Rural marketing in India presents unique opportunities and challenges. Some key facts: - Rural India accounts for over 70% of India's population and generates over half of national income. - The rural consumer is highly heterogeneous across regions, occupations, literacy levels, and lifestyles. There is no typical rural consumer. - The rural market size is large and growing steadily, with many non-food products now common in rural areas. For some products, rural consumption exceeds urban. - When marketing in rural India, companies must address the 4 As - availability, affordability, acceptability, and awareness to succeed. Examples include low-cost packaging, localized products/messaging, and innovative distribution networks. - Le

1. RURAL MARKETING

2. SOME FACTS ABOUT
RURAL SECTOR
•
•
•
•
•
•
There are 42,000 rural
supermarkets (haats) in India that
exceed the total number of retail
chain stores in the United States
(35,000)
Of the 20 lakh BSNL mobile phone
connections, 50 percent are in small
towns and villages
Of the six lakh odd villages in the
entire country, 5.22 lakh had a
Village Public Telephone (VPT) as of
March 2004
The 41 million Kisan Credit Cards
(KCC) issued in rural India exceed
the 40 million credit-plus-debit
cards issued in urban India
Electricity consumption by the
agricultural sector has shown a
sharp increase from 17.6 percent of
total consumption in 1980-81 to 292 percent in 1999-2000
In 2001-02, the Life Insurance
Corporation (LIC) sold 55 percent
of its policies in rural India

3. DEFINING RURAL
INDIA
• The Census of India defines rural as:
– Any habitation with a population density of less
than 400 per sq.km., where at least 75 percent of
the male working population is engaged in
agriculture and where there exists no municipality
or board
• FMCG sector defines rural as:
– An any place with a population up to 20,000
• Durable & Agri-input companies consider rural
as:
– Any town with a population below 50,000

4. DEFINITIONS
Definitions of Rural
Village: Basic unit for rural areas is the revenue village,
might comprise several hamlets demarcated by physical
boundaries.
Census
Town: Towns are actually rural areas but satisfy the
following criteria.
•Minimum population >= 5,000
•Population density >= 400/sq.km.
RBI
•75% of the male population
engaged in non-agri activity
Locations with population up to 10,000 will be considered as
rural and 10,000 to 100,000 as semi-urban.
NABARD
All locations irrespective of villages or town, upto a
population of 10,000 will be considered as ‘rural’.

5. DEFINITIONS
Definitions of Rural
Planning Commission Towns with population up to 15,000 are considered
as rural.
Sahara
Locations having shops/ commercial establishments’
up to 10,000 are treated as rural.
LG Electronics
The rural and semi urban area is defined as all other
cities other than the seven metros.

6. What is Rural
Marketing?
• According to the National Commission on
Agriculture:
– Rural marketing is a process which starts
with a decision to produce a saleable farm
commodity and it involves all the aspects of
market structure or system, both
functional and institutional, based on
technical and economic considerations and
includes pre and post harvest operations,
assembling, grading, storage,
transportation and distribution
• Simply, It referred to marketing of rural
products in rural and urban areas and
agricultural inputs in rural markets

7. What is Rural
Marketing?
• Rural Marketing is a two-way marketing process
that includes the flow of goods and services
from rural to urban areas and the flow of goods
and services from urban to rural areas, as well
as the flow of goods and services within rural
areas

8. DIFFERENCE BETWEEN URBAN
& RURAL
URBAN
Size and
Characteristics
Occupation
RURAL
City has a large population size
growing at a fast growth rate
due to immigration from rural
areas for education and
employment. The population
density is high. Towns are
smaller urban units.
Occupations are diverse,
Village is a human settlement
with a small administrative
unit. It comprises few
hundred households and the
population growth due to
immigration is insignificant.
Predominant occupations are
ranging from professionals,
cultivation and agricultural
skilled, semi-skilled to unskilled labour. People continue to
workers. Occupational
practise traditional
specialization is achieved with
occupations. Skill upgradation
higher education and training
with technology has been
to build skills.
limited.

9. DIFFERENCE BETWEEN URBAN &
RURAL
URBAN
Settlement
Pattern
RURAL
The city settlement is compact though
spread over a larger area. Land use is
residential, commercial, industrial,
roads and streets, institutional and
community facilities, etc.
Village has land for human settlement
and for cultivation.
Structure of houses is permanent and
often rises to more than one storey.
Housing on rental is highly prevalent.
Houses are largely semi-pucca or
kachha. They are owner occupied.
Primary resource base is production
and distribution of industrial goods &
services
Land is the primary resource for
livelihoods. Other forms of resources
are water bodies, forests, and
mountains. Cows, buffaloes, and
poultry are kept fro household need
for milk, eggs & meat.

10. DIFFERENCE BETWEEN URBAN &
RURAL
URBAN
Realms of
activities
RURAL
Interaction and mobility is
spread over large geographical,
social and economic area.
Relationship is more complex
with differentiation in personal
and professional life. There is
erosion of role of custom,
tradition, and religion. Formal
mechanisms of social control are
needed in absence of community
influence. Women have freedom
in choice of activity and
interest.
Restricted to smaller
geographical, social and
economic areas. Individuals are
recognized or referred to on
the basis of family, cast, and
village. Individual behaviour is
governed by custom, tradition,
and religion. Conformance and
compliance to mechanisms of
social control is through family,
kinship, and community. Woman
have limited freedom in choice
of activity or interest.

11. The Importance of the Rural Market


•
More than 70% of country’s consumers are in the rural market
More than half of national income is generated here
Should All Firms Go Rural?
 For several products there is now enough demand in urban markets
 But firms with huge ambitions have to necessarily tap rural markets
The Rural Marketing Environment It can be studied under 2 heads, the Rural
Consumer and the Rural Demand
1. The Rural Consumer
• ‘Many Rural Indias’ within ‘Rural India’ and No Such Thing as a ‘Typical Rural
Consumer’

12. Rural Consumer
contd…
Chapter 43: Rural Marketing in India
A scattered lot, living in villages that vary widely in population
size
A heterogeneous lot as well
 Mixed picture in income and socio-economic position


13. Rural Consumer contd…
Chapter 43: Rural Marketing in India
 Highly stratified
•
•
•
•
•
•
•
Age mix
Region to region and state to state variation in economic position
Occupation is now ‘beyond agriculture’ for over 1/3rd of the
workforce
Diversification of the rural economy brings new income sources
New income is generated from agriculture as well as other sectors
Heterogeneity in literacy rate too
– There is a huge literate population in rural India
– There is heterogeneity in the literacy rate
In lifestyle too, rural consumers do not fall into a single bracket
• The Expectation Revolution
 Rising expectations; the aspirations of the rural people growing
ahead of their income
• The Idea of a Stereotype does Not Fit
 Heterogeneity gives rise to variations in buying behaviour of the
consumers

14. Chapter 43: Rural Marketing in India
Rural Consumer contd…

Other Notable Influences on the Buying Behaviour of Rural Consumer
• Location and extent of exposure to urban lifestyles
•
The situation in which the consumers use the products
•
Availability of electricity
•
The place of purchase
•
The Influencers’ role
•
Influence by youngsters in the family, bahus
•
Influence of the village community
•
Marketers’ efforts to reach out to the rural market
• Size of the Rural Population
India’s population is rural
More than 81 crore consumers; 73% of

15. Chapter 43: Rural Marketing in India
2. Rural Demand- Size and Composition of Rural Market

Aggregate size of the rural market/demand
•
•

Projected to reach Rs.16,700 bn in 2015
A large market, larger than the urban
Steady growth and welcome shift in composition
• Several non-food products established in rural consumer basket
For many products, market is large despite low penetration
rate

•
The great India number trick

16. Chapter 43: Rural Marketing in India
Rural Demand contd..
 In many products, rural consumption accounts for a
larger share than urban
•
•
Washing soaps, popular bath soaps, package tea, hair oils, batteries
Sewing machines, radio, transistor, tape recorder, watches, B&W TV,
bicycles, table fan, pressure cookers
 In growth rate too, rural market overtake urban in
many products
•
Packaged tea, analgesics, washing soap, detergents, motorcycles

17. MARKETING MIX FOR
RURAL MARKETS
• Marketing Mix ‘refers’ to the set of actions, tactics,
tools or variables that a company uses to promote and
sells its brand or product in a markets
• The marketing mix is a crucial elements of any
marketing plan as it offers marketers a mix of
products, services and prices, utilizes a promotion mix
of advertising, sales promotion, direct marketing and
personal selling to reach the target customers through
distribution channels
• The 4 Ps of the marketing mix remain the same, both
in urban and rural markets. However, marketers need
to meet the challenges of availability, affordability,
acceptability and awareness (4 As) of products and
services that are peculiar to rural markets

18. The 4 Ps of Marketing: A
re-look from the rural
perspective
• The basic marketing-mix tools remain the
same both in rural and urban markets, but it
is the challenges of the 4 As that compel
the marketer to revisit the marketing tools
when he ventures into rural markets

19. Availability
• Total 6,38,000 villages in India; 742 million
Indians live in rural areas
• HUL : strong distribution system to reach the
interiors of the rural market
• Coca-Cola : evolved a hub-and-spoke distribution
model to reach villages
• LG has set up 45 area offices and 59 rural /
remote area offices

20. Affordability
• Low disposable income, daily wage earners
attract small unit packs.
• Godrej : introduced three brands of Cinthol,
Fair Glow & Godrej in 50-gm. packs, priced at Rs
4-5 for MP, Bihar & UP—the so-called BIMARI
states
• HUL : launched soap brand Lifebuoy, at Rs. 2
for 50gm.
• Coca-Cola : Introduced 200-ml glass bottle at
Rs. 5. The Sunfill, a powered soft-drink
concentrate, sachet of 25gm priced at Rs. 2

21. Acceptability
• The third challenge is to gain acceptability for
the product or service
• LG Electronics : developed customized television
christened it Sampoorna. It was a runway hit,
selling 1,00,000 sets in the very first year.
• Coca-Cola : provides low-cost ice boxes, that is
a tin box for new outlets and a thermocole box
for seasonal outlets considering lack of
electricity and the absence of refrigerators in
rural areas

22. Awareness
• Only 41 percent of rural households have access to
television—building awareness
• HUL : relies heavily on its own company-organized
media. These are promotional events organized by
stockists
• Godrej Consumer Products : uses radio to reach the
local people in their own language
• Coca-Cola : uses combination of television, cinema and
radio to reach 53.6 percent of rural households
• LG Electronics : uses vans, local-language advertising
and road shows to reach rural customers
• Philips India : uses wall writing and radio advertising

23. Examples of rural marketing
mix
• ICICI BANK customized their rural ATMs, so they can
operate biometric authentication. ICICI rural ATMS
are battery operated so that power failure is not
issue.
• BP energy Sell smoke less, biomass run stoves
(Oorja) for rural markets, priced attractively Rs.675.
• Bank of India introduced Bhumiheen credit cards for
providing credit card facilities to landless farmers.
• Noika develop affordable Mobile phones for rural
markets with unique features such as local language
capabilities, present time/ call limits etc.

24. Examples of rural marketing
mix
• Philip develop a TV ‘ Vardaan’ for rural markets.
This TV work on the voltage 90-270 volts.
• Philips developed ‘ Free Power radio’ this radio
do not require power and battery also. it run on
simple winding of level provided in the set. The
price of this attractive set is Rs. 995.
• LG developed CTV called’ CinePlus’ was launched
in rural markets price Rs.5000

25. Examples of rural
marketing mix
Hyundai increases focus on Rural India
new promotional scheme titled - ‘Ghar Ghar Ki
Pehchaan'. In this first of its kind initiative, Hyundai
Motor would extend special schemes for government
employees in rural areas and members of Gram
Panchayats on the purchase of the Hyundai Santro
Launched on May 1, the ‘Ghar Ghar Ki Pehchaan'
scheme will continue till July 31, 2008. Through this
special rural scheme Hyundai Motor India plans to
touch base with at least 58 per cent of Indian villages
with a population of 500 or more.

26. DISCUSSION