Rural Marketing

Rural Marketing is defined as any marketing activity in which the one

dominant participant is from a rural area. This implies that rural
marketing consists of marketing of inputs (products or services) to the
rural as well as marketing of outputs from the rural markets to other
geographical areas.

Marketing is the process used to determine what products or services may

be of interest to customers, and the strategy to use in sales,
communications and business development. It generates the strategy that
underlies sales techniques, business communication, and business
developments. It is an integrated process through which companies build
strong customer relationships and create value for their customers and for
themselves. It is a function which manages all the activities involved in
assessing, stimulating and converting the purchasing power to effective
demand for a specific product and service. This moves them to the rural
areas to create satisfaction and uplift the standard of living.

Rural areas of the country or countryside are areas that are not urbanized,
though when large areas are described country towns and smaller cities
will be included. They have a low population density, and typically much
of the land is devoted to agriculture. Defra have a working definition, The
Rural/Urban Definition, that was introduced in 2004 as a joint project
between a number of Government Departments and was delivered by the
Rural Evidence Research Centre at Birkbeck College (RERC).

Marketing strategies that worked for urban markets do not necessarily

work for the rural ones. There are 7 differentiators identified in Why the
rural market is different, JWT, 2009

1. Intra community influences are relatively more important than inter-

community ones. Word-of-mouth in close knit communities is more
powerful.
2. Scarcity of media bandwidth. Rural individual's access to media
channels is limited and in the case of broadband the comparable upload
and download speed may be slower. Online shopping is seen as a solution
by many but will be dependent on broadband speed.[1]

3. Slow to adopt brands. Slow to give them up. Rural consumers will be
slower to pick up trends or brands but will remain loyal when accepted.

4. Expenses are year long; income is seasonal. Many rural areas rely on
seasonal tourism peaks when income will be high and to a lesser extent
agricultural incomes from seasonal crops. This means there will be more
disposable income at certain times with rural businesses and employees.

5. Information hungry; but entertainment starved. Isolation from

entertainment centres has led to companies trying edutainment to get their
message across.

6. Higher receptivity to experience advertising. Retail outlets in rural areas

have many demonstration areas along with markets for tasting.

7. Commercially profitable; and socially acceptable. Brands with

demonstrable local, rural, environmental and/or social credibility stand a
better chance.

Rural Marketing meant different in 3 different periods.

Part1(before 1960):It was a completely an unorganized market,where

“baniyas and mahajans” dominated the market.Rural marketing was
another word for agricultural marketing because agricultural produces like
food grains and industrial like food grains and industrial like cotton,oil
seeds,sugarcane etc occupied primary attention and the supply chain
activities of firm supplying agricultural inputs and of artisans in the rural
areas received secondary attention.

Part 2(1960 to 1990):The greatest thing which happened in this period was
green revolution which led to farming involving scientific and
technological methods and many poor villages became prosperous
business centers.With better irrigation facilities,soil testing,use of high yield
variety seeds,fertilizers,pesticides and deployment of machines like power
tillers,harvesters,threshers etc,the output increased especially wheat and
paddies.Due to this marketing of agricultural inputs was also now there a
new potential market.Now marketing of rural marketing meant
“marketing of agricultural inputs” and “agricultural marketing”.Agencies
like Khadi and Village Industries Commission,Girijan Cooperatie Societies
APCO Fabrics,IFFCO,KRIBHCO Company bloomed and government paid
special attention to promote these products.Sale of handicrafts,handloom
textiles,soaps ,safety matches and crackers increased on large scale in urban
areas.

Part 3(after mid 1990):Since 1990 ,India’s industrial sector had gained
strength and maturity.It’s contribution to GNP increased
substantially.There was metamorphosis of agricultural society to industrial
society.With support and development programmes of central and state
governments,service organizations and socially responsible business
groups like Mafatlal,Tatas,Birla,Goenkas and others the rural areas
progressed socially and economically.

The economic reforms further increased competition in the market,the

rural market grew steadily for household consumables and durables. A
few other companies known for their marketing orientation –Hindustan
Lever,Philip India,Asian Paints,Singer and Larsen and Turbo have also
taken great efforts in this direction.

Hindustan Unilever(HUL) started successful rural marketing projects like

“Project Shakti” and “Operation Bharat” in India.Hindustan Unilever
began the first home to home operation in rural areas in personal products
in 1998 which was known as “Operation Bharat”.By 1999 “Bharat
Operation” covered 13 million rural household.During the course of
operation, there were HUL vans which visited villages across the country
distributing sample packs comprising a low unit price pack each of
shampoo,talcum powder ,toothpaste and skincream priced at 15rs.This was
to create awareness of the company’s product categories and of the
affordability of the product. Coca Cola also explored the market by
introducing bottles at rs.5,backed with Aamir Khan advertisement .Amul is
another case in point of aggressive rural marketing .In 2000,ITC tried
developing direct contact with farmers in remote villages in Madhya
Pradesh.ITC E-choupal was a result of this initiative.

Rural Marketing is growing at a far greater speed than its urban

counterpart .Multinationals have realized the potential and are ready to tap
rural markets .To name a few Colgate, Eveready batteries ,LG Electronics
,Phillips ,BSNL, Life Insurance Corporation, Britannia and Hero Honda are
trying to seep in rural markets.

Problems in Rural Marketing Communication: The literacy rate among

rural consumers is very low there print media has very little scope in the
rural areas .In India there are 18 languages which are recognized,these
languages and many dialects are spoken in rural India. English and Hindi
are not understood by many people. Due to this rural consumers do not get
exposure to new products. Transportation: The transportation
infrastructure is extremely poor in rural India.In India there are six lakh
villages.Almost 50 per cent of them are not connected by road also.India
has second largest railway system in the world,many parts in India are not
connected through railways. Availability of appropriate media:The radio
network in theory covers 90 per cent,but people who actually listen is
less.T.V is not available in every house in rural areas.Therefore
opportunities are very low in rural areas. Warehousing: There are many
agricultural products which are produced in a particular seoson but is
demanded throughout. Due to lack of adequate and scientific storage
facilities in rural areas, stocks are being maintained in towns only.

The size of the prize in Indias hinterlands is on the rise. Rural India
accounts for about 50 per cent of Indias GDP and nearly 70 per cent of the
countrys population. Since 2000, per capita GDP has grown faster in rural
areas than in its urban centres: 6.2 per cent CAGR versus 4.7 per cent. Rural
incomes are growing and consumers are buying discretionary goods and
lifestyle products, including mobile phones, television sets and two
wheelers: between 2001 and 2009, spending in rural India was $69 billion,
significantly higher than the $55 billion spent by the urban population.

Companies that recognise this enormous opportunity are experimenting

with various go-to-market models to garner their share of this growth. But
the results have been mixed. To understand why and what to do about it
Accenture conducted a major research study of more than 100 companies
to discover how successful companies are responding to the opportunities
and hurdles.

An efficient sales and distribution model is the most critical factor to

achieve profitable and sustainable growth in rural markets: nearly 60
percent of the survey respondents ranked it as the top imperative. Our
research found that a hallmark of success in rural India is overcoming
challenges in the three stages of the consumer lifecycle reaching, acquiring
and retaining the rural customer. In terms of reaching the rural consumer,
the biggest obstacles facing companies are inadequate distribution
networks, partners with limited capabilities, long payment cycles, and
weak marketing channels. Not surprisingly, respondents to Accenture
survey cited high cost-to-serve the rural markets as the number one
challenge: more than 50 per cent listed it as one of the top three challenges
they face. As far as rural customer acquisition is concerned, understanding
and meeting the diverse, specialised needs and preferences of such
customers pose major challenges to companies.

Organisations often make the biggest mistakes by treating rural consumers

as a homogeneous market and offering them the same value proposition
they offer to urban markets. Although companies are focusing heavily on
rural market customer acquisition and reach, bolstering customer retention
efforts has become more important as competitors improve their market
penetration.

With increasing rural competition and high cost-to-serve, providing

reliable and consistent after-sales service and optimising the costs of a
high-quality experience remain major obstacles. The wide geographic
dispersion of a small number of customers drives high sales-service costs,
and many businesses cannot provide a dedicated after-sales service
network.

Our experience of working with organisations across sectors indicates that

companies respond to these challenges is what differentiates them in the
rural marketplace.

Success in Indias rural markets hinges on the performance of companies on

two key measures: rural performance that is the degree to which rural
markets are strategically important to a companys growth agenda, defined
by the contribution of rural markets to the enterprises top and bottom lines.
Rural innovation, or the level of rural focused innovations, in a companys
product, packaging, pricing, channels and operating models.

With these two measures in mind, we have classified companies into four
categories of success: rural masters, rural performers, rural voyagers and
new entrants.

Rural masters are profitable companies that have secured a significant rural
market share. They excel at execution. They apply rigour to governance
and control to make sure their strategies translate into required actions.
They have developed novel strategies to serve rural consumers and draw
on an intimate understanding of consumers cultures and needs to enter
rural markets. They have well-conceived expansion strategies that they
support with significant capital and resources.

Rural performers are profitable entities that have established a strong rural
footprint by using conventional approaches or by emulating Rural masters.
They often lack an innovative streak. They tend to focus on existing
product portfolios and try to mitigate risk through aggressive product
marketing to strengthen their position. These companies have been
successful in the past. But in the future, they may struggle in a changing
and more competitive landscape.

Rural voyagers have adopted disruptive approaches to serve Indias rural

markets. For example, they create unique products and services, customise
pricing or packaging, or develop new channels to reach the last mile.

However, they are yet to make profits. Though rural voyagers often
understand rural consumers better than their competitors, they usually
take a more cautious approach toward expansion. Furthermore, they learn
from their initial forays (such as pilots conducted in a few states) to
determine their next investment strategies and tactics. A large number of
companies fall into this quadrant, and they still face many challenges. In
some cases, rural voyagers can seek government help to subsidise their
products on a large scale. However, they must also invest in channel
partners and engage with community influencers to achieve acceptance
among rural consumers and succeed.

New entrants are companies that have recently made forays in rural
markets. Conservative in nature, many of these enterprises have limited
operations and have not generated the profit needed to create economies of
scale. Though these companies can learn from the experience of rural
masters, they face high barriers to entry. These companies will need to
make extra efforts to create a differentiated position for themselves in the
rural marketplace.

As rural markets evolve and competition in rural markets intensifies,

companies will have to look for new approaches to harness this
opportunity in ways that protect their margins while also growing
revenue. Deploying the correct sales and distribution model can assist
companies in driving profitable growth in a relatively short span of time.
Rural masters will have to find ways to scale operations without hurting
their bottom line. For a rural performer, the challenge will be to create
differentiated offerings and brand loyalty to retain customers and sustain
their business models. Rural voyagers will build their own ecosystems and
brand awareness to acquire new customers. New entrants will travel their
own paths to penetrate rural markets. By focusing on the specific needs,
behaviours and preferences of the rural consumers, and by applying a
systematic approach to market expansion, companies can accelerate their
rural expansion journey.