Definition of Rural Marketing

Rural Marketing: A Detailed Explanation

Rural marketing involves developing, pricing, promoting, and distributing products specifically for rural markets. This exchange is aimed at meeting the needs and wants of rural customers and achieving organizational goals.

Two-way Process in Rural Marketing

• Two-Way Process: Rural marketing involves a two-way exchange between urban and rural areas:

  • Urban to Rural:
    • Products: Fast-Moving Consumer Goods (FMCG), agricultural fertilizers, automobiles, and other goods are marketed from urban areas to rural markets. This flow represents urban products and services reaching rural consumers.
  • Rural to Urban:
    • Products: Agricultural supplies such as fruits, vegetables, flowers, and milk are marketed from rural areas to urban markets. This flow represents rural products reaching urban consumers, often in the form of raw materials or food products.

Concept of Rural Marketing

In India's economy, rural marketing plays a significant role, influencing the lives of a vast number of people. The rural market contributes significantly to the country's revenue, with rural regions comprising the majority of consumers. Rural marketing in India can be categorized into:

• Consumer Goods Market: Includes both durable and non-durable goods.
• Agricultural Inputs Market: Includes fertilizers, pesticides, seeds, etc.

Rural marketing should not be confused solely with agricultural marketing. It encompasses the flow of goods from urban to rural areas and vice versa.

Characteristics of Rural Marketing

• Large and Scattered Market
  • Size and Distribution: According to the 2011 census, 68.4% of India's population lives in rural areas, scattered over a vast geographical area. Reaching over 600,000 villages is challenging. Innovative distribution models like ITC e-Choupal and HUL Project Shakti help address this challenge.
• Diverse Socio-economic Background
  • Regional Differences: Different parts of the country have varied socio-economic conditions, adding diversity to rural markets.
• Changing Demand Pattern
  • Income and Credit Facilities: Increased income and credit facilities (e.g., Kisan Credit Card) are changing rural demand patterns. Rural areas contribute significantly to India's GDP and monthly expenditure. Consumer durables and auto industry sales are growing rapidly in rural markets.
• Agriculture as Major Income Source
  • Seasonal Demand: About 60% of rural income comes from agriculture, leading to higher demand for consumer goods during the harvesting season.
• Saving Habits
  • Banking Efforts: Cooperative and commercial banks have encouraged saving habits among rural consumers. Currently, over 33% of India's savings come from rural areas.
• Traditional Outlook
  • Cultural Values: Rural consumers value traditions and seek core benefits from products. They prioritize price-performance, which explains the success of products like Ghari detergent over others.
• Low Standard of Living
  • Economic Factors: Rural areas generally have lower standards of living due to lower literacy rates, income, and social backwardness. Despite this, about 34% of FMCG manufacturers' sales come from rural areas.
• Infrastructure Facilities
  • Challenges and Improvements: Rural areas often lack adequate infrastructure such as roads, warehouses, and communication systems, making distribution costly. However, improvements are occurring:
    • Literacy Rates: Rural literacy rates increased from 58.7% in 2001 to 68.9% in 2011.
    • Telecommunication: Despite infrastructure challenges, rural areas have seen a significant rise in wireless telephony, with over 200 million cellphone users.
    • Banking and Insurance: The number of bank account holders and insurance policyholders in rural areas is substantial, reflecting increased financial inclusion.

Additional Facts and Information

• Employment Programs: Government initiatives like the Integrated Rural Development Programme (IRDP), Jawahar Rozgar Yojana (JRY), and Training Rural Youth for Self-Employment aim to diversify rural employment beyond agriculture.
• Telecommunication Growth: All India Radio covers 98.8% of the population, and the growth of mobile telephony has reached even remote rural areas.
• Financial Inclusion: Rural areas have a higher number of bank account holders compared to urban areas, and insurance penetration is significant, with half of LIC policies coming from rural areas.

Attractions in the Rural Market:

Marketers are increasingly adopting strategies to "Go Rural" due to several attractive factors in the rural market:

• Large Population:
  • Insight: A significant portion of India's population resides in villages. This large rural population presents a vast potential market for marketers looking to expand their reach.
• Increased Income:
  • Insight: With modern agricultural techniques and equipment, farmers are producing more and earning better returns. This increase in income boosts the purchasing power of rural consumers, allowing them to buy higher-quality products.
• Competition in Urban Market:
  • Insight: Urban markets are highly competitive, with well-informed consumers who have established brand loyalties. To avoid intense competition, marketers are targeting the relatively untapped rural markets.
• Improved Infrastructure:
  • Insight: Many rural areas now have better roads and transportation, making it easier for marketers to access these markets. Additionally, improved telecom services allow marketers to reach rural consumers through mobile phones.
• Saturated Urban Market:
  • Insight: When urban markets become saturated with products, and consumers have numerous choices, marketers look to rural areas for new opportunities and revenue streams.
• Support of Financial Institutions:
  • Insight: Cooperative and public sector banks offer low-interest loans to rural consumers, increasing their purchasing power and improving their standard of living.
• New Employment Opportunities:
  • Insight: Government programs such as the Integrated Rural Development Programme (IRDP), Jawahar Rozgar Yojana (JRY), and Training Rural Youth for Self-Employment aim to create jobs and diversify the income sources for rural populations.

Concept of Rural Marketing: Rural marketing in India's economy plays a crucial role in the lives of people. Despite a few metropolitan cities, most districts and industrial townships are connected to rural markets. Rural markets generate significant revenue and comprise a substantial portion of the country's consumers, contributing to more than half of the national income.

Classification of Rural Marketing:

• Market for Consumer Goods:
  • Goods: Includes both durable goods (like appliances and vehicles) and non-durable goods (like food and personal care products) that are marketed to rural consumers.
• Market for Agricultural Inputs:
  • Inputs: Includes products like fertilizers, pesticides, seeds, and other inputs essential for agricultural activities.

Clarification of Rural Marketing Concept: There is often confusion about rural marketing being synonymous with agricultural marketing. However, rural marketing encompasses a broader scope. It involves:

• Urban to Rural Flow: Marketing and distribution of goods from urban to rural areas.
• Rural to Urban Flow: Marketing and distribution of goods produced by non-agricultural rural workers to urban areas.

Additional Facts:

• Economic Influence: Rural marketing is influential in the Indian economy due to the large rural consumer base.
• Revenue Generation: Rural areas contribute significantly to the country's revenue.
• Growth Opportunities: As rural incomes and infrastructure improve, the potential for market growth in these areas increases.