Marketing communication and promotion poses problems in rural markets. There are many constraints emanating from the profile of the audience and the availability of media.
The literacy rate among the rural consumers being low, the printed word has limited use in the rural context. In addition to the low level of literacy, the tradition bound nature of the rural people, their cultural barriers and taboos and there overall economic backwardness adds to the difficulty of the communication task. The situation is further compounded by the linguistic diversity. Rural communication has to necessarily be in the local language and idiom. The constraints of media further compound the difficulty. It has been estimated that all organised media put together can reach only 30 per cent of the rural population of India TV is an ideal medium for communicating with the rural masses. But its reach in the rural areas is limited even today. As regards the print media, the various publications reach only 18 per cent of the rural population. Even in areas reached, the circulation is limited. And as already mentioned, the low literacy level of the rural population acts as a further inhibitor in the use of the print media in rural communication. Cinema is relatively more accessible. It has been estimated that 33 per cent of the total cinema earnings in the country come from rural India. Rural communication has also become quite expensive. For rural communication to be effective, repeat exposures is a must; and if the gap between exposures is long the message loses its edge during period. These factors make rural communication more expensive. Rural communication has to go through all the time consuming stages of creating awareness, altering attitudes and changing behaviour. In addition, it also has to work against deep-rooted behaviour patterns.
In short, the crux of marketing communication in the rural context is one of finding a medium’ that will deliver the required message in a cost effective manner to target an audience that is predominantly illiterate.
Consumer/market composition related problems.
- The literacy rate is low. Therefore usage of print media or for that matter any print material is redundant. Moreover even the segment that can be serviced by printed material is multi-lingual in nature.
- There is social backwardness in rural areas. This implies that in most of the consumer durable segment the user is seldom the buyer or the decision maker.
- There is an indifferent attitude towards the purchase of certain goods such as packed food, high price premium soaps, hair oils, toothpaste etc. because they are used to the traditional way of consumption.
Media related problems.
About 30% of the rural masses can be reached through organized media such as TV, radio, newspapers etc. Theoretically TV covers 25% of the rural population, radio about 90% and the press around 20%. But in reality the %’s can be still lower.
Solving of promotion and communication problems
Media Mix: Apart from the organized media like TV, Radio, Newspaper and the press, the rural marketer or the advertiser is expected to make correct use of the following:
- Hoardings in the market place
- Van publicity
- Village mela kind of events
- Sponsorship to drama troops
- Organizing as well as advertising lottery tickets
- Use of bus tickets as a method of advertising
- Post and telegraph publicity
- Effective point of purchase advertising
- Puppet shows (both sponsorship as well as advertising)
- Music rewards and mike announcements
Interpersonal Media: Interpersonal media has a special advantage in rural marketing in the sense that it facilitates 2 way communication and interaction. Infact it is observed that rural buyers prefer face-to-face communication. They take and adhere to advice from the seller in the most responsive manner. The interpersonal media can be conducted in the following manner:
- Group meetings of consumer or prospects (prospective buyers) with the marketing people.
- Information centers or service centers where rural consumers can sort information and advice regarding the use of certain products such as agricultural inputs and machinery.
- Live demonstration about products.
- House to house or door-to-door promotion campaign.
- Sponsoring product related quizzes and other contest in schools or at community centers.
- Sponsoring local sports, festivals or cultural events.
Let us now turn to personal selling and sales force management in the rural context. As a general rule rural marketing involves more intensive personal selling effort compared to urban marketing.
Rural Marketing Calls for Some Unique Traits on the Part of Salesmen
While the basic traits of personal selling such as empathy, enthusiasm, communication skill and knowledge of selling techniques are required in equal measure by urban and rural salesmen, the latter require certain additional traits and capabilities in order to match the peculiar conditions of the rural market.
Willingness to Get Located in Rural Areas
First of all, only those who are genuinely happy in living and working in the villages can become good rural salesmen. It is common knowledge that the rural areas lack modem amenities compared with the urban areas, Because of this factor, salesmen are generally reluctant to work in rural centres. To circumvent this problem, some firms locate their salesmen in towns and allow them to cover the rural areas assigned to them from these towns. Experience has shown that such an arrangement does not produce optimum results. Experience has also shown that successful rural marketing firms locate their rural salesmen right in the midst of the rural market to be covered. Lipton India for example, has located one of its salesmen in Khategaon, an interior place in Deva district in Madhya Pradesh. It takes three hours by bus to reach the location from Indore Similarly, it has located a salesman at Anthiyoor in Tamil Nadu, which can be reached (only after a 2 1/2 hours journey by bus from Coimbatore followed by half an hours walk through paddy fields. The company proudly cites this practice as one main source of its bazaar power.
Location is just the starting point. The salesmen must have proper acquaintance wi6 the cultural pattern of rural life in the given rural territory. Since the cultural pattern of rural communities differs from one another, a cultural background that is in consonance with the culture of the given rural community is a specific requisite of success for the rural salesmen. Urban markets in contrast, present a cultural convergence.
Rural salesmen must also be able to guide the choice of products. They should not hook the customers into buying all the products in the catalogues. On the contrary, they must help them eliminate items that are outside their specific requirements and those that are beyond their financial reach.
Attitude factors are of particular significance in the rural context. For example, the rural salesmen must have a great deal of patience, as their customer is traditional and cautious person. Perseverance is another essential trait. It will not be possible for the rural salesman to clinch the sale quickly. He may have to spend a lot of time with the customer and make several visits to him to gain a favourable response from him.
Knowledge of the Local Language
Another special requirement is that the rural salesman should be well versed with the local language. Whereas his urban counterpart can successfully manage with English and a working knowledge of the local language, the rural salesman needs a strong background of the local language. In fact, he has to go one step further; he must be well versed in the specific lingo and idiom of the local area/community, for, in rural India, within each major language group, the colloquial expressions and speaking manners vary considerably from locality to locality.
Capacity to Handle a Large Number of Product Lines
The rural salesmen are often required to handle a much larger number of product lines compared with their urban counterparts. In urban marketing the salesmen are able to generate economic size of business through a limited number of product lines. As such, their employers do not have to load them with too many items. The rural salesmen on the contrary, usually do not generate economic volume of business if they handle just a few products. They are compelled to handle a large variety of items. Quite often, the items differ widely from one another. In other words, the rural salesmen are required to become a jack of all trades. The rural salesmen are also required to travel more compared with their urban counterparts. Whereas the urban salesmen move in highly concentrated and compact market segments, the rural salesmen have to cover larger territories and scattered customers. Their workload and strain could therefore be more.
Rural selling also involves greater creativity. Often, the products concerned may be very new in the rural context. The rural salesmen cannot sit back and say that it will take, several years for a particular product to penetrate the rural market. On the other hand, he must endeavour to introduce them in the rural areas through creative selling, using the consumption pioneers and opinion leaders. Rural marketing also presupposes the delivery of a new standard of living to the rural masses. It is essentially developmental marketing. The rural salesman has to be a carrier of a developmental message to the less privileged rural community.
Solving Sales Force problems by managing sales force in rural areas
Managing the Rural Sales Force
In tune with the special requirements which the rural sales force has to meet, the task of sales force management too carries certain added dimensions in the rural context. In selecting the salesmen, in giving them orientation, in motivating them and in developing them the sales manager has to adapt to the unique requirements of rural selling. For example, while providing orientation to the newly recruited rural salesmen, the sales manager may have to devote a longer time. And mere classroom training will not meet the requirements of orientation of rural salesmen. The salesmen need comprehensive on the job coaching in selected village markets. And they need to be educated about the rural marketing environment in addition to being trained in salesmanship and selling techniques. The rural sales manager must also support his salesmen with non-conventional means of market promotion suitable to the rural consumers. Rural salesmen also need more intensive sales training & as they have to handle a variety of products.
In short, sales force management in the rural context becomes an exacting job, especially when the firm has big stakes in rural marketing and when it operates on a nation wide basis. For example, Hindustan Lever’s rural salesmen have to cover 70,000 rural locations. Administering such a large and scattered sales force, supervising them, supporting them in sales calls, coaching them on the job, attending to their official and personal problems and above all, motivating them for better results in an exacting task for the sales manager.
Organizing an effective distribution channel is the second major task in rural marketing. This task too is beset with many unique problems.
Problems in Channel Management
a. Multiple tiers, higher costs and administrative problems
In the first place, the distribution chain in the rural context require large no. of tiers, compared with the urban context. The long distances to be covered from the product points and the scattered locations of the consuming households cause this situation. At the minimum, the distribution chain in the rural context needs the village level shopkeeper, the mandi level distributor and the wholesaler/ stockists in the wholesalers / stockists in the town. And on top of them, it involves the manufacturer own warehouses/ branches office operations at selected centers in the marketing territory. Such multiple tiers and scattered outfits push up costs and make channel management a major problem area.
b. Scope for manufacturers own outlets limited; greater dependence
The scope for manufacturers direct outlets such as showrooms or depots is quite limited in the rural market unlike in the urban context. It becomes expensive as well as unmanageable. Dependence of the firm on the intermediaries is very much enhanced in the rural context as direct outlets are often ruled out. But controlling such a vast network of intermediaries is a difficult task. Control is almost indirect. And because of these factors the firm has to be more careful while selecting the channel members in the rural context.
c. Non availability of dealers
In addition, there is the problem of availability of dealers. Many firms find that availability of suitable dealers is limited. Even if the firm is willing to start from scratch and try out rank newcomers, the choice of candidates is really limited.
d. Poor viability of the retail outlets
Moreover, sales outlets in the rural market at the retail level suffer from poor viability. A familiar paradox in rural distribution is that the manufacturers incurs additional expenses on distribution and still the retail outlets find that the business is not remunerative to them. The scattered nature of the market and the multiplicity of the tiers in the chain use up the additional funds the manufacturer is prepared to part with. And no additional remuneration accrues to any of the groups. Moreover, the business volume is not adequate enough to sustain the profitability of all the groups and the retail tier is the worst sufferer.
e. Inadequate bank facilities
Distribution in rural markets is also handicapped due to lack of adequate banking and credit facilities. Rural outlets need banking support for the three important purposes:
- To facilitate remittances to principals and to get fast replenishments of stocks.
- To receive supplies through bank
- To facilitate securing credit from banks
As banking facilities are inadequate in the rural areas, the rural dealers are handicapped in all these aspects. It is estimated that there is only one bank branch for every fifty villages.
Analysis shows that many companies hesitate to venture into rural markets largely because of the problems on the distribution front. They find it uneconomic to operate outlets in rural areas as in their perception, cost of selling, cost of transportation, cost of sub – distribution and cost of servicing the outlets are all very high in the rural market.
Possible Approaches for Effective Channel Management in the Rural Context
Taking due note of the difficulties, let us see how a firm can go about these tasks.
The Existing Market Structure
It has been estimated that the Indian rural market is composed of 22,000 primary rural markets and 20 lakh retail sales outlets of which nearly one lakh are fair price shops of the Public Distribution System (PDS). One retail shop serves on an average 60 to 70 families in the rural areas. The structure involves stock points in feeder towns to service these retail outlets at the village level. The stock points belong to either the manufacturer or the marketer / distributor for the area. In either case, the stock point in the feeder town is the key to rural distribution.
The Available Channel Choices
Today, the channel types that are available in the rural markets are as follows:
- The private shops
- The co operative societies
- The Fair Price Shops (FPS), (co operatives or private), of the PDS
- The village shandy or weekly market
Out of the above, the cooperative societies are mainly concerned with the distribution of agricultural inputs and the FPS with the distribution of essential commodities consumed by the common man. The ‘village shandy’ is a widely used channel of the rural market. But its role in marketing branded products is somewhat limited.
The Private Village Shops
For a large variety of consumer products, the private shops are the main channel in the rural markets; they are also the cheapest and the most convenient channel to align with. As such, we shall examine in some detail how the private village shops are utilised by the business firms in their rural distribution effort.
According to a census of retail outlets carried out by the Operations Research Group(ORG), there are 2.02 million sales outlets in rural India, with a major chunk constituted by the private shops. In fact, the private village shops are seen to be one of the cheapest distribution channels in the world. This is quite striking, considering the many handicaps with which the village shopkeeper in India has to operate. He is forced to deal in a large number of products in order to make his operations viable. That means a larger inventory. The longer lead time for replenishments from the urban based production point enlarges the inventory holding further. And as his sales are not uniform throughout the year, he has to carry the inventory over a longer period of time. All these factors lead to the blocking up of his capital. The scope of compensating for the higher costs through increased mark up is rather limited. He cannot add a higher mark up on many of the products he is handling simply because the consumer he is catering to cannot afford to pay a higher price. Nor is he able to make up by increased turnover. The average daily turnover of a rural shop is often less than Rs200. Even this level of turnover is generated only when he extends credit to his customers. And he incurs additional expenses for the frequent trips he has to make to the supply points in the towns/market centres. But in spite of all these handicaps of low turnover, high inventory costs and inadequate marketing support from the principals, the village shopkeeper operates quite efficiently. He achieves this feat largely through his inborn ability for astute management of money and other inputs. He also puts in hard work. He keeps his shop open for 14 hours a day compared to the 8 hours service provided by the urban shops. And he keeps his shop open for 365 days in the year with the support of his wife and children and ensures that he does not miss a single possible sale. In fact, it is mainly this human labour, the cost of which neither, gets accounted or paid for that makes the traditional private village shops of India one of the cheapest distribution channels in the world.
It is quite natural that firms seeking an effective presence in the rural market willingly embrace the private village shops as the major component of their distribution outfit. And on their part, the village shops function as an effective bridge between the scattered rural consumers and the urban-based producers.
Organising one’s channel out of these private shops, however, requires assiduous efforts on the part of the firm. It has to select its outlets from out of existing shopkeepers or select a few freshers and appoint them as the outlets. The choices are usually confined to the following categories:-
- Existing traditional private shops
- Money lenders willing to branch off to trade
- Land owners willing to branch off to trade
- Educated Unemployed persons
The firm has to select personnel from among the above groups depending on the product line and other relevant factors and then train them and develop them into competent dealers.
A concept that has come to be known as satellite distribution can be tried in developing a distribution channel in the rural market. Under this system, to start with, the firm appoints stockists in feeder towns. They take care of financing goods, warehousing of goods and sub- distribution of goods in the area covered by the feeder town. The firm also appoints a number of retailers in and around the feeder towns and attaches them to the stockists. The firm supplies the goods to the stockists either on cash or on credit or on consignment basis. The stockists take care of the sub-distribution job on the terms and conditions determined by the firm.
The sales volume of the retailers will vary depending on the potential of the area covered and the capacity of the dealer concerned. Over a period of time, some retailers grow in terms of business turnover. If such retail points also happen to be transportation centres within the feeder town area, the firm elevates them as stockists. The area of operation of the original stockist shrinks in this process, but care is taken to see that his, volume of business does not shrink. This is achieved, in practice, on account of the growth in demand and deeper market penetration. If twenty retailers operate in the network of an original stockist, five or six of them get elevated over a period of time as stockists. Out of the retailers some remain attached to the original stockist and others are attached to the new stockists, depending on location, service convenience and other relevant factors. The process continues as long as the market keeps expanding just like the second-generation stockists, a set of third generation stockists get established in course of time. And at any point of time, enough retail points invariably hover around a particular stockist. Hence the name satellite distribution. The main advantage of this system is that it facilitates market penetration in the interiors of the rural market. However, the firm must ensure that in the process, the motivation of the earlier generation stockists is not destroyed due to overzealous and premature elevation of the retailers into stockists.
The main problems in physical distribution in the rural context relate to:
- Inadequate railways
- Bad or no roads
- Immediate carriers or cargo operators
b. Warehousing Problems
- No electricity (only 35% of India have electricity)
- Unavailability of godowns
- Marketing purposes
c. Communication Problems
- Only 3% of India is connected by phones
- Unreliable post and telegraph facility
Transportation infrastructure is quite poor in rural India. Though India has the 4th largest railway system in the world, many parts of the rural India remain outside the rail network. As regards road transport, nearly 50% of the 576000 villages in the country are not connected by roads at all. Many parts in rural India have only kacha roads and many parts of the rural interiors are totally unconnected by roads with any mandi level town. As regards carriers, the most common mode is the animal drawn cart. Because of these problems in accessibility, delivery of products and services continues to be difficult in rural areas.
In warehousing too, there are special problems in the rural context. Business firms find it quite difficult to get suitable godowns in many parts of rural India. And there is no public warehousing agency in the interiors of rural India. The central warehousing corporation (CWC) and the state warehousing corporation (SWC’s) which constitute the top tier in public warehousing in India, do not extend their network of warehouses to the rural parts. They go only upto the nodal points or major market centers. The warehouses at the mundi level which constitute the second tier in the warehousing chain are mostly owned by cooperatives. And the same is the case with rural godwons, which form the third tier. None of these tiers function as public warehousing agencies ; they provide the warehousing service only to their members. As such, a business firm has to manage with the CWC/SWC network which stops with the nodal points, or it has to establish its own depots or stock points run by its stockists / distributors. Of course, in such cases, the commercial advantages of operating through a public warehousing agency like CWC/SWC are lost to the firm.
Communication infrastructure, consisting of posts and telegraph and telephones, is quite inadequate in rural areas. Since communication is the first requirement of efficient marketing, lack of proper communication infrastructure poses difficulties, especially in physical distribution.
Cost-Service Dilemma Gets More Acute
The effect of these problems on the physical distribution front is certainly felt by any business firm venturing into the rural market. They adversely affect the service aspect as well as the cost aspect. Maintaining the required service level in the delivery of the products at the retail level becomes very difficult. At the same time, physical distribution costs get escalated with 80 per cent Of the total rural consumers living in the ‘less than 1,000 people’ category of villages. The scattered nature of the market and its distance from the urban based production points, compound the difficulty arising from the constraints in transportation, warehousing and communication. Larger pipeline stocks and bigger inventories in warehouses are the natural outcomes of these constraints. It means higher costs of transportation, higher inventory carrying costs and transit and storage losses. And as we will see in detail in the next section, costs of distribution channels too are much higher in the rural context. Consequently, the total distribution cost per unit is higher by as much as 50 per cent on an average in the rural market, as compared to the urban market. In fact, the experiences of some companies operating in the rural market show that the cost of distribution in rural areas is two and a half times that of urban areas.
Solving of Physical Distribution Problem
The marketers have to find solutions to the distribution problems. While deriving solutions, the marketers have to keep in mind cost and the service to the consumers. Some of the solutions are as follows:
Shared Physical Distribution Responsibility with Stockists or C&F Agents
With a view to keeping the costs low, some firms try out remote control marketing. But experience shows that firms with major aspirations in rural marketing cannot depend on such remote control operations; they cannot take the route of ‘simply consigning the goods’ and retiring the bills through banks.’ For them, effective presence in the market is a must. While it may not be necessary to have a netw6rk of own stock points throughout the marketing territory, the firm should have a network of stockists or clearing cum forwarding agents(C&F agents) at strategic locations for facilitating physical distribution can be shared by the firm and the stockists.
Combining different modes of transportation
As regards transportation, the system of rail-cum-trucks for long distance movement, trucks for medium/ short distance movement and delivery vans and bullock carts for local haulage should effectively serve the purpose. Water transport too, has a role in specific areas. Bullock cart has a special role in rural distribution. Business firms operating in the rural market of the country have to appreciate that the bullock carts play a major role in secondary transport. They are available in plenty and they are ideal for the rural roads.
Company delivery van
Companies like Hindustan Lever, TOMCO, Brooke bond – Lipton and ITC who are the pioneers in rural marketing in India, have successfully experimented with company delivery vans, for resolving the distribution problems in the rural market. The delivery van takes the products to the retail shops in every nook and corner of the rural market. Besides resolving the problem of product delivery, the van also serves certain vital secondary purposes – it enables the firm to establish direct sales contact with thousands of rural consumers; it also helps the firm in sales promotion. But the cost of operating such vans is quite high. And the proposition can work only if the market/ area assures business potential enough to cover such costs. In the case of HLL, ITC, etc… they knew that such a level of business would accrue only out of a sustained and long term marketing effort and market presence. These firms had the resources, as well as the will to stay in the market. Through the system of operating the vans, they were not just solving a transportation problem, they were developing the market. And they were viewing the costs as a long term investment.
While the company delivery vans are very useful in rural distribution, the idea cannot be easily implemented by firms with relatively less resources. Syndicated distribution may be of help in such cases, the firms can come together and encourage an independent agency to operate such delivery vans with a view to hiring its services. The delivery van here becomes a syndicated service.
Assistance form stockiest
The Company can also get assistance from stockiest. The stockiest can own or hire vans or trucks and accordingly distribute the goods to the retailers and the dealers. The company should help finance such kind of plant and projects.
Central Warehousing Facility
The Central Warehousing Corporations (CWC) and The State Warehousing Corporations (SWC) should also pay attention in providing suitable warehousing in rural areas. At present the CWC and the SWC concentrate their warehousing activities only at major markets. The smaller markets are handled by cash starved gram panchayat’s or Satellite municipalities. There is an urgent need to have good warehousing facilities at local market to. These have to be provided either by the government or the companies operating in particular areas. A system can be devised where in a group of companies can come together and have common warehousing facilities. Here the cooperative rule can also help provide good warehousing facilities in rural areas.
Sorting out communication problems
The communication problems in the villages can be sorted out (mostly) by the government alone. The marketer must make the government must make the government realize the importance of rural markets and the corresponding network of post, telegraph and telephones. Locally there are examples of private telephone exchanges that have worked wonders for specific areas. However small exchanges have limited scope. Recently the government has alone sent corporate partnership in printing and disembursing postal and telegraphic material. However the experiment doesn’t seem to have caught on.
While the rural market of India certainly offers a big attraction to marketers, it would be totally naive to think that any firm can easily enter the market and walk away with a sizeable share of it. A firm seeking a share of this market has to work for it, as the market bristles away with a variety of problems. The enterprise has to grapple with these problems and find innovative solutions to them. In fact, only because a few pioneering firms correctly understand these problems and came up with innovative solutions to them, that we now see a wonderful trend of growth in rural markets.
What are these problems? How are they peculiar to the rural market? And how does a firm solve them?
The existing problems in rural marketing are:
- Physical Distance
- Lack of Human Resource
- Rules & Regulation
- Lack of Information
- Size of the Market
- Buying Power
The solution to these problems is four fold
We will look at each one of these in detail
Considering the environment in which the rural market operates and other related problems, it is possible to evolve effective strategies for rural marketing. Some of the typical characteristics which will help in rural market segmentation are land holding pattern, irrigation facilities, progressiveness of farmers, cropping pattern; mix of enterprise, education levels, proximity to cities/towns, sociological factors, occupation categories.
An appropriate segmentation of the highly heterogeneous rural market and identification of the needs and works of different segments will form the very basis for rural market strategies. For rural market, it will be ideal to think of strategies from the marketing mix point of view, main strategies are related to product, price, place and promotion.
We will discuss each one in detail
A. Product Strategies
Meaningful product strategies for rural market and rural consumers are discussed here.
1. Small unit and low priced packing
Larger pack sizes are out of reach for rural consumers because of their price and usage habits. This method has been tested by other products like shampoos, biscuits, pickles, vicks five gram tins, etc.
In the strategy of keeping the low priced packed the objective is to keep the price low so that the entire rural community can try. This may not be possible in all types of products, but wherever this can be resorted to, the market is bound to expand.
2. New product designs
A close observation of rural household items indicates the importance of redesigning or modifying the products. The manufacturing and marketing men can think in terms of new product designs specially meant for rural areas keeping their lifestyles in view.
3. Sturdy products
Sturdiness of a product either in terms of weight or appearance is an important fact for rural consumers. The product meant for rural areas should be sturdy enough to stand rough handling and storage. People in rural areas like bright flashy colours such as red, blue, green etc., and feel that products with such colours are sturdy but they are more concerned with the utility of the item also.
4. Brand name
The rural consumers are more concerned with the utility of the products. The brand name awareness in the rural areas is fairly high. A brand name and/or logo is very essential for rural consumers for it can be easily remembered.
B. Pricing strategies
Pricing strategies are very much linked to product strategies. Some of these strategies are mentioned here.
1. Low cost/cheap products
This is a common strategy being adopted widely by many manufacturing and marketing men. Price can be kept low by small unit packings.
2. Avoid sophisticated packing
Simple package can be adopted which can bring down the cost as it is presently being done in the case of biscuits. Some innovation in packing technology is very necessary for rural markets.
3. Refill packs/reusable packaging
Such measures have a significant impact on the rural market. By such technology also the price can be reduced. In addition the packaging material used should preferably lend itself for reuse in rural areas. An ideal example in this direction can be the packing of fertilizers. Now companies have started packing fertilizers in LDPE or HDPE sacks, which are not only tamper proof but also reusable.
4. Application of value engineering
This is a technique which can be tried to evolve cheaper products by substituting the costly raw material with the cheaper one, without sacrificing the quality or functional efficiency of the product, for example in food industry, ‘soya protein is being used instead of milk protein. Milk protein is expensive while soya protein is cheaper but the nutrition value is same. This technique yields itself for application in many engineering or product designed areas so that the price can be kept at an affordable level. These areas have to be explored by manufacturing and marketing men in the context of rural markets.
The pricing strategy for rural market will depend upon the scope for reducing the price of the product to suit the rural incomes and at the same time not compromising with the utility and sturdiness of the product.
C. Distribution strategies
Most manufacturers and marketing men do have a distribution arrangement for village with a population of at least 5000 people. While it is -essential to formulate specific strategies for distribution in rural areas, the characteristics of the product, its shelf life and other factors have to be kept in mind. The distribution strategies that are specifically designed for rural areas are: through co-operative societies, public distribution system, multi-purpose distribution centres, distribution up to feeder markets/mandi towns shanties/hat/jathras/melas, agricultural input dealers etc.
Experience has shown that the cooperatives have played a useful role in improving the marketing services in the regulated markets. The fact, however, remains that these societies command only a small share of the total markets and do not present any challenge to the private trade at inmost places. The Gujarat Cotton Cooperative Marketing Societies set a good example of vertically integrated markets. The cooperative marketing institutions have to introduce scale economies in their marketing operation and provide efficient and comparable services to the customers in competition with the private trade. Cooperative institutions would do better if the state level marketing federations enter into multilevel activities to improve the turnover of their business. The non-govemmental organizations can anchor a key role in conscientizing the rural people to form into cooperatives highlighting the possible benefits without being exploited.
D. Promotion strategies
Mass media is a powerful medium of communication. It could be television, cinema, print media, radio and so on. The other means of mass media available are hoardings/wall paintings, shanties/hats/melas, non-price competition, special campaigns etc. Besides these, other mass media like hand bills and booklets, posters, stickers, banners of the schemes etc.
For disseminating the information, related to agricultural and other rural industries products, the government should circulate pamphlets either to panchayati raj office or to schools where it can be documented for the reference.
While making efforts to improve the marketing system within rural areas and the marketing of rural produce to other areas, we should foresee the forces of globalization affecting the market forces.
What works in the urban market may not in the rural areas that are with respect to marketing. Pesticide used by the farmers are same or similar to what are used in urban households but have to be packed or packaged and distributed differently due to the differentiation in usage. Also pricing becomes a factor here. Similarly water is the universal commodity i.e. either piped or bottled for the urban consumer and canalled or irrigated for the rural farmer. Therefore the marketer must bring the right product to suit the needs of the rural consumer. In this connection the following can be considered motivating.
Rural consumer prefers smaller packages this is because:
- The rural consumer buys in low quantity due to low purchasing power.
- Secondly the rural consumer may be trying out the product and doesn’t like to be saddled by the larger quantities.
While designing the packages, the color, design and quality of the pack is of great importance. The rural consumer may prefer a pack with either dark or bright or both dark and bright colors in a contrasting combination. He may also prefer packs that have fancied designs. As far as the quality of the pack is concerned he may not mind medicour packaging and even no packaging if this results in lower prices.
2. Product Quality
It is of utmost importance. The dimensions of the quality that are to be considered are durability, features and serviceability in that order. In no way, the marketer must ever even think of sacrificing quality or manipulating its winning combination dimensions. This is because the fragile rural consumer may loose faith in the product and may either resort to alternative brands or traditional products. The new product should not only excite him but also satisfy him.
The product pricing must be reasonable and must depend upon the quality of the product. Distributing to various rural areas is very expensive. However the cost of this should not be transferred under any circumstances on to the rural buyer. It should be noted here that the rural consumer is highly price sensitive and competition is not between competitors but with the fact of “no-use”.
The rural consumer prefers to buy nationally advertised brands as compared to local brands. They consider or perceive powerful national brands to have more value than locally available brands. Naming a particular brand is an important activity. Brand names should be such that the rural consumers don’t find it difficult to pronounce and remember. Short, sweet and simple brand names can work wonders with the rural market. At times marketers will try to experiment with brand names that have local connections.
1. Size of rural consumer population:
The size of India’s rural consumer group can be understood from the details provided in the following table:
Population in crores
Percentage to total
Population in crores
Population in crores
The table shows that now 76% of India’s total population is rural. If we consider the state level picture, in several states like Uttar Pradesh, Madhya Pradesh, Rajasthan and Kerela, the rural population constitutes more than 80% of the total population. And there are also states like Bihar and Orissa where as much as 90% of the total population is rural.
2. Significant Aspects of Rural Consumer Profile
Coming to consumer characteristics, it can be seen that in general sense, low purchasing power, low standard of living, low per capita income, low literacy level and overall low economic and social position are the traits of the rural consumers. By and large, the rural consumers of India are a tradition bound community; religion, culture and even superstition strongly influence their consumption habits.
3. Location Pattern of Rural Consumers
Whereas the urban population of India is concentrated in 3,200 cities and towns, the rural population is scattered over 5,70,000 villages. Statistics show that out of 5, 70,000 villages only 6,300 have a population of more than 5,000 people each. More than 3 lakh villages or more than 55% of the total number of villages are in the category of 500 people or less and more than 1.5 lakh villages or 25% of the total are in the category of 200 people or less. The inference is clear; rural demand is scattered over a large area, unlike the urban demand, which is highly concentrated.
4. Literacy level
It is estimated that rural India has a 23% literacy rate compared with 36% of the total country. The adult literacy program launched by the government in the rural areas are bound to enhance the rural literacy rate in the years to come. Two aspects need to be specially emphasized: (1) In absolute numbers, there are 11.5 crore of literate people in rural India compared with 12 crore in urban India, and (2). Every year 60 lakh is getting added to the literate population of Rural India.
5. Rural Income
An analysis of the rural income pattern reveals that nearly 60% of the rural income is from agriculture. Evidently, rural prosperity and the discretionary income with the rural consumer is directly tied up with agricultural prosperity. Anything that contributes to agricultural prosperity will directly result in increase income for the rural population and the consequent increase in their spending capacity. The pre dominance of agriculture in the income pattern has one more significance ie- rural demand is more seasonal.
6. Rural Savings
Statistics reveal that in recent years, rural consumers have been drawn into the saving habit in a big way. The commercial banks and the co-operative have been marketing the saving habits in rural areas for quite some years. Today, as much as 70% of the rural house hold are saving a part of their income. The habit is particularly widespread among salary owners and self employed non-farmers.
Since the major income in the rural areas is from agriculture the demands turns out to be seasonal. Promotional activities are normally done in the crop-cutting season, as this being that golden season for the farmers.
The position in the rural market was totally different twenty years ago. At present there is a demand for products like TV, fans, oil engines, readymade garments, medicine, etc. New products like toiletries, baby care products and consumer durables are now getting good demand. Demand pattern of rural markets are changing due to the following reasons:
1. New Employment Opportunities
Earlier the only occupation of people in rural areas was agriculture. Now due to development in rural areas the and also due to agricultural advancement new and exciting careers are emerging. Self-Employment policy with assistance from bank has become great success in rural areas.
2. Green Revolution
Technological breakthrough since 1965 in Indian agriculture has led to many revolutions like Operation Flood, White Revolution, Blue Revolution, etc… Today, rural India generates 210 million tons of food grains per year. It produces 15 million eggs, 90 million broilers, 50 million tons of milk per annum. Due to 2000 EXIM policy, export of Indian farmers has increased considerably.
3. Better credit facilities through banks
All types of loans – short, medium & long-term loans – has helped rural masses in better investment. Co-operative and public sector banks are extending loans to the rural people and creating job opportunities for them.
4. Green Card / Credit Card for farmers
Helps / encourages farmers to buy consumer goods on easily payable credits / installment basis.
5. Improved exports due to Export Policy
Open market, WTO, GATT, has all resulted in better openings / markets, increased income, increased purchasing power.
6. Remittances from Indians working abroad
A sizeable contribution to growing rural income & purchasing power.
7. Expectation Revolution among Rural Masses
Expectation Revolution brought about a powerful change in the environmental dynamics.
8. Political & Social changes through favorable Government policies
New farm policy, high support price, tax exemption in backward areas, subsidy, etc. Liberalization facilitated contract farming thus the farmer has ready market for their produce
9. Marketing Efforts
Firms like HLL, Bajaj Auto, Godrej soaps, BFL, Brooke Bond, etc. have started penetrating rural market.
Role of newspapers, radio, T.V., etc. has given rise to new demand for goods and services. Cable TV has played important role in bringing change in lifestyle and consumption habits of rural people.
4. Reference Group
Typically, in a rural area the reference groups are primary health workers, doctors, teachers and panchayat members, the village trader or the grocer, commonly called ‘Baniya’ or ‘Mahajan’ are an important influencer in the decision making of rural customer. A marketer needs to be aware of these influences that can effect changes in the rural customer’s consumption patterns.
Consumption patterns differ according to income levels. Typically, in a rural area the principal occupation is farming, trading, crafts, plumbing, electric works, primary health workers and teachers.
Agriculture and related activities continue to be the main occupation for majority of the rural population. Land is the major source of income for about 77% of the population.
6. Media Habits
Rural people are fond of music and folklore. In rural areas a popular form of entertainment is the ‘Tamasha’ and ‘Nautanki’. And then there are television, radio and video films.
7. Rural Electrification
The main objective is to provide electricity for agricultural operations and for small industries in rural areas. About 5 lakh villages (77%) have electric supply and this has increased the demand for electric supply and this has increased the demand for electric motors, pumps and agricultural machinery.
8. Other Variables
Culture, language, religion, caste and social customs are some other important variables for profiling a rural customer. Rural consumers have a lot of inhibitions and tend to be rigid in their behavior. A company has to take intense care while targeting them.
Rural Consumer Class