Rural marketing

Understanding rural markets a competitive edge in tapping the potential in rural india

The Indian rural market is much larger when compared to the urban market in terms of population and number of households and also by way of geographic dispersal. The rural market consists of about 100 million households with a population of around 700 million .But the rural areas are characterized by low per capita income ,low literacy, agriculture-dependent economy and low level of industrialization. These characteristics of rural india limit its capacity for consumption of goods and services. In recent times, however, the scene has changed due to the rapid progress achieved in agricultural development and allied activities such as animal husbandry, sericulture ,horticulture and the encouragement given to rural and cottage industries. This has increased the potential of marketing various consumer goods in rural areas.

Why marketing in rural areas?

Over the years, the government of india and various state governments have been emphasizing development of rural areas through investments in improving infrastructure, increasing productivity and by promoting modern agricultural methods. They have also been formulating and implementing schemes for employment generation. These efforts have resulted in making india`s rural economy comparatively more vibrant and prosperous.

The ‘Green Revolution’ has, in turn, brought about a socioeconomic revolution in Indian villages . The average per capita income of frames is on the increase and the manner in which they spend their disposable income has also changed. The rural market is not passive. It is vibrant and growing at a rapid pace. The villages have not only accepted modern living style. Farmers have become choosy in their buying. Apart from food and consumable items, they are interested in buying radios, television sets, DVD players, two wheelers, wrist watches, cooking gas, mixers and furniture.

The need to look at rural markets

Nearly three-fourths of the country`s consumers are in rural areas and one-half of the national income is generated there. The rural market began showing its potential in the 1960s and 1970s. Thereafter, the 1980s and the 1990s witnessed a steady development.

It is, however, during the late 1990s and the early years of the current century that marketers began to realize that they would need to top rural market for sustained growth. The growth in urban areas was slowing down and seemed to be heading towards saturation. Rural india is in comparison virgin territory and hence a land of great promise such as Hindustan Unilever, Procter & Gamble, ITC, Dabur, Marico, Colgate-Palmolive, Hero Honda, Coca-Cola and Pepsi, made a beeline to rural areas. In a bid to make their products more relevant to rural cosumers, they either, they either cut prices or launched smaller and more economical versions. This strategy has evidently helped, going by the significant share contributed by rural areas to the total revenue of several leading consumer product companies.

Problems and challenges in rural marketing

A number of companies have, thus, been trying to get a grip on the rural markets in a variety of ways, but they face several challenges. There is no question that the rural markets offer tremendous opportunities, but it is not all that simple to tap this potential in a smooth sailing way. This market bristles with a variety of challengers and every marketer has to work hard to face and overcome them. Some of the important issues to contend with are:

Ø Offering affordable and useful products in which the rural consumers find value.

Ø Reaching out to a widely dispersed market; especially tapping remote villages with small population.

Ø Seasonal and irregular demand (often linked to amount of rainfall and harvest seasons)

Ø Transportation bottlenecks – limited reach of media, low levels of literacy, diversity of languages and complexity of dialects.

Ø Competition from fake/imitation products.

Ø Inadequate banking and credit facilities.

Ø Problems in organizing marketing channel.

Rural consumer behavior

Understanding rural consumers forms the basic foundation for marketers to fine-tune their offers and be successful in rural markets. But many marketers tend to extend their understanding of urban consumers as well; or view rural consumers based on long-held stereotype images which are no longer valid. Therefore, the challenge is to examine the rural market without the blinkers of the urban mindset. The major factors that influence the buying behavior of rural consumers are:

Ø Socioeconomic environment of the consumer

Ø Cultural environment

Ø Geographic location

Ø Education/literacy level

Ø Occupation

Ø Exposure to urban lifestyles

Ø Exposure to media and extent of media reach

Ø Points of purchase exposure to products

Ø Involvement and influence of others in purchase

Ø Marketer`s efforts to reach out the rural market