financial deeds in households. They can not ask for credits as they have minimum to no assets to

guarantee the loan. Sometimes despite of having assets to guarantee the loan, women do not have

the decision making rights as decision making is left to the male members of the family. It is

found that rejection rates for loan for women in India are more than those owned by men.

There are 189 million Saving bank account in rural and Semi-Urban area where as in

urban and Metropolitan the total number of Saving bank accounts are 139. If we compare the

total number of population in Rural India, it can be noticed that the number of Saving Bank

account in Rural and Semi Urban area are very lower in number as compared to Urban and

Metropolitan areas. Moreover if we see the share of deposits in the bank accounts, rural areas

have around 10% of the total savings in India. (Report of the Committee on Medium-term Path

on Financial Inclusion, 2015).

Way Forward

Rural market's untapped potential is throwing a big challenge as well as an opportunity to

marketers in India and now as rural market is duly recognized. Marketers can have integrated

marketing plans and programmes and meet the challenge by capitalising immense marketing

opportunity. If they succeed in exploiting rural market potential, we will witness a new era of

economic prosperity in the Indian villages in the near future. It requires incessant efforts to

connect people with right information at right point of time and facilitate their efforts through

establishing sustainable support system.

Rural Infrastructure Development:

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First and foremost thing that is needed is promotion of rural infrastructure development.

Improved irrigation facilities, infrastructure, better roads, free trading in agri produce, removal of

excise duty on tractors, agri implements; and the insurance scheme for farmers will give a boost

to the rural economy and generate a greater demand for corporate products. Warehousing and

storing facilities in rural areas will have significant impact on rural development. It is because,

on one hand transportation of goods is difficult and on the other hand if storage facilities are not

available with feeder units, the maintenance of continuous flow of goods will be a difficult task.

However, to benefit from this new opportunity, urban marketers will have to gain a better

understanding of rural lifestyles, needs and aspirations and design appropriate products.

NGOs:

Non government organizations (NGOs), working in proximity with rural people have a mandate

of focusing on sustainable development through providing avenue for income generation. They

command substantial influence in the villages covered by them. Companies may join hands with

them to mutual benefit. With NGOs undertaking distribution, companies realize benefits

accruing from infrastructure and grass roots level networking. Also organization security would

provide a buffer against delayed retail collections. From the NGOs standpoint, such association

with companies could yield employment opportunities for local residents.

The organisations can create a facilitating environment to promote self-employment of

the rural poor-organization of the rural poor into Self Help Groups (SHGs), capacity building of

the group through financial assistance, training, selection of key activities, infrastructure build-

up, technology and marketing support. The programme has been able to provide access to

institutional finance to the rural youth for initiating small-scale income-generating activities,

thereby increasing household income and can contribute to the empowerment of women.

Institutions like NABARD can play a proactive role in facilitating the process of

promoting financial assistance to the cooperatives and grameen banks and strengthen the rural

farm and non-farm sector. Adequate and timely financial support from the banking system to the

farmers for their cultivation needs, including the purchase of inputs in a flexible and cost-

effective manner is prerequisite for promoting the avenues of marketing. Promoting the role of

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SHG through assured micro finance through bank-linkages so that take up micro enterprises and

thereby enhance their incomes (read purchasing power) and increasing budget allocation on

accelerated irrigation programmes.

Technology Transfer:

Technology transfer is also another prerequisite condition to promote rural marketing. The main

motto of technology transfer is to promote rural based livelihood systems that promote rural

economy in general and sustainable livelihood promotion in particular. The promotional

measures in technology transfer is to disseminate 'information'. The information is to promote

improving in scientific agriculture and integrated rural development. Connecting the rural masses

in general and farmers in particular with the technological advancement will give an impetus to

employment and information to the rural people about the ways and means to access the avenues

of entrepreneurship development, rural marketing and empowerment. Role of youth is pivotal in

getting access to the technology and optimum utilization of their resources.

People’s Control Over the Resources:

People’s control over the resources is fundamental in getting establishment of rural based

economy through rural marketing. Efforts are to be made towards access to productive assets

like, land, finance and decision making with regards to crop diversification from staple wheat

and rice to more profitable cash crops.

Conclusion:

Rural marketing is an essential strategy to bring the rural people into mainstream marketing. The

rural markets offer a great scope for a concentrated marketing effort because of the recent

increase in the rural incomes and the standard of living which will help to increase income level

and production of agricultural commodities in rural areas. Provided, rural marketing should go in

line with the needs of the rural people. The products should be need-satisfying in nature.

Similarly, the products generated in rural areas should find a way to attract the urban masses to

fetch the products.

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Tangible and intangible support to the rural population in general and the poor and need

in particular will go a long way in attaining the rural marketing objectives.