akshay assigmenta.docx

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ASSIGEMENTS RURAL MARKETING

SOLVED QUESTION

SUBMITTED TO : MR.PETER BRIAN BENJAMEN

ASSISTENT PROFESSOR

ST. JOSEPH ENGINEERING COLLEGE

VAMANJOOR

SUMITTED BY : AKSHAYA RAO

2ND YEAR MBA

ST. JOSEPH ENGINEERING COLLEGE

VAMANJOOR

SUMITTED ON : 8/6/2013


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1. Define Rural Marketing.

Ans: 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.

It is a two-way marketing process wherein the transactions can be:

i. Urban to Rural : A major part of rural marketing falls into this category. It involves the

selling of products and services by urban marketers in rural areas. These include: Pesticides,

FMCG Products, Consumer durables, etc.

ii. Rural to Urban : Transactions in this category basically fall under agricultural marketing

where a rural producer seeks to sell his produce in an urban market. An agent or a middleman

plays a crucial role in the marketing process. The following are some of the important items

sold from the rural to urban areas: seeds, fruits and vegetables, milk and related products,

forest produce, spices, etc.

iii. Rural to Rural : This includes the activities that take place between two villages in close

proximity to each other. The transactions relate to the areas of expertise the particular village

has. These include selling of agricultural tools, cattle, carts and others to another village in its

proximity.

2.Discuss scop of rural maeketing

Ans:Opportunities and Challenges

This chapter captures situations that refl ect the growing interest and enthusiasm of business

towards rural markets. Opportunities in the rural market are examined in the light of intense

and growing competition in urban markets. The market opportunities are clearly perceived

through a comparison of consumption patterns for durables as well as non-durables between

the rural and urban markets. Identifying opportunities and clarity in decision-making requires

an unambiguous defi nition of rural marketing. Rural marketing and rural markets are

conceptualised to clearly distinguish them from urban marketing and urban markets.

Limitations in the approach used for identifying the rural markets are also examined.

THE ROAD MAP

Indias vast rural market offers a huge potential for a marketer facing stiff competition in the

urban markets. The rural market environment is very different from the familiar surroundings

of the urban market. Rural consumers have customs and behaviour that the marketer may fi

nd diffi cult to contend with. The underst anding of India s rural markets is an importantobjective of this book. The other major objective is to comprehend infl uences on this market


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with emphasis on understanding consumer response to marketing decision variables. The

third objective of the book is to develop appropriate methods to research rural markets.

Appropriate research methods are important in the context of the rural market for two

reasons:

(a) the consumers ability to discriminate varies; and

(b) the reference points used by rural consumer differ from those of the urban consumers.

The researchmethods to measure perception, attitudes and behaviour in rural markets vary

from the approach used in researching urban markets. Research methods unsuitable in rural

markets create a distorted picture of the consumer and result in failure of marketing

efforts.

The opportunities in the rural market are demonstrated by comparing consumption levels in

urban and rural markets for different product categories. Their volumes and growth show the

importance of this market. Understanding demographic profiles of consumers and their

response to brand offering is a useful approach to analyse the rural market. A large number of

caselets in the book capture the consumer response to brand offering. The need for

appropriate methodology for researching consumers is demonstrated by non-applicability of

the urban reference points and measures in the context of rural markets. Literature available

on rural development provides alternative methods to research rural markets. The

understanding of the rural consumers is utilised in decision-making situations. Organising the

chapters according to marketing decision variables provides the focus on decision -

making. The critical aspect of reaching the consumer with the message and the product

offered is examined in great detail. Short cases and data illustrated later in this book provide

the decision-maker with important criteria for evaluation of options in these markets. The infl

uence of consumer perceptions on product design in different product market situations

Rural Marketing: Opportunities and Challenges is identified. Consequently, the concepts and

the framework developed are relevant for marketing decisions. The use of the existing

network of channel members in rural markets is the key to connecting with the rural

heartland. Haats and melas, which are unique to rural markets, supplement the retailer route

to rural markets. The interaction between consumers and these unique institutions provides

information for use in marketing decisions. The marketing strategy is examined in the context

of the competitive situations in the rural market. Competition is categorised into

(a) generic competition,(b) competitionwith the unorganised sector,


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(c) new entrants, and

(d) meeting

the challenges created by imitations. The challenges faced by the marketer in these

competitive situations lead, at the same time, to the opportunities available in rural markets.

CORPORATE INTEREST IN RURAL MARKETS

When rural customers discover the new and exciting choice of brands available in urban

markets, a demand for these brands is created in rural areas. Marketers have entered the rural

markets by extending the distribution of their existing offering or developing a separate

marketing strategy for the rural markets. When Titan, the watch manufacturer, found rural

consumers purchasing their Sonata brand of quartz watches, they formulated a marketing

strategy tailored to the requirements of the rural market. There is an increase in the launch of

new products and brands in rural areas. In many product categories like cigarettes, biscuits,

soaps, etc., specifi c brands are developed only for rural markets. The rural market, in both

durables and non-durables, can be developed through new products and suitable positioning

3. Mentions the components of rural marketing

Ans: COMPONENTS OF MARKET

i. Two parties are necessary

ii. Goods or commodity for transaction

iii. Business relation and communication between buyer and seller

iv. Demarcation area or place there, uniform price or competition is not a condition

4. Explain the different type of rural marketing

Ans:

i. Area of Coverage Local market Tehsil Level markets Regional Level markets National Level

ii. Location

Village Market


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Primary Market Wholesale Markets Terminal Market

iii. Volume of Trade

Retail Markets Wholesale Markets

iv. Time Span

Short Period Markets

Long Period Market Permanent Markets

v. Number of Commodities General Market Specialized Markets

5. Differentiate Between Rural Markets and Urban Markets.

Ans: The differences between rural markets and urban markets are

No. ASPECTS URBAN RURAL

1.

PHILOSOPHY

Marketing & Societal

Concepts &

Relationship

Marketing

Marketing & Societal

Concepts,

Development

Marketing &

Relationship Marketing

2. A. MARKET

B. DEMAND High Low

C. COMPETITION Among Units In

Organized Sector

Mostly From

Unorganized Units

CONSUMERS


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LOCATION Concentrated Widely Spread

LITERACY High Low

INCOME High Low

EXPENDITURE Planned, Even Seasonal, VariationNEEDS 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 graspQUALITY PREFERENCE Good Moderate

4. PRICE

SENSITIVE Yes Very much

LEVEL DESIRED Medium-high Medium-Low

5. DISTRIBUTION

CHANNELS Wholesalers,

stockiest,

retailer, supermarket,

specialty stores, &

authorized

showrooms

Village shops, Haats

TRANSPORT FACILITIES Good Average

PRODUCT AVAILABILITY High Limited

6. PROMOTION

ADVERTISING Print, audio visual

media, outdoors,

exhibitions etc. few

languages

TV, radio, print media to

some extent. More

languages

PERSONAL SELLING Door-to-door,

Frequently

Occasionally

SALES PROMOTION Contests, gifts, price Gifts, price discounts


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8.what are the basic concept of rural economy

Ans:Profi le of the Rural Market

The attractiveness of the rural market is its size. The number of individual consumers and

households in rural markets is compared with that in the urban markets. The demographic

profi le indicates the heterogeneity of rural consumers in terms of occupation, income and

literacy. The literacy levels are also examined by gender and the variations observed suggest

a two-level segmentation of rural markets. The market volume is also examined in terms of

consumption expenditure. The per capita consumption expenditure and also the total

consumption expenditure are compared between the rural and urban markets. The

consumption levels between the rural and urban markets are examined for both markets.

The size of rural markets, demographic profi le of the rural market and market volume help

us to draw a broad mental picture of the rural markets. The number of villages, population

and the number of households indicates the market size. The demographic profi le of the rural

market is described in terms of household size, sex distribution, literacy levels, occupation

and income.

Market Size

The number of villages, population and number of households captures the rural market size.

Physical Coverage

The number of villages in India is more than .64 million. The number of villages or locations

that are to be served is 124 times that of the urban markets as the number of urban locations

or towns is 5,161.

Number of Towns and Villages in India

Item Year Number

No. of towns 2001 -5,161

No. of villages 2001- 640,000Source : Census of India, 2001.

The large population and number of households suggest a large

potential in the rural market.

Population Distribution in Urban and Rural Regions

(In millions)

Year 1971 1981 1991 2001

All India 548 683 846 1029Urban 109.1 159.1 217.4 286.1


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Rural 438.9 523.9 628.6 742.9

Source: Central Statistical Organisation, 2004.

The large number of villages indicates a widely spread out market and it is a challenge for the

marketer to service this dispersed market.

Households and Houses Over Time in Rural Regions

(In million)

No. of Occupied

Year No. of Households Residential Houses

1971 79.6 72.7

1981 90.9 86.1

1991 111.6 107.9

2001 138.27 135.1

Source:

1. Central Statistical Organisation, 2004b.

2. Census of India, 2003.

Demographic Profi le of the Market

The demographic profi le of the rural market is captured by the household size, sex

distribution, literacy level, occupation and income

Household Size and Sex Distribution

Item Rural Urban

Average household size 5.07 4.43

Average no. of adults per household 3.25 3.11

Average no. of children per household 1.82 1.32

Sex ratio (no. of females per thousand males) 951 901

Source: National Sample Survey Organisation, 2005.

L iteracy Rate

Literacy rate is available from National Sample Survey (NSS) 60 th round (January June

2004), listed in Table 2.5. The rural markets have lower levels of literacy as compared to the

urban market

The difference in literacy between the rural and urban markets is much more among the

female population than the male population. The reach of the print media in rural markets is

therefore limited; and this is more so for the female population when compared to the male population.


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Occupation

The details on occupation are available from National Sample Survey and NCAER data.

Although majority of the rural population is employed in agriculture, yet a large percentage

of more than 30 per cent employed is in the non-agricultural sector. Salary earners in the rural

areas are a signifi cant group with more than 11 per cent of the head of the households as

salary earners. About 50 per cent of the rural population

Literacy Rate by Geography and Gender

(In percentage)

Location Male Female All

Rural 72 49 61

Urban 88 75 82

Source: National Sample Survey Organisation, 2005.

Distribution of Households by Occupation in Rural India

(Nos. per thousand households) July 2000 June 2001 January June 2004 Occupation (NSS

56th round) (NSS 60th round) Self-employed in non-agriculture 145 144 Agricultural labour

267 274 Other labour 110 89 Self-employed in agriculture 368 356 Others 110 135

Source : National Sample Survey Organisation, 2005.

self-employed. The income stream for the self-employed differs from those working for

others. The labour constitutes more than 35 per cent of the population and their income is on

daily basis. In addition to designing suitable pricing, the marketer needs to design suitable

product and also delivery channels to take into account the variations in the rural market. The

need for segmentation and targeted marketing strategy is clearly indicated.

Income

It is short-sighted to view rural markets as an extension of urbanmarkets. The issue facing the

rural marketer is not of adequateconsumers who can afford what the urban market consumes.

The situation, instead, requires the marketer to identify and reach out to consumers with

offers that meet variations in their ability to purchase.

In rural India, about half the households are in the income category of less than Rs 35,000 per

annum but more than 17 per cent

Distribution of Households by Annual Income

This distribution pattern is true for the north and south regions. In the eastern region, the

number of households with less than Rs 35,000 income is more than 50 per cent and thosewith income over Rs 70,000 is 11 per cent. In contrast, in the western region only about a


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third of the households are with income of less than Rs 35,000 and more than one fourth

households have income exceeding Rs 70,000 per annum (see Table 2.9).

Distribution of Households by Income and Region

(Percentage)

Annual Income North South East West

< 35,000 46.50 49.17 57.97 34.14

35,001 70,000 34.89 34.76 30.97 40.44

70,001 105,000 10.84 10.14 6.90 15.17

105,001 140,000 4.01 3.71 2.28 6.03

>140,000 3.76 2.21 1.89 4.21

Total 100.00 100.00 100.00 100.00

Source: NCAER, 2003.

Income Distribution by Occupation

Income Distribution by Occupation

The profi le indicates lower literacy levels and lower income with agriculture as the main

occupation. A small percentage of the rural population includes businessmen, professionals

and wage earners who are in the middle income or the higher income

groups. Slightly less than one-fourth of the cultivators are in the middle and higher income

groups. The middle and highincome groups in the rural areas are the high potential

consumers and these total more than 17 per cent of the population. The middle-income and

high-income group constitute 47.3 per cent of the urban population, but in terms of number

the group is 135.3 million in size. In rural areas, the population in this group is 128.5 million.

The potential in the rural market is, therefore, close to that of the urban market in terms of

middle and highincome groups. The income distribution suggests two distinct audiences for

communicating with in rural India:

(a ) the rural rich, and a set of educated middle class with exposure to mass media and

purchasing power;

(b ) a vast majority of illiterate and poor and who cannot be easily reached through mass

media


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9.Write a note on rural entertainments

Ans: Media Preferences

It has been recognised that the effectiveness of media depends largely on the audience. As

observed earlier, consumers in the higher income category have access to mass media and are

more receptive to it. Traditional media are likely to be more effective with the average rural

audience that is less cosmopolitan and have a lower income. In a study on communication of

health information to rural people, the media channels were ranked on effectiveness.

Interpersonal communication was ranked most effective followed by television/VCR, print

and then radio.

Channel and Programmes Viewed

It has been observed that the rural viewer does not switch channels. Brand loyalty to a

programme is fairly high. This is infl uenced by the presence of large number of black and

white televisions and lower-priced colour televisions that have limited channels. DD1 is the

channel with the highest viewership. For mass products, popular network programmes can be

used to the marketers advantage. The co st per thousand contacted works out to as low as Re

1. The viewership patterns of the popularly watched programmes on Doordarshan help

illustrate this.

Viewership Patterns on DD1

(in million nos.)

Programme Urban Rural Total

Rangoli 52 42 94

Hindi Film 59 57 116

Source: Dhawan, 1996.

Programmes that are popular in urban areas are also popular among rural audiences, though it

has been observed that a large group does not fully comprehend the main theme. A fairly

large section of the audience feels that advertisements are not related to their world and do

not view them favourably. This is observed in a study covering multiple locations.

Audience Response to T.V. Commercials

A study on audience response to Television commercial was conducted in Purulia (West

Bengal), Erode (Tamil Nadu), and Kheda (Gujarat). Its fi ndings were:

People below the age of 35 years watch more television. Around 70 to 80 per cent were

males, 30 to 40 per cent were illiterate and majority were farmers or farm labourers.More than 60 per cent of viewers watch national programmes.


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In the south and north, fi lms and musical programs like Chitrahaar are viewed but news

programmes are more popular in the south.

Around 60 per cent understand the main theme, 10 to 20 per cent remember only the

visuals and do not comprehend the meaning while only 12 per cent understand the words.

Programmes in English are understood by a minority.

Around 26 per cent do not like advertisement slots between programmes while 70 per cent

like them. Those who dislike advertisements feel that visuals mostly show a different world

and are not able to identify with them.

In Purulia, 15 per cent consider the attire depicted vulgar while in Erode 10 per cent

consider it vulgar.

Regarding toiletry items, more than television exposure, the proximity to urban area was a

stronger factor in changing rural habits. Television did however assist trials in affordable

brands.

Audience Behaviour

Audience behaviour is examined for important media like television, radio and newspaper as

their behaviour infl uences media decisions.

Television Viewing Behaviour

Media decisions are guided by viewing habits. Television in rural markets means

Doordarshan. Since the rural routine is not as dominated by the clock as in urban areas, a

prime time television programme may mean that the viewer switches on the set 20 to

30 minutes earlier. Typically, about 10 minutes before prime time there is a switchover to the

national network. Advertising rates before this happens are relatively low and could bring in

the same kind of mileage as prime time advertising does.

Radio Listening

Radio is a popular media. Besi des AIRs primary channel programmes, Vividh Bharati is also

heard regularly. It is not only farm news and Samachar but fi lm music that is popular. This is

because rural consumers listen in to the radio throughout the day, unlike in urban India where

people listen to the radio in the mornings. The sponsor has to exercise care in the media and

its usage as otherwise the message is unlikely to be heard among the target audience. For

instance, a tractor jingle at 11.00 p.m. in the night hardly has any rural audience and is of

little advantage to the advertiser.

Access to Newspapers

Newspapers normally reach the feeder market or small towns and are read in shops or roadside hotels. People sometimes buy newspapers here and take them back home where they


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are read by other people. In some cases, the newspaper is read at the common

gathering/meeting. Social gatherings or friendly gettogether differs from village to village. In

Nayadih village near Jamshedpur, the mosque was a common meeting place in the evening or

after prayers. The younger generation also frequently meets in the evening (Sirbhaiya, 1994).

10. Explain the issues related to rural marketing environment.

Ans: The factors influencing the rural marketing environment are

i. Population: Around 70 percent of India lives in rural areas. The figures of different years

are as given below:

As per Census Data

Year 2011 2001 1991 1981

Population in million 1180 1027 846 683

Density per kmsq 320 324 273 230

Person per household 5.2 5.5 5.52 5.55

Villages inhabited 000 620 627 627 579

Rural Population 812 742 629 524

Urban Population 368 285 218 159

Rural population as % of total population 70 72.2 74.3 76.7

ii. Occupation: The main occupation of rural people is Agriculture. Other occupations

are Farm Labourer, Priest, Blacksmith, Carpenter, Washerman, Barber, Shoe maker, Potter

and Milkman. There are also rural occupations such as village postman, teacher, village nurse

and health worker, village doctor, policemen, street vendor, grocerer, shops for repairing

cycles, automobiles and electrical gadgets. The proportions are given below

S I

No

Occupation Proportion to total rural population

(%)

1. Agriculture 50

2. Agricultural Labour 27

3. Business 10

4. Non-agricultural

Labour

9


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5. Salary earners 2

6. Not gainfully employed 2

Total Rural Population 100

iii. Income: The village income is generated mostly by sale of agricultural produce. Also

there are income generated by sale of animal produce, service, interest on investment,

Government subsidies and grants, mortgage of properties and gold, Charities and donations,

The labour and Others.The proportion is as given below

SI No Sources of Income Proportion to Total Rural Income (%)

1. Agriculture 59

2. Agricultural wages 16

3. Business and craft 9

4. Non-agricultural wages 7

5. Salaries 3

6. Current Transfers 2

7. Others 4

Total Rural Income 100

iv. Location of rural population: As per Census 1991. There are 3,697 urban cities and

5,80,779 rural villages. The location and concentration of rural villages are as below:

SI No Population Range (No.

of persons)

Number of

villages

Proportion

to total

(%)

Population in

millions

Proportion to

total (%)

1 Less than 200 1,03,952 17.9 10.53 1.7

2 200 to 499 1,41,143 24.3 48.46 7.8

3 500 to 999 1,44,998 25.0 104.36 16.8

4 1000 1999 1,14,395 19.7 160.29 25.7

5 2000 4999 62,915 10.8 185.57 29.8

6 5000 9999 10,597 1.8 69.84 11.2

7 10000 and above 2,779 0.5 43.76 7.0


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Total 5,80,779 100 622.81 100

v. Education: Education level is increasing year after year in India. The statistics are

given below:

Census Year Persons Male Female

1961 29.40 40.40 15.35

1971 34.45 45.96 21.97

1981 43.57 56.38 29.76

1991 52.21 64.14 39.29

2001 64.84 75.85 54.16

vi. Land Distribution: India has a large geographical land area of 3.288 million square

kms. Land classification is based on the use of land like Forest Land, Uncultivable Land,

Land not available for cultivation and Cultivate Land.

Classification of land based on topography is Mountains, Hills, Plateaus and Plains.

vii. Irrigation: Government are having different projects to connect the irrigation

facilities all over India. Many places have been irrigated are doing well. Punjab and Haryanahas 75% of irrigation cropped area. Uttar Pradesh has 63% of irrigation cropped area. Sardar

Sarovar Project across river Narmada has irrigated 19 lakh hectares. Nearly 80% of the wheat

area is irrigated. Rice is 45%, cotton is 31% and maize 20% are irrigated.

viii. Rural Development Programmes: A lot of developmental programmes are being

arranged by the Government to support the rural people and for their improvement.

ix. Infrastructure facilities : Different Infrastructure facilities are provided to rural India.

Rural Electrification: 88% of the villages have electricity connection in India. 496 villages

has been declared non feasible for electrification. Electricity tariff charged is very low in

rural areas. In Karnataka and Tamil Nadu, the supply of electricity is almost free for

agricultural purposes. In certain states, fixed charge is levied

Rural Communication System: The road network of over 3 million kilometers in India is

the largest in the world. Still the road connectivity and the quality of roads are poor. A

network of rural roads has connected about 70% of the Indian villages and all weather roads

serve over 40% of the villages, while 605 remained inaccessible during rainy seasons. Rail

network covering a total length of 64,015 kilometers. It is the 4th largest railway network in


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the world. New cinema houses are set up in semi-urban and rural areas. Temporary cinema

houses in sheds, with a thatched roof or zinc sheet roof

11.How HUL implemented PROJECT SHAKT? Discuss.

Project Shakti

HLL uses its traditional channels to effectively reach urban, semiurban and large rural

villages. Its traditional models are not cost effective to reach villages with less than 2,000

population. The Project Shakti model experimented in the state of Andhra Pradesh uses self

help groups (SHGs) of women. The SHGs are formed by the District Rural Development

Authority. SHGs are micro-credit bodies that encourage savings among the women members

and convert these savings into micro enterprises. HLL selected women members who were

trained to educate on the product benefi ts and sell the products. Typically, a woman from an

SHG selected as a Shakti entrepreneur receives stocks at her doorstep from the HLL rural

distributor and sells direct to consumers as well as to retailers in the village. They received

training and handholding for the fi rst three months from HLL. The women, guided by the

company representative (called Rural Sales Promoters, or RSPs), would sell both door-to-

door (at MRP) as well as to retailers (at a discount typically given out by distributors). They

would get different margins for each different sale. The shopkeepers did not feel threatened

because these women were not undercutting the MRP; also, the stocks reached their doorstep.

The Shakti entrepreneur borrows from her SHG for starting the business. Each Shakti

entrepreneur services 6 10 villages in the population strata of 1,000 2,000 people. Initially,

the Shakti entrepreneur starts with 4 5 chief brands from the HLL portfolio Lifebuoy,

Wheel, Pepsodent, Annapurna salt and Clinic Plus and then adds on other products that have

demand (Gupta and Rajshekhar, 2005).Typically, unit packs are small. The contribution of

this model was that earlier retailers used to stock only fast moving brands like Lifebuoy and

Rexona but by going from home to home, the company ensures that a larger range is stocked.

The company built its toothpaste brand Pepsodent and brand of iodised salt Annapurna

through the Shakti model. The model piloted in 50 villages of Nalgonda district in Andhra

Pradesh is now extended to other parts of the state and to the states of Karnataka, Gujarat,

Madhya Pradesh, Uttar Pradesh, Tamil Nadu, Chattisgarh and Orissa (Kamath, 2003).

Shakti also includes the Shakti Vani programme of health and hygiene education and creating

access to relevant information through the iShakti community portal. Shakti Vani is a social

communication programme. Women, trained in health and hygiene issues, address villages


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communities through meetings at schools, village baithak s, SHG meetings and other social

forum. In 2004, Shakti Vani covered 10,000 villages in Madhya Pradesh, Chattisgarh

and Karnataka. The vision is to cover 50,000 villages in 2005. iShakti, the internet-based

rural information service, has been launched in Andhra Pradesh, in association with the state

government s Rajiv Internet Village Programme. iShakti has been developed to provide

information and services to meet rural needs inhealth and hygiene, agriculture, animal

husbandry, education, vocational trainin g and employment, and womens empowerment.

The service is now available in Nalgonda, Visakhapatnam, West Godavari and East Godavari

districts. The vision is to have 3,500 kiosks across the state by 2005 (Hindustan Lever

Limited, 2005).

12.Discuss the feture of rural marketing

The future of Rural MarketingIntroduction:

The Ex- Chairman of Hindustan Lever observes that Most marketers realize that Indiais on the cusp of momentous change. The economy is vibrant, incomes are rising; and thehabits, preferences, and attitudes are changing rapidly. But nowhere is this more evident thanin rural India. There is, thus, an emerging need to build expertise in rural marketing.

From the income dispersal projection by NCAER for 2006-07, that the number of poor households will shrink by half to 2.8 crore from 6.1 crore in 1997-98, whereas themiddle income households will double and the rich households will treble over the decade, inrural India. This upward push-taking rural people from poverty to prosperity-will lead togreatly increased purchasing power. Todays non -consumers comprising the rural poor willenter the market as first-time buyers in large numbers. To claim a larger share of the growingrural pie will call for a radical shift in management thinking, from the one-solution-fits-allmentality, to market innovations.Focused Marketing Strategies:To succeed in the rural market, companies will need to adapt the 4Ps of marketing and the 4As their strategy- Awareness, Access, Availability, and Affordability. We have seen some

efforts in this direction already, low unit packs, use of IT, use of traditional media, but we arelikely to see a lot more attention and innovation from marketers.Product

Developing relevant products to meet the specific needs of rural consumers willexercise the minds of marketers. For example, know that voltage fluctuation is a major

problem in our villages, because of which bulbs last but a few days. Companies will put their R & D teams to develop filaments that can withstand violent fluctuations, thereby extendingthe life of the bulb. A rural-centric approach to product development, will hasten the growthrate in the rural market.

Also increased literacy and awareness levels will lead to an influx of new productcategories, like educational and lifestyle products. Marketers will have to be alert to these

opportunities, to gain the first mover advantage in these new markets.Price


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Price will continue to be an element of the marketing mix. However as rural incomescontinue to rise in the coming years, we may see the share of low unit packs coming downsomewhat and economy packs gaining share. Also as the reach of media and awareness levelimprove, we are likely to see companies shift their focus trade to consumers. Another factor favoring consumer schemes in the future is the expected proliferation of multi-brand open

format stores, which will take competition directly to the consumer and better offer would bea definite incentive for the buyer, to choose a particular brand.Distribution

Challenge of reach-markets are small and scattered- will be addressed throughinnovation. Project Shakti of Hindustan Lever is one such successful example. Nehru YuvaKendra volunteers model through haats being piloted by MART for Colgate, is another suchnew model. Amway is already selling bio-fertilizers in rural India, through its famous muti-layer distribution model. A large number of independent mobile traders visit interior villagesand sell a variety of products. No company has used them so far for last mile distribution of their products. If mobile traders could be or organized, given official recognition through

branded uniforms and offered an attractive business model, this virtual army of sellers couldoffer a cost effective solution to service remote locations.Communication

While companies will continue to have a national communications strategy, they willhave to think and act locally. The need for focused communication aimed at the rural marketsshould not be underestimated. This calls for innovation and substantive changes.

If the Indian advertizing industry is to reach rural India, it has to be firmly groundedin rural perception, values and traditions. It has to drown itself in local colors, customs andmodels of communication, to make itself relevant to rural society. It has to gain the trust of masses, by manipulative claims on the other. It has to reach out and relate to the level that itcan bring about the behavioral changes. Finally, it has to find ways to reincarnate innovation.The four components are not mutually exclusive: they share mutual feeding relationships.

The fact that multinational giants like Coca-Cola and Pepsi have recognized this needfor at least regionalizing their advertising, by featuring locally popular heroes in their TVcommercials, is a step in the right direction.

Mass media will have to be supplemented with traditional media. Haats, melas, jatras, puppet shows and street theatre are integral to village life and these platforms allow the muchneeded two way communication process, to create a strong connect with rural audiences.

The opinion leaders are changing from the earlier Pradhan and the postman to ruralyouth and people having good jobs in nearby towns, as the latter have higher level of exposure to media and urban lifestyle. Similarly Sachin Tendulkar and Sharukh Khan areappropriate role models, as cricket and movies are as popular in villages, as in our cities.

Market Research:As the rural market develops in the next few years, more qualitative studies will be needed tounderstand the rural consumer, his lifestyle, aspirations and motivations. Research agencieswill also have to develop relevant rural segmentations models. However Western techniquesand tools often evoke inappropriate responses from less literate people. Agencies willtherefore need to evolve a set of tools that can capture responses accurately. PRA is one suchtool used in the social sector which involves rural people in research process and they enjoysharing and analyzing about themselves.

Another area that needs the attention of research agencies is the complete lack of intelligent data on rural markets. For example a company wanting to use haats for

promotion, does not know how to select relevant haats for its purpose as besides the number


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of haats there is no data on the number of visitors, profile of visitors, purchase per visitor,availability of different products ,sale of branded products and other similar data. Reliabledata the rural sector and detailed mapping of haats, mandis, melas and folk media forms will

become a priority for effective market planning, for which companies will need to join handsto sponsor syndicated studies.

Quantitative studies on demand estimation, nmarket shares, customer satisfactionwhich have been restricted to the urban market, will need to be undertaken in the rural marketas well, as demand grows and rural India becomes more attractive for marketers.Consumer Finance:

The evolution of urban markets in the 90s was fueled by the entry of consumer finance products as an outcome of the financial sector reforms in the Indian economy.Initially, consumer finance was limited to housing and vehicle loans. Sale of 4-wheelerscrossed an impressive 1 million vehicles in 2004. Of these majorities were financed. Theadvent of non banking finance companies and private sector banks led to spread of consumer finance to the durables category. This resulted in an unprecedented boom in the sale of TVs,VCDs, refrigerators etc. With banks like ICICI and HDFC and others moving aggressivelyinto the rural markets and durable companies like LG, Philips and others extending their distribution, it can be expected that the urban boom of the 90s should be repeated in the ruralmarket during the current decade.Rural Vertical:

Companies will need to equip themselves, if they want to succeed in the dynamicrural market. To begin with, top management commitment would be absolutely essential. TheCEO would need to articulate a strong commitment to rural marketing, only then will themarketing team its focused attention and sustained support to this growing market segment.Companies will need to treat rural marketing as a separate area of work, in the same manner that the export market or urban market is given special attention. Hindustan Lever has already

created a separate rural vertical with a team of RSMs, ASMs, SOs, and RSPs committedexclusively to servicing the rural market. Rural has been given separate sales targets and thecompany is in the process of allocating separate sales promotion and advertising budgets for this market. These decisions have helped the company focus more sharply on the growingrural market. VIP industries have also created a separate rural vertical for its recentlylaunch ed low priced range of Alfa luggage. In the coming years more companies are likelyto set up a separate department, to tap the growing potential of the rural market.

Retail and IT models:India boasts of a huge unorganized rural retailing system through the 42,000 haats.

However organized rural retailing has not taken deep roots in rural India. ITC has recently setup the first Choupal Sagar in Sehore and has announced plans to set up 25 large format storesin M.P. by the end of 2005 and the company has ambitious plans of ultimately having 1,000Choupal Sagars spread across the country. Godrej, Tatas, Reliance, Escorts and others arealso busy finalizing their rural retailing plans. These open format stores will change theshopping experience, empowering the consumer as he would now decide what he buys, after comparing the different brands displayed in open, easy-reach shelves. This will reduce theinfluence of the retailer forever.

In the existing kirana store model, products are out of reach of the consumer and he isforced to buy what the zealous shopkeeper offers.

IT and connectivity will also impact the way business is done. Earlier village retailershad to block investment in stocking large quantities of products, as fresh supplies took weeksfrom the time the post card order was sent out. Today with STD facility, the retailer can dial


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the town distributor instantly and fresh stocks would reach him in just a couple of days, because of better road connectivity. He can therefore manage his business with a far lower inventory. The funds so released can now be invested in stocking a greater variety, offeringmore choice to the consumer, resulting in higher sale. Rural retail trade will thus becomemore attractive for companies and they will be compelled to directly service village shops

through the distributor van, rather than leave it to the wholesaler, as has been the situation inthe past.Rural Managers:

As the rural market is already bigger than its urban counterpart, there is need todevelop a good understanding about it among corporate managers. For this to happen ruralmarketing should be taught as a subject in every business school. Most management institutesdo not offer even as a elective, very few offer it as a core subject. There is an urgent need tomake this subject compulsory and assignments should be so designed, that the students visitvillages and get sensitized to rural life.

There are few institutes such as IRMA, XIM, Narsee Monjee and HRM that offer specialized rural marketing courses. Companies should target, as well as regional businessschools, to create a dedicated, empowered and distinct rural marketing team.Glamorize Rural Marketing:

It is a well-known fact that students at Business schools prefer e-Marketing or Retailor International Marketing, to Rural Marketing as an elective subject. This is because rural isconsidered unglamorous. Industry seminars on these subjects also evoke a similar response.This must change as the rural market in size is bigger than any of the other marketsmentioned here. Industry associations, government agencies and academic institutions,should take upon themselves to give due importance to rural marketing. We have awards for the best marketer, best advertizing person, best IT manager and several others, but none for rural marketing.

Public-Private Partnership:In the coming years, it is hoped companies will not fight for a share of the limitedrural pie. Instead they should join hands with the government in self-interest to increase thesize of the pie, by creating economic activity in villages through micro enterprises andmainstream these efforts, by linking them with large industry. The efforts of these public-

private partnerships which have already begun, will create the much needed affluenceresulting in greater purchasing power in our villages and lead to greater purchasing power inour villages and lead to greater demand for corporate products.

The fast improving rural infrastructure and higher exposure to city life the sharpdivide between urban and rural will get blurred in the coming years, as has already happenedin Kerala and Punjab. This will lead to rural people looking up to urbanities and imitatingtheir life style. But this process has only just begun .e-Rural Marketing:In very simple terms e-Rural Marketing refers to customized application of e-marketing for the rural markets. As the technology usage environment and the corresponding benefits thatare sought in the rural markets are very different from urban markets, the overallimplementation of e-marketing in the rural areas becomes quite different from that of theurban markets.

Therefore, e-rural marketing represents application if Internet based technologies as atool, to facilitate efficient and effective exchange with and from the rural market.

As it appears, Internet has the potential to deliver results in rural terrain. It offers anopportunity to develop a direct contact with rural consumers sans the traditional distributionnetwork or the inefficient intermediaries. It has the potential to solve many of the distribution


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problems which were acting as hindrance in the way of the development of rural market.Organizations can use this medium to provide a web space, which can be one stop solution tomany problems of the rural market. This whole approach can act catalyst in the developmentof the rural markets.

Companies can integrate their marketing efforts online for the rural markets as well.

Amazing thing experienced by the companies that employed the Internet tool in the ruralmarket is that illiteracy, unawareness and existing digital divide is not as big a barrier as it is

perceived to be.

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