Defining

Rural
Government agencies from IRDA & NCAER (National Council of Applied Economic Research )define
‘Rural’ as “a village with a population of less than 5,000 with 75% of the male population engaged in
agriculture etc.”

Rural management
Rural management is the study of planning, organising, directing, and controlling of rural
area, co-operatives, agribusiness and allied fields

RURAL CONSUMER
Classification
The rural consumers are classified into the following groups based on their economic status:
The Affluent Group
• They are cash rich farmers.
• Very few in number.
• They have affordability but do 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 category.
The Middle Class
• One of the largest segments for manufactured goods.
• It is 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 grants from the government and reap the benefits of many such schemes and may move
towards the middle class.
• The farmers of Bihar and Orissa fall under this category.
Characteristics
• The rural consumer has a very high involvement in any product purchased.
• He purchases products more often (mostly weekly), usually in small quantities.
• He is very quality conscious but value for money is of prime importance.
• He looks more for functionality of the product rather than frills associated which he cannot use but for
which he will
have to pay extra.
• He is brand loyal. Once loyalty formed is difficult to dislodge.
:He understands symbols and colours better, and looks for endorsement by local leaders or icons.
• The source of information is critical for him, as he is influenced by information received and opinion
formed
through various resources in his purchasing decisions.
• Purchasing decisions are usually taken by the eldest member of the family.
• Brisk buying is done after the harvesting period. Major purchasing is done during the festivals.
• In many cases, the buyer is different from the user.
Rural Profile / Features of Rural Market in India (Nov. 08)

1. Large and scattered market: According to 2011 census rural population is 68.84% (1.21 billion)
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 backwardnesss.
8. Poor infrastructure facilities: Facilities like roads, warehouses, communication system, etc. are
inadequate in rural areas. Hence physical distribution becomes costly.
9. Media reach: The reach of pint media is 10% followed by TV 31%, radio 31% and cinema 33%.
10. Communication: As per Indian Express report about 6 lakhs villages are without telephone
facilities.
11. Electrification: About 88% of villages have been electrified and rest will soon get electricity by
“Rural Electricity Corporation”.( saubhagya yojana)

Potential of Rural Market

With urban market showing signs of saturation, companies are excited about the potential of rural India.
Some major companies that have focused in the rural sector are Philips, Parle, Proctor & Gamble,
Colgate-Palmolive, Godrej Soap, Bajaj Auto, TVS, Atlas Cycle and HUL.

Following points indicate the potential of rural markets:

Scope / Attractiveness of Rural Market / Why Companies Go Rural (May 06)

1. Large Population: According to 2001 census rural population is 68.84 % of total population
and it is scattered over a wide range of geographical area
2. Rising Rural Prosperity: Average income level has improved due to modern farming practices,
contract farming, industrialisation, migration to urban areas and remittance of money by family
members settled abroad.
3. Growth in Consumption: There is a growth in purchasing power of or rural consumers. The
average per capita household expenditure is Rs. 382.
4. Changing Lifestyle: Lifestyle of rural consumer changed considerably.
5. Life Cycle Advantage: The products, which have attained the maturity stage in urban market, is
still in growth stage in rural market. E.g. popular soaps, skin cream, talcum powder, etc.
6. Market Growth Rate Higher than Urban: As per the survey made by NCAER the growth rate of
FMCG market and durables market is higher in rural areas. The rural market share is more than
50% for products like body talcum powder, toilet soaps cooking oil, hair oil etc.
7. Rural Marketing is not Expensive: To promote consumer durables inside a state costs Rs one
crore while in urban areas it will costs in millions.

Constraints in Rural Marketing (Nov. 06) *(May 06)

 1. Vastness and Uneven Growth: India has 6,40,867villages, which are scattered over a wide
range of geographical area, and also they are not uniform in size.
2. *Transport Problem: Transportation infrastructure is very poor in rural India. Though India has
the fourth largest railway system in the world, many villages remain outside the railway network.
Many villages have only kaccha roads while many of rural interiors are totally unconnected by
roads. Because of this the physical distribution is difficult in rural areas.
3. Communication Problems: Communication infrastructure consisting of posts, telegraphs and
telephones is inadequate.
4. Warehousing Problems: Central Warehousing Corporation and State Warehousing Corporation
do not extend their services to the rural parts. The warehouses at mandi level are managed by co-
operative societies who provide services to members only.
5. Many Languages and Dialects: The number of language and dialects vary widely from state to
state, region to region and even from district to district. Though the recognized languages are
only 16 the number of dialects is around 850.
6. Market Organisation & Staff: Rural marketing needs large marketing organisation and staff to
have an effective control, which requires huge investment.
7. Non-Availability of Dealers: It is not possible to have direct outlets in each rural market; firms
have to have service of dealers, which is not easily available.
8. Hierarchy of Market: Rural consumers have identified market places for different items of their
requirements. Thus depending upon the purchase habit of rural people, the distribution network of
different commodities has to be different.

Physical structure of rural society

Rural – Urban distribution: 68.84% & 31.16%
Population (in Crore)
2001 2011 Difference.
74.3 83.3 9.0
Sex Ratio
2001 2011 Difference
946 947 +1
Literacy Rates (in %)
2001 2011 Difference
58.7 68.9 +10.2

Rural Units (or Villages) in India:

Villages: • Census 2001 6,38,588 • Census 2011 6,40,867 Increase: 2,279

Population by Rural Urban Residence – India - 2011 • Total : 1,210,193,422 • Rural: 833,087,662 •
Urban: 377,105,760 Persons: • Total : 100.0 % • Rural: 68.84 % • Urban: 31.16 %

Factors Contributing to the Growth of Rural Markets

1. Employment Opportunities: The income from new employment and rural development efforts
has increased the purchasing power of rural people.
2. Green Revolution: Due to green revolution a technological break through has taken place in rural
India, which results into substantial wealth generation in these areas.
 3. Favourable Government Policies: Tax exemption in backward areas, subsidy, concession,
incentives and heavy investment in rural development programmes in has brought rapid growth
of rural markets.
4. Literacy Growth: Literacy rate is increasing in rural areas, nearly 45% of rural Indians are
literate. This brings social and cultural changes in buying behaviour of the rural customers.
5. Rising Disposable Income: Good monsoons, green revolution and Administered Pricing
Mechanism (PAM) have raised disposable income in rural areas.
6. Attraction of Higher Standard of Living: Rural people have been motivated to change their
lifestyles and have higher standard of living.
7. Spread of Cable Television: The growth of satellite TV channels has made a major impact on
villages. This has led to a change in lifestyle and consumption pattern.

PRODCUT STRETEGY

PRODCUT STRETEGY (Nov. 02)

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 tractor’s brand ‘Bhumiputra’
4. Slogan of Red Label Tea “jiyo mere lal” proved very effective to promote sale.

DUPLICATE AND COUNTERFEIT PRODUCTS IN RURAL MARKET

Spurious products are the copy of established brand name at a cost of few thousand rupees and sold it in
the rural market. This duplication takes place in all sectors and especially in FMCG, food items and
medicines.

Counterfeiting is a kind of duplication where the fake products bear the identical name of the original
product, its packaging, graphics, color pattern, design and even same name and address as the genuine
manufacturer. A pass-off product is one that comes with a few minor changes from the original product.
The slight changes are made to avoid legal problems.

Example:

Head and Shower – Head and Shoulder

Pantane – Pantene

Sunmilk – Sunsilk

Lifebuoy – Loveboy

Climik Plus – Clinic Plus

Parla G – Parle G

Vikas – Vicks
SOCIO ECONOMIC REFORMS

1. Coir Udyami Yojana

This is a credit linked subsidy scheme for setting up coir units with project cost upto Rs 10 lakh plus
working capital which shall not exceed 25 % of the project cost.

2. Prime Minister’s Employment Generation Programme

The scheme is a composition of two schemes- Prime Minister’s Rojgar Yojana and Rural Employment
Generation Program. It is a credit-linked subsidy program that aims at generating employment opportunities
through establishment of micro enterprises in rural as well as urban areas. The objective is to provide
continuous and sustainable employment to a large segment of traditional and prospective artisans, rural and
urban unemployed youth in the country. The scheme facilitates participation of financial institutions for higher
credit flow to micro sectors.

3. Pradhan Mantri Awas Yojana- Gramin

The Pradhan Mantri Awas Yojana- Gramin (PMAY-G) has been devised in line with
Government’s commitment to provide ‘Housing for All’ by 2022 in the rural areas. The scheme
aims at providing a pucca house with basic amenities to all houseless householder living in
kutcha and dilapidated houses by 2022.
4. Deen Dayal Antyodaya Yojana

The scheme is designed with an aim to uplift the urban poor folks by enhancing sustainable livelihood
opportunities through skill development. The scheme is an integration of the National Urban Livelihoods
Mission (NULM) and National Rural Livelihood Mission (NRLM ). The scheme entails providing shelter
equipped with essential services to the urban homeless in a phased manner. It also addresses the livelihood
concern of the urban street vendors by facilitating suitable space, institutional credit, social security and
skills to the urban street for accessing emerging market opportunities.

5. UJALA

The Unnat Jyoti by Affordable LEDs for All was launched in 2015 with a target of replacing 77 cr
incandescent lamps with LED bulbs. To nullify the high-cost of LEDs that acted as a barrier previously in
adoption of energy efficient systems, the scheme was implemented to set up phase wise LED distribution
across the nation to provide people with affordable LED bulbs and energy efficient appliances. The
objective is to promote efficient lighting, enhance awareness on using efficient equipment that will reduce
electricity bills and preserve the environment.
Every grid-connected consumer having a metered connection from their respective Electricity
Distribution Company can get LED bulbs at about 40% of the market price under the Ujala scheme.
6. Pradhan Mantri Kaushal Vikas Yojana

Pradhan Mantri Kaushal Vikas Yojana (PMKVY) is the flagship scheme of the Ministry of Skill
Development & Entrepreneurship (MSDE). The objective of this Skill Certification Scheme is to
enable a large number of Indian youth to take up industry-relevant skill training that will help
them in securing a better livelihood. Individuals with prior learning experience or skills will also
be assessed and certified under Recognition of Prior Learning (RPL). Under this Scheme,
 Training and Assessment fees are completely paid by the Government. The scheme has been
approved for another four years (2016-2020) to benefit 10 million youth.

7. PM
8. Ujjwala Yojana

The Pradhan Mantri Ujjwala Yojana was launched to safeguard the health of women and the
household from consumption of unhealthy fuels by providing them with clean cooking fuel in the
form of LPG.
The scheme is designed to protect the health of the women by curbing health issues that result
from consuming fossil fuels and other fuels used for cooking. Moreover it also reduces casualties
that occur as a result of unclean fuels and control respiratory issues due to consumption of
unhealthy fuels. Apart from furthering the health of women, this scheme also seeks to empower
women in rural India by issuing connections under the name of the women in the household.
.
[Link] YOJANA: The Saubhagya Scheme or Pradhan Mantri Sahaj Bijli Har Ghar Yojana is
an Indian government project to provide electricity to the households. The project was announced in
September 2017 by Prime Minister Narendra Modi, who said that the aim was to complete the
electrification process by December 2018.
Pradhan Mantri MUDRA Yojana (PMMY)
Pradhan Mantri MUDRA Yojana (PMMY) is a scheme launched by the Hon’ble Prime Minister
on April 8, 2015 for providing loans up to 10 lakh to the non-corporate, non-farm small/micro
enterprises. These loans are classified as MUDRA loans under PMMY. These loans are given by
Commercial Banks, RRBs, Small Finance Banks, MFIs and NBFCs. The borrower can approach
any of the lending institutions mentioned above or can apply online through this portal
[Link] . Under the aegis of PMMY, MUDRA has created three products namely
'Shishu', 'Kishore' and 'Tarun' to signify the stage of growth / development and funding needs of
the beneficiary micro unit / entrepreneur and also provide a reference point for the next phase of
graduation / growth.
PROMOTIONAL STRATEGY
Qualities Required for a Rural Sales Person (Nov. 03, May 06, 07)

1. Knowledge of local language

2. Willingness to get located in villages
3. Cultural Congruence: Rural salesman must have proper acquaintance with the cultural pattern of
rural life.
4. Attitudes: Rural salesman must have patience as their customers are traditional and conscious, it
will not be possible to clinch the sales quickly. He may have to spend lot of time with customer
and make several visits to gain favourable response.
5. Capacity to handle number of products lines: Rural salesman usually does not generate
economic value of business if he handles few products. He is required to handle much large
number of products lines as compared to urban salesman.
6. Greater Creativity: Rural marketing involves greater creativity. If the product is very new in the
rural context, He has to introduce it using consumption pioneers and opinion leaders.

ALTERNATIVE MEDIA FOR RURAL COMMUNICATION (May 04, Nov. 04, 07)

A] Formal Organised Media

1. Newspapers and Magazines: Local language newspapers and magazines are popular among
educated rural families. E.g. Dina Thanthi in Tamilnadu, Punjab Kesri in North and Loksatta in
Maharashtra.
 2. TV: About 77% of villages receive TV transmission and 27% of rural people actually watch TV.
Regional channel is very popular like SUN TV in Tamilnadu and Asianet in Kerala.
3. Cinema: About 29% of rural people watch cinema as regular lifestyle. Short feature films with
advertisement message, Ad-films and documentaries that combine knowledge and advertisement
are useful for rural communication.
4. Radio: It is a well-established medium in rural areas. Radio reaches large rural population at low
cost.
5. * Point Of Purchase: Point of purchase or point of sale is popular promotional tool used in rural
market. POPs should be especially designed to suit rural requirements. POPs. Colors, symbols
and pictures should be used more than the written words.
6. Outdoors: Outdoors such as hoardings, wall paintings, illuminations and other displays are also
now being used for rural communication.

B] Rural Specific Media

1. Music Records: It is an inexpensive medium. On complete language group can be reached on a
low budget through cassettes that can be played in the place where rural people gathered.
2. *Puppetry: Puppetry is the indigenous theatre of India; it has been mot popular form of
entertainment available to the village people. The performer uses puppets as a medium to
communicate, ideas, values and social messages. Example:
1. Sounds and drama division of the government of India used puppets to promote various
government projects.
2. LIC used puppets to educate rural masses about ‘jeevan beema’ in Lucknow.

Types of Puppet Theatre in India

States Type of Puppet Content

Rajasthan Kathputli Prithvi Raj Chauhan, Amar Singh Rathod
Orissa String Puppet Radha Krishna
Bengal Rod Puppet Mahabharat, Radha Krishna
Chennai & Andhra Pradesh String/Rod Puppet Lathakali
Orissa, Kerala, Karnataka Shadow Puppet Ramayana

1. Folk Theater: Folk theatre is mainly short and rhythmic in form. It has been used as an effective
medium for social protest against injustice and exploitation.
2. Interpersonal Media: In many cases, rural people prefer face-to-face communication than mass
communication. A firm can contact with audience through fairs & festivals, folk, etc.
3. Group Meeting: It is a component of interpersonal media. Salesman can effectively convey the
product message at these meetings. Demonstration of products can also be carried out.
4. House-to-House Campaign: In these campaigns, promotional staff makes house-to-house visits
in rural areas. This is different from door-to-door selling campaigns. Promotion staff does not sell
the products, they only propagate the products.
5. *Field Demonstrations:
6. *AV Vans: AV van is a comprehensive mobile promotion station. The van can be used for sales
campaign in addition to promotion campaigns. AV van exhibits films, audiovisual presentations,
slide shows etc. It is very popular with rural marketing firms particularly agro business firms. AV
van is very effective tool in rural communication but its cost is very high as the target population
is very high.
 7. *Syndicated AV Vans: It is an AV van publicity service provided by the independent agencies.
Firms, which cannot afford to have their own publicity van, can utilise the syndicate van services.
8. Stalls, Haats, Meals: These are useful media of rural communication to spread the message and
to induce brand trials.
9. Wall Paintings: The speech or the film comes to an end but the paintings stay as long as whether
allows it to stay. The retailer usually paints its shops wall and name board which acts as a status
symbol
10. Use of Logos and Symbols: Illiterate villagers would remember brands only by picture, symbols
more than the name.
11. Use of Information Technology: ITC developed a web portal in regional languages to provide
information to the farmers about the products and services which they need in order to enhance
farm productivity, information on whether, scientific practices, market prices etc.
12. Focus on Reference Groups: They are the opinion leaders and are the key persons of the village
e.g. Sir Punch, Gram Sevak, Teachers, Doctors etc. These people should be taken into
consideration while chalking the rural communication.

Constraints in Rural Communication

1. Low Literacy Rate: Due to low literacy level, the written words have limited use in rural
communication.
2. Low Spending Capacity: Due to low disposable income, they cannot buy radio & TV
3. Joint Families and Strong Kinship Ties: Rural people live in joint families where females
depend on their males for information regarding various products. So it becomes difficult to reach
female consumers directly.
4. Linguistic and Socio-cultural Differences: Number of languages and different cultural and
social norms creating problems for marketers in designing the messages, as mass media in one
particular language doesn’t work for entire rural population.
5. Unique Media Habits: Media habits of villagers are such that the newspapers are found mostly at
groceries shop, tea stall etc. Magazines are not read at all. The household press subscription is
almost absent.
6. Situation Based Leisure Time Activities: Farmers has to work during nighttime and odd hours
also. It is difficult to find the leisure time for communication.
7. Expensive Communication: For rural communication to be effective, repeat exposure is a must
otherwise the message loss its effect during gap periods. This makes rural communication more
expensive.
8. Poor Infrastructure: Due to the lack of roads and telecom facilities reaching rural audience is
very difficult. TV viewer-ship is affected by uncertain supply of electricity.
9. Lack of Research Data: Decisions regarding messages and media mix for rural communication
depends only on sales force and distributors, which is insufficient.
10. Selective Attention: Rural people select the messages that are have in their interest and ignore
others.