1

GROUP-1
TEAM MEMBERS:
SUBHALAXMI NATH
SUCHARITA SARKAR
SUJATA SHARMA
RUPALI ROY
PRIYANKA SHAW
OINDRILA DASGUPTA
SUVAM DEY
2 CURRENT SITUATION OF RURAL MARKETS
IN INDIA
 India in last twenty years showed a remarkable shift in its economic, social and technological environment.
By the liberalization and privatization policies and the subsequent phenomenon of globalization have led to
huge inflow of foreign investments and entry of large MNCs in India.
 These organizations are now shifting their focus from the saturated metros and tier-I cities to the rural and
semi urban towns, to increase their revenues and market. But rural areas have their own limitations in terms
of number of villages with low population density, accessibility, infrastructure, telecommunication network,
illiteracy, social and cultural backwardness and low income.
 Besides this almost 70% of Indian population stays in the rural areas and the revenue generated by the
agricultural sector in the total GDP is less than seventeen percent. The maximum of rural population has
comparatively low income as well as consumption rate compared to their urban areas. Still yet they have
aspirations and wants for most of the urban products.
 The factors that have created rising demands among rural buyers are increase in literacy levels, migration to
urban sectors, growth in media and telecommunication, availability of bank credit schemes, globalization of
market, low price technology products (such as television, mobile, fridge, camera, etc.), government
sponsored employment generation, and tax concessions and loan waivers.
 CONT.
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 Businesses in India are optimistic about growth of the country's rural consumer markets, which
is expected to be growing faster than urban consumer markets.
 Mainly, the wider reach of media and telecommunication services provides information to
India’s rural consumers and influencing their purchase decisions. This involves aspects of price
combined with utility, aesthetics and features, and not just low prices.
 The lands in India consist of about 650,000 villages. These villages are enclosed by about 850
million consumers making up for about 70 per cent of population of our country and
contributing around half of the country's Gross Domestic Product (GDP). Consumption
patterns in these rural areas are gradually changing to as equal as the consumption patterns
of urban areas.
 Some of India's largest consumer companies serve one-third of their consumers from rural
India. Owing to a favorable changing consumption trend as well as the potential size of the
market, rural India provides a large and attractive investment opportunity for private
companies. India’s per capita GDP in rural areas has grown at a Compound Annual Growth
Rate (CAGR) of 6.2 percent since 2000.
4 MARKET STRUCTURE
 The structure of the rural market can be defined by
interlinking the Product and Consumer flow processes as
mentioned in the illustration. We have taken the buyer and
seller to define different systems in rural markets.
 Quadrant I − It explains a situation in which both the buyer
and seller are from rural area. This is a constant economy
system in which all rural produce is consumed within the
system.
 Quadrant II − It explains that the majority of people
concentrate on Quadrant II situation, which unsustainably is
tried by marketers to sell urban products in rural markets.
 Quadrant III − It is necessary to develop an urban-rural
marketing linkage, so that both urban and rural products
can freely move across both the markets. Marketing should
work as a process of motivation to deliver and improve
standards of living of rural people and consumption rural
products by urban people.
 Quadrant IV − It explains a situation in which both the buyer
and seller are from urban area. This is a constant economy
system in which all urban produce is consumed within the
system.
5 FACTORS AFFECTING RURAL MARKETS

SOCIO-CULTURAL FACTORS
 Culture
 Social Class
 Social and Cultural Environment
 Caste System
 6 POPULATION
 India is the largest democracy in the world occupying 2.4 percent of the world’s geographical area and
supports 16 percent of whole world population. More than 72 per cent of the total population of our country
resides in rural areas.
 The estimated size of India’s rural consumers can be estimated from the following table. This table highlights the
rural and urban population of India between 1981 and 2001 −
 According to this table, around 72 percent of the total population of our country lives in rural areas. This provides
the marketers a larger market as compared to the urban market. So, growth in population is the main
contributing factor that leads the marketers to have an eye on this particular segment.
 In terms of the number of the people, the Indian rural market is almost twice of the entire market of the USA and
the USSR. But we have to consider other factors while studying rural marketing environment like occupation
pattern, spending pattern, economic reforms, source of income generation and infrastructure facilities etc.

Increase over Previous decade

1981 1991 2001 1991 2001
Rural Population (in 50.20 60.21 66.0 +10.01 +5.79
crore)
Urban Population (in 15.62 24.18 32.6 +8.56 +8.42
crore)
Total 65.28 84.39 98.6 18.57 14.21
 7 OCCUPATION
 Occupational pattern of rural people also has an impact on the nature of income
generation, which will in turn affect the expenditure pattern. Purchase behavior of the
rural consumers depends upon the nature of occupation and the consistency in the
generation of income.
 A major section of the rural population relies on agriculture and allied activities for
occupation. So, the income in the hands of rural people is very much conditioned by the
status of agriculture and other allied activities.
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LITERACY RATE
 The literacy level of rural people has a considerable impact on the marketing strategies to
be adopted by the marketing team especially in communication with the rural people.
 Higher the level of literacy, the easier it becomes for companies to penetrate into rural
areas.

LAND AND DISTRIBUTION USE

 One of the main obstacles for marketers to exploit the rural market potential has been the
largeness of rural markets in terms of the areas it covered. It is much easier to divide it
according to the needs of the urban population because of concentration, but it is very
difficult in the case of rural market because of their widespread nature.
 Rural population is distributed in almost about 638365 villages. It is also noted that villages
are not uniform in size. About 42 percent of the villages in India has population of less than
500 people in it.
9 RURAL MARKETING PROCESS
 THE RURAL MARKETING PROCESS
 The Five steps are described here:
1. Product redesign- It calls for innovation in both design and pricing , reducing costs
across production and distribution.
2. Awareness : Companies have to arrange demonstrations and encouraging trials. They
must also identify opinion leaders and have a system of approaching such individuals
regularly with information on new products and to maintain relationships.
3. Purchase : The product offered for purchase has to be backed by supply and payment
chains. These have to be reinvented for rural areas. Supply chains must overcome the
lack of transport channels and that too with regularity.
4. After sales Service : Innovative approaches are needed to create after sales service in
rural areas. Companies have to invest in mobile units or other means to establish a
presence in areas where footfalls are low.
5. Word of mouth recommendations : A good purchase experience followed by good
service establishes positive word of mouth publicity for the company .
BARRIERS OF RURAL MARKETING

1 Inadequate Infrastructure

2 Inadequate local skills and talents

3 Inadequate sales, distribution networks and information

4 Large Investments required

5 Non availability of proper ware houses , cold chains

6 Inadequate communication channels

7 Inadequate purchasing power of consumers

8 Political / local resistance from local communities

OPPORTUNITIES IN RURAL MARKETING

 Government Investments
 Improved Rural Infrastructure in some areas
 Training and skill development of local talent undertaken by agencies
 Using technology to jump and getting over distribution challenges
 Improved access to financing and technology
 Favorable government policies to build rural storage facilities
 Underserved markets , reliance on word-of-mouth communications
 Many government and private initiatives improves standard of living
 Social networks , non-traditional partnerships
4 A’s of RURAL MARKETING
 The 4A APPROACH
1. Affordability: Here Affordability does not mean that cheaper products should me made and marketed,
the meaning is to reach the customer by satisfying their needs. The designing of the product should
match the needs of the customer. The income earned in rural markets is from different ways , so by
keeping this in mind most of the companies should design the product in such a way that it reaches the
customer.
2. Availability: The greatest problem in the rural market is to reach the customer or retailer. Its the
logistics way to make the product available there . Once it reaches the retailers shelf then there will not
be any problem. This is because there will be lesser number of brands available at market and the
Influence or image/ Relationship of the retailer makes the difference. The companies should work out to
reach the customer in time.
3. Awareness: The Awareness program should be in such a manner that it should reach the customers
mindset. The main way of reaching the customer is through the commercials on media like TV, Radio
and Outdoor . The awareness programs should be conducted at the area ( Junction) where the village
heads meet or in other way the meeting place at the villages. The promotional activities should be good
in the local language.
4. Acceptability: The most important theme of Marketing Mix is Acceptability. They should feel that the
product is designed as per their needs and it should deliver a great solution to the customer. They
should think that the product gives some value to them , and it should serve the purpose what they are
planning to buy for. The customer should feel the comfort with the product and there should not be any
hesitation to go for it.
Companies that have gone beyond business objectives and incorporated social objectives in their purpose

Company / Brand Business Social Objectives

Amul Milk and Milk Products Organizing milk cooperatives , helping farmers with
live stock and to get higher milk process

Aravind/ narayana Health care Providing world class health care while reducing
cost , village outreach
Bandhan Bank Banking Providing microcredit; organizing thrift village
societies
Essilor Eye care Providing villages eye care and spectacles at low
cost
Fabindia Apparel, furnishings , health products Organizing artisan communities and getting better
prices for their products

Jaipur Rugs Carpets & rugs Training local artisans and empowering them

Mitticool Refrigerator and appliances Low-cost appliances that do not work on electricity

Novarties Medicines Providing health care and branded medicines to

villages
Grameen Bank/ Bandhan Bank/ Grameenphone Banking / telecom services Organizing people for microfinance / cheap telecom
services to villages in Bangladesh
Amul is one of the most endearing brands of India. It is the largest food brand in India
with an annual turnover of 20375 core for the year ended March 2015 , which is equivalent
to the combined revenue of the food businesses of its three closest rivals Nestle, Hindustan
Level Limited (HUL) and ITC Limited .
Around 70% population in India lives in rural area. Also known as bottom of the
pyramid.
It created an opportunity for companies like Amul.
Amul derives 70% sales from rural area.
Amul established a direct linkage between milk producers and consumers by eliminating
middlemen.
Milk producers ( farmers ) control procurement , processing and marketing .
Amul has taken initiatives for its rural marketing by:-
Insurance against natural calamities.
Establish tele-centers and enhance technology in village.
To purchase all milk produced from member farmer.
Provide best price to the member farmer for the milk produced.
To develop and deliver services that will improve lives of people in the network.
To hire professional managers, to run federation and the union whose values
included up-liftment of poor people.
Adopted a low-cost price strategy to make its products affordable and attractive to
consumer by garneting them value for money.
Amul established the dairy information and service kisok which offered information
services, banking and communication facilities.
Provide veterinary services and support services in animal husbandry and also
provide financial support for small and marginal farmers.
Using Distribution Channels Creatively ( The colalife Story)

ColaLife’s name comes from the following question: “Coca-Cola seems to get everywhere in
developing countries, yet life-saving medicines don't. Why?”. ColaLife studied the techniques
used by the producers of fast moving consumer goods (FMCGs) to get their products into the
hands of people living in remote areas of Africa and applied the same techniques with the aim of
improving access to diarrhea treatment.
Coca Cola seems to get everywhere in developing countries but every five children under the
age of five died in these areas through simple causes such as dehydration through diarrhea.

The design process- Finding out what people want

The product- Kit Yamoyo

Honda : Taking service to Rural Areas

Honda Motorcycle & Scooter India Pvt. Ltd. Has launched the mobile service van (MSV)
that takes the company to the doorstep of rural consumers at a very effective cost. Honda’s
mobile 3s set up is equipped with Sales-Service –Spares facility , according to its website. It
uses a hub and spoke model to expand its dealership and service outlets in a mobile format into
remote areas , according to the website. The company has developed its wave 2.0 strategy for
realizing the potential in hinterlands and thereby achieving an increased market penetration.
The MSV is designed to display a two wheeler , with seating arrangement for customers , a
LED display for showing the products , provision for test rides and public address system to
create customer awareness via regular announcements. Two service inlets provide service and
genuine spare parts.
 Design
Products must be designed specifically for rural areas. Merely
offering cheaper versions by lowering quality would be a bad strategy.
Instead, companies have to invest in ‘reverse engineering’, which
means starting with the price the customer can pay, then innovating
to deliver products and thereby make a profit.

An interesting example of this difference in perception is the ASUS PC. Designed

for the next billion customers or first-time users of a computer, it was created on
the premise of being "Easy to learn; Easy to work; Easy to play" and ended up
disrupting the laptop market and creating an entirely new category—the
netbook.
 Distribution
The greatest invention cannot change the world if it does not get
manufactured and distributed.
Distribution in rural areas must be lean and incur low cost. Channels
must acquire the ability to cater to small demand from scattered areas
and somehow reach goods where they are needed in time.
 Demand
Several challenges arise in managing demand. First is to
communicate with customers so that they get interested in products,
second is supplying small quantities on a regular basis and third is
keeping in constant touch with consumers to assess future demand.
 Development
Companies have to invest in the social and economic development of
communities they wish to serve commercially in order to raise the
incomes of the people living in them. It may be argued that
development cannot be done by private companies and is in the
purview of government agencies. But unless people get more incomes,
they will hardly be able to buy the products, no matter how good they
are. Collaborations with other companies, investments in technology
and working with NGOs are ways of developing and serving rural
markets.
 Dignity
The Sammaan Foundation ("sammaan" means dignity) is one such
example of bringing opportunity and hope back for the downtrodden
by adding some creative innovation. Founded by Irfan Alam, a 27-
year-old from the Indian state of Bihar, his idea is to systematize the
working of all Rickshaw pullers by bringing them under one roof, and
to modernize the cycle rickshaw pulling sector (which contributes 30%
in urban transport) with small but creative changes
 contd.
Rural consumers do not want to be talked down to nor do they want to
see themselves as being deprived. That makes rural marketing quite
complex. Marketing managers trained in traditional marketing
practices will have to change their mindset and develop new sets of
tools keeping in mind the dignity of consumers.
 RURAL MARKET- ROAD AHEAD
 Rural and semi-urban markets are witnessing strong demand for composite products and health
insurance policies, more-so because of increasing awareness and Government initiatives.
Bottom-of-the-pyramid products such as micro-insurance are gaining popularity day-by-day.
Insurers are considering telecom franchisees, NGOs, regional rural banks, cooperatives, post
offices and micro finance institutions as major channels to sell their products. They are even
contemplating on an extensive rural-agent network for sale of insurance products and services.

 Rural India buys 45 per cent of all branded soft drinks and 49 per cent of all motorcycles sold in
the country. The Accenture report states that between 2009 and 2012, annual rural per capita
consumption grew at 19 per cent, which was 2 per cent higher than the urban consumption.
Meanwhile Nielsen estimates that the FMCG market in rural India will hit US$ 100 billion-mark by
2025, up from the current US$ 12 billion.

 Another report by McKinsey Global Institute says that by 2025, annual real income per household
in rural India will grow from the 2.8 per cent of the past two decades to 3.6 per cent over the next
two decades.
BIBLIOGRAPHY

 https://www.tutorialspoint.com/rural_marketing/rural_marketing_influencing
_factors.htm
 https://www.ibef.org/pages/34343
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