Chapter I

RURAL MARKETING: A CONCEPTUAL FRAMEWORK

Learning objectives of this chapter:

 Conceptual clarity about fundamental Rural Marketing concepts: Rural and Rural Marketing.

 Learn about evolution of Rural Marketing in India  Comprehend the Rural Marketing process as Rural Marketing Model  Comparative analysis of Rural vs. Urban Marketing

Rural

 Census of India (2001), defines rural as, that what is not urban.

 Urban is: All locations with a municipality/ corporation, cantonment board or a notified town area committee. All other locations satisfying all the following Criteria: a) Minimum population of 5,000.

b) At least 75 percent of male workforce engaged in non-agricultural activities and c) Population density of over 400 persons per sq km

Definition of Rural by Marketing World

 Most FMCG and Agri-input companies define rural as a place with the population up to 20,000.

 Consumer Durable companies consider any town with population below 50,000 as a rural.

 Some MNCs define rural/semi urban area as all cities other than seven metros.

 Rural in marketing parlance is also defined as an area, which begins where the controllable distribution and media reach ends.

Rural Urban Continuum

 Customers in India have also been divided into three broad groups in terms of geography and sociological characteristics (Jha, 2003): a) Urban b) Rural c) Rurban  Rurban being the overlap between the two, with pretensions to being closer to urban in physical features and proximity to large urban centers, but with deep rural sociological moorings.

Rural Marketing

 Planning and implementation of marketing function for the rural areas.

 It is a two way marketing process, which encompasses the performance of business activities that direct the flow of goods from urban to rural areas (for manufactured goods) and vice-versa (for agriculture produce) and also within the rural areas (Gopalaswamy, 2005).

Rural Marketing

It is a distinct specialization of marketing discipline, which encompasses customized application of marketing tools and strategies to understand the psyche of rural consumer in terms of needs, tailoring the products to meet such needs and effectively delivering them to enable profitable exchange of goods and services to and from the rural market.

Rural Marketing Scope: Flow of Goods and Services (Mithileshwar, 2003)

Urban From/To

Urban

Rural

1. Consumables & Durable Agricultural Inputs 2. Consumables 3. Consumer Durables Not concerned Rural 1. Rural Artisans Services & Products 1.

Agricultural & Allied Production 2. Rural Artisans & Rural Industry Products

Phased Evolution of Rural Marketing

Phase

I II III IV

Time period Purpose Major Products Source Market Target Market

Since independence but before Green Revolution Green Revolution to Pre-liberalisation period Agricultural Marketing Marketing of Agri-inputs Agricultural produce Agricultural inputs Rural Urban Urban Rural Post-liberalisation period in 20 th century 21 st century Rural Marketing Developmental Marketing Consumables and durables for consumption and production All Products and Services Urban & Rural Urban & Rural Rural Urban & Rural

Rural Marketing Model

Research Segment rural market Study lifestyle of rural population of different segments region Develop profile of rural consumers of different market segments Define and prioritize their needs in general terms Develop specific need profile for a product category in that region Select target markets Develop/Modify Marketing Mix Implementation Control

Factors Differentiating Rural Marketing from Urban Marketing Sr.

1.

2.

3.

4.

List of Factors Infrastructure Availability:

that of urban markets.

electricity supply, media reach, availability of finance facility, education level, roads, connectivity, presence of organized markets; in rural market is very different from Income Streams: The pattern of income generation in rural areas based on agriculture is seasonal and highly unreliable unlike the fixed monthly income in the urban areas. This creates a consumption pattern, which is different from urban one.

Lifestyle: The lifestyle and daily routine of consumers in two markets is markedly different. This creates significantly different profile of consumers for the same product in these two markets.

Context: Because of variation of infrastructure and income streams, the context in which an individual exists in rural areas is very different from the one in urban areas. This creates difference in nature and priorities of needs in two markets.

Factors Differentiating Rural Marketing from Urban Marketing Sr.

5.

6.

7.

8.

9.

List of Factors

Socio-cultural Background: Value system and thus perception toward goods /services and consumption is different in two markets Accessibility: The cost and logistics of accessing consumers in a highly widespread and heterogeneous rural market are very different from those involved in reaching urban consumers, concentrated in good number in single location. Thus, demanding two different types of approaches.

Media Reach & Habits: The reach of media vehicles and the media habits are very different in rural and urban markets. Requiring very different type of promotional strategy in these two markets.

Nature of Competition: The nature and intensity of competition amongst the brands is very different in the two markets.

Consumer Behaviour: The response of consumers to marketing stimuli is very different in two markets. Rural consumer’s behaviour is quite different from that of urban buyer’s behaviour.



Summary: Points to Ponder

Rural is a distinct type of market and is not just a poor extension of the urban areas. Apart from income there are host of infrastructural and socio cultural factors that differentiate the rural from urban market.

  Rural cannot be tapped effectively with an urban mindset. It requires a distinct approach and thorough understanding of the rural markets.

There is no single definition of rural that suits all the stakeholders operating in the rural market.



Summary: Points to Ponder

Rural Marketing is a distinct specialization of marketing discipline, which encompasses customized application of marketing tools and strategies to understand the psyche of rural consumer in terms of needs, tailoring the products to meet such needs and effectively delivering them to enable profitable exchange of goods and services to and from the rural market.

 Understanding of lifestyle and developing a generic profile of rural consumers in a particular segment of rural market is of utmost importance along with the income of the rural consumer in order to select or reject it as target market. Income alone should not be used as basis for making a target market decision.