Rural Marketing: Opportunities, Challenges & Strategies


By

Kamal Kant Bishnoi
Lecturer
Chetan Choudhary
Reader & HOD
MBA Department
Rajasthan Institute of Engineering and Technology
Jaipur
 


Introduction

To promote brands in rural markets requires the special dealings. Due to the social and backward condition the personal selling efforts become a challenging role to play. The word of mouth is an important message carrier in rural areas. Infect the opinion leaders are the most influencing part of promotion strategy of rural promotion efforts. The experience of agricultural input industry can act as a guideline for the marketing efforts of consumer durable and non-durable companies. Relevance of Mass Media is also a very important factor.

The Indian established Industries have the advantages, which MNC don't enjoy in this regard. The strong Indian brands have strong brand equity, consumer demand-pull and efficient and dedicated dealer network which have been created over a period of time. The rural market has a grip of strong country shops, which affect the sale of various products in rural market. The companies are trying to trigger growth in rural areas. They are identifying the fact that rural people are now in the better position with disposable income. The low rate finance availability has also increased the affordability of purchasing the costly products by the rural people. Marketer should understand the price sensitivity of a consumer in a rural area. This paper is therefore an attempt to understand opportunities, challenges and strategies in the rural market. 

Indian Marketers on rural marketing have two understanding

(i) The urban metro products and marketing products can be implemented in rural markets with some or no change.

(ii) The rural marketing required the separate skills and techniques from its urban counterpart. The Marketers have many facilities to make them believe in accepting the truth that rural markets are different in so many terms.

Realities before the Marketers

70% of the Indian population lives in rural areas. This segment, commonly referred to as the 'bottom of the pyramid', presents a huge opportunity for companies. 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 Agricultural marketing denotes marketing of goods and services of the rural areas to the urban consumers or industrial consumers, whereas rural marketing involves delivering manufactured or processed goods or services to rural producers or consumers.

Opportunities in Indian Rural market

* More than 750 million people * Estimated annual size of the rural market

    FMCG

Rs. 70,000 Crore    

    Durables

Rs. 5,500 Crore    

    Agricultural-Inputs (including tractors)

Rs. 48,000 Crore    

    2 / 4 Wheelers

Rs. 8,400 Crore    


* In financial year 2001-02, LIC sold more than 50% of its policies in rural market.
* 42 million rural households (HHs) are availing banking services in comparison to 27 million urban HHs.
* Investment in formal savings instruments is 6.6 million HHs in rural and 6.7 million HHs in urban.
* In last 50 years, 45% villages have been connected by road.
* More than 90% villages are electrified, though only 44% rural homes have electric connections.
* Government is providing subsidiaries to the villagers to use other source of energy like Solar System and is now being used in large amount.
* Number of "pucca" houses increasing day by day.
* Rural literacy level improved from 36% to 59%.
* Percentage of BPL families declined from 46% to 25%.
* Out of two million BSNL mobile connections, 50% are in small towns / villages.
* 41 million Kisan Credit Cards have been issued (against 22 million credit-plus-debit cards in urban), with cumulative credit of Rs. 977 billion resulting in tremendous liquidity.

Challenges in Indian Rural market

Rural markets, as part of any economy, have untouched potential. There are several difficulties confronting the effort to fully explore rural markets. The concept of rural markets in India is still in evolving shape, and the sector poses a variety of challenges. Distribution costs and non-availability of retail outlets are major problems faced by the marketers. The success of a brand in the Indian rural market is as unpredictable as rain. Many brands, which should have been successful, have failed miserably. This is because most firms try to extend marketing plans that they use in urban areas to the rural markets. The unique consumption patterns, tastes, and needs of the rural consumers should be analyzed at the product planning stage so that they match the needs of the rural people.

Therefore, marketers need to understand the social dynamics and attitude variations within each village though nationally it follows a consistent pattern. The main problems in rural marketing are: -

* Understanding the Rural Consumer
* Poor Infrastructure
* Physical Distribution
* Channel Management
* Promotion and Marketing Communication

Dynamics of rural markets differ from other market types, and similarly, rural marketing strategies are also significantly different from the marketing strategies aimed at an urban or industrial consumer.
Strategies to be Followed in Indian Rural Market-

a) Marketing Strategy

Marketers need to understand the psychology of the rural consumers and then act consequently. Rural marketing involves more exhaustive personal selling efforts compared to urban marketing. Firms should abstain from designing goods for the urban markets and subsequently pushing them in the rural areas. To effectively tap the rural market, a brand must associate it with the same things the rural folks do. This can be done by utilizing the various rural folk media to reach them in their own language and in large numbers so that the brand can be associated with the myriad rituals, celebrations, festivals, "melas", and other activities where they assemble.

b) Distribution Strategy

One of the ways could be using company delivery van which can serve two purposes - it can take the products to the customers in every nook and corner of the market, and it also enables the firm to establish direct contact with them, and thereby facilitate sales promotion.

However, only the companies having excellent Infrastructure can adopt this channel. The companies with relatively fewer resources can go in for syndicated distribution where a tie-up between non-competitive marketers can be established to facilitate distribution. Annual "melas" organized are quite popular and provide a very good platform for distribution because people visit them to make several purchases.

According to the Indian Market Research Bureau, around 8000 such melas are held in rural India every year. Rural markets have the practice of fixing specific days in a week as Market Days called "Haats' when exchange of goods and services are carried out. This is another potential low cost distribution channel available to the marketers. Also, every region consisting of several villages is generally served by one satellite town termed as "Mandis" where people prefer to go to buy their durable commodities. If marketing managers use these feeder towns, they will easily be able to cover a large section of the rural population.

c) Promotional Strategy

Marketers must be very careful while choosing the mediums to be used for communication. Only 16% of the rural population has access to a vernacular newspaper. So, the audio visuals must be planned to convey a right message to the rural folk. The rich, traditional media forms like folk dances, puppet shows, etc., with which the rural consumers are familiar and comfortable, can be used for high impact product campaigns. Radio is also very popular source of information and Entertainment, Adds on radio can also be a helpful tool for marketers.

Conclusion

Thus, looking at the challenges and the opportunities, which rural markets offer to the marketers and the manufacturers, it can be said that the future is very promising for those who can understand the dynamics of rural markets and make use of them to their best advantage. A radical change in attitudes of marketers towards the cheerful and budding rural markets is called for, so they can successfully impress on the 750 million rural consumers spread over approximately six hundred thousand villages in rural India.

Bibliography

1) S. Neelamegham," Marketing in India, Cases and Reading, Vikas Publishing House Pvt. Ltd, III Edition, 2000.
2) Singh, Awadhesh Kumar ,Satyaprakash Pandey, "Rural Marketing Indian Perspective", New Age International Pvt Ltd, I Edition, 2005.
3) http://www.mbauniverse.com/ruralmarket.php
4) http://www.ibef.org/economy/ruralmarket.aspx
5) http://www.ibef.org/artdispview.aspx
 


Kamal Kant Bishnoi
Lecturer
Chetan Choudhary
Reader & HOD
MBA Department
Rajasthan Institute of Engineering and Technology
Jaipur
 

Source: E-mail February 24, 2010

          

Articles No. 1-99 / Articles No. 100-199 / Articles No. 200-299 / Articles No. 300-399 / Articles No. 400-499
Articles No. 500-599 / Articles No. 600-699 / Articles No. 700-799 / Articles No. 800-899 / Articles No. 900-1000
Articles No. 1001-1100 / Articles No. 1101 Onward / Faculty Column Main Page