UNIT IV

Rural Marketing

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Rural Marketing: A concept that is catching up fast in the changing market
scenario today.

With urban markets becoming more and more competitive and saturated,
the shift is towards tapping the rural markets.

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Rural is a place which is far away from towns and cities. People are
traditionalist, rooted to the land and generally resist change.

Rural marketing is the planning and implementation of the marketing

function in the rural areas.
Deals with a two way exchange process. Manufactured goods from the
urban to rural areas and agricultural goods from rural to urban areas.

Rural Marketing has also been defined as the process of developing,

pricing, promoting, distributing rural specific goods and services
leading to exchange between urban and rural markets, which satisfies
consumer demand and also achieves organizational objectives (Iyer).
Factors differentiating rural marketing from urban marketing
Infrastructure availability :electricity supply, finance facility, education
level, roads connectivity
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Income streams :
Life style: daily routine of consumers is different
Socio – cultural back ground :value system, goods/services
and consumption in general is quite different
Accessibility : the cost and logistics is high
Media reach and habits: different types of promotional
strategy in these two markets.

Adi Godrej, chairman, Godrej group once said “ The rural

consumer is discerning and the rural market is vibrant. At
the current rate of growth, it will soon outstrip the urban
market. The rural market is no longer sleeping but we are”
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Villages are the heart of India
75% of population lives in 6,38,365 villages
90% is concentrated in the village having population less than 2000
Rural segment comprises 13.5 crore households which constitute
72% of total households in India
But the rural market is not homogeneous across the country.
The consumer willingness to accept innovation also varies among
the rural market
A brief description of rural India
Rural income distribution
Is generating more than half of the national income
55.6% contribution to the national income by 74.6 crore rural
population
But per capita income is low
The annual household income for rural areas in 2002 was Rs
56,630 as compared to Rs 1,02,963 in urban area
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As on 2005 the monthly family expenditure in rural area was Rs 1840 as
against Rs 2795 for urban India.
32.5% population lives below poverty line in India.

The BPL distribution also varies across the country. Where in Punjab it is
only 6% for Odisha it is nearly48%.

But there has been a growth of rural literacy from 36% to 59%.

By 2005 90% of rural population was under electrification in Punjab against

10.3% in Bihar.
Still
70% of rural population is involved in small and medium scale agriculture.

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Factors Making Rural Markets Attractive
1. Rural demand growing faster than urban demand
2. Consumption of modern products and services are increasing by the
day.
3. Heat of urban market competition makes grabbing market share
difficult
4. Rural market still very much virgin and untapped market.
5. Rural markets compose half of the total domestic market
6. Increase in per-capita income in the rural belt.
As Mr Harish Manwani Chairman HUL and COO Unilever said at the 79 th
AGM
“ Rural market has the potential to add $ 1.8 trillion to the Indian economy,
equal to its present fig. of $2.3 trillion. By 2025 the rural market will
offer retail business equal to $ 100 billion. The challenges for tomorrow
are agriculture, rural employment and employability and human
resource development. The rural markets calls us for a ‘Go-to-market
strategy’.”
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Factors influencing Buying behavior of Rural
Customers
Location: Largely influenced by their exposure to
urban life-styles. Nearness to feeder towns
influences the buying behavior of the consumers in
the adjoining cluster of villages.
Eg. Villages near NCR, Gurgaon, Faridabad have been
transformed greatly due to the proximity to these
places.

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Availability of Electricity: Availability of electricity results in increased
usage of consumer electronic gadgets. Lack of electricity results in
the usage of alternative sources.

Place of Purchase: Purchases made from village shops or haat are generally
of basic ingredients, whereas those made from towns cities are of more
advanced in nature. Sometimes the same person makes purchase of
different requirement from different places.
Influencers Role: The role of the influencer has shifted from the head of the
family to others in the family like youngsters daughters and daughter-in-
laws. Even the role of the external influences like advertisements and
sales promotions also need to be considered.
In village setup the community decision making is quite common. The
Sarpanch and the other opinion leaders also influence decisions made
by the villagers.

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Consumer market of Rural India
Large market size despite low per capital
Rural India has twice as many people as urban India at 850 million.
Some consumer goods have a bigger market in the rural areas compared to
the urban market. Ex Washing soaps, batteries, toiletries, bicycles etc.
There have been a 17% growth in the use of shampoo in rural areas
within a 5 yr period from 2000-2005.

According to McKinsey, the aggregate rural consumption by 2015would be

Rs 16700 billion which will rise up to Rs 26,400 billion by 2025.

Product strategy for Rural Market

Depending on the situation some products can be offered both to the rural
and the urban customer.
In some cases, a little modification and adaptation is desirable.

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Specifically designed products: In addition to adapted low priced products,
in rural areas a manufacturer may also be required to produce
specifically designed products able to suit the need of the rural
population.
A manufacturer must aim to shift from the concept of ‘Modifying what I
have’ to ‘ Creating what they don’t have’.
Color as a product feature is important factors in the rural market. Rural
people generally prefer bright colors. Asian paints understood this
difference between the rural and the urban customer.
Packaging: Rural population’s purchase decision is reasonably influenced
by the color of the package rather than the product. Identification of the
products happens with the colour and appearance of the packaging. This
explains why many regional brands imitate national brands in lookalike
packages and brand names.
Pack size: Smaller pack sizes are more popular in rural areas owing to lower
purchasing power and limited availability of cash.

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Positioning: Positioning strategies in the rural market are different from
those in the urban market. As the rural consumer looks for value in
products, the positioning must also be similar. Titan positions its ‘Royal’
and ‘Regallia’ ranges in the urban market as premium collection. But in
the rural market ‘Sonata’ range has been positioned as an utility
affordable range of wrist watches.

Branding: Rural customer has also showing its preference for the brands.
Value packed with affordability is the call of the rural market.
Lifebuoy. Britannia Tiger are brands which are doing well in rural markets
today.
Pricing: Could be same as the pricing in the urban market. Let the
consumer decide what price he wants to pay. Low unit prices have
generally been accepted in the rural markets.

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Pricing in the rural market is to be combined as product, packaging and
price. Prices must follow the rural pattern of income. Low per capita
requires low unit price. Rs 5 toothpaste, 5gm Vicks Vaporub, 60gm
Lifebuoy soap etc. 200ml ‘Chota Coke’ at Rs 5 helped coke increase
customer base from 16 to 24 cr customers.
Channel Management
Rural markets require three tier channel management. The wholesaler,
the mundi reseller and the retailer. The manufacturer may also be
required to maintain a branch office in the territory.
Also a larger stock cover is required to be maintained in rural areas. This is
because during monsoons it is very difficult to service most rural
markets.
Marketing Communication
Audio-visual media is always effective in rural markets.TV, Radio, Cinema,
hoardings, wall paintings, illumination and other displays.

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Industrial Marketing
Marketing to domestic consumers is entirely different as compared to
marketing to Industrial markets.
Industrial marketing involves marketing of technically complex products
and services to industrial buyers. It usually involves a lot of personal
selling activity.
Derived Demand: Industrial demand is derived either from consumer
demand or is dependant on the consumer goods or services.
Ex. Steel is an industrial produce. But steel is used in among other, in the
production of cars, refrigerators etc. Thus the demand of steel
industrially is also dependant on the products produced from it.

Customers for Industrial products include:

1. Commercial Enterprises:
2. Government: The union and the state governments are also customers
to industrial markets. These include PSU, various
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Departments including railways, defence, I&B, PHE etc.
3. Institutional Customers: Government Institutions like hospitals etc.
Private institutions include schools and colleges vocational training
centre's etc.
4. Manufacturing Units: Sugar, cotton etc
5. Non-manufacturing units: Banks etc. Cooperative movements like Amul,
Nirma etc.

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Purchasing Practices in Different Organizations
1. Commercial Organizations: Involves the technical and
the commercial departments. Tasks involves
identifying and negotiating with the suppliers,
selecting the suppliers and building relationships.
Purchasing is done to improve operational efficiency
and improve competitive advantage.
2. Government Units: The central department
Directorate General of Supplies& Disposal ( DGS&D)
finalizes the rates for standard products. The firms
need to register themselves with the agency, submit
tenders and then wait for the opening. Generally the
lowest quote gets to supply.
3. Purchasing in Institutions: A practice similar to the Government
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departments is followed.
Buying Situations
3 Common types of purchases / buying situations
i. New Task / New Purchase :
Here, buyers have limited knowledge and experience of the new
product/service. Hence, more information is obtained, more people are
involved, risks are more, and decisions take longer time.
ii. Modified Rebuy / Change in supplier :
This situation occurs when the firm is not satisfied with the performance
of existing suppliers, or there is a change in product specs. Hence, the
need for searching alternate suppliers.
iii. Straight Rebuy / Repeat purchase :
Here, the buying firm places repeat orders on suppliers who are
currently supplying certain products/services. Such decisions are
routine, with less risks and less information needs, and can be taken by
junior executives.

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 Marketing of Services
• Definition:Services marketing typically refers to both business to
consumer (B2C) and business to business (B2B) services, and
includes marketing of services such as telecommunications services,
financial services, all types of hospitality services, car rental services,
air travel, health careservices and professional services.
• The American Marketing Association defines services as - “Activities,
benefits and satisfactions which are offered for sale or are provided
in connection with the sale of goods.
Intangibility:
Heterogeneity/Variability
Perishability:
Inseparability of production and consumption:
Types of Services- Core & Supplementary

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 In the non-ownership framework services are divided into five broad
categories
Rented goods services: These services allow customers to obtain
temporary right to use physical goods that they prefer not to own. E.g.
Hotel room, table in a restaurant.
Defined space and place rentals: Customers obtain the right to use a
defined portion of a large space. Example Office space in a large
building etc.
Labour and expertise rentals: Customers obtain the right to hire
people to perform tasks which they either can’t do or do not want to
do due to lack of necessary skills or for other reasons.
Access to shared environment: Customers can share physical
environment with others at the same time. Ex. Parks, Cinema Halls
etc.

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
The 7P’s of services marketing are
Product: Products lie at the heart of the company’ service marketing
strategy. Since services are a concept, creating a service concept that
meets the customers expectation compared to available competitor
services decides the success of the service marketing.
Core service- Air travel.
Supplementary services- e-ticket booking, e-payment etc.

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Place: Distribution of services involves physical as well as non-physical
channels depending upon the nature of the services. Information based
services can be delivered instantly to a far location. Also services can be
delivered directly to the customer or through intermediaries. The
timing of delivery of the service is decided along with the place of
distribution of the service.
Time factor: Time is a vital issue in delivery of any product, more so in
case of services. Speed and convenience of time has attained great
importance in the distribution of services.
Price: A value exchange between the service provider and the customer is
facilitated by the inherent value of payment. For the provider price
includes cost of providing the service and creating a surplus. Pricing in
services is dynamic. It is influenced by type of customer, time and place
of delivery and demand and supply patterns.
For the customer the price is the cost he must incur to obtain the
benefit. ’Worthiness’ of a service is dependent upon the money and
the outlay of time and effort involved in acquiring the service. The
buyer must therefore try to minimise the burdensome outlays
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Promotion: Effective promotion is at the heart of a successful promotion
campaign. Promotion plays three vital roles
It creates needed information and advice by creating exposure to its
potential customers.
Promotion persuades potential customers regarding merits of specific
brand or service over competitors.
Promotion encourages customers to take action at specific times.
In services marketing, communication is educative in nature. Suppliers
teach customers about benefits of the new service, when and where to
obtain the service and how to enter the service process to obtain the
best result. Promotional activities like incentives are designed to induce
trial purchase or to enhance business during lean period.
Process: The service industry is controlled by two very important
aspects first, what a company does and second how the company
does it i.e. the process. Creating and delivering good services require
proper designing and implementation of the effective process. Badly
designed services result in disappointing experience for the customer.
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services process has certain aspects 22
Customers are often involved in co-production: Some services require
customers to participate in the production of services. Ex. Saloon, where
a customer has to be willing to be given a haircut. Further, in some
services customers themselves function as partial employees. E.g.
Telecom, Internet etc.
 Physical Environment: Some Services require customers to enter the
service factory for receiving the services. Thus the need to suitably
design the physical environment arises. Buildings, interior design,
equipment, staff, uniforms, direction signs etc provide tangible
evidence of the firm’s service quality. They guide the customers
through the service process and facilitate delivery of services.

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People: Services have a distinct feature of human involvement in the
delivery process. Thus in spite of the advancement made in the service
sector they still require the customers to interact with the service
employees. The service quality is influenced by attitude and skills of the
people involved in the service process. Thus proper selection, training,
motivation of these service employees affects the service output from
these employees. Combination of technical & interpersonal skills
empowers the employee to deliver good service.

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• Services are ___________ activities. (Economic)
• Services offer benefits without _____________. (Ownership)
• In services ______________ assets create value creation. (Intangible)
• Services are performances which are_______________. (Time based)
• Services are often difficult to _______________ and _______________.
(visualise and Understand)
• In services distribution may take place through ____________ channels.
( Non-physical)
• Traditional marketing does not cover managing the ___________
interface. (Customer)
• Marketing is not complete without effective_________________.
(Communication)
• A service is a combination of ____________ and __________ services.
(core/ supplementary)
• Services have a high proportion of ______________. (experience)

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NON-PROFIT ORGANIZATIONS
A nonprofit organization (NPO, also known as a non-business entity) is
an organization whose purposes are other than making a profit.
A nonprofit organization is often dedicated to furthering a particular
social cause or advocating for a particular point of view.
A nonprofit organization is a business entity that is granted tax-
exemption.
Legally, a nonprofit organization is one that does not declare a profit
and instead utilizes all revenue available after normal operating
expenses in service to the public interest.

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