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THE UNIVERSITY OF BURDWANCENTRE FOR MANAGEMENT
STUDIESDEPARTMENT OF BUSINESS
ADMINISTRATION
A PRESENTATION ON
RURAL MARKET
The term ‘rural marketing’ used to be
an umbrella term for the people who
dealt with rural people in one way or
other. It got a separate meaning and
importance after the economic
revaluation in India after 1990.
Rural marketing is defined as managing all the activities involved in assessing, stimulating and converting the purchasing power of the rural consumers into effective demand for specific products and services and moving them to the people in rural areas to create satisfaction and a better standard of living and thus achieving organizational objectives.
INTRODUCTION
Marketing channels are routes through which rural products move from producers to consumers
• Cleary 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 counter part. 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
RURAL MARKETING CHANNELS
ClassificationThe rural consumers are classified into the following groups based on their economic status:
The Affluent Group• They are cash rich farmers.
• Very few in number.
• They have affordability but do 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 category.
RURAL CONSUMER
The Middle Class
• One of the largest segments for manufactured goods.
• It 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 grants from the government
and reap the benefits of many such schemes and may move
towards the middle class.
• The farmers of Bihar and Orissa fall under this category.
Characteristics
• The rural consumer has a very high involvement in any
product purchased.
• He purchases products more often (mostly weekly), usually in
small quantities.
• He is very quality conscious but value
for money is of prime importance.
• He looks more for functionality of the
product rather than frills associated which
he cannot use but for which he will have
to pay extra.
• He is brand loyal. Once loyalty formed is difficult to dislodge.
• He understands symbols and colours better, and looks for endorsement by local leaders or icons.
• The source of information is critical for him, as he is influenced by information received and opinion formed through various resources in his
purchasing decisions.
• Purchasing decisions are usually taken
by the eldest member of the family.
• Brisk buying is done after the harvesting
period. Major purchasing is done during
the festivals.
• In many cases, the buyer is different from
the user.
Why Rural Marketing is hot?
• Rural Push Policy of UPA Government• Four Consecutive years of positive growth in
rural GDP• 40% hike in MSP of Crops over last two years• Farm Loan Waiver & NREGS• Growing Industry Demand for land (Overnight
Wealth)• Big rise in remittances from Cities• Slowing urban demand forcing corporates to
rural markets
Rural Marketing is a new discipline because:-
• India is a predominantly agrarian society.• Western Marketing has no experience to
manage it. • Urban markets are saturating in India. • There are immense opportunities at the
bottom of the pyramid.• R. M. can change rural business. • Retail boom will also expedite the growth of
rural marketing.
Why Rural Marketing is a New Discipline
• Large population
• Rising prosperity
• Growth in consumption
• Life-style changes
• Life-cycle advantages
• Market growth rates higher than Urban
• Rural marketing is not expensive
• Remoteness is no longer a problem.
Whether Rural Markets are Attractive
The Rural Marketing Matrix
(Mar
ket)
Handicrafts, Handloom
Textiles, Leather
products (Semi-organised)
Farm & Non-Farm
and services (Unorganised Sector)
Rural
Brand Consumables
and durables (Organised)
Urban
Scope of Rural Marketing
LIFE OF RURAL PEOPLE
Rural employment(in millions)
YEAR AGRICULTURE,
HUNTING,
FORESTRY
AN D FISHING
INDUSTRY MANUFA
CTURIN
G
CONSTRUC
TION
SERVICES
1999-00 218.3 32.6 21.2 9.4 35.5
2004-05 249.4 47.0 27.8 16.8 46.7
2009-10 229.0 58.6 24.2 31.7 49.5
Large market
Growing purchasing power
Increasing aspirations
Enablers such as financing
Infrastructure Development
Diversity in tradition and culture
Lack of distribution channels
Poor understanding of customers
Op
po
rtu
nit
ies
Ch
allenges
Why Rural market
Opportunities
Large Customer Base
•70% of Population
Purchasing Power
• Increase in Minimum Support Price (MSP)
•National Rural Employment Guarantee Scheme (NREGS)
• Sixth Pay Commission
• Farm loan waiver
Enablers
• Strong credit structure with Regional Rural Banks (RRBs)
•Kisan Credit Card (KCC)
•Cooperative societies have been the traditional source of finance in rural areas
Infrastructure
• Infrastructural development in India's rural belt has gained momentum in recent years
•The Pradhan Mantri Gram Sadak Yojana (PMGSY)
•Telecom Penetration
Resident Sales Executives
• Appointing a local resident of the village as a
salesman has also been a successful selling strategy
• This strategy has been named as ‘Sons of Soil’
• The RSE tries to generate sales enquiries from local
government offices, banks, schools, hospitals, etc.
• Rural customers feel more comfortable interacting
with a local person
• Conventionally it looks that since rural consumers are
dispersed, reaching them is costly.
• But according to a research, it costs roughly Rs.1 Crore to
promote a consumer durable inside a state including the
expenses of advertising in vernacular newspapers, television
spots, in-cinema advertising, radio, and point of purchase
promotion.
• Campaigns like this, which can reach millions, costs twice as
much in urban areas.
Rural marketing is not expensive
4 A’s Approach
1.Availability
Strive to reach at least 13 113 villages with a population market penetration.
2.Affordability
Introduce small unit packs
3.Acceptability
• Offers products and services that suit the rural market
• Easy to understand
4.Awareness
• One on one contact programs are extremely efficient.
• Educate and try to induce trial.
STRATEGIES
Distribution strategy
Using company delivery vans, melas,
haats, and mandis/ agri markets.
Promotional strategy
• Rich traditional media forms like
puppetry, folk dances, audio visuals,
etc. should be used to convey the
right message to the rural folk.
• Forms with which the rural
consumers are highly comfortable with should be used.
Rural development is a strategy designed to improve the economic and social life of rural poor.
It is a process, which aims at improving the well being and self realization of people living outside the urbanized areas through collective process.
Rural Development is all about bringing change among rural community from the traditional way of living to progressive way of living. It is also expressed as a movement for progress.
The United Nations defines Rural Development as:
“Rural Development is a process of change, bywhich the efforts of the people themselves areunited, those of government authorities toimprove their economic, social and culturalconditions of communities in to the life of thenation and to enable them to contribute fully tonational programme.”
INFA-
STRUCTURE
TECHNO
LOGY
HEALTHEDUCATION
ECONOMY
DEV. IN RURAL AREA CAN BRING
Satellite dish antennas reach rural India
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.
Typical shop in rural India stocked with sachets, etc
RURAL DEVELOPMENT
HUL with its Project Shakti has already
has a reach of 1.7 lakh villages, and
aspires to reach 5 lakh villages by
2020.
In 2001-02, LIC sold 55% of its
policies in rural India.
Mahindra & Mahindra sells most of
its SUVs in the rural market.
SOME NOTEWORTHY SUCCESS
STORIES "Yaara da Tashan..." 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.
In 2000, ITC took an initiative to develop
direct contact with farmers who lived in
far-flung villages in Madhya Pradesh.
ITC's E-chaupal was the result of this
initiative.
ITC. Touching your life. Everyday
