Rural Marketing, Concept, Scope, Characteristics

15/05/2020 1 By indiafreenotes

Rural marketing is a process of developing, pricing, promoting, and distributing rural specific goods and services leading to desired exchange with rural customers to satisfy their needs and wants, and also to achieve organizational objectives.

The Rural Marketing is a two-way process, i.e.

  • Urban to Rural: FMCG Goods, Agricultural fertilizers, automobiles, etc. are offered by the urban market to the rural market.
  • Rural to Urban: The agricultural supplies viz. Fruits, vegetables, flowers, milk, etc. is offered from the rural market to the urban market.

The marketers are following the strategy to “Go Rural” because of the following attractions in the rural market:

  • Large Population: Still, the majority of the population in India resides in Villages and therefore, the marketers find more potential in the rural areas and direct their efforts to penetrate the rural market.
  • Increased Income: The income and the purchasing power of the rural people have increased. With the use of modern agricultural equipment and technology, the farmers can produce more and can get better returns for their agricultural produce. The increased income motivates a farmer to improve his livelihood by purchasing a good quality product and thus, the marketer gets an opportunity to enter into the rural market.
  • Competition in Urban Market: There is a lot of competition in the Urban market, where people are well aware of the goods and services and have created a brand loyalty. Therefore, the marketers move to the rural market to escape the intense completion and generate revenues from the untapped areas.
  • Improved Infrastructure facilities: Today, many villages are well connected with the roads and transportation facilities that enables the marketer to access the rural market and promote his goods and services. With the growth in telecom services, the rural people can be reached easily via mobile phones.
  • Saturated Urban Market: Also, the marketers may move to the rural markets, when the urban market has reached the saturation point, the i.e. market is well stuffed with the products, and the consumers are not likely to make a frequent purchase due to the varied options available in the market.
  • Support of Financial Institutions: Several Co-operative banks and public sector banks offer the loan facility to the rural people at low-interest rates. With the loan, the purchasing power of an individual increases, thus resulting in a better standard of living.
  • New Employment Opportunities: The Government is running several employment opportunity programmes, with the intention to engage people in other activities apart from the agriculture occupation. The Integrated Rural Development Programme (IRDP), Jawahar Rozgar Yojana (JRY), Training Rural Youth for self-Employment are the certain programmes, designed to increase the livelihood of rural people.

Concept of Rural Marketing

The concept of Rural Marketing in India Economy has always played an influential role in the lives of people. In India, leaving out a few metropolitan cities, all the districts and industrial townships are connected with rural markets. The rural market in India generates bigger revenues in the country as the rural regions comprise of the maximum consumers in this country. The rural market in Indian economy generates almost more than half of the country’s income.

Rural marketing in Indian economy can be classified under two broad categories.

These are:

  • The market for consumer goods that comprise of both durable and non-durable goods
  • The market for agricultural inputs that include fertilizers, pesticides, seeds, and so on.

The concept of rural marketing in India is often been found to forms ambiguity in the mind of people who think rural marketing is all about agricultural marketing. However, rural marketing determines the carrying out of business activities bringing in the flow of goods from urban sectors to the rural regions of the country as well as the marketing of various products manufactured by the non-agricultural workers from rural to urban areas.

Characteristics of Rural Marketing

  1. Large and scattered market

According to 2011 census rural population is 68.4% (2001–72%) of total population and it is scattered over a wide range of geographical area. With regard to size, still more than 2/3 of the population lives in rural India and the 170 million household consumers. The sheer size is equal to US, UK, Germany, France, Japan and Italy together. To reach 6.00.000+ villages is really a challenge. A few new rural distribution and procurement models have been innovated by ITC e-chaupal and HUL Project Shakti.

  1. Diverse socio-economic background

This is different in different parts of the country and brings diversity in rural markets.

  1. Changing demand pattern

Demand pattern of rural customer is fast changing due to increase in income and credit facilities offered by the banks like ‘kisan credit card’. In terms of India’s GDP, 54%, equal to that of Switzerland, is contributed by rural India. In India’s monthly expenditure, about 55% comes from rural India.

Non-food spending is equal to that of urban India. Consumerism is certainly on a rise and the spending on lifestyle products is emerging. Consumer durables market is growing at 10% per annum in urban areas, but the growth rate in rural India is 25%. Of the 40% of the sale in auto industry comes from rural India.

  1. Major income comes from agriculture

About 60% of the rural income is from agriculture and hence the demand for consumer goods is high during harvesting season.

  1. Saving habits

Rural consumer is now having saving habits due to the efforts of co­operative and commercial banks. Presently more than 33% of India’s savings comes from rural India.

  1. Traditional outlook

Rural customer values old customs and traditions and are interested in deriving core benefit from the product. They believe in price-performance paradigm. It is because of this reason that ‘Ghari’ detergent has replaced ‘Wheel’ as the no. 1 laundry brand.

  1. Low standard of living

Rural consumer have low standard of living because of low literacy, low per capita income and social backwardness. However, roughly 34% of FMCG manufacturers’ total sales comes from rural areas.

  1. Infrastructure facilities

Facilities like roads, warehouses, communication system, etc. are inadequate in rural areas. Hence, physical distribution becomes costly affair. Electrification is yet not complete in all the villages. The Literacy rate in rural areas has gone up from 58.7% in 2001 to 68.9% in 2011. During this period the improvement in literacy rate in rural area is twice that of urban areas (rural: 10.2% and urban: 5.1%). Improvement in female literacy is more than males in both rural and urban areas.

The telephone service is not available in all the villages, especially where there is no post office. Radio network has increased considerably. From 6 radio stations at the time of independence, All India Radio covers 98.8% population spread over 90% of the country. Infrastructure or lack of it has not deterred the telecom companies to reach rural areas through their wireless telephony.

The cellphone users’ number is more than 200 million. The number is more than the subscribers in Brazil, Indonesia and Russia. The number of account holders in banks in rural areas is greater than urban India. In case of LIC half the policies are from the rural area.

Scope of Rural Marketing

Rising Rural Prosperity: Average income level has improved due to modern farming practices, contract farming, industrialization, migration to urban areas and remittance of money by family members settled abroad.

Large Population: According to 2001 census rural population is 72% of total population and it is scattered over a wide range of geographical area.

Growth in Consumption: There is a growth in purchasing power of rural consumers. The average per capita household expenditure is Rs. 1181.92 in 2018.

Life Cycle Advantage: The products, which have attained the maturity stage in urban market, is still in growth stage in rural market. E.g., popular soaps, skin cream, talcum powder, etc.

Changing Lifestyle: Lifestyle of rural consumer changed considerably.

Rural Marketing is not Expensive: To promote consumer durables inside a state costs Rs one crore while in urban areas it will costs in millions.

Market Growth Rate Higher than Urban: As per the survey made by NCAER the growth rate of FMCG market and durables market is higher in rural areas. The rural market share is more than 50% for products like body talcum powder, toilet soaps cooking oil, hair oil etc.