Chapter1

RURAL-MARKETING CHAPTER 1

A silent revolution is sweeping the Indian country side. It has compelled marketing whiz kids to go rural. The marketing battle has shifted from cities to villages.

“Go rural” seems to be the latest slogan. Adi Godrej says“The rural consumer is discerning and the rural markets are vibrant. At the current

rate of growth it will soon outstrip the urban market. The rural market is no longer sleeping we are”

The real India lies in the villages. All smart marketers Indian as well as MNCs have revered this gospel.

Companies like Hindustan lever, Godrej, Colgate Palmolive, Parle Foods, Nirma works, Philips, have made in roads into the countryside. Rural reach is on the rise and it is fast becoming the most important route to growth.

RURAL MARKETING INTRODUCTION

Quite often rural mktg is defined in a narrower sense to include only mktg of agricultural produce.

Let us see how in phased manner, it’s definition & scope has been widened.

According to National Commission “Rural Marketing is a process which starts with a decision to produce a saleable farm commodity and it involves all the aspects of market structure or system, both functional and institutional based on technical and economic considerations and includes pre and post harvest operations, assembling, grading, storage, transportation and distribution”.

“Rural marketing can be defined as a function that manages all activities involved in assessing , stimulating and converting the purchasing power of rural consumers, into an effective demand for specific products and services and moving these products and services to the people in rural areas to create satisfaction and a better standard of living and thereby achieving organizational goals”.

Definition of rural marketing

Rural marketing involves the process of developing, pricing, promoting ,distributing rural specific product and a service leading to exchange between rural and urban market which satisfies consumer demand and also achieves organizational objectives

It is a two-way marketing process wherein the transactions can be:

1. Urban to Rural: It involves the selling of products and services by urban marketers in rural areas. These include: Pesticides, FMCG Products, Consumer durables, etc.

2. Rural to Urban: Here, a rural producer (involved in agriculture) sells his produce in urban market. This may not be direct. There generally are middlemen, agencies, government co-operatives, etc who sell fruits, vegetables, grains, pulses and others.

3. Rural to rural: These include selling of agricultural tools, cattle, carts and others to another village in its proximity.

Large, Diverse and Scattered Market: Rural market in India is large, andscattered into a number of regions. There may be less number of shopsavailable to market products. Major Income of Rural consumers is from Agriculture: Rural Prosperityis tied with agriculture prosperity. In the event of a crop failure, theincome of the rural masses is directly affected. Standard of Living and rising disposable income of the rural customers:It is known that majority of the rural population lives below poverty lineand has low literacy rate, low per capital income, societal backwardness,low savings, etc. But the new tax structure, good monsoon, governmentregulation on pricing has created disposable incomes. Today the ruralcustomer spends money to get value and is aware of the happening around him. · Traditional Outlook: Villages develop slowly and have traditionaloutlook. Change is a

continuous process but most rural people accept change gradually. This is gradually changing due to literacy especially in the youth who have begun to change the outlook in the villages.

Features of Indian Rural Markets:

Rising literacy levels: It is documented that approximately 45% of ruralIndians are literate. Hence awareness has increases and the farmers are well-

informed about the world around them. They are also educating themselves on the new technology around them and aspiring for a betterlifestyle. Diverse Socioeconomic background: Due to dispersion of geographicalareas and uneven land fertility, rural people have disparatesocioeconomic background, which ultimately affects the rural market. Infrastructure Facilities: The infrastructure facilities like cemented

roads, warehouses, communication system, and financial facilities areinadequate in rural areas. Hence physical distribution is a challenge tomarketers who have found innovative ways to market their products.

The term rural marketing which was earlier used us an umbrella term to refer to all commercial transactions of rural people acquired a separate meaning of great significance in 1990s. The evolution is explained below

Phase #1 :: ( Before mid 60’s ) Rural mktg referred to mktg of rural product in rural & urban areas & agricultural inputs in rural mkts. It was considered synonymous to “Agricultural mktg”

Scope of rural marketing

Green revolution ushered in scientific farming practices and transferred many poor villages into prosperous busy centers. As a result, the demand for agricultural inputs went up. Better irrigation facilities, soil testing, use of high yield varieties of seeds, fertilizers, pesticides, and employment of machinery like power tillers matches, harvesters, threshers, etc changed the rural scenario.

In this context marketing of agricultural inputs assumed significance. During this period the marketing of rural products received considerable attention in the general marketing framework. Village industries flourished and products like handicrafts, handlooms, textiles, soaps, safety matches, crackers etc, hit urban market on large scale.

Phase 2

During the two earlier phases , mktg of house hold consumables & durables to the rural mkts was not considered. In this third phase, it

assumed prime importance. India's industrial sector had gained importance and it

contributed to the growth of GNP. A new service sector emerged signifying the metamorphosis of agricultural sector into industrial society.

Due to the development programs of central and state governments and socially responsible business groups like Tata's, Birla's, Gonekas and others the rural areas witnessed all round socio economic progress. The economic reforms further accelerated this market. Steadily the rural market has grown for household consumables and durables.

Phase 3 after mid 1990

DEFINITION OF RURAL MKTG

TO RURAL TO URBAN

FROM URBAN1. Consumable & durable agricultural inputs2. Consumables3. Consumer durables

Outside the scope of Rural Mktg

FROM RURAL

Rural Artisans services & Products

1. Agricultural & Allied Production2. Rural Artisans & Rural industry products

Rural marketing can be seen as a function which manages all those activities involved in assessing, stimulating and converting the purchasing power into and effective demand for specific products and services, and moving them to the people in rural area to create satisfaction and a standard of living to them and thereby achieves the goals of the organization.

Rural marketing

The big question facing marketers entering the rural sector is whether it needs a transactional or developmental approach.

The role of rural marketing is more developmental than transactional. It is more process of delivering better standard of living and quality of life to rural environment taking into consideration the prevailing rural milieu.

Nature of rural market

Sl.no Aspect Transactional Development

1 Concept Consumer orientation, marketing concept

Society orientation, societal concept

2 Role Stimulating and conventional marketing

Catalytic and transformation agent

3 Focus Product market fit Social change

4 Key task Product innovations and communications

Social innovations and communications

5 Nature of activity

Commercial Socio cultural, economic

6 Participants

Corporate enterprises, sellers

Government and voluntary organization

7 Target group

Buyers Beneficiaries and buyers

Distinction between transactional & developmental marketing

Sl.no Aspect Transactional Development

8 Offer Product & service

Development project

9 Communication

Functional Developmental

10 Goal Profits, customer satisfaction, brand image

Market development and corporate image

11 Time frame Short-medium Medium –Long

12 Motivation Profit motive, business policy

Service motive, ideological or public policy.

The model of rural marketing represents a combination of transactional and developmental approaches.

Rural marketing process is both which is the outcome of general and rural development process. Initiation and management of social and economic change in the rural sector is core of the rural marketing process.

Innovation is the essence of marketing. It narrows down the rural and urban divide.

The process of change can be evolutionary and not revolutionary.

The exposure of rural ties to variety of marketing transactions puts them in the role of beneficiaries than just buyers of modern input.

Communication is the vital element of rural marketing. It should serve to reduce conflict encourage cooperation and strengthen competitive spirit between rural as well as within rural areas. Communication is the point of conversion of ruralite from an “induced beneficiary” to an “autonomous buyer”

The rural market can be classified in way to similar to urban market.

Consumer Market:Constituents : Individuals and householdsProducts: Consumables Food products,

toiletries, cosmetics, Textiles and Garments. Foot Wear, etc.

Durables : Watches, Bicycles Radio, TV, Kitchen appliances, Furniture, Sewing machine, wheelers etc.

Taxonomy of rural market

Constituents :agricultural and allied activities, poultry farming, fishing animal husbandry cottage health center school co-operatives etc.

Products : consumable seeds, fertilizer, pesticides, animal feed. Fishnets, medicines, petrol diesel etc.

Durables : Tillers, tractors, pump sets, generators, harvesters, boats etc.

Industrial market

Constituents : individuals, households, offices and production firms.

Services market: repairs, transport. Banking, credit insurance, healthcare, education, and communication, power etc.

Services market

Large Population (approx. 72%) Increasing prosperity Improving literacy levels Growth in consumption Changing Life Style Improved Life Cycle Mkt growth rates > than urban counter part Rural mktg is no more expensive & Remoteness is no longer a problem Help from Tele - Communication technology

to reach rural customers

Attractiveness of rural market

Rural markets hitherto found unattractive have become the new targets to corporate enterprises mainly for two reasons:

Urban markets have become congested with too many competitors. The markets have reached saturation point.

Rural markets have become the main street with potential for consumption of variety of products and services. For many products rural market provides a promise owing to lag in adaptation. It makes market entry easy.

Attractiveness of rural market

Large Population (approx. 72%) Increasing prosperity Improving literacy levels Growth in consumption Changing Life Style Improved Life Cycle Mkt growth rates > than urban counter part Rural mktg is no more expensive & Remoteness is no longer a problem Help from Tele - Communication technology

to reach rural customers

Rural Mkt offers high Business Potential

· Large, Diverse and Scattered Market: Rural market in India is large, and scattered into a number of regions. There may be less number of shops available to market products.

· Major Income of Rural consumers is from Agriculture: Rural Prosperity is tied with agriculture prosperity. In the event of a crop failure, the income of the rural masses is directly affected.

Changes in rural market

Standard of Living and rising disposable income of the rural customers It is known that majority of the rural population lives below poverty line and has low literacy rate, low per capital income, societal backwardness, low savings, etc. But the new tax structure, good monsoon, government regulation on pricing has created disposable incomes. Today the rural customer spends money to get value and is aware of the happening around him.

Traditional Outlook: Villages develop slowly and have a traditional outlook. Change is a continuous process but most rural people accept change gradually. This is gradually changing due to literacy especially in the youth who have begun to change the outlook in the villages


Rising literacy levels: It is documented that approximately 45% of rural Indians are literate. Hence awareness has increases and the farmers are well-informed about the world around them. They are also educating themselves on the new technology around them and aspiring for a better

lifestyle. Diverse Socioeconomic background: Due to

dispersion of geographical areas and uneven land fertility, rural people have disparate socioeconomic background, which ultimately affects the rural market.


Infrastructure Facilities: The infrastructure facilities like cemented roads, warehouses, communication system, and financial facilities are inadequate in rural areas. Hence physical distribution is a challenge to marketers who have found innovative ways to market their products.

As part of planned economic development, the government is making continuous efforts towards rural development. In this age of liberalization, privatization and globalization, rural market offers a big attraction to the marketers to explore markets that are untapped.


Population Occupation Pattern Income Generation Location of rural population Expenditure Pattern Literacy Level Land Distribution Land Use Pattern Irrigation Dvpt Programmes Infrastructure Facilities - Rural Electrification - Rural Communication : i) Road Network ii) Rail Network iii) Cinema

Houses iv) Television v) Postal

System

rural market environment

Though Indian rural mkt offer vast untapped potential, it is not so easy to operate because of variety of problems.

Rural Mktg is TIME COMSUMING & requires CONSIDERABLE INVESTMENTS in terms of EFFORTS in evolving appropriate mktg strategies to tackle these problems.

Problems of rural market

A. Underdeveloped people & Underdeveloped market.

B. Low Literacy Levels C. Lack of Proper Physical Communication

Facilities.D. Media for Rural Communication.E. Many Languages & dialects.F. Vastness & Uneven Spread.G. Low per capita incomes.H. Logistics, Storage , Handling & Transport.I. Product Positioning.J Hierarchy of MarketsK. Seasonal Demand

Problems of rural market

To solve the problems of rural markets in India, the following suggestions can be used by marketers:

1. Regarding the problems of physical distribution, the marketer may have a joint network of stockiest/ clearing-cum-forwarding (C&F) agents at strategic location for facilitation of physical distribution for its products in the rural market. The main advantage of this scheme is that the costs of physical distribution can be shared by the companies and stockiest. The combination of different modes of transport based on availability of tracks will be beneficial to the companies. Some of the leading companies use delivery vans in rural areas for resolving the distribution problems in rural market. The delivery van takes the products to the retail shops in every corner of the rural market and it enables the company to establish direct sales contact with majority of the rural consumers which helps in sales promotion

Solutions to problems of rural markets:

2. The rural market is composed of a number of retail sales outlets along with fair price shops under the public distribution system. It is suggested that the government should encourage private shopkeepers and cooperative stores to come forward and establish their business in rural areas instead of the weekly market known as weekly bazaar. Fertilizer companies have opened their outlets for proper distribution of fertilizer among the farmers. Similarly, the companies dealing in consumer goods can apply this model. The company may also appoint a number of retailers in and around the feeder towns and attach them to the stockiest who distributes the goods to the retailers as per the potential of the market. This system has the benefit of penetrating into the interior areas of the rural markets.

3. To solve the problems of sales force management, it is suggested that the company takes due care in the recruitment and selection of sales people because the traits they require are different from urban and suburban sales persons. For the rural markets, only those sales people should be preferred for selection who is willing to work in rural areas. They must be aware of the local language and must have the patience to deal with rural customers and can discharge the duties of a bare-footed salesman. Administration of such a large and scattered sales force, supervising and supporting them in sales calls, guiding them, attending to their official and personal problems, and motivating them for better results should be an exacting task for the sales manager. Thus, the people operating in rural areas should invariably be from the rural background and should have a missionary zeal to serve the rural masses.

4. With reference to marketing communication in rural areas, the company should use organized media-mix like TV, Radio, cinema and POP(point of purchase) advertising. Television is gaining popularity in the rural areas but due to poor supply of electricity, radio is performing significantly better. Since, the rural people need demonstration, short-feature films with disguised advertisement messages, direct advertisement films and documentaries that combine knowledge and advertisements will perform better rural marketing communication. Here the companies may also use audiovisual publicity vans, which may sell the products with promotion campaign. To attract the rural consumers, companies can organize village fairs, dance and drama shows, group meetings to convince the rural consumers about the products and services.

The rural market in India is quite fascinating and challenging in spite of all the difficulties existing. The potential is enormous. Even though, these markets have weaknesses they also have tremendous opportunities which should be availed by the marketers. It is well known that “Markets are created and not born”. The market so created should be tapped effectively. An ideal example is that of LIC. The Life Insurance Corporation of India generates life insurance business by appointing the insurance agent from the village itself so that he can easily convince his near and dear ones. LIC started a scheme called Gram Vikas where the Sarpanch is given a target to sell a minimum of 10 policy plans and the commission so earned is spent on the development of their respective villages. The marketers have to come up with innovative ideas through which the villagers also get involved in getting business from their respective villages. The Indian rural market is quite fascinating and challenging. It provides tremendous opportunities which beckon a marketer to explore.

Conclusion

Consumer is the basic foundation of every business. What consumer see, thinks, prefers and buys is of great importance to marketers to fine tune their marketing offers and achieve high level of consumer acceptance and Satisfaction.

Chapter 2 The rural consumer

The rural consumers are classified into the following groups based on their economic status:

The Affluent Group: They are cash rich farmers and a very few in number. They have affordability but not form a demand base large enough for marketing firms to depend on. Wheat farmers in Punjab and rice merchants of Andhra Pradesh fall in this group.

The Middle Class: This is one of the largest segments for manufactured goods and is fast expanding. Farmers cultivating sugar cane in UP and Karnataka fall in this category.

The Poor: This constitutes a huge segment. Purchasing power is less, but strength is more. They receive the grants from government and reap the benefits of many such schemes and may move towards the middle class. The farmers of Bihar and Orissa fall under this category.

Classification of rural consumer

Occupation Age and life style Economic situation Life style Personality and self concept Psychological factors

Characteristics of rural consumer

• More perplexing b’coz of a singular lack of consistency in groups which are homogeneous in parameters of demographics –age ,occupation ,education, income

For low involvement products there is a definite homogeneity among people with similar demographics and psychographics b’coz of common perceptions of message, content ,& imagery of brands

Factors affecting CB • Cultural factors • Social factors • Technological factors• Economic factors• Political factors• Set of values , perceptions, preferences & behaviors through the

family or other key institutions involved at each stage of life.• Behavioral norms & societal acceptance.

Rural consumer behavior

It is the most fundamental determinant of person’s behavior. Rural India lives in a society which is bound by culture. As the child grows in rural environment he acquires a set of values, perceptions, preferences, and behaviors, through family or other key institutions involved at each stage of his life. The time-tested true behavior exhibited by a collective group id therefore determined by culture. The degree of impact of culture will have on behavior depends on its intermingling with other cultures, the influence of sub-cultures and the evolving of a hybrid culture.

Cultural factors

A consumer is influenced by newly emerging social factors that are emerging in the environment he lives and works in. these supplements the traditional reference groups, the family, friends, opinion leaders. Emergence of new institutions in rural India, which have brought forward new reference points and influencers in the form of professional workers such as anganwadi workers, the auxiliary Nurse Midwife, Self Help Groups or members of community based programmes etc.

Social factors

Technology has an impact on the occupation and lifestyle of the rural people. Occupation like dairy poultry farming and animal husbandry have become more productive and profitable. New technology has boosted the income of rural folks, it has reduced. New technology has boosted the income of rural folks. It has drudgery of manual workers. It has saved both time and energy and has made the framework acceptable even to the educated youth.

Technological factors

The rural economic environment is characterized by the following features

Poverty 2.8% below poverty line per capita income 1200 per month.

Low income occupations 70% in agriculture and 21% in services.

Economic factors

The philosophy and decisions of the ruling party and the thinking of rival parties greatly influence the fortunes of rural people. The governments at the center and state levels are by and large helpful to rural people. However the development plans so far the urban are benefitted more than rural. A emphasis has been laid down on developmental programmes and few highlights are as follows

Four fold increase in outlay Programmes for self employment

Political factors

The buying decision process involves a logical sequence of five steps

Need recognition:-when the buyer recognises a gap between his desired state and the actual state buying process starts. Such recognition is caused by stimuli either internal or external. At this stage the marketer should help consumers identify their current and future problems and felt latent needs. To do this marketers have to research on consumer problems and needs.

Buying decision process

The consumers try to find information pertaining to their want satisfying products to make the right choices. The amount of information required depends on

Type of product-convenience shopping or specialty good

Nature of product-complex ,high-tech or simple and easy to distinguish.

Personal –family, friends, neighbors'. Commercial- advertising sales people displays Public – TV, Radio, Internet Experiential- handling, examining, using the product.

Information search

The evaluation process may be done more carefully and logically in some cases for example consumer durables. In case of goods which are consumed in one shot the evaluation may be less. Evaluation is designing and applying suitable creteria.

Evaluation of alternatives

All the existing brands in the market make a total set. Through information search consumer will become aware of some brands in the total set. Awareness set consist of brands which the consumer, is aware of the brands, which meet initial buying criteria, will be considered for further evaluation. They make up consideration set. Through application of final criteria the consumer evolves his choice set. All brands are acceptable to the consumer. However final choice will be made in favor of one brand. The factors which influence final choice

Attitude of others Unanticipated situational factors Perceived risk.

Purchase decision

A buyer feels satisfied when the perceived product performance is close to his or her expectations. If it exceeds expectation the customer is delighted. If it falls short of expectation the customer is disappointed. He develops cognitive dissonance.

Post purchase feelings

A persons whose word acts and actions informally influence the actions or attitude of other is opinion leader. The influence is informal and usually verbal. Opinion leadership can be nonverbal based on observation of behavior. The leadership comes from social status, power or success in public life

Opinion leaders exert a greater influence in products and services that directly impact their occupations and sources of livelihood, or significantly improve their daily living conditions rather than like those of urban India who mostly influence consumers for a range of products that reflects their lifestyles are status symbols or are items of conspicuous consumption.

Opinion leadership process

The flow of technology from international boundaries to metros to cities to towns, to kasba to the village to the rural consumer is long chain. This long chain ensures that rural consumer is less exposed to and therefore less aware of products and services evolving regularly in the market. Also the reach of communication achieve is through work of mouth especially large area is not covered by the mass media. While external environment is limited rural consumer is also limited in his ability or desire to adopt innovations due to low levels of literacy.

Diffussion of innovation

Brand value, brand loyalty are terms and concepts long familiar to the urban consumer. But the rural consumer is only now beginning to appreciate the relevance of brands and their meeting wants and needs.he is faced with lot of choice as more brands appear on rural retail shelves.

Some brands like Ghari, Parle-G, Lux, Fair and Lovely and Colgate were entrants to rural markets and have gained high acceptance over a period of time.

Brand loyalty