RURAL MARKETING

- A paradigm shift in Indian marketing

BY
M.Gowtham kumar
MBA II year
Lords Institute Of Engineering &
Technology
What is Marketing ?????

Philip Kotler defines marketing as 'satisfying needs and

wants through an exchange process‘

Rural Marketing

Rural marketing is the process of marketing in rural areas. it

includes the adoption of various marketing strategies and policies
in rural market with a view to convert the needs and wants of
rural people into demand
 The future lies with those companies who see the poor as
their customers.
-CK Prahalad.

CONCEPT:
 In recent years, rural markets have acquired significance, as the overall
growth of the economy has resulted into
substantial increase in the purchasing power of the rural communities.
 On account of green revolution, the rural
areas are consuming a large quantity of industrial and urban manufactured
products.
 In this context, a special marketing strategy, namely, rural marketing has emerged. But often,
rural marketing is confused with agricultural marketing
 whereas rural marketing involves delivering manufactured or processed inputs or services to
rural producers or consumers.

Rural Consumer Insights:

 Rural India buys.

• Products more often (mostly weekly).

• Buys small packs, low unit price more important than economy.
 In rural India, brands rarely fight with each other; they just have to be present at the right
place.
 Many brands are building strong rural base without much advertising support.

• Chik shampoo, second largest shampoo brand.

• Ghadi detergent, third largest brand.

 Fewer brand choices in rural: number of FMCG brand in rural is half that of urban
 RURAL MARKETING-A TWO WAY PROCESS

It is a Two-way marketing process wherein the transactions can be:

URBAN TO RURAL RURAL TO URBAN

FLOW FLOW

AGRICULTURAL AGRICULTURAL AND

INPUTS ALLIED PRODUCTION
CONSUMABLES RURAL ARTISANS AND
CONSUMER DURABLES RURAL INDUSTRY PRODUCTS
CAPITAL GOODS FOOD
INDUSTRIAL RAW
MATERIAL
 PROFILE OF RURAL CONSUMERS
 LITERACY : 23% of the rural population is literate

 LANGUAGE : presence of a numerous local languages

 INCOME : mostly seasonal income
 OCCUPATION : majority people involve in agriculture
 DENSITY : Low, Small units of villages widely scattered
 CULTURE : Traditional outlook, slow in accepting change
What makes Rural Markets Attractive ??

Rural market has following arrived and the following facts substantiate this.
 742 million people
Estimated annual size of the rural market
• Durables Rs 5,000 Crore
• Agro-inputs (incl. tractors) Rs 45,000 Crore
• 2 / 4 wheelers Rs 8,000 Crore
• FMCG Rs 65,000 Crore
 In 2001-02, LIC sold 55 % of its policies in rural India.
 Of two million BSNL mobile connections, 50% in small towns/villages.
 Of the six lakh villages, 5.22 lakh have a Village Public Telephone (VPT)
 41 million Kisan Credit Cards issued (against 22 million credit-plus-debit
cards in urban) with
 Cumulative credit of Rs 977 billion resulting in tremendous liquidity.
 Of 20 million Rediff mail signups, 60 % are from small towns. 50%
transactions from these towns on Rediff online shopping site.
 42 million rural HHs availing banking services in comparison to 27
million urban HHs.
 Investment in formal savings instruments: 6.6 million HHs in rural and
6.7 million in urban
 CHANGING PROFILE OF RURAL CONSUMERS

 Rural consumers are dependent on agriculture and were notvery literate

about products and services available. This scenario is slowly changing due
to increase in literacy and disposable income.
 Not long ago, rural consumers went to a nearby city to buy "branded
products and services". Only select household consumed branded goods,
be it tea or jeans. Earlier, big companies flocked to rural markets to
stablish their brands.
Rural markets today are critical for every marketer - be it for a branded
shampoo or a television.
 Today a customer in a rural area is quite literate about myriad products
that are on offer in the market place, thanks to television.
 Many companies are foraying into the rural markets and educating them
on newer products and services.
The rural youth today are playing a far more significant role in
influencing the purchase decisions.
Penetration levels of consumer durables in the rural sector have risen
dramatically in the last decade or so.
Even the rural woman is coming out of the closet. She is exercising her
choice in selecting categories
Usage of television, mobiles , internet to update their knowledge about
products
OPPORTUNITIES IN RURAL MARKETING

 The Indian rural markets with its vast size offers a huge demand its
population is 3 times than that of Urban population
 Rural markets have opened up room for innovation
 Infrastructure developments
 Untapped potential
 Market size and potential 
 Increasing income
 Accessibility markets
 Competition in urban areas
 A potential of about Rs 140,000 crs
Rural Marketing mix
STRATERGIES FOR RURAL MARKETING
• Brand name
• Sturdy products
PRODUCT
STRATERGIES • New product designs
• Small unit and low priced packing

• Low cost products

PRICE
STRATEGIES • Refill packs
• Value engineering
• Mass media-T.V, radio,cinema,print media
• Special campaigns ,puppet shows, folk dances
STRATERGIES
PROMOTION
• Mobile vans ,pamphlets, wall paintings
• co-operative societies
• distribution up to feeder Markets/mandi towns
STRATERGIES
DISTRIBUTION
shanties/hat/jathras/melas.
CHALLENGES IN RURAL MARKETING

low literacy

Low and seasonal income

Inadequate storage facilities

Lack of transportation facilities

Spurious brands

Lack of communication system

Dispersed markets
COMPANIES IN THE RURAL SECTOR

 HLL started ‘Operation Bharat’ to tap the rural markets. Under this it
passed out low–priced sample packets of its toothpaste, fairness cream,
Clinic plus shampoo, and Ponds cream
ITC is setting up e-Choupals
BPCL Introduced Rural Marketing Vehicle (RMV) as their strategy for
rural marketing in which village to village and fills cylinders on the spot for
the rural customers
Amul has kicked off its largest distribution expansion exercise to take its
chilled products like butter, cheese, ice-cream and paneer to small towns
and districts with population of up to 5,000 people
HUL plans ‘Bharat' packs for rural markets
And many more companies have also sketched plans to tap rural markets
some of them are :
L.G
Britannia
Eveready
lifebuoy
Videocon
Mahindra tractors
Hero Honda
Colgate
Palmolive
Nihar coconut oil etc…………
 CONCLUSION

Thus looking at the challenges and the opportunities which rural markets

offer to the marketers it can be said that the future is very promising for

those who can understand the dynamics of rural markets and exploit

them to their best advantage. A radical change in attitudes of marketers

towards the vibrant and burgeoning rural markets is called for, so they

can successfully impress on the 230 million rural consumers spread over

approximately six hundred thousand villages in rural India.