Chapter IV

Rural and Urban Markets: A Comparative Analysis

Learning objectives of this chapter:

• Understand the factors that differentiate urban and rural markets and create rural-urban divide

• Comprehend the consequent differences in urban and rural consumer behaviour

Factors Causing Urban-Rural Divide

Factors Contributing Factor (in %age)

Infrastructure 42%

Income 31%

Lifestyle 19%

Interaction 8%

Source: Rajesh K. Shukla, “Rural Markets: The Next Frontier for Manufacturers”, Rural Asia, BIMTECH, 2005

Parameters Differentiating Urban and Rural Markets

• Infrastructure• Socio-cultural background• Accessibility• Media Reach & Habits• Rural Sales Promotion• Nature of Competition

Media Habits in Rural and Urban Areas

Media habits Urban Rural

TV Viewing

Female viewing 39% 28%

Satellite channels 20% Around 2%

Newspaper readership

40% 32%

Reading any magazine

8% 6%

Cinema habits

Going to cinema 54% 43%

At least once a month

12% 11%

Radio listening

Radio 25% 36%

AIR 18% 26%

Vividh Bharti 15% 23% Source: “The Rural: At the Cusp of Change”, Rural Asia 2005 19th May 2005

Reach of Media in Rural Areas

Reach of Media Urban : Rural Penetration

TV sets per 1000 individuals

146:61

Press 3:1

Television 2:1

Satellite Television 5:1

Cinema 2:1

Internet 27:1

Radio (VB + PC + FM) 1.3:1 Source: NRS-2003, in Phadnis A., “The two-in-one nation!”, The Hindu Business Line, 2005

Differences in Consumer Behaviour in Rural and Urban Markets

a) Need based Buyer Behaviour of Rural Consumers

b) Conscious Decision-making by Rural Consumers

c) More Value for Money Decision making

d) Consensus Decision Making by Rural Consumers

e) Innate Resistance to Change amongst Rural Consumers

f) Different Lifestyle and Product Usage Environment

g) Different Perception with regard to Marketing Stimuli

Summary: Points to Ponder

• It is not only the income alone, but also host of other factors that distinguish rural markets from urban market.

• Difference in the availability of the infrastructure is the major difference between the two markets.

• Differences in socio-cultural background of consumers in two markets significantly differentiate the consumer’s behaviour in these two markets.

• The challenges in distributing goods and services in the rural market justify the requirement of separate rural marketing effort and approach.

Summary: Points to Ponder

• The media reach and media habits are very different in urban and rural markets; creating need for different promotion strategies for the two markets.

• Nature of competition, response towards pricing and branding are also quite different in the two markets.

• There are significant differences in the two markets regarding: lifestyle of the consumers and their desire to change, How they perceive the marketing stimuli? How they decide to buy? Why they buy? The environment in which product is used.

• Overall consumer behaviour and consumer decision-making process are significantly different in the urban and rural market, which justify approaching the rural market and rural consumer in a manner different from the urban one.