Mr.

Ankit Goel
1st author's affiliation
Assistant Professor - Management Department
IITM, New Delhi

ankitgoelpgdm@gmail.com
Mrs. Parul Garg
Lecturer-MBA Department
B.S.A. College of Engeenering & Technology
Mathura - 281004 (U.P.)

parulgarg.mba@gmail.com

Rural Marketing: The Changing Scenario

Abstract
Think of rural India and the images that come up are of bullock carts, cow-dung, miles and miles of paddy fields
and kutcha roads and houses. It may not be true any longer. The rural market has changed drastically in the past
decade. A decade ago, the rural market was more unstructured and was not a prioritized target location for
corporates. Very few companies, mainly the agro-based ones, were concentrating in these markets. The
introduction of currency, transport, and communication and developments in infrastructure has increased the
scope of rural market. Gradually, corporate realized that there was saturation, stiff competition and clutter in the
urban market, and a demand was building up in rural areas. Seeing the vast potential of 75 per cent Indians living
in rural areas and demand base offers great opportunities to marketers, they started focusing on these unexplored,
high-potential areas. The companies are applying several models and strategies to be winner in the rural market
In recent years, rural markets have acquired significance, as the overall growth of the economy has resulted into
substantial increase in the purchasing power of the rural communities. This paper discusses the present scenario of
rural marketing especially rural produce, and its importance, current trends, and highlights certain problems
related to rural marketing. Further it highlights the improvements that make the rural marketing system most
effective.
"The future lies with those companies who see the poor as their customers."- C. K. Prahalad

Keywords: Rural, Marketing

products. In this context a special marketing strategy,
namely, rural marketing, has emerged.

1. Introduction
Emergence of Rural Marketing:
In recent years, rural markets have acquired
significance, as the overall growth of the economy has
resulted into substantial increase in the purchasing
power of the rural communities. On account of green
revolution, the rural areas are consuming a large
quantity of industrial and urban manufactured

It can be explained as a marketing activity which is

targeted to rural population in the rural areas which
have some difference in their needs, wants, desire,
buying behaviour, consumer behavior etc. as they are
raised in different customs, tradition and culture and
have different economic, social and political
background.

IITM Journal of Business Studies (JBS) Vol. 1, Issue 1, 2014

Features of Rural Market in India

1. Large and scattered market: According to 2001
census rural population is 72% of total population and
it is scattered over a wide range of geographical area.
2. Diverse socio-economic background: This is
different in different parts of the country and brings
diversity in rural markets.
3. Changing demand pattern: Demand pattern of
rural customer is fast changing due to increasing in
income and credit facilities offered by banks like
kisan credit card.
4. Major income comes from agriculture: About 60%
of the rural income is from agriculture and hence the
demand for consumer goods is high during harvesting
season.
5. Saving habits: Rural consumer is now having
saving habits due to the efforts of co-operative and
commercial banks.
6. Traditional outlook: Rural customer values old
customs and traditions.
7. Low standard of living: Rural consumer have low
standard of living because of low literacy, low per
capita income and social backwardness.
What makes rural markets attractive
The Indian rural market has a huge demand base and
offers great opportunities to marketers. Two-thirds of
Indian consumers live in rural areas and almost half of
the national income is generated here. The reasons for
heading into the rural areas are fairly clear. The urban
consumer durable market for products like colour
TVs, washing machines, refrigerators and air
conditioners is growing annually at between 7 per cent
to 10 per cent. The rural market is zooming ahead at
around 25 per cent annually. "The rural market is
growing faster than urban India now," says Venugopal
Dhoot, chairman of the Rs 989 -crore(Rs billion)
Videocon Appliances. "The urban market is a
replacement and up gradation market today," adds
Samsung's director, marketing, Ravinder Zutshi.
According to MART, a New Delhi-based research
organization that offers rural solutions to the corporate
world, rural India buys 46% of all soft drinks sold,
49% of motorcycles and 59% of cigarettes. This trend
is not limited just to utilitarian products: 11% of rural
women use lipstick.
Other numbers are equally revealing. According to the
National Council of Applied Economic Research

(NCAER), an independent, non-profit research

institution, rural households form 71.7% of the total
households in the country. Spending in this segment is
growing rapidly and consumption patterns are closing
in on those of urban India. Jagmohan Singh Raju, a
professor of marketing at Wharton, says: "No
consumer goods company today can afford to forget
that the rural market is a very big part of the Indian
consumer market. You can't build a presence for a
brand in India unless you have a strategy for reaching
the
villages."
Some
surprising
facts:
1. 742 million people
2. Estimated annual size of the rural market
FMCG Rs. 65,000 crore
Durables Rs. 5000crore
Agri
inputs(including
Tractors)
Rs.45000crore
2/4 wheelers Rs. 8000crore
3. Of two million BSNL connection 50% are in
small towns /villages
4. 41 million credit card have been issued (again
22milion credit plus debit cards in urban) with
cumulative credit of Rs. 977 billion resulting
in tremendous liquidity.
5. 42 million households are availing banking
services in comparison to 27 million urban
households.

2. LiteratureReview
The focus of literature,mainly written in the
post
liberalization
period,
is
on
highlightingpotentialofvastruralmarketandpro
vidingdescriptionofafewcasesof
commercialorganization
ofruralareas.Theliterature has uncritically
borrowed theories, frameworkandconceptfrom
themainstreammarketing
discipline,whichhasshiftedthe
growthofthesubjectasanindependentfieldof
academicinvestigation.There is an urgent
need to build a distinctive perspective and a
sound theoretical base for ruralmarketing,
which would create its own concepts,
frameworks, theories and body
of

IITM Journal of Business Studies (JBS) Vol. 1, Issue 1, 2014

knowledge.
Theissueneedsimmediateattentionoftheresear
cherinruralmarketing.

3. Objectives of the study

1. To understand rural marketing and study its current
scenario.
2. To find out how rural markets can be catered and
their untapped potential can be tapped.
3. How 4 Ps of marketing can be adopted effectively
and efficiently in rural markets.
4. Understanding different strategies followed by
companies for rural marketing.
5. Finding the opportunities in rural market and
understanding the challenges ahead.

4. Research Methodology
This paper is based on secondary data. Data have been
grabbed out by googling in different websites and
research papers.

5. The major players in the rural

market
Hindustan Lever
Coca-Cola
Colgate
Gillette
Unilever
Phillips and Nestle

Unique selling proposition (USP)

Extension services
Business ethics
Partnership for sustainability
Client and Location specific promotion involves a
strategy designed to be suitable to the location and the
client.
Joint or co-operative promotion strategy involves
participation between the marketing agencies and the
client.
'Bundling of inputs' denote a marketing strategy, in
which several related items are sold to the target
client, including arrangements of credit, after-sale
service, and so on.
Management of demand involve continuous market
research of buyers needs and problems at various
levels so that continuous improvements and
innovations can be undertaken for a sustainable
market performance.
Developmental marketing refer to taking up
marketing programmes keeping the development
objective in mind and using various managerial and
other inputs of marketing to achieve these objectives.
Media, both traditional as well as the modern media,
is used as a marketing strategy.
Unique
Selling
Propositions
(USP) involve
presenting a theme with the product to attract the
client to buy that particular product. For examples,
some of famous Indian Farm equipment manufactures
have coined catchy themes, which they display along
with the products, to attract the target client, that is the
farmers. English version of some of such themes
would read like:

6. Rural markets and rural marketing

involve a number of strategies, which
include:

Client and location specific promotion

Joint or cooperative promotion
Bundling of inputs
Management of demand
Developmental marketing

The heartbeats of rural India

With new technique for a life time of
company
For the sake of progress and prosperity
Extension Services denote, in short, a system of
attending to the missing links and providing the
required know-how.
Ethics in Business. form, as usual, an important plank
for rural markets and rural marketing.

IITM Journal of Business Studies (JBS) Vol. 1, Issue 1, 2014

Partnership for sustainability involve laying and

building a foundation for continuous and long lasting
relationship.
'''Building sustainable market linkages for rural
products: Industrys role, scope, opportunities and
challenges'''

7. RURAL MARKETING MIX AND

ITS FOUR P APPLICATION
Rural Marketing Mix
Marketing Mix refers to the set of actions, tactics,
tools or variables that a company uses to promote and
sells its brand or product in a markets.

4 Ps of Rural Marketing
1. Product- Product refers to anything that is
capable of or can be offered to satisfy need or
want. Product for rural market must be built or
modified to suit the lifestyle and needs of the
rural consumers.
Product Strategy:
1. Small Unit Packaging
Small packs are preferred due to the following
reasons:
1. Small packs help the rural consumer to pick
the product at affordable price.
2. Individual use products like shampoo; toilet
soaps, etc. are bought in smaller size.
3. Small packs are easy to display and they
increase the visual appeal.
4. Small packs are convenient to retailer to do
his business.
Example:
1. Cavin Kare introduced shampoo in 4 ml
sachets at 0.50 paise.
2. Rasna is now available in sachet at Re. 1
3. Ponds introduced 20 gm talcum powder
4. Tiger biscuit is available in four biscuits pack
at Re. 1
2. New Product Design

The products are designed as per the rural lifestyle.

Example:
1. PVC shoes and chappals are designed to work
in adverse conditions.
2. LG electronics launched Sampoorna TV
that can withstand power fluctuations.
3. Philips introduced small refrigerators
especially for rural consumers.
3. Sturdy Products
Sturdiness of a product is an important factor for rural
consumers. The rural consumers believe that heavier
the, higher he power and durability.
Example:
1. Bullet motorcycle is popular in village due to
its ruggedness.
2. Escorts has positioned their motorcycle
Rajdoot as a tough vehicle.
3. Rural consumer prefer dry battery cell, which
are heavy.
4. Utility Oriented Products
Rural consumers are more concerned with the utility
of the product and its appearance.
Example:
1. Philips introduced low cost radio Bahadur
with only medium wave receiver, which was
failed and fund that rural consumer purchase
radio not only for news but also for
entertainment.

5. Brand Name
Rural consumers are more brand loyalists than urban
consumer. The brand name should instantly be
understood by the rural consumers. Rural consumers
are unfamiliar with English and absurd names. More
preferably rural brand is a symbol, logo or color.
Example:
1. Everyday battery with a cat symbol rural
consumers remember it as billi wali battery.
2. Lifebuoy soap rural consumers remember it
as lal saboon
3. Mahindra tractors brand Bhumiputra

IITM Journal of Business Studies (JBS) Vol. 1, Issue 1, 2014

4. Slogan of Red Label Tea jiyo mere lal

proved very effective to promote sale

2. Price - Price refers to the amount the customers

LG Electronics defines all cities and towns

other than the seven metros cities as rural and
semi-urban market. To tap these unexplored
country markets, LG has set up 45 area offices
and 59 rural/remote area offices.

has to pay in order to acquire a product or services.

The villagers due to their limited resources are very
price sensitive by nature.

4. Promotion- This refers to all the activities

Pricing Strategies:

Large Volume low merging

Overall Efficiency and passing on benefits to
consumers.
Low cost/ value for money product

Examples of successful pricing strategy

Godrej introduced three brands of Cinthol ,
Fair Glow and Godrej in 50-gm packs, priced
at Rs 4-5 meant specifically for Madhya
Pradesh, Bihar and Uttar Pradesh the socalled `Bimaru' States.
Hindustan Lever, among the first MNCs to
realise the potential of India's rural market,
has launched a variant of its largest selling
soap brand, Lifebuoy at Rs 2 for 50 gm
Coca-Cola has also introduced Sunfill, a
powdered soft-drink concentrate. The instant
and ready-to-mix Sunfill is available in a
single-serve sachet of 25 gm priced at Rs 2
and mutiserve sachet of 200 gm priced at Rs
15.

undertaken to make the product or service known to

and preferred amongst the user and trade. Promotion
aspect always creates a challenge in rural markets
because of the fact that village have thin population
density and are widely spread over large remote areas.
NCAER conducted survey to study the socio
economic effects of advertising ; the India Society of
Advertisers sponsored this survey. It covered 3,836
household in 50 towns and 50 rural district in 10
states. It showed a clean rural urban divide, 16% of
rural and 25% of urban customers felt that advertising
influenced them to frequently or always buy products
they do not really need.
Media Vehicles used for promotion

Television
Radio
Print media
Cinema
Hoarding/Wall Painting

Examples of some successful Rural Marketing

Strategies

3. Place refers to point of sale. A village as a place

for promotion, distribution, and consumption is very
different from town or city.
Place Strategy

Segmentation
Distribution up to feeder markets/ Mandi
towns.
Direct Contact with rural Retail
Examples
To service remote village, stockists use
autorickshaws, bullock-carts and even boats
in the backwaters of Kerala. Coca-Cola,
which considers rural India as a future growth
driver, has evolved a hub and spoke
distribution model to reach the villages

ICICI BANK customized their rural ATMs,

so they can operate biometric authentication.
ICICI rural ATMS are battery operated so that
power failure is not issue.
BP energy Sell smoke less, biomass run
stoves
Bank of India introduced Bhumiheen credit
cards for providing credit card facilities to
landless farmers.
Nook develop affordable Mobile phones for
rural markets with unique features such as
local language capabilities, present time/ call
limits etc.
Philip develop a TV Vardaan for rural
markets. This TV work on the voltage 90-270
volts.

IITM Journal of Business Studies (JBS) Vol. 1, Issue 1, 2014

Philips developed Free Power radio this

radio do not require power and battery also. it
run on simple winding of level provided in
the set. The price of this attractive set is Rs.
995.
LG developed CTV called CinePlus was
launched in rural markets price Rs.5000

8. Consideration of four As application

in Rural Marketing
Availability: The first challenge is to ensure
availability of products and services. Indias
627,000 villages spread over 3.2 million sq. km,
given the poor state road; it is not easy to reach
700 million rural Indians.
Affordability: The second challenge is to ensure
affordability of the products and services. With
low disposable income products need to be
affordable to the rural consumers. Some
companies consider it by introducing small unit
packs, e.g. Godrej introduced Fair glow in 50 gm
packs.
Acceptability: The third challenge is to gain
acceptability for the products and services.
Therefore there is a need to offer products that
suites the rural consumer needs and customs. E.g.
LG developed a customised TV for the rural
market and promoted Sampoorna.
Awareness: Events like fairs, festivals, haats etc.
are to be used for brand communication. Ideas
like putting sticker on the hand pumps, walls of
the wells, tin palates on trees surrounding the
ponds etc. are some of the innovative media used
by soap companies like Lux, Lifeboy, Rin and
Wheel. The idea is to advertise at the time of
consumption.
Some other examples:

Affordability -- Godrej introduced three

brands of Cinthol, Fair Glow and Godrej
(soap) in 50-gram packs, priced at 10
rupees; Adidas and Reebok increased their

sales by 50% in rural markets by reducing

prices.

Size and design changes -- Videocon

introduced a washing machine without a
drier ; Philips launched a low-cost
smokeless chulha(stove); DCM Shriram
developed a low-cost water purifier
especially for rural areas.

Improving product acceptance -- LG

Electronics developed a customized TV
(cheap and capable of picking up lowintensity signals) for the rural markets and
christened it Sampoorna. It sold 100,000
sets in the first year.

9. Recent Trends in Rural Marketing

Project Shakti by Hindustan Lever-"The
objectives of Project Shakti are to create
income-generating
capabilities
for
underprivileged rural women by providing
a small-scale enterprise opportunity, and
to improve rural living standards with
greater awareness of health and hygiene,"
In addition to the distribution network, the
Shakti project includes Shakti Vani (or
voice), a social awareness program, and
iShakti, a community portal.
ITC's e Choupal Initiative
Integrated Marketing
APANAMANDI / KISAN MANDI /
RYTHUBAZAAR
RURAL AGRI- EXPORT
ONLINE
RURAL
MARKET
(INTERNET, NICNET)

10. Rural Marketing: Opportunities

and Challenges Ahead
Opportunities
1. More than 90% Villages are electrified

IITM Journal of Business Studies (JBS) Vol. 1, Issue 1, 2014

2. Rural telephone density has gone up by

300% in the last 10 years
3. Rural literacy level improved.
4. Empowerement of rural masses to ensure
economic self-reliance
Challenges
The rural markets are full of challenges because
of following characteristics like illiteracy,
distances, vast markets potential, communication,
rail and road transportation, distribution of
products and services, understanding consumer
behaviour, socio- cultural factors, languages, lack
of infrastructural facilities etc. Another major
plague of rural marketing has been widespread
availability of fakes. Shopkeeper plays a very
important role here, as consumer asks for things,
not brands like Laal wala sabun dena, Lal Dant
Manjan Dena. To counter this nuisance agency
would certify specific village Kirana Wala as
Genuine Products Store. Failure to comply at
surprise checks would result in immediate
termination of contract.
Some other important
marketing are as follows:-

problems

of

rural

Under developed people

Under developed market
Improper communication facilities
Many languages
Vastness & uneven spread
Low per capita income
Poor infrastructure facilities
Seasonal demand
11. ROLE OF IT IN DEVELOPING RURAL
MARKETS
With the cost of technology coming down day by
day, several companies are attempting to create
virtual bazaars or agri- portals akin to weekly
mandies. The most notable virtual mandies are
the e-chaupal by ITC, India Agriline by EID
Parry and Dairy Portal by Amul. ITCs e-Caupal
initiative has already reached 30 lakhs families of
India and by 2010, it hopes to reach 10 million

farmers. It is 5050 e-Chaupals and home ushered

in a revolution of sorts in the six states of India
serving integrated needs of 3 million farmers.
Where the core activity is to tell the farmer the
price at which ITC will buy Soya, Coffee, Fish
and wheat on that day. It is a winning model as
both ITC and the farmers make neat savings by
passing the middlemen in the physical mandi.
The same kiosks are now being used for reverse
trading also for the companies to sell products
and services needed by farmers directly. In the
coming years, more and more companies are
going to take IT route to make the rural markets
more accessible and thus should open up new
business opportunities
12. The future of rural marketing
Increased telecom broadband penetration, clean
energy investments, Foreign Direct Investment
(FDI) in rural development, PURA (Providing
Urban Facilities in Rural Areas), growth in food
processing industry and several new initiatives
are set to transform India rural and make it an
even bigger market place for the global
corporates
to
pounce
upon.
Several management studies have proven the
strength of rural markets over urban. Rural
market potential in India is so huge that a mere
one percent increase in Indias rural income
translates to Rs 100,000 million of buying
power, according to a study quoted in Marketing
to Rural Consumers- Understanding and tapping
rural market potential by Sanal Kumar
Velayudhan and Gudha Sridhar (Excel Books).
Rural market is already big for FMCG (53%) and
durables (59%).
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. rural marketing needs
collaboration. The traditional command/military
structure of corporations operating in urban

IITM Journal of Business Studies (JBS) Vol. 1, Issue 1, 2014

markets must change at strategic, executive and

operational decision-making levels.

13. Conclusion
There is huge potential and definitely there is lot
of money in rural India but the smart thing would
be to weigh in the roadblocks as carefully as
possible. The companies entering rural market
must do so for strategic reasons and not for
tactical gains as rural consumer is still a closed
book. It is only through unwavering commitment
that the companies can make a dent in the market.
At the end, it can be concluded that though there
are number of road blocks in the path of proper
distribution in rural markets, but by designing and
adopting effective strategies and proper use of
resources, marketers can overcome these barriers
and explore the opportunities lying untapped in
rural market to achieve organizational goal- profit
maximization.

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