Introduction

The rural market is an area of darkness to Indian entrepreneurs. An area which is vast in size
but amorphous in detail. Also an area where communication are poor and the population
poorer because their operation are small scale and inadequate, therefore inefficient. It is an
area which cuts itself off from the nation’s economy because its own is not fully monetised.

And yet, the rural market represents the largest potential market in the country. It
encompasses over 70 per cent of population. Its primary activities are agriculture, animal
husbandry, fisheries, forestry which accounts for half of the national income. Rural assets
also amount to more than 50 per cent of the country’s tangible wealth. However, compared to
the urban sector with 20 per cent of the population and 50 per cent of the income, money
must be spread thinly. Yet there are pockets of wealth which an urban entrepreneur can tap.

Today Indian Rural market is full of opportunities and has seen impressive growth in recent
years. The middle to high income household in rural India are now 17% of the rural
population and are growing at an annual rate of 7%. Significant growth in literacy levels,
changes in lifestyle, increasing brand consciousness, changing consumption patterns,
improvements in infrastructural facilities and rapid spread of communication network in rural
areas have presented a growing potential for the companies.

And the marketers who can understand various challenges of the rural markets and can
approach the rural markets with radical changes, is sure to be successful impressing upon 230
million rural customers spread over approximately six hundred thousand villages in rural
India.

What is rural marketing?

What are the challenges of rural marketing?

There are seven major challenges in rural marketing, they are:-

1. Transportation problem:

Transportation infrastructure is quite poor in rural India.80 per cent of villages

in the country is not connected by roads. The late Prime Minister, Mr. Rajiv Gandhi,
had started a plan to connect every village with big towns under ‘JAWAHAR
ROJGAR YOGNA”. As we know, marketing activities require transportation
 facilities. Due to poor transportation facilities, farmers, face the problem of reaching
city markets and find it difficult to get fair prices for their crops.

2. Warehousing problem:
In the rural areas, there are no facilities for public warehousing as well as
private warehousing. Rural farmers face the problem of storage of their crops. As they
cannot hold their crops for some time, they have to sell their crops immediately at low
prices.
3. Packaging problem:
Packaging is the first important step of product processing. If the packaging
cost is high, it will increase the total cost of products. It is suggested that the marketer
should use cheaper materials in packaging for the rural market. For example, small
polypack of refined oil is more popular than good in containers of the same product
due to its lowest cost. One more important factor is the size package, e.g., the size of
the package should also be small.
4. Media problems:
Media have lot of problem in rural areas. T.V. is a good medium to
communicate at message to the rural people. But due to non-availability of power, as
well as T.V. sets, two-thirds of rural population cannot get the benefits of various
media.
5. Seasonal marketing:
The main problem of rural marketing is seasonal demand in rural areas,
because 75 per cent of rural income is also seasonal. For example, the demand for
fertilizers is always high during the start of Kharif and Rabi crops. The demand for
consumer goods will be high during the peak-crop harvesting period, because this is
the time at which the rural people have substantial high case inflows. Rural marketing
depends upon the demand of rural people and demand depends upon income and
consumer behaviour.
6. Low per capita income:
Per capita incomes are lower in rural areas compared to those in urban areas.
Again, the distribution of rural income is highly skewed, since the landholding
pattern, which is the basic asset, itself is skewed. Thus the rural population presents a
highly heterogeneous spread in the villages.
 7. Low level of literacy:
The literacy rate is low in rural is low in rural areas. This again leads to the
problem of communication for promotion purposes. Print medium becomes
ineffective and to an extent irrelevant in rural areas since its reach is poor and so is the
level of literacy.

Strategies to overcome the challenges

Some of the strategies that are used to overcome the rural marketing problems are:

a) Segmentation of rural marketing:

In earlier days the entire rural market was considered as same and was planned
for in a similar manner. As a result there was total mismatch between the aspiration of
rural customers and what marketers were thrusting on them in different regions.
India has about 6,38,000 villages, 50% of the villages are very small having a
population of less than 500 with a limited purchasing power and many of them do not
have even a single shop. The next following categories with population of 501 to
2000 numbering 2.5 lakh villages have around five shops. These villages may not be
good enough for a favourable distribution cost benefit equation to begin with, but can
be tapped later after successfully tapping the villages with a population more than
2000.
Thus segmentation is necessary for any company to start its business in rural
markets.
b) Competitive strategy:
A company operating in the rural market place can consider how the suggested
five forces given below, impact their operation in the rural market.
Supplier:
The Company not only has to make high quality products but also has to sell
them cheap. This can be achieved only if the company has good suppliers who can
provide good quality material or ingredients at very low price. Otherwise the
company has to go for backward integration to achieve the economies, which
determine success in the rural market.
 Customer power:

Due to the increased literacy, advent of TV, promotional efforts and increased
contact with urban markets, has become much more knowledgeable about products
and empowered then in the past. Therefore companies need to provide quality goods
to consumers. The word of mouth factor is very crucial in rural markets; it can affect
consumer either in positive or in negative way. Hence companies must be very careful
in their dealing and must use this as a tool for promotion. And finally retailer, as
retailer is the market forces in rural market they bargain a lot for providing shelf space
and stocking of product. Hence companies need to go for more promotions so that
they are forced to keep the product because of consumers demand.
Potential entrants:

The companies operating in the rural market must work to raise the entry
barriers by being there first and building good relation with retailers so that the chance
of new entrants coming in and surviving are less.
Substitute product:

Due to high level of illiteracy, low awareness and dependence on retailers in

rural areas, most of the branded products are substituted by the cheaper products.
Competitors:

The brands rarely compete with one another on the retailer’s shelf space but
they have to be just there and then through influence of retailer they can find way into
consumers home. Hence companies need to pocket the retailers for sales.

c) Product strategy:
Proper product mix is very essential for satisfying the variables in rural
market.

Understanding of valued product:

Marketing mix must deliver superior value to the rural consumer at a price
point, he is comfortable, in order to be successful.

Packaging:
 The size of the pack helps the rural consumers pick the product at the price
they can afford. The affordability, storability, display ability, availability along with
the usage are the reasons for rural consumers to look for small packs. On other hand
the small packs can give higher margin per unit in comparison to larger packs but on
the other hand they can cannibalise on sale of existing products of the company and
thus leading to lower overall profit.

Branding and logos :

To build a brand in the rural market, product have to be geared to rural in

terms of price, packaging and communication and delivered to target audience in the
language they understand using the idiom specific communication.

Use of symbols like muscle man for MRF, lightening for rin, helps the rural
consumers to identify brands at the time of the purchase. Hence logos are very
important.

d) Pricing strategy:
Companies should not only price their products competitively, but also
offer their rural prospects the maximum value for money spent. Indian companies can
do this by putting in place an aggressive cost structure. Re-designing of products for
the rural market should be done in a matter to maintain a low cost for the products.
Refill packs are a good example in this case. Hence the pricing decisions must be
influenced not just by income received but also on when it is received and how it is
allocated.
Rupees 5 price point:
Low unit packs were there since long; only determination is different now.
The pioneer in this category was tea and coffee marketers. Brooke Bond pack was
available earlier in 5 paise, later in 10 paise, 25 paise and 50 paise and then with the
inflation it became Re. 1 pack. Now it is the time of Rs 5 pack.
Even Coke came up with Rs 5 price point which attracted huge masses. And what is
different from the past is that large number of product categories is now available in
small packs and it has taken shape of mega trend.
e) Communication strategy:
Since rural masses are still lack with communication media it very
essential for companies to communicate about product to same.
Education instead of promotion:
The basic premise for communicating a promotional message for rural
market is that it has to be essentially an educational message. This education provided
in interesting, interactive and entertaining format brings better results. Rural
consumers need not only to be told the benefits delivered by a brand convincing but
also how the benefits outweigh cost that he is going to incur.
Outdoor Media Options:
Large numbers of outdoor media options are available with the media
planner to take the message to the rural prospects. And selection of type of outdoor
media depends on population of area, geography etc. two widely used outdoor media
are wall painting and video vans.
Wall painting: are effective and economic medium for advertising in rural areas.
Speech or video comes to an end, but wall paintings stays as long as the weather
allows it.
Video vans: is one of the effective means of reaching out physically to the rural
customers and providing them with touch and feel of product and the brand.
Unconventional platforms to promote brands:
In order to communicate the message to vast multitude of rural
population, marketers have to experiment also with unconventional media along with
the traditional mass media options. Some of the unconventional platforms are:-
Mandis: these are the agricultural markets, known by different names as terminal
markets/primary or secondary wholesale market and are set up by state governments
to procure agriculture produce from framers.
Melas: the companies need to turn to innovative methods of advertising and brand
building in fairs or melas to reach their potential customer base.
Mills: Marketing and Research Team (MART) conducted a study in 24 villages across
UP and Punjab and found that the creative use of avenues like mills, rural games,
tournaments, service camps and appointment of local brand ambassadors can
appreciably increase communication effectiveness in the rural areas.
Pilgrim sites: Many pilgrim sites attract lakhs of crowd hence companies need to
concentrate more on these locations for better promotions.
Rural games: Even sponsoring rural games will also provide wide publicity in rural
areas since large population participates in such rural tournaments.
 Schools: young children are emerging as the agent in the rural areas. Thus
communicating with this generation will build loyal customers for the brand.

Conclusion:

Rural India is problem-ridden, but this is one of the phases of the growth
process. Every developing country has to through the same. Thus, India should move ahead
with development programs, but supplement the same with support from the private sector.
This would lead to more equitable and inclusive development.