Rural Marketing

“The future lies with those companies who see the poor as their customers."

- C. K. Prahalad

In a diverse market like India, having second largest population in the world, the urban-rural divide is quite significant. According to various studies, around 12.2 per cent of the world’s population lives in rural India. Considering this as an untapped potential, a special marketing strategy, namely, rural marketing has emerged. It involves delivering manufactured or processed inputs or services to rural producers or consumers.

Another reason that rural market is gaining importance is due to competition in the urban market, the market is reaching towards saturation level as higher capacity of the purchasers have been targeted by the marketers. So the marketers are looking for extending their product offerings to an unexplored market i.e. the rural market. This has also led to the CSR activities being done by the corporate to help the poor people attain some wealth to spend on their product categories. Here we can think of HUL initiatives in rural India. One of such project is the Project Shakti, which is not only helping their company earn revenues but also helping the poor women of the village to earn money which is increases their purchasing power. Also this will increase their brand loyalty as well as recognition in that area.

Rural market can be segmented using the concept of “urban orientation”. Urban orientation is defined as the degree to which a rural consumer would like to replicate the urban lifestyle. The higher the urban orientation, the higher will be the requirements for goods and services consumed in urban India and vice-versa. Broadly, the market can be segmented into three categories (i) Premium Niche Segment (ii) Premium and value-for-money segment (iii) Value-for-money segment.

Also an interesting fact, most of the Indian villages have a population of less than 1,000, while there are only a few villages where more than 10,000 people live. With such a widespread market, marketers have been finding it difficult to penetrate this vast audience. For a rural mark

eter, it may not be commercially viable to reach out to villages that have a population of less than 2,000 people which constitutes 87% of the villages in India. Most of the rural audience in the smaller villages come to shop at a nearby ‘haat’ or travel to a nearby bigger village. Hence, if the marketer is focussing on those 13% (75000) villages, it is possible to cover almost all of the Indian rural audience.

In spite of attraction, it is not easy to enter the market and grab a sizeable share of the market, in the short time. Some of the reasons could be:

• Low Literacy and Communication: There are not enough opportunities for education in rural areas. The literacy level is as low (36%) when compared to all- India average of 52%. Due to this, the consumers cannot understand the message that has been communicated through advertisement of the products and services.
• Seasonal Demand: Demand for goods in rural markets depends upon agricultural situation, as agriculture is the main source of income. Agriculture to a large extent depends upon monsoon and, therefore, the demand or buying capacity is not stable or regular.
• Transportation: Many rural areas are not connected by rail transport. Kacha roads become unserviceable during monsoons and interior villages get isolated.
• Distribution: An effective distribution system requires village-level shopkeeper, Mandal/ Taluka- level wholesaler or preferred dealer, distributor or stockiest at district level and company-owned depot or consignment distribution at state level. The presence of too many tiers in the distribution system increases the cost of distribution.

Keeping these difficulties in mind and to meet the objectives of Rural Marketing, the traditional four P's of marketing - Product, Price, Place and Promotion have been replaced by a different framework for analysis. A number of companies have worked on various elements of the marketing mix to improve the four A's - Affordability, Awareness, Availability and Acceptability for rural markets. FMCG companies innovated on package sizes to introduce low price points. They have customized promotional strategies for rural markets using local language and talent. Some FMCG players continue to expand rural penetration (Tata Tea's Gaon Chalo). Coca-Cola's Parivartan program has trained more than 6,000 retailers to display and stock products. Dabur has created a training module ASTRA (advanced sales training for retail ascendance) in several regional languages. A number of auto companies have launched rural-specific campaigns.

Definitely there is huge untapped potential in rural India. But there are hindrances at the same time. The greatest hindrance is that the rural market is still evolving and there is no set format to understand consumer behaviour. Lot of study is still to be conducted in order to understand the rural consumer. Only FMCGs with deeper pockets, unwavering rural commitment and staying power will be able to stay longer on this rural race and hence should venture into this territory.

Co-Author

Pinak Mukherjee
pinaktheone@gmail.com

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-- Written by someone special

CREDIT CRUNCH... When will it end?

First of all we need to see, what is credit? 

It is a transaction of sale and purchase with out the purchaser making an immediate payment or having a payment made through a financial agency on his behalf to whom he would be paying later. This payment through a financial agency is not the payment in real money, it is an advice from one bank to another, where by by virtue of a document a certain amount is made available, in reality it is intangible. 

A credit crunch is when most of the purchasers are unable to sell stock or collect on it in the economic slowdown and cannot pay their vendors. 

The question is when will it end; to answer this question to need to take a couple of steps back, it all kicked in with an accelerator effect in 2007-2008, where as the American economy had been on crutches well before the 9/11, therefore, to conclude that it was the failure of the mortgage market in the US would be incorrect. A step back further, when the American mortgage market saw rise in sales, lending started, everyone from almost all over the US and even international buyers jumped on the band wagon. 

These buyers from within the US and out of it apparently were buyers but many of them were wolves in a sheep's hide, the venture capitalists, the speculators, they played with prices, purchasing started, the lending agencies, perhaps owned by a few of them as well, the interest rates were very interesting then. These were the culprits, not only in the US but the world over, these few venture capitalists started it and start it. 

It took roots as every one saw the realizable profits in short term, it grew and grew the lending agencies quietly watched although they had an idea of the implication of over supply of money but kept on lending till the time they were making their profits. 

It took millions to just clean the shit - nothing more, all money on corporations were given glamorous titles to make it look like an effort to revive; window dressing! 

The recession period as we are going through it and surely be coming out of it soon is only till the time each individual government takes initiatives within its own country to kick start its economy, looking up to America to come up with a genius plan is sheer stupidity; if America was so smart why did it all start from its territories? 

Beatmianus!! thats my name....

People!!! It's confession time. I have been hiding some dark secrets within me for the past two years. No longer. The weight of guilt bears too heavily on me. 

(1) I am not Siddharth Bijlani. I am a denizen of planet Fatlianus, known to most of you as T42. I arrived on your planet two years ago on a spaceship and due to my extremely well developed nose(which is the centre of intellectual activity among our specied) I was able to clear JEE and get into this hellhole that is IITR. Now I need to go home. Can someone please find Hrithik Roshan? I think he knows where my spaceship is. 

(2) My real name is Beatmianus. And yes, I did come here in peace. Sadly I was not taken to your leader.

(3) I love the females of your species here. They remind of some of the animals found in our planet. 

(4) You are not safe on this planet with me around. Please ignore me if I have already added you as a friend.I hope these revelations will not affect our relationship. 

Please meri bhavanaon ko samjho!!!