India’s rural market holds high potential for increased consumer buying, as per the reports prepared by the NCAER. This paper explains the potential of the rural market and the issues of concern with regard to rural marketing.
Rural markets are becoming important for reasons of economic growth in these areas and increasing interfirm rivalry in urban market. The rural buyer is less educated, price sensitive, more traditional and is keen viewer of T.V and video programmes. Products for rural markets have to be simpler, easy to use, visually identifiable, affordable, communicated in an interesting style and available at the customers’ door step.
Rural consumer behaviour is a very complex phenomenon, which needs more efforts to understand, explain & predict. In order to get a clear understanding of the same, every marketer should realize that consumer behaviour is, in fact, an assumption every marketing manager must make, if he plans to hit the rural market.
The marketing program consists of numerous decisions on the mix of marketing tools to use. These tools consist of 4P’s of marketing i.e. product, price, place and promotion. The marketing mix is considered as the sole vehicle for creating and delivering customer value.
7 P’s of Rural Marketing in India
ABSTRACT
India’s rural market holds high potential for increased consumer buying, as per the reports prepared by the NCAER. This paper explains the potential of the rural market and the issues of concern with regard to rural marketing.
Rural markets are becoming important for reasons of economic growth in these areas and increasing interfirm rivalry in urban market. The rural buyer is less educated, price sensitive, more traditional and is keen viewer of T.V and video programmes. Products for rural markets have to be simpler, easy to use, visually identifiable, affordable, communicated in an interesting style and available at the customers’ door step.
Rural consumer behaviour is a very complex phenomenon, which needs more efforts to understand, explain & predict. In order to get a clear understanding of the same, every marketer should realize that consumer behaviour is, in fact, an assumption every marketing manager must make, if he plans to hit the rural market.
The marketing program consists of numerous decisions on the mix of marketing tools to use. These tools consist of 4P’s of marketing i.e. product, price, place and promotion. The marketing mix is considered as the sole vehicle for creating and delivering customer value.
Intoduction
What Rural Means??
“Typically, from an Indian census point of view, rural has been defined with a ‘deprivation’ orientation, rural being a landmass without access to continuous electricity, water, the stock market. There has been a correction in this view, however. Marketers today define rural as people living a different lifestyle as opposed to that of those who have settled in the bigger cities and towns. Rural is defined as pastoral in nature and as a mass of people who relate their income closely to the lands they till or use to raise their cattle and livestock”.
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“The Census of India defines urban India,” says Gupta of TSMG. “Urban India constitutes places with a population of more than 5,000, a population density above 400 per square kilometer, all statutory towns, that is, all places with a municipal corporation, municipal board, cantonment board, notified area council, etc. and with 75% of the male working population engaged in non-agricultural employment. All non-urban is rural.”
In simple words, we can say that rural India is a less developed countryside where the infrastructure is primitive, houses are of mud or brick but rarely painted well, the primary source of livelihood is agriculture, employment opportunities in the organized sector are negligible, eating choices are restricted to home-cooked, simple food, schools are far away, health facilities are rudimentary.
Marketing Mix
It refers to a set of actions, tactics, tools or variables that a company uses to promote and sells its brand and product in the markets. The 4P’s of marketing mix are:
Product: refers to anything that is capable of or can be offered to satisfy need or want?
Price: refers to the amount customers have to pay in order to acquire a product or services.
3 C’s of pricing
Customer Values
Competitor Prices
Cost of Company
Place: refers to point of sale
Promotion: This refers to all the activities undertaken to make the product or services known to and preferred among the consumers.
The Rural Market Environment in India
“The marketing man is a decider and an artist- a mixer of ingredients, who sometimes follow a recipe, developed by others and sometimes prepares his own recipe. And, sometimes he adapts his recipe to the ingredients that are readily available and sometimes invents some new ingredients, or experiments with ingredients as no one else have tired before.”
This paper is emphasized on understanding the marketing environment as it is the success key to effective marketing management for rural marketing. The rural market environment needs a separate examination as it varies significantly from that of the urban market. The rural customer shows distinctive characteristics which makes him/her different from urban buyers.
1. The Rural Consumer:
Size of Rural Consumer Group: We all know that the heart of India lives in its villages and the Indian rural market with its vast size and demand base offers great opportunities to marketers. 12.2% of the world lives in Rural India and to successfully tap this growing market is every marketer’s dream.
Characteristics of Rural Consumer Group
Location pattern:-Though the aggregate size is very large, individual subsets of this market tend to be rather small and disparate. Geographical, demographical, statistical, logistical differences are very apparent. Each of these market segments differs and requires different strategies to be formed. The face of Indian agriculture is changing from dry land and irrigated agriculture into high-tech and low-tech agriculture. Farmers in states like Maharashtra and Andhra Pradesh have reaped the benefits of adopting new age farming practices. This has radically changed the economics of farming, with the investment in these systems lowering the cost of cultivation, increasing yields due to integrated crop management practices and reducing the dependence on rainfall. As a result, disposable income has grown sharply. The aspirants are becoming climbers showing a sustained economic upturn as purchasing power is increasing in the rural markets. Further, due to the diversity of this market, marketers need to think, plan and act locally. It is therefore essential to develop an accurate Marketing Mix for selling to rural India.
Socio-economic position: – The sudden lure of rural India can be attributed to the socio-economic changes sweeping rural areas today. Increased productivity meant more income in the hands of the farmer who now wanted to buy the same products as his/her urban counterpart did.The process of income generation & creating hope for better standards of living was also accelerated by companies and banks adopting villages for an integrated rural development. So, while fertilizers companies’ interest in adopting villages lay in increasing consumption of their products, companies like TISCO, TELCO & ITG made it a part of their social commitment. The Integrated Rural Development Programme encompasses education, health, modern farming practices, land development & co-operative marketing of produce.
Culturally a Diverse and Heterogenous Market:-The rural market is not only a scattered market, but is also diverse & heterogenous. Rural consumers are diverse in terms of religious, social, cultural & linguistic factors. Various tiers are present, depending on the incomes like those of Big Landlords, Trades, Small Farmers, Marginal Farmers, Laborers’ & Artisans.
State to State Variation in Extent of Development:-There is also great deal of difference between different states in extent of development. The study provided by IMRB shows that each sate have different various parameters such as availability of health & education facilities, availability of public transport ,electricity, TV transmission, post offices and water supply & so on.
Literacy Level:-It has been estimated that rural India has a literacy rate of 28% compared with 55% for the whole country. The picture has been changing over the years. For e.g. a decade ago, the literacy rate in rural India was only 20%. The adult literacy programmes launched in the rural areas are bound to enhance the rural literacy rate in the years to come.
Lifestyle:-The rural consumers are marked by a conservative and traditional bound lifestyle. But the fact is that the lifestyle is undergoing a significant change. The change can be attributed to several factors such as:
Growth of income & change in income distribution
Growth in education
Enlarged media reach
Growing interaction with urban communities
Marketers’ efforts to reach out the rural market.
Buying Behaviour Undergoes Major Change
In recent years, some convergence in aspirations seems to be taking place between the urban and rural markets. The trend seems to be stronger among the younger generations. It is been found that aspirations of youth are same in both urban & rural market, the only difference is that rural youth are still not in a position to follow their aspirations as that of urban youth.
No stereotype Rural Consumer: – The low purchasing power/ low per capita income & low literacy level are the common traits of rural consumers. Rural consumers are traditional-bound, with religion, culture & tradition strongly influencing their consumption habits. But still, the rural consumers do not share a common buying behavior. There are consumers who can afford high-priced brands and are also willing to buy. There is thus great scope and need for segmenting the rural market on the basis of buying behavior.
2. The Rural Demands
Steady Growth: – The recent NCAER publication “The Great Indian Middle Class” further reveals that the Indian middle class consisted on 10.7 million households or 57 million individuals of which 36 per cent lived in rural areas. No wonder, the rural markets have been a vital source of growth for most companies. For a number of FMCG companies in the country, more than half their annual sales come from the rural market. Although with the substantial improvement in purchasing power, increasing brand consciousness, changing consumption pattern and rapid spread of communication network rural india offers a plethora of opportunities for marketer.
Composition of Rural Demand:- Many new products have entered the consumption basket of the rural consumer, they have started buying and using a number of modern products, which were unknown in the rural market. There are several products which have already well established in the rural market such as packaged tea, bath soaps, washing soaps, detergents, safety razor blades, scooters, motorcycles etc. On the other side there are many products, the rural market has overtaken the urban as the demand of motorcycles is also more in the rural market than the urban market.
Rural Marketing Mix
Product: Product for the rural market must be built or modified to suit the lifestyle & needs of the rural customers. The rural market is not a homogenous set of customers with preferences frozen in time.
The company should keep in mind that before developing the products for rural market, marketers must identify the typical rural specific needs. Urban products cannot be dumped onto rural markets without modifications. For instance, shampoos or soaps with distinctive, strong rose or jasmine perfumes are very popular with the rural women in South India. The urban women do not identify as strongly with these perfumes. Sachetization is also a distinctly rural-driven phenomenon. As demand in several categories is being created, intensity of use is quite low. On average, rural folk would use a shampoo only once a week. Habits take time to change and making unit sachet packs affordable is the key to inducing trial and purchase. Systematic, in-depth research that can help understand the depths of the mind of the villagers, their buying criteria, purchase patterns and purchasing power are an essential input while developing rural specific products or services.
In the rural market product developers should aim at eliminating all the cost-adding features, i.e., features which a rural consumer is unwilling to pay for as he sees no obvious utility. This would “redefine value” in the minds of the consumer and tremendously increase product acceptability.
The product strategies to be followed in rural market:
Newly/ Modified product
Utility Oriented product
Avoiding sophisticated packaging
Application of Value Engineering
Small unit packaging
Example:
Induce rural customers to buy and try the new product i.e trial by low unit packs, Sachets(HLL),Cavin Care -Chik, P&G-Vicks Vaporub, Godrej with 6ml sachet , One Rasna sachet can make six glasses Social & Cultural variations
Combi- Packs – Colgate offers toothbrush with small toothpaste
Family Packs-Britannia , Priyagold
Price: The villagers due to their price sensitivity are very cost sensitive.This does not mean that a rural consumer is a miser. He is not simply looking for the cheapest product rather he understands and demands value for money in every purchase that he makes. Pricing therefore is a direct function of factors including cost-benefit advantage and opportunity cost. Pricing offered to consumers should be for value offerings that are affordable.
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The consumer is looking for tangible price advantages today. It is believed that rural consumers believe in “smart buying”. A study revealed that the average rural consumer takes approximately 2 years to decide on buying a watch! He will not do so unless he is totally convinced that he is getting value for money. Impulse buys and purchases are very rare when considering the “value for money” factor that reigns supreme in most rural purchase decisions.
It must be remembered that the rural consumer does not have a budget problem. He has a cash flow problem. This is because the village folk receive funds only twice a year. At these times, he is capable of making high volume purchases. So, when there is a cash flow crunch, marketers need to provide financial products, schemes or solutions that suit the needs of the rural population.
The Pricing Strategies to be followed in rural market
Large volume- low emerging
Overall efficiencies and passing on benefits to the consumers
Low cost/value for money products
Low volume-low price
Example: –
Low cost products i.e Clinic-plus in 50 paisa, one rupee, two rupee pack, Colgate at Rs. 50 /-
HLL derives 50% of its revenue from rural areas, sells Lux shampoo in a four milliliter sachet priced at 50 Paisa and six-milliliter sachet priced at one rupee
Place: A village as a pace of promotion, distribution and consumption is very different from town and city. The most crucial link in ensuring the success of rural marketing efforts is distribution. In Rural India, the selection and use of distribution channels is a nightmare. As in Rural India’s 3 million outlets are located in 6.3 lakh villages. Thus, marketers are faced with the problem of feeding 3 million shops located in vastly diverse areas each of which records an average sale of only Rs.5,000 per outlet. Further problem is that even this sale is mostly on credit. The diversity in the distribution of shops is the self-limiting factor in terms of servicing the rural distribution network.
Rural distribution has a rigid hierarchy of markets that make channel decisions relatively structured. It is essential for rural marketing companies to understand this hierarchy. Rural folk are habituated to traveling once a week for their weekly purchases to a satellite town. For durables where the outlay involved is typically large, the purchase would be made in an assembly market for reasons of choice and availability of adequate cash flow. It is therefore not necessary for a marketer of TV sets to take their distribution channel all the way down to the village shop. A TV will not be sold there as the cash flow does not exist at that point in the hierarchy of markets. A television distributor must be present at assembly markets which are much smaller in number, more controllable, easier to reach and service. Keeping the hierarchy in mind will help decide the optimum level of penetration required to reach a critical mass of rural consumers.
Haats are the nerve centre of Rural India. They are a readymade distribution network embedded in the fabric of rural society for over 1000 years. Right from the time of Chandragupta Maurya, Haats are seen as a place for social, cultural and economic interchange.One in every five villages with a population of over 2000 has a haat. A lot of re-distribution also occurs through haats. This is because, a large number of retailers and sub-wholesalers buy from haats for their village stores. What is most attractive to marketers is that 90% + of sales in haats are on cash basis. Traditionally, in village shops a lot of credit sales occur due to the fact that in a small geographic area of a village, everybody knows everybody. Apart from the 90% cash sale, 5 to 7% is conducted on barter system and the rest 3 to 5% is on credit. Also attractive to companies wishing to use the system is the low selling overheads. Participation fees at haats are a flat Re.1 to Rs.5 per stall and this rate is common to a giant like Hindustan Lever and the smallest local seller.
Distribution costs must be reduced through optimum utilization of the network. Thus, incorporating haats in the distribution strategy of a rural marketing organization selling consumer goods and FMCG products (typically once a week purchase items) is a tremendous opportunity. Perhaps the other most important factor to consider while developing rural distribution strategy is that the move from transactional marketing to relationship marketing is most evident in the village market. A strong bond needs to be created with every consumer even in the remotest villages and smallest town.
The distribution strategies to be followed in rural market:
Segmentation
Covering of villages having population above 2,000
Distribution to feeder market or mandi town
Direct contact with rural retail.
Example: Samsung van displays all the products, the company has tied up with local distributors to showcase the Samsung range in local melas.
Promotion: Promotion aspects always create a challenge in rural areas as they have a very thin population density but are spreaded in the large remote area.
There are a lot of barriers that militate against homogenous media and message delivery. The rural consumer likes to touch and feel a product before making a choice. Demonstrations are undoubtedly the most effective promotional tool that shapes purchase decisions of the rural population. In today’s information era, it is very important for companies to wise-up on emerging technologies. It has in fact become a medium to attract larger audiences for a product demonstration. Technology must be used to prepare a database of customers and their requirements. The use of video using mobile vans and even large screen video walls at events should be arranged. Several visual communication and non-verbal communication are used by the companies to reach the rural audience as large proportion of the rural population cannot read or write. More importantly, in rural India, the word of mouth is the key influencer. Intermediaries are the foundation to rural distribution. If the intermediary understands and is constantly reminded about your product, then the end user will not be allowed to forget. The re-use capacity and colour of the container in which the product is packed is also a crucial factor. Infact, reusable packaging is considered a major aid in promoting sales for products in the rural market. Consumer and Trade schemes such as discount coupons, off season discounts, free samples, etc. encourage spending. Lucky draws and gift schemes are a major hit in most states. The use of local idioms and colloquial expressions are an excellent way to strike a rapport with the rural consumer and must be borne in mind when developing media plans and public relations programmes. The rural consumer is very down to earth but equally discerning and marketers need to step into the shoes of the rural folk while creating product promotion campaigns. Another unique feature of rural markets is that the Decision making process is collective. The persons involved in the purchase process – influencer, decider, buyer, one who pays can all be different. So marketers must address brand messages in their campaigns at several levels. Apart from regular household goods, several agribusiness companies have also started providing gift schemes with offers for free jewellery that influences the ladies to pressure the farmers to purchase agricultural inputs from select companies. This promotion strategy thus makes women influence purchase decisions that they would ordinarily not be involved in.
Youth power is becoming increasingly evident in villages. Rural youth bring brand knowledge to the households. This has forced several companies to change the focus and positioning of their products and services towards this segment that is growing in absolute number and relative influence.
The promotional strategies to be followed for promotion in rural market
TV
Radio
Print media
Cinema
Hoarding
Example:
1. Films on products like Vicks, Lifebuoy, Colgate and Shampoos are shown in rural cinemas halls.
2. LIC and Private insurance companies have been showing short movies in rural theatres to create awareness about life insurance
People:-An essential ingredient to any service provision is the use of appropriate staff and people. Consumers make judgments and deliver perceptions of the service based on the employees they interact with, therefore it is necessary for the companies to provide proper training to their staff. Staff should have the appropriate interpersonal skills, aptititude, and service knowledge to provide the service that consumers are paying for.
Process:- It refers to the systems used to assist the organisation in delivering the service. Banks that send out Credit Cards automatically when their customers’ old one has expired again require an efficient process to identify expiry dates and renewal. An efficient service that replaces old credit cards will foster consumer loyalty and confidence in the company.
Physical Evidence:- Physical Evidence is the element of the service mix which allows the consumer again to make judgments on the organisation. If you walk into a restaurant your expectations are of a clean, friendly environment.
Physical evidence is an essential ingredient of the service mix, consumers will make perceptions based on their sight of the service provision which will have an impact on the organisations perceptual plan of the service.
Cases of Rural marketing mix in India
1.Coca Cola
When Coca -Cola re-entered the Indian Market in the mid-1990’s , it took the high road to marketing and got nowhere. More recently it re-invented itself and its TV commercial showed Bollywood star Amir Khan first as a Punjabi Farmer and also in other rustic roles in different parts of India .Coca -Cola available at Rs. 5 a bottle Result was within months Coke was able to reach out to rural audiences in large numbers all over India .
2.Arvind Mills
When Arvind Mills discovered even the cheapest brand could not make dent in the rural markets .It introduced ready-to-stitch Ruf&Tuf Jeans with price as low as 195 a Piece The Jeans were distributed using local retail outlets in villages with population up to 5,000 .Tailors were trained and given Machine accessories needed to stitch heavy denim In about year and a half Arvind sold 50 Lakh Rug & Tuf kits because it had beaten the lowest-priced organized sector jeans around Rs. 300 at that time
Conclusion
Today, the rural market is blooming with the increase in the disposable incomes of the households. By nature, rural marketing is complex and studying the perception of rural consumers is always a difficult task unlike that of urban consumers. An effective communication not only provides information about products, but also educates the consumers regarding the use of products. Therfore, it is necessary that rural consumers have to be thoroughly studied so as to have better knowledge of rural marketing and work out appropriate marketing strategies.
The essence of modern marketing concept is to satisfy the customer, and naturally all the marketing activities should revolve around the customers and their buying behaviour. The consumers need to be guided in the proper direction in order to make a decision. There’s a necessity to raise the emotional involvement of consumers in order to prevent brand defection.
The marketers must recognize that rural marketing is primarily developmental marketing & must be willing to take an approach of ‘market seeding’ in the initial stages.
It is often said that markets are made, not found. This is particularly true of the rural market of India. It is a market meant for the truly creative marketer.
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