RURAL MARKETING

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 Introduction -
Need to understand rural marketing for marketers.
 Strategic marketing requirements for rural markets

 Macro and micro benefits- economy and rural

consumer ,marketing mangers
 Large Scope/potential as marketing activity

 Active corporate/global / sectors- product/services

 Government roles

 Dynamics of market environment

 Challenges/ developmental/BOP marketing

 evolving consumers empowerments- men /women

 Influences thru smart phones/ micro influencers.

 Agriculture developments /reforms and growth of rural

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markets-linkages with agriculture
INTRODUCTION

 Rural market defined-

Definition differs for each sector.
1- Maximum Population > 2000,- >5000 ,>10000 per
villages , its density 400/sq km, occupation , social
governance and basic infrastructure like sanitation etc
 2- Rural Markets are any habitation with population density
of less than 400 sq km with 75 % of male working population
engaged in agriculture and a population not more than
10,000.

 3- Most corporate treat all other market other than metros as

Rural Markets
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RURAL MARKETS

RBI
CLASSIFICATION
•Rural: population less than 10,000

•Semi-Urban: 10,000 and above and less than 1 lakh

•Urban: 1 lakh and above and less than 10 lakh

•Metropolitan: 10 lakh and above

 Rural marketing- definitions
1- “A function that manages all activities involved in
assessing, stimulating, and converting the purchasing power
of rural consumers in to effective demand for specific
products and services and moving these products and services
to the people in rural areas to create satisfaction /value and
better standard of living and thereby achieving organizational
goals.”

2- The process of developing, pricing, promoting, distributing,

rural specific goods & services leading to exchange between
urban & Rural markets, which satisfies consumer demand &
also achieves organizational objectives.

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 Growing IMPORTANCE OF RURAL MARKETs
for marketers

•HUGE POPULATION ABOUT 83 CRORE PEOPLE

•MORE THAN EUROPE POPULATION

•MORE THAN DOUBLE THE US POPULATION

•INCREASING LITERACY

•INCREASING INCOME

•CHANGING LIFESTYLE

•IMPROVED INFRASTRUCTURE [ROADS, ELECTRICITY,

COMMUNICATIONS]

•GOVERNMENT FOCUS AND EMPHASIS.

•Intense competition in urban markets
RURAL MARKETS
DIFFERENCE BETWEEN RURAL AND URBAN MARKETS

CHARACTERISTICS URBAN RURAL

Infrastructure Good Underdeveloped
Economy Better Half of urban
Lifestyle Developed Basic/developing
Socio cultural background Heterogeneous Homogeneous

Availability of reach Integrated Scattered

Habits Developed Basic
Competition Brands /Severe Dealer /channel Partner

Consumer Behaviour Developed Basic/developing

AN OVERVIEW
 Rural Population

From 866 millions in 2015 to 935 millions estimated in 2021.

 Rural households
From 168 million of 2011 to 205 million estimated in 2021.
Therefore, market size of rural India expected to increase from USD 0.5
trillion to USD one trillion by 2020
 Occupation
Increasing non- agri + commercial agri,
agri labour reduces to 12% in 2010 from 27% 10 years back leading to
mechanized farming.
 Income-
rural income accounts for 56 % of India's total income, 64% of total
expenditure and 33% of savings.
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Majority of rural population will be earning between 1 to 5 usd per day.
Moving from poverty to prosperity
 OVERVIEW CONTD
 Literacy
65% in 2011 vs 53% in 2000, now estimated at 74% through the elearning
initiative.
 Increased Consumption

27 million mobile internet users in 2013 has now doubled and likely grow fast
with bharat jodo.
DTH subscribers growing fast
FMCG growing at 18 % vs. 12 in Urban & FMCD at 25% vs. 10 in urban
 Lifestyle changes-

Psychographics change due to media explosion, income & education

Decision making shifts- women empowerment, youth- more open to changes-
kitchen wares
 Increasing Demand

Increasing usage and demand for branded products

tooth powder to toothpaste, mosquito repellents, premium detergents and so10on
OVERVIEW CONT-
 Distribution facilities-
growing thru 1,38,000 rural post offoces,
42,000 weekly haats, 25,000 melas,
7,000 mandis, APMC’s
3,80,000 public distribution shops,
32,000 bank branches+ mobile banking and internet banking
, 5,00,000 + village primary cooperative societies.
 Infrastructure-

90% villages electrified, P.C. and smart phone penetration

growth in 2008 -24% in r vs. 7 in u, laptops in schools ,
corporates in Organized retailing
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 Market size
 India’s per capita GDP in rural regions has grown at a
Compound Annual Growth Rate (CAGR) of 6.2 per cent
since 2000.
 The Fast Moving Consumer Goods (FMCG) sector in rural
and semi-urban India is expected to cross US$ 20 billion
mark by 2018 and reach US$ 100 billion by 2025@.
 Road Ahead

 As is the trend with urban India, consumers in the rural

regions are also expected to embrace online purchases over
time and drive consumption digitally. The rural regions are
already well covered by basic telecommunication services
and are now witnessing increasing penetration of computers
and smartphones. 12
 Taking advantage of these developments, online portals are
being viewed as key channels for companies trying to enter
and establish themselves in the rural market.
 The Internet has become a cost-effective means for a
company looking to overcome geographical barriers and
broaden its reach.
 Market research firm Nielsen expects India’s rural FMCG
market to reach a size of US$ 100 billion by 2025.
 Another report by McKinsey Global Institute forecasts the
annual real income per household in rural India to rise to 3.6
per cent 2025, from 2.8 per cent in the last 20 years.

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 Nielsen’s advanced analytics and macroeconomic data reveal
that just 33% of villages, numbering about 200,000, account
for 80% of all rural fast-moving consumer goods (FMCG)
sales.
 This high concentration exists across various markets and
levels of consumer affluence, making it vital for
manufacturers and retailers to cater to people in those
villages and clusters.
 Further, these high potential Rurban clusters and villages act
as feeder points for the rest of the proximate markets.

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BENEFITS

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MYTH 1:
RURAL TO URBAN MIGRATION
 Contrary world bank estimates-Accenture report shows a
growing trend
- India - 762 million in 2001 to 853 m in 2011
- China -809 m to 665 m
- Brazil- 33m to 30 m
- Russia- 39m to 37 m.

TWO THIRD’S OF THE COUNTRY’S POPULATION WILL 17

STILL CONTINUE TO LIVE IN VILLAGES

 MYTH 2: AGRARIAN – RURAL ECONOMY
Growing Non Farm income

Better earning opportunities thru NREGA, MUDRA , contract farming , corporate and government initiatives etc , migration may continue only for short
span during agri lean month
Increased institutional agro credit, NABARD role, MFI roles ,commercial farming creates related non farm activities and reducing subsistence farming.

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MYTH 3:
RURAL MARKETS MORE
HOMOGENEOUS…

 Actually Heterogeneous
 Branded product consumption increasing but not too high

 look for more value for money products and services rather
than cheap/ duplicates

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WHAT MAKES THE RURAL MARKET A
PROMISING PLACE
 Rural per capita consumption growth of 19% between 2009 and 2012 two
percentage points higher than urban
 Nelson estimates US$ 100 B FMCG consumption in 2025 up from 12 b
US$ currently
 As incomes grow rural consumption shifts from necessities to discretionary
and lifestyle products and services
 Fast reforms, initiatives from government and corporates - attracting
FDI , domestic investments.
 Increasing rural share in GDP contribution.
 Increasing market potential > 800 million rural consumers . Fast growing
purchasing power/per capita expenditure.
 Improved infrastructure – PMGSY + ICT
 Commercial focus on agriculture 20
 Premium products are replacing entry level versions
 Industry classification penetrating in rural – banking fallowed
by FMCG, consumer durables, automotive, pharmaceuticals ,
Insurance etc.
 Fast media penetration
 Print and TV ads are almost as popular
 Influencers playing a role to help brands build trust and
product awareness

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CHARACTERISTICS OF THE RURAL MARKET PLACE
Low Per Capita Income

Limited infrastructure for distribution

Multiple dialects languages, cultural diversity

Dispersed large spread

Low literacy, conservative attitudes

Narrow consumption basket

Spurious products
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Long Payback, high marketing costs

URBAN MARKETING RURAL MARKETING

 Individual consumer  Societal orientation

orientation
 Catalytic, transformational mktg
 Process-stimulating and
conversional mktg.  Beneficiaries & buyers
 Focus- market fit  Social change-
 Key task- product innovation  Social innovation and
and communication communication. CSR activities
 Nature of activity- more  Socio-cultural, economic
commercial  Govt - agencies, NGOs, Corporate
 Participants- corporates, and collaborations, cooperation
sellers  Medium to long duration strategy
 Time frame - short, medium frame
 Offer-products/services  More Development schemes,
projects
 Distributions –
Retailors/Supermarkets  Small outlets/Hats, Jatras 23
 CHALLENGES FOR MARKETERS
 Accessibility
 Market expansions / Channel Mix and relationships

 Customer Acquisitions

 Creating Trust, relevance with stakeholders

 Defining value proposition

 Engaging the right influencers

 Customer Retention

 Cost economization, with Low cost models of after sales

supports
 Attracting and retaining talent

 CSR Initiatives

 Use of technology for communication reach 24

 Competition- local/regional players/spurious brands

THE 4A’S OF RURAL MARKETING MIX AND
RELATED CHALLENGES

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GO TO RURAL DECISION
SUMMARY OF MANY AND DIVERGENT FACTORS THAT INFLUENCE THE GO RURAL
DECISION

Rural inhibiting factors

Urban push factors Rural pull factors
Saturation stage Rising affordability Uneven development
Fierce competition Growing acceptance Fragmented market
Changing lifestyles Increasing availability needs Diversity in occupations
Improving accessibility Heterogeneity in lifestyles
Success stories of Low-income streams
corporations Lack of steady and sustainable
consumption
Promotional agencies lack
marketing skills
Access difficulty
Limited awareness and acceptance
Low level of education
Low budget for promotion
Intensifying competition
Failure of some companies
SCOPE FOR PRODUCTS
 Marketing of Agro inputs
 FMCG Marketing
 FMCD Marketing
 Rural Handicrafts
 Agri Products
 Services – Agri operations- Tractor harvesting ,sowing,
tilling , rural transportation logistics, Retailing, personal
banking etc

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 Inhibiting factors-
1- unevenness,
2- disparity, fragmented, diversity, heterogenity
3-low income streams,
4-lack of steady and sustainable consumption,
5-limited skills with ad /promotion agencies,
6-limited awareness and acceptance,
7-low education,
8-low budgets for promotion,
9-local /regional competition,
10- failed initiatives by co’s
 Strategic approaches-

1-Trickle down-as csr,+ extended sales thru feeder towns, nike,

2-undifferentiated, -4 a’s for fmcg products-colgate
3-differentiated,- 4 a’s+ specific design as per price sensitivity, electrification
levels, running water, more developmental vs transactional marketing
4-BOP-developmental mktg +csr,new opportunity, demand innovations
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 Integrated, innovative and inclusive marketing models works
 -Developmental + Transactional ,social process, win win, fast
growing, flexible
 Implementation issues-

McKinsey 7 –S frame model –

1-strategy- long term with suitable STP ,innovations
2- structure- for sales force org , distribution etc suitable
3-Systems- for M.R.,M.I., M.C. Manpower training etc
4-Shared values- top to bottom value delivery
5- Staff- selection, background
6-Skills - social skills, suitable like demos etc
7-Style- participative, collaborative, MFI, ngo

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 More of a Evolutionary and not revolutionary marketing
 Marketers need to understand

rural market environment,

rural consumer behavior,
STP process ,
marketing mix –strategic applications,
Increasing market Competition,
Innovations,
role of ICT,
Influencers - opinion leaders,
agriculture products and its marketing-
emerging marketing- online etc
organized retail ,
cooperatives, Apid
ltetti
contract farming, corporate farming etc ng g
 Evolving Rural consumer-
Greater changes among rural youths , rapidly getting
exposed to urban products and services. thru ICT and
education.
Cultural norms are changing
 Women empowerment

 Exploding middle class in rural India

 Emerging rural India.

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SUCCESS STORIES

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