Honey to Modify

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ASIAN BUSINESS SCHOOL, NOIDA

The aim of this project report is to understand

RURAL MARKETING

SUBMITTED BY: - Nusrat Makroo

SUBMITTED TO: - Dr.Latika Sahni

THIS THESIS WAS COMPLETED IN PARTIAL FULFILLMENT OF M.B.A FROM

PUNJAB TECHNICAL UNIVERSITY


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CERTIFICATE

This is to certify that Ms. Nusrat Makroo is a bonafide student ofASIAN BUSINESS

SCHOOL, NOIDA and is presently pursuing a Master of Business Administration.

Under my guidance, she has submitted her project report titled on RURAL

MARKETING partial fulfillment of the requirement for the semester project during the

Master of Business Administration.

To the best of my knowledge, this report has not been previously submitted as part of

another degree or diploma of any another Business School or University.

___________________________

(Mrs. Latika Sahni)

Dean, Asian Business School

Noida


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ACKNOWLEDGEMENT

A work is never a work of an individual. I owe a sense of gratitude to the intelligence and

co- operation of those people who had been so easy to let me understand what I needed

from time to time for completion of this exclusive report.

I want to express my gratitude towards respectable dean, Mrs. Latika Sahni my project

guide, who was instrumental in providing me direction, constant encouragement and co-

operation in my attempt to take this project to its logical conclusion.

Last but not the least, I would like to forward my gratitude to teachers at Asian Business

School, who always endured me and stood by me and without whom I could not have

envisaged the completion of my project.


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EXECUTIVE SUMMARY

A debate continued for a long time amongst the Indian Marketers, both practitioners &

academicians, on the justification for the existence of the distinct discipline of rural

marketing. The approach toward rural markets needs to be distinct from the one adopted

for the urban markets. The rural market cannot be tapped successfully with an urban

marketing mindset & would definitely require its thorough understanding. In a large rural

economy like India's, rural marketing has emerged as an important and distinct internal

sub division within the marketing discipline.


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RURAL MARKETING

In recent years, rural markets of India have acquired significance, as the overall growth of the Indian

economy has resulted into substantial increase in the purchasing power of the rural communities. Rural

Marketing involves the process of developing, pricing, promoting, distributing rural specific products.

Rural marketing requires the understanding of the complexities. Indian agriculture industry has been

growing at a tremendous pace in the few decades. On account of green revolution, the rural areas are

consuming a large quantity ofindustrial and urban manufactured products. In this context, a special

marketing strategy, namely, rural marketing has emerged. But often, rural marketing is confused with

agricultural marketing the latter denotes marketing of produce of the rural areas to the urban

consumers or industrial consumers, whereas rural marketing involves delivering manufactured or

processed inputs or services to rural producers or consumers. In the context of rural marketing one has to

understand the manipulation of marketing mix has to be properly understood in terms of product usage.

The concept of rural marketing in India is often been found to form ambiguity in the

minds of people who think rural marketing is all about agricultural marketing. However,

rural marketing determines the carrying out of business activities bringing in the flow of

goods from urban sectors to the rural regions of the country as well as the marketing of

various products manufactured by the non-agricultural workers from rural to urban areas.

Thus, any strategy in rural marketing should be given due attention and importance by understanding the

product usage.


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EVOLUTION OF RURAL MARKETING

Phase I ( from Independence to Green Revolution):

Before the advent of the Green revolution, the nature of rural market was altogether

different. Rural marketing then referred to the marketing of rural products in rural &

urban products.

Phase II (Green Revolution to Pre-liberalization period):

During these times, due to the advent & spread of the Green Revolution, rural marketing

represented marketing of agriculture inputs in rural markets & marketing of rural produce

in urban areas.

Phase III (Post-liberalization period on 20th century):

The third phase of rural marketing started after the liberalization of the Indian economy.

In this period, rural marketing represented the emerging, distinct activity of attracting &

serving rural markets to fulfill the need & wants of rural households, peoples & their

occupations.

Phase IV (21st century):


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Learning from its rural marketing experiences after the independence, the corporate

world has finally realized the quick-fix solutions & piecemeal approaches will deliver

only limited results in the rural markets.

Nature of Rural Market

Rural market in India is large, and scattered into a number of regions.


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Major Income of Rural consumers is from Agriculture: Rural Prosperity is tied with

agriculture prosperity. In the event of a crop failure, the income of the rural masses is

directly affected. Standard of Living and rising disposable income of the rural customers:

It is known that majority of the rural population lives below poverty line and has low

literacy rate, low per capital income, societal backwardness, low savings, etc. But the

new tax structure, good monsoon, government regulation on pricing has created

disposable incomes.

Traditional Outlook: Villages develop slowly and have a traditional outlook. Change is

a continuous process but most rural people accept change gradually. This is gradually

changing due to literacy especially in the youth who have begun to change the outlook in

the villages.

Rising literacy levels: It is documented that approximately 45% of rural Indians are

literate. Hence awareness has increases and the farmers are well-informed about the

world around them. They are also educating themselves on the new technology around

them and aspiring for a better lifestyle.

Diverse socioeconomic background: Due to dispersion of geographical areas and

uneven land fertility, rural people have disparate socioeconomic background, which

ultimately affects the rural market. Infrastructure Facilities: The infrastructure facilities


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like cemented roads, warehouses, communication system, and financial facilities are

inadequate in rural areas. Hence physical distribution is a challenge to marketers who

have found innovative ways to market their products.Is rural marketing transactional or

developmental inits approach?It is true, rural markets have become an attractive

proposition for commercial businessorganizations

RURAL INDIA

The concept ofRural Marketing in India Economy has always played an influential

role in the lives of people. In India, leaving out a few metropolitan cities, all the districts

and industrial townships are connected with rural markets.

The rural market in India is not a separate entity in itself and it is highly influenced by the

sociological and behavioral factors operating in the country. The rural population in India

accounts for approx 74.3 percent of the total population.

The Registrars of Companies in different states chiefly manage: The rural market in


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India brings in bigger revenues in the country, as the rural regions comprise of the

maximum consumers in this country. The rural market in Indian economy generates

almost more than half of the country's income. The rural market in India is vast and

scattered and offers a plethora of opportunities in comparison to the urban sector. It

covers the maximum population and regions and thereby, the maximum number of

consumers.

The steps taken by the Government of India to initiate proper irrigation, infrastructural

developments, prevention of flood, grants for fertilizers, and various schemes to cut down

the poverty line have improved the condition of the rural masses.


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WHAT MAKES RURAL INDIA ATTRACTIVE?

1 Large population

2 Rising prosperity

3 Growth in consumption

4 Life cycle changes

5 Life cycle advantages

6 Market growth rate higher than urban

7 Rural marketing is not expensive

8 Remoteness is no longer a problem


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Rural Consumer

A detailed Profile Size of RCG Rural population about 73% of total population. Acc to

2001 census 74 crore population 12 crore households.

Socio-economic

Low purchasing power/per capita income

Bounded by tradition, culture, religion & community.

60% rural income from agriculture >50% have income < Rs. 25,000 About 14% have

income >50,000 .

70 % rural households have started saving their income. (service class, non-farmers like


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shop keepers)

Literacy level

Rural India has literacy rate of 28% compared with 55% of the whole country.

Literacy rate has increased from 20% to 28%.

Every year 8 million people get added to rural India's literate population

Classification of rural consumers

The rural consumers are classified into the following groups based on their economic

status:

The Affluent Group: They are cash rich farmers and a very few in number. They have

affordability but not form a demand base large enough for marketing firms to depend on.

Wheat farmers in Punjab and rice merchants of Andhra Pradesh fall in this group.

The Middle Class: This is one of the largest segments for manufactured goods and is


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fast expanding. Farmers cultivating sugar cane in UP and Karnataka fall in this category.

The Poor: This constitutes a huge segment. Purchasing power is less, but strength is

more. They receive the grants from government and reap the benefits of many such

schemes and may move towards the middleclass. The farmers of Bihar and Orissa fall

under this category.

Rural Consumer Behaviour

Consumer Buyer Behaviour refers to the buying behaviour of final consumers -

individuals andhouseholds who buy goods and services for personal consumption. All of

these final consumerscombined make up the consumer market.The consumer market in

this case is Rural India. About 70% of Indias population lives in ruralareas. There are

more than 600,000 villages in the country as against about 300 cities and 4600towns.

Consumers in this huge segment have displayed vast differences in their

purchasedecisions and the product use. Villagers react differently to different products,

colours, sizes,etc. in different parts of India. Thus utmost care in terms of understanding

consumer psycheneeds to be taken while marketing products to rural India.Thus, it is

important to study the thought process that goes into making a purchase decision, sothat

marketers can reach this huge untapped segment.


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Roadblocks of Indian Rural Markets

There are several roadblocks that make it difficult to progress in the rural market.

Marketers encounter a number of problems like dealing with physical distribution,

logistics, proper andeffective deployment of sales force and effective marketing

communication when they enterrural markets. The major problems are listed below.

1. Standard of living

2. Low literacy levels.

3. Low per capita income.

4. Transportation and warehousing.

5 Ineffective distribution channels

6. Many languages and diversity in culture


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7. Lack of communication system.

8. Spurious brands

9. Seasonal demand

10. Dispersed markets

MARKRTING STRATEGIES TO CAPTURE RURAL INDIA

SEGMENTATION OF RURAL MARKET The first step is to develop & implement any

strategy for the rural market should include the appropriate segmentation of the rural

market. The important thing is that appropriate segmentation basis need to be applied.

BY COMMUNICATING AND CHANGING QUALITY PERCEPTION Companies are

coming up with new technology and they are properly communicating it to thecustomer.

As a rural Indian customer always wanted value for money with the changed perception.

BY PROPER COMMUNICATION IN INDIAN LANGUAGE The companies have

realized the importance of proper communication in local language for promoting their

products. They have started selling the concept of quality with propercommunication.

BY TARGET CHANGING PERCEPTION If one go to villages they will see that


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villagers using Toothpaste, even when they can useNeem or Babool sticks or Gudakhu,

villagers are using soaps like Nima rose, Breeze, Cintholetc. even when they can use

locally manufactured very low priced soaps. Villagers are constantly looking forward for

new branded products.

BY UNDERSTANDING CULTURAL AND SOCIAL VALUES Companies have

recognized that social and cultural values have a very strong hold on the people. Cultural

values play major role in deciding what to buy. Moreover, rural people are emotional and

sensitive. Thus, to promote their brands, they are exploiting social and cultural values.

BY PROVIDING WHAT CUSTOMER WANT The customers want value for money.

They do not see any value in frills associated with theproducts. They aim for the basic

functionality.

BY PROMOTING PRODUCTS WITH INDIAN MODELS AND ACTORS Companies

are picking up Indian models, actors for advertisements as this helps them to

showthemselves as an Indian company.

BY ASSOCIATING THEMSELVES WITH INDIA MNCs are associating themselves

with India by talking about India, by explicitly saying thatthey are Indian.


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3 PS

.Product Strategies

The specific strategies, which can be employed to develop or modify the products to

targets the rural market, can be classified as follows:.

1. Small unit packing: Given the low per capita income & purchasing habits of the

ruralconsumers, small unit packages stand a good chance of acceptance in rural market.

2. New product designs: Keeping in view the rural life style the manufacturer and


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themarketing men can think in terms of new product designs.

3. Sturdy products: Sturdiness of a product is an important factor for rural consumers.

The product should be sturdy enough to stand rough handling, transportation & storage.

4. Utility oriented products: The rural consumers are more concerned with utility of the

product and its appearance

5. Brand name: For identification, the rural consumers do give their own brand name on

thename of an item. The fertilizers companies normally use a logo on the fertilizer bags

though fertilizers have to be sold only on generic names. A brand name or a logo is very

important for a rural consumer for it can be easily remembered.

Pricing strategies

1. Low cost/ cheap products: This follows from the product strategy. The price can be

keptlow by low unit packagings like paisa pack of tea, shampoo sachets, vicks 5 grams

tin, etc. thisis a common strategy widely adopted by many manufacturing and marketing

concerns

.2. Refill packs / Reusable packaging: In urban areas most of the health drinks are


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available.The containers can be put to multipurpose uses.

.3. Application of value engineering: in food industry, Soya protein is being used instead

of milk protein. Milk protein is expensive while Soya protein is cheaper, but the nutrition

content of both is the same. .

4. Large volume-low margins (Rapid or slow penetration strategy): Marketers have to

focus on generating large volumes & not big profit margins on individual products.

5. Overall efficiency & passing on benefits to consumers: For rural products, the strategy

should be to cut down the production, distribution & advertising costs & passing on these

benefits to the customers to further increase the turnover.

6. Low volume-low price strategy: This strategy of reducing prices by reducing the

packagesize in order to make it appear more affordable, is delivering very good results

for a largenumber of FMCG product categories, in the rural markets of India.

7. Ensuring price compliance: Rural retailers, most of the times, charges more than the

MRP.The manufacture has to ensure price compliance either through promotional

campaigns.

promotional campaigns for the rural markets:

1. Think Global Act Local Rural population is diverse, but the commonalities of their ethos

& simple living habits need to be understood for advertising to succeed. For that, the

theme of the advertisement needs to revolve among universal themes, such as family-

love.


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. 2. Think in Local Idiom This is the need of the advertising professionals who can think like

the rural people. The only we can have insights like Thanda matlab Coca Cola. There

should be the use of language writers who understands the rural & regional pulse better.

3. Simplicity & Clarity All promotional messages targeted at rural audience need to be

simple & clear, which can be easily understood, & they should not include any confusing

elements.

4. Narrative Story Style The promotional message can be delivered in the form of an

entertaining story with a message depicting how the brand delivers larger good to the

family & society. .

5. Choice of Brand Ambassador Brand Ambassador for the rural markets need to be picked

carefully as urban successes might not get replicated in the rural markets.

FACTORS INFLUENCING BUYER BEHAVIOUR

Geographical Variations in Market Behaviour The rural market is not a homogeneous

one. Variations in economic development and in consumer willingness to accept innov-

ations are evident in rural markets. Geographical variations in exposure to urban centers

and variations in development have resulted in tremendous heterogeneity even within a

state.


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a brand. They ask for products they have seen or heard on radio or TV (Khatri, 2002).

The influence of children on choice is mostly for personal care products.

- Retailers also influence consumers in rural markets. An important reason for this is the

credit that the retailer extends to many of his customers.

4 As approach of Indian Rural Market

Availability, affordability,acceptability and awareness (the so-called 4 As)

AvailabilityThe first challenge is to ensure availability of the product or service.

Indias 627,000 villagesare spread over 3.2 million sq km; 700 million Indians may


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live in rural areas, finding them isnot easy. However, given the poor state of roads, it

is an even greater challenge to regularlyreach products to the far-flung villages. Any

serious marketer must strive to reach at least13,113 villages with a population of

more than 5,000. Marketers must trade off the distributioncost with incremental

market saturation. Over the years, Indias largest MNC, Hindustan Lever,a subsidiary

of Unilever, has built a strong distribution system which helps its brands reach

theinteriors of the rural market.To service remote village, stockiest use

autorickshaws, bullock-carts and even boats in thebackwaters of Kerala. Coca-Cola,

which considers rural India as a future growth driver, hasevolved a hub and spoke

distribution model to reach the villages. To ensure full loads, thecompany depot

supplies, twice a week, large distributors which who act as hubs. Thesedistributors

appoint and supply, once a week, smaller distributors in adjoining areas.

LGElectronics 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 59rural/remote area offices.

AffordabilityThe second challenge is to ensure affordability of the product or service.

With low disposableincomes, products need to be affordable to the rural consumer, most

of who are on daily wages.Some companies have addressed the affordability problem by

introducing small unit packs.Most of the shampoos are available in smaller packs. Fair

and lovely was launched in a smallerpack. Colgate toothpaste launched its smaller packs

to cater to the travelling segment and therural consumers.Godrej recently introduced

three brands of Cinthol, Fair Glow and Godrej in50-gm packs, priced at Rs 4-5 meant


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specifically for Madhya Pradesh, Bihar and Uttar Pradesh the so-called `Bimaru

States.Hindustan Lever, among the first MNCs to realize the potential of Indias rural

market, haslaunched a variant of its largest selling soap brand, Lifebuoy at Rs 2 for 50

gm. The move ismainly targeted at the rural market. Coca-Cola has addressed the

affordability issue byintroducing the returnable 200-ml glass bottle priced at Rs 5. The

initiative has paid off: Eightyper cent of new drinkers now come from the rural markets.

Coca-Cola has also introducedSunfill, a powdered soft-drink concentrate. The instant and

ready-to-mix Sunfill is available ina single-serve sachet of 25 gm priced at Rs 2 and

multi serve sachet of 200 gm priced at Rs 15.

AcceptabilityThe third challenge is to gain acceptability for the product or service.

Therefore, there is a needto offer products that suit the rural market. One company which

has reaped rich dividends bydoing so is LG Electronics. In 1998, it developed a

customized TV for the rural market andchristened it Sampoorna. It was a runway hit

selling 100,000 sets in the very first year. Becauseof the lack of electricity and

refrigerators in the rural areas, Coca-Cola provides low-cost iceboxes a tin box for

new outlets and thermocol box for seasonal outlets.The insurance companies that have

tailor-made products for the rural market have performedwell. HDFC Standard LIFE

topped private insurers by selling policies worth Rs 3.5 crores intotal premium. The

company tied up with non-governmental organizations and offeredreasonably-priced

policies in the nature of group insurance covers. With large parts of ruralIndia

inaccessible to conventional advertising media only 41 per cent rural households have

access to TV building awareness is another challenge. Fortunately, however, the

ruralconsumer has the same likes as the urban consumer movies and music and for


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both theurban and rural consumer, the family is the key unit of identity. However, the

rural consumerexpressions differ from his urban counterpart. Outing for the former is

confined to local fairsand festivals and TV viewing is confined to the state-owned

Doordarshan. Consumption ofbranded products is treated as a special treat or luxury.

AwarenessBrand awareness is another challenge. Fortunately, however, the rural

consumer has the samelikes as the urban consumer movies and music and for both

the urban and rural consumer,the family is the key unit of identity. However, the rural

consumer expressions differ from hisurban counterpart. Outing for the former is confined

to local fairs and festivals and TV viewingis confined to the state-owned Doordarshan.

Consumption of branded products is treated as aspecial treat or indulgence.Hindustan

Lever relies heavily on its own company-organized media. These are promotionalevents

organized by stockiest. Godrej Consumer Products, which is trying to push its soapbrands

into the interior areas, uses radio to reach the local people in their language.Coca-Cola

uses a combination of TV, cinema and radio to reach 53.6 per cent of ruralhouseholds. It

doubled its spend on advertising on Doordarshan, which alone reached 41 percent of

rural households. It has also used banners, posters and tapped all the local forms

ofentertainment. Since price is a key issue in the rural areas, Coca-Cola advertising

stressed its`magical price point of Rs 5 per bottle in all media. LG Electronics uses vans

and road showsto reach rural customers. The company uses local language advertising.

Philips India uses wallwriting and radio advertising to drive its growth in rural areas.The

key dilemma for MNCs ready to tap the large and fast-growing rural market is

whetherthey can do so without hurting the companys profit margins.


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Radio: Radio reach is highest in Kerla (62%) followed by Tamil Nadu (35%) and

Karnataka (32%). Example : Colgate, Jyoti Labs, Zandu Balm are some of the company

using radio communication programme. A ten second spot in Regional station would cost

only about Rs. 2000/-

Cinema :1. Films on products like Vicks, Lifeboy, Colgate and Shampoos are shown in

rural cinemas halls. 2.LIC and Private insurance companies have been showing short

movies in rural theatres to create awareness about life insurance Outdoor Advertisement

Form of media which includes signboard, wall painting, hoardings, tree boards, bus

boards etc.

Direct Mail Advertising: Mailers for seed and pesticides to be sent as per agricultural

season. Direct mailers on consumer durables to be sent during the harvesting season so

that the farmers will,. have money for purchasing the same.

Farm to Farm / House to House Many LIC agents and companies dealing with high value

consumer durables have tried this approach with success in rich rural areas. ACC

representatives retailers make house-to house visit and give information about product

stability.

Group Meeting The Banker once in a week visit a village get the villagers in school hall

or Panachyat office and explain to the villagers the various financial facilities offered by

the bank MRF conduct tractor owners meet in association with local distributors.

Opinion Leaders Asian Paints promoted its Utasv brand of paint by painting the village

Sarpanchs house a few months prior to the launch to demonstrate that the paint does not


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peel off and is an ideal replacement of chuna. The health development assistant of HUL

regularly meets school teachers to promote Lifebuoy soap in Villages.

The Melas ( It is estimated that over 20,000 melas are conducted every year) Paint

companies supporting Pola fair in Maharashtra by painting the horns of the bulls.

Sonepur Mela, Vaisakh Purnima Mela( Bihar). Navaratri Fair, Ambaji (Gujarat)

Naucahndi Mela, Ramlila Mela(UP) Kartik Mela, Gawlier Trade Fair( MP)

Haats ( On certain days of the week , both the sellers and buyers meet in the village to

buy and sell goods and services). Parachut Oil, Nirma washing powder and tiger brand

biscuits have been promoted through haats. About 40,000 Haats are held in rural areas in

our country, highest number haats in U.P (10,000).

Audio Visual Van ( The van is a mobile promotion station having facilities for screening

films, slides and mike publicity. Nippo promotes batteries through specially designed

vans called melavans. The van are equipped with TV/VCR for showing products

awareness films. Colgate India makes extensive use of VANs. ITCs mobile Vans take

the message of e-choupal to new village.

TRADITIONAL FARMERS TO NEW AGE MARKETERS


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Through the e-Choupal initiative, ITC aims to confer the power of expert

knowledge on even the smallest individual farmer. Thus enhancing his

competitiveness in the global market

the e-Choupal initiative; the single-largest information technology-based intervention by

a corporate entity in rural India. Transforming the Indian farmer into a progressive

knowledge-seeking netizen. Enriching the farmer with knowledge; elevating him to a

new order of empowerment. e-Choupal delivers real-time information and customised

knowledge to improve the farmer's decision-making ability, thereby better aligning farm

output to market demands; securing better quality, productivity and improved price

discovery. The model helps aggregate demand in the nature of a virtual producers' co-

operative, in the process facilitating access to higher quality farm inputs at lower costs for

the farmer. The e-Choupal initiative also creates a direct marketing channel, eliminating

wasteful intermediation and multiple handling, thus reducing transaction costs and

making logistics efficient. The e-Choupal project is already benefiting over 3.5 million

farmers. By 2012, the e-Choupal network will cover over 100,000 villages, representing

1/6th of rural India, and create more than 10 million e-farmers.

A digital transformation

Smart Cards enable farmer identification to provide customised information on the

echoupal.com website. Online transactions are captured to reward farmers for

volume and value of usage.


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BIBLIOGRAPHY

Book- Text & Practice, New Delhi: Biztantra,2005-06,381p

http://www.itcportal.com/sets/echoupal_frameset.htm

http://www.echoupal.com/ http://www.itcportal.com/sets/agriexp_frameset.htm

http://www.slideshare.net/hemanthcrpatna/a-project-report-on-rural-marketing

Projectsformba.blogspot.com

http://www.slideshare.net/sumankalyan14/rural-marketing-2859640

http://www.outsourcing-buzz-blog.com/2011/09/wipro-launches-rural-bpo-program.html
http://www.slideshare.net/hemanthcrpatna/a-project-report-on-rural-marketinghttp://www.slideshare.net/sumankalyan14/rural-marketing-2859640http://www.slideshare.net/hemanthcrpatna/a-project-report-on-rural-marketinghttp://www.slideshare.net/sumankalyan14/rural-marketing-2859640

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