Emerging rural markets in india

ABSTRACT
. The real India lives in the village. So rural marketing is the new
buzzword as it has become the new marketing mantra for the survival
and growth of the companies forcing them to go rural
The development of the nation is inter-linked with the development of the rural
Population. To be successful in the rural market, companies will have to be
innovative and sensitive while devising marketing strategies.If we look the
present situation of rural consumers they have huge disposable income and they
are also getting remittance from abroad bcz it is found that atleast one family
member in rural household is working in Gulf countries. Marketers need to design
creative solutions to overcome challenges typical of the rural environment such
as physical distribution, channel management, promotion and communication.

Keywords-rural consumers,rural population
Research methodology:-

The Secondary data will be collected through Internet, books and the materials
published in journals and magazines. Research is limited to India.


INTRODUCTION
India is an agro-based economy and the growth of most of the other sectors of economy is
driven by rural demand. Urban market is reaching towards the saturation point, thus bringing in
and urgent need to focus on rural development. Moreover, more than 70% of India's population
lives in villages and constitutions a big market for industry because of increasing disposal
incomes and awareness level
In comparison to just 5,161 towns in India there are 6,38,365 villages in India. This in itself is an
indicator where the real India resides. Companies are realizing slowly but surely that the key to
gain true market leadership lies in tapping the rural potential. However, the rural sector in India
suffers from different kinds of problems. Some areas are having enough money but their level of
awareness and hence consumerism is very low. But there are many areas where economic
empowerment, education, health etc., are major problems. While there is a large growth in the
urban market, the rural or latent market is yet to be tapped, and has an enormous potential for
growth. A rural market can be defined as any market that exists in a area where the population
is less than 10, 000. The rural market in India is scattered and spread over a wide geographical
area. Indian market is divided into urban and rural markets. Urban market is flooded with low
demand. Rural market witnesses a high demand It's the rural segment of market that
contributes more profit than its urban counterpart. Rural marketing broadly involves reaching
customers, understanding their wants, supply of goods and services, and ultimately satisfying
consumers, leading to more sales. The general impression is that only agricultural inputs like
seeds, fertilizers, pesticides, cattle feed and agricultural machinery have a potential for growth
in the rural market. However, there is a growing market for consumer goods now. It has been
estimated the rural market is growing at the rate of five times its urban counterpart.
Rural marketing has become the latest mantra of most corporate.
Companies like Hindustan Lever, Colgate, Palmolive, Britannia, and even
Multinational Companies (MNCs) like Pepsi, Coca Cola, L.G., Philips, and
Cavin Kare are all eyeing rural to capture the large Indian Market.




RURAL MARKET MORE ATTRACTIVE
Rural market has following arrived and the following facts substantiate
this:
742 million people
Estimated annual size of the rural market
o FMCG Rs 65,000 Crore
o Durables Rs 5,000 Crore
o Agri-inputs (incl. tractors) Rs 45,000 Crore
o 2 / 4 wheelers Rs 8,000 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 creditplus-
debit cards in urban) with cumulative credit of Rs 977
billion resulting in tremendous liquidity.
Of 20 million Rediffmail 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










Objective of the Study
1. To find out the consumer behavior while purchasing goods in rural areas.
2. To know the brand awareness in rural areas.

Marketers efforts to reach out the rural market-many corporate have been trying hard to devolp a
market for their products in the rural areas ,investing substantially in these areas.This has brought about some changes in the way buyers
purchase different products.
Mukesh Ambani has company. Brother Anil Ambani, who parted ways with him in 2005, is
connecting rural India through Reliance Infocomm, a mobile services provider. Its network now
encompasses 240,000 towns and villages, accounting for 42% of the rural population. It plans to
double the rural coverage to 400,000 villages, making up 50% of the rural population.
There are many others. The rural initiative of the Mumbai-based $1.3 billion House of Godrej
Godrej Aadhaar plans to set up 1,000 stores across India in the next five years. Delhi-based telecom
major Bharti Airtel chairman Sunil Mittal has tied up with Wal-Mart, which will need its supply chain.
From the Goenkas to the Gulabchands, from the Tatas to the Thapars, every major Indian business
group has plans to move into the hinterland.
Objectives of study

To study rural marketing in detail.
To know importance of rural marketing.
To know the scope rural marketing in India.
To know the role played by rural marketing in development of rural India.
clearly by means of Parle biscuits demand analysis.
To understand the essential factors concerning rural marketing.
Understanding consumer behavior of rural India with respect to rural marketing.

Limitations of study

The project is covering only the certain areas &aspects of marketing.
The secondary data is based on internet & books related to marketing.





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http://www.brandchannel.com/papers_review.asp?sp_id=1319
Explain Challenges in Rural Marketing.
Ans. Though rural markets are a huge attraction to marketers, it is not easy to enter the market
and take a sizeable share of the market, in the short time due to the following reasons.
Low Literacy There are not enough opportunities for education in rural areas. The literacy level
is as low (36%) when compared to all- India average of 52%.
Seasonal Demand Demand for goods in rural markets depends upon agricultural situation, as
agriculture is the main source of income. Agriculture to a large extent depends upon monsoon
and, therefore, the demand or buying capacity is not stable or regular.
Transportation- Many rural areas are not connected by rail transport. Kacha roads become
unserviceable during the monsoon and interior villages get isolated.
Distribution An effective distribution system requires village-level shopkeeper, Mandal/ Taluka-
level wholesaler or preferred dealer, distributor or stockiest at district level and company-
owned depot or consignment distribution at state level. The presence of too many tiers in the
distribution system increases the cost of distribution.
Communication Problems Facilities such as telephone, fax and telegram are rather poor in rural
areas.
Traditional Life Life in rural areas is still governed by customs and traditions and people do not
easily adapt new practices. For example, even rich and educated class of farmers does not wear
jeans or branded shoes.
Buying Decisions Rural consumers are cautious in buying and decisions are slow and delayed.
They like to give a trial and only after being personally satisfied, do they buy the product.
Media for Promotions Television has made a great impact and large audience has been
exposed to this medium. Radio reaches large population in rural areas at a relatively low cost.
However, reach of formal media is low in rural households; therefore, the market has to
undertake specific sales promotion activities in rural areas like participating in melas or fairs.
Career in Rural Market While rural marketing offers a challenging career, a rural sales person
should require certain qualifications and specialized talent.
Cultural Factors Culture is a system of shared values, beliefs and perceptions that influence the
behavior of consumers. There are different groups based on religion, caste, occupation, income,
age, education and politics and each group exerts influence on the behavior of people in
villages.

These figures also prove that the rural market is
emerging stronger with a gradual increase in disposable
income of the rural folk. In addition, better procurement
prices fixed for the various crops and better yields due to
many research programmes have also contributed to the
strengthening of the rural markets. Thus, with the rural
markets bulging in both size and volume, any marketing
manager will be missing a great potential opportunity if he
does not go rural.

MARKETING-MIX DIFFERENCES


ASPECT RURAL URBAN
Product
a) Awareness
b) Concept
c) Positioning
d) Usage Method
e) Quality Preference
f) Features
Price
a) Sensitive
b) Level Desired
Physical Distribution
a) Channels

b) Transport Facilities
c) Product Availability
Promotion
a) Advertising



b) Personal Selling

c) Sales Promotion

d) Publicity

Low
Less Known
Difficult
Difficult to grasp
Moderate
Less Important

Very much
Low-Medium

Village Shops, Haats &
jatras.
Average
Limited

TV, Radio, Print Media to
some extent, More
Languages


Occasionally


Gifts, Price Discounts

Less


Limited

High
Known
Easy
Easily rasped
Good
Important

Yes
Medium-High

Wholesalers&
Retailers.
Good
High

Print, Audio-Visuals,
Outdoors,
Exhibitions.


Door-to-Door
Frequently

Contests, Gifts, Price
Discounts

Good Opportunities.


Adequate scope
RURAL V/S URBAN





In order to draw insights from the rural consumers behaviour, lets look at some of the indicators that represent their
characteristics as of today :
1. Increase in potential market size - Close to 96% of the Indian rural consumers fall in the category of low income
and mass affluent groups. Out of these, low income households represent close to five-sixths of the total with the rest
being mass affluent households. The chart given below highlights the growth in the number of low income and mass
affluent households in India. These facts make it easy to infer that this segment of the market is fast presenting a
lucrative business opportunity.
SR. NO. ATTRIBUTE RURAL URBAN
1 Population Density Low High
2 Occupation Agriculture Trade, Industry, and Services.
3 Economy Close and less monetized. Open and Monetized.
4 Infrastructure Poor and Weak. Abundant and Strong.
5 Attitude to
Modernization
Tradition bound. Ready for adaptation and
change.
6 Family Structure Joint Nuclear
7 Possession of House
hold assets
Low High
8 Mobility Low High
9 Literacy Low High
10 Exposure Low High
11 Attitude towards Life Fatalistic Scientific
12 Manufacturing Activity Low High
13 Distribution Outlets Fewer More

2. Increase in incomes As highlighted by the graph above, the incomes for the relevant groups, i.e. low income and
mass affluents is also on the rise signifying a greater purchasing power.
3. Mindset
a. It is the mindset of the urban consumer, which gives importance to value rather than price that is reflected
in the rural consumer today.
b. Not only that, rural consumers are upgrading from locally made substances to (eg. sand mix for washing
hands) to convenience products (eg. soaps) which may be unbranded. This signifies an effort to move
towards better and easy to use products. However, this change is only reflected in the buying patterns of
the younger sections of the family. The elders still prefer to use age-old natural solutions.
4. Awareness Several modes of communication, both conventional and unconventional, have made their way
through the hinterlands of India. The rural consumers are today exposed to a variety of entertainment sources and
other stimuli because of the extensive media reach and scope. Around 35% of rural India watches television, which
attempts to influence consumer patterns.
5. Consuming potential According to the Central Statistical Organization (CSO), India is a consumption led economy
because of its high private final consumption expenditure (PFCE) levels of 60% of its GDP. The chart below
highlights the share of the rural market in terms of consumption of various products and services. It is clearly evident
that contribution of the rural markets cannot be ignored (their PFCE is 31.7% of GDP).

6. Position in the consumption chain This relates to their income levels which determine the avenues into which
the additional income generated will fall into. For the urban consumer, it could be entertainment or some investments.
However, in rural households, a small part of the additional income gets saved and the rest will go into consumption.
7. Consumption pattern The pie chart given below gives a depiction of the expenditure heads of a rural household.

8. Penetration of branded items The graph given below draws a comparison between the penetration in rural and
urban areas for various FMCG product categories.
Penetration and per capita consumption
Rural - urban penetration (2002)
Category Market Size
(US$ million)
Urban Penetration (%) Rural Penetration (%) Total Penetration (%)
High Penetration categories
Fabric Wash 1210 89.6 82.9 84.9
Personal Wash 938 97.9 90.7 92.8
Packet Tea 635 91.2 82.2 84.9
Low Penetration categories
Toothpaste 409 69.8 32.3 43.5
Skin 312 36.6 19.8 24.7
Hair Wash 230 40.1 16.3 23.3
Talcum Powder 148 66 36.8 45.1
Branded Atta 107 44 30.2 34.3
Dish Wash 102 54.6 11.5 24.4
Instant Coffee 55 - - -
R&G Coffee 30 - - -
Ketchups 25 12.5 0.7 4.2
Deordorants 19 - - -
Jams 13 - - -

It is very noticeable through this table that basic FMCG goods have a deep penetration in the rural markets.
Conclusion- the Indian rural market has grown in recent years in size, range and
sophistication. Economic reforms in India have brought about major changes in the whole
market environment.

Successful rural marketing calls for a review of the nature and profile of rural
consumers, designing the rural products to appeal to them, and adopting suitable media as
well as appropriate strategies for communication and distribution.

Economic reforms and changing economic conditions have clearly pointed out that the rural market
is the future market of India. To become successful and contending players calls in for a review of
rural marketing environment, rural consumer, media and strategies to be adopted.