Department of Business Administration

St. Joseph Engineering College, Vamanjoor, Mangalore

Fourth Semester M.B.A-First Sessional Examination-April, 2010
08MBAMM415 : RURAL MARKETING

[Time: 1 hr 30 minutes] [Max. Marks: 50]

Answer scheme
1.
a.
Rural marketing involves the process of developing, pricing, promoting, distributing rural
specific product and a service leading to exchange between rural and urban market which
satisfies consumer demand and also achieves organizational objectives.
The census of India defines rural as any habitation where the population density is less
than 400 per sq. km, and where at least 75 per cent of the male working population is
engaged in agriculture, and where there isn't any municipality or board. Having said that,
there are about 600,000-odd villages in India (Refer Exhibit 1). Leaving aside Hindustan
Lever and ITC, most FMCG Sector would define rural as any place with a population
below 20,000. Similarly, durable and agri-input companies consider any town with a
population below rural, primarily because the adjoining villagers come to shop there for
say a television set.

3marks

b.

N Aspect Urban Rural

o.
1 Marketing & Societal Marketing & Societal
Concepts & Concepts,
Relationship Development
Philosophy
Marketing Marketing &
Relationship
Marketing
2 a) Market
b) Demand High Low
c) Competition Among Units In Mostly From
Organized Sector Unorganized Units
Consumers
Location Concentrated Widely Spread
Literacy High Low
Income High Low
Expenditure Planned, Even Seasonal, Variation
Needs High Level Low Level
Innovation/Adoption Faster Slow
3 Product
 Awareness High Low
Concept Known Less Known
Positioning Easy Difficult
Usage Method Easily Grasped Difficult To Grasp
Quality Preference Good Moderate
4 Price
Sensitive Yes Very much
level desired Medium-high Medium-low
5 distribution
Wholesalers, stockists, Village shops, “Haats”
retailer, supermarket,
channels
specialty stores, &
authorised showrooms
Transport Facilities Good Average
Product Availability High Limited
6 Promotion
Print, audio visual TV, radio, print media
media, outdoors, to some extent. More
Advertising
exhibitions etc. few languages
languages
Door-to-door, Occasionally
Personal Selling
frequently
Contests, gifts, price Gifts, price discounts
Sales Promotion
discount
Publicity Good opportunities Less opportunities

7marks

c.
Myth no 1: In the aftermath of urban-rural convergence, rural market will be mainly an
extension of urban markets and will eventually embrace the product and brand lifestyles of
the latter, supported by higher disposable incomes, aggressive retail promotion and
advertising.
The reality: Rural markets represent a distinct dynamic in how they come into being and
make unique demands on how the product is designed and how the brand is positioned and
promoted. Greater the strategic attention to these unique demands, assure greater the
chances of product's success in the rural market.
Myth no 2: The market size can be estimated based on mere demographic interpolation of
current penetration levels and sales volumes and that even fringe presence or limited
acceptance of lifestyle consumer products in rural market would translate into future
market potential to be tapped.
The reality: Fringe acceptance of consumer products or brands is no indication of market
potential. It actually would only result in higher incidence of brand and product mortality
as more firms try to choke those segments with competing brands. Rural market dynamics
instead demand sustained effort at brand building and product acceptance.
Myth no 3: That rural market represents a more or less homogenous matrix of attitudes,
values and purchasing behavior across regions leading to what may be termed "one size
fits all" approach.
The reality: The Indian rural market is a complex mosaic of mind-sets, cultures, and
lifestyles. While education, employment, income, agricultural land ownership may still be
the major deciding factors accounting for social differentiation, they do not yield
reciprocal cohort behavioral patterns, with respect to consumption patterns, purchasing
decisions and priorities of product ownership.
Myth no 4: That rural markets are highly price-inelastic and only suited for 'value-for
money' products as against premium quality products.
The reality: Despite lower incidence of premium product purchases, the rural consumers
across all income segments exhibit marked propensity to spend on premium high quality
products which are backed by strong brand values, where they correspond to their own
aspirations and quality needs. The problem really lies in market not being able to offer a
premium product in the specific context of rural demand.

10marks
2. a.
Efforts to influence consumer perception of a brand or product relative to the
perception
of competing brands or products. Its objective is to occupy a clear, unique, and
advantageous 'position' in the consumer's mind such as 'the best driving car,' 'the most
economical car,' or 'the safest car.'

3marks
b.
Indira Awaas Yojana
Pradhan Manthri Gram Sadak Yojana (PMGSY)
.Swarnjayanti Gram Swarozgar Yojana
.Jawahar Gram Samridhi Yojana
.Employment Assurance Scheme
.Rural Housing
.Rural Sanitation 7marks

c.
1. Standard of living: The number of people below the poverty line is more in rural
markets. Thus the market is also underdeveloped and marketing strategies have to
be different from those used in urban marketing.
2. Low literacy levels: The low literacy levels in rural areas leads to a problem of
communication. Print media has less utility compared to the other media of
communication.
3. Low per capita income: Agriculture is the main source of income and hence
spending capacity depends upon the agriculture produce. Demand may not be
stable or regular.
4. Transportation and warehousing: Transportation is one of the biggest challenges in
rural markets. As far as road transportation is concerned, about 50% of Indian
 villages are connected by roads. However, the rest of the rural markets do not even
have a proper road linkage which makes physical distribution a tough task. Many
villages are located in hilly terrains that make it difficult to connect them through
roads. Most marketers use tractors or bullock carts in rural areas to distribute their
products. Warehousing is another major problem in rural areas, as there is hardly
any organized agency to look after the storage issue. The services rendered by
central warehousing corporation and state warehousing corporations are limited
only to urban and suburban areas.
5. Ineffective distribution channels: The distribution chain is not very well organized
and requires a large number of intermediaries, which in turn increases the cost and
creates administrative problems. Due to lack of proper infrastructure,
manufacturers are reluctant to open outlets in these areas. They are mainly
dependent on dealers, who are not easily available for rural areas. This is a
challenge to the marketers.
6. Many languages and diversity in culture: Factors like cultural congruence,
different behaviour and language of the respective areas make it difficult to handle
the customers. Traits among the sales force are required to match the various
requirements of these specific areas.
7. Lack of communication system: Quick communication is the need of the hour for
smooth conduct of business, but it continues to be a far cry in rural areas due to
lack of communication facilities like telegraph and telecommunication systems etc.
The literacy rate in the rural areas is rather low and consumer’s behaviour in these
areas is traditional, which may be a problem for effective communication.
8. Spurious brands: Cost is an important factor that determines purchasing decision in
rural areas. A lot of spurious brands or look-alikes are available, providing a low
cost option to the rural customer. Many a time the rural customer may not be aware
of the difference due to illiteracy.
9. Seasonal demand: Demand may be seasonal due to dependency on agricultural
income. Harvest season might see an increase in disposable income and hence
more purchasing power.
10. Dispersed markets: Rural population is highly dispersed and requires a lot of
marketing efforts in terms of distribution and communication.
10marks
3. Process of dividing the whole market into distinct subsets of consumer with common
needs or characteristics.
Bases for market segmentation
1.geographic segmentation
2.Demographic
3.Psycho graphic
4.Socio-cultural
5.Behavioural
10marks