A Refereed Monthly International Journal of Management
Paradigm Shift and Changing Future of Rural Marketing in India
Author
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Dr. Vinod N Sambrani
Professor and Research Guide
Kousali Institute of Management Studies
Karnatak University Dharwad
E-mail:- vinodsambrani@gmail.com
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Jayadatta S
Assistant Professor
KLE IMSR Research Scholar
Kousali Institute of Management Studies
Karnatak University Dharwad
E-mail:- jayadattaster@gmail.com
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Abstract
Rural India in the near future is presumed to become one of the largest markets
on the globe and is also transforming quickly in this dynamic world. Today India’s
rural population consists of 12% of the world population representing huge untapped
population. Consistently as the purchasing power and preferences of rural people
are changing and every organization is looking forward to invest in rural markets.
Rural markets have gained significance in the present scenario in nations like India
and China which might lead to sustainable development and growth of Indian economy
in upcoming years resulting in substantial increase in buying power of rural consumers.
For most of MNC’s rural marketing has become the latest mantra that are focusing
on rural markets to make inroads into huge Indian market. Village areas consume
huge variety of urban and industrial manufactured goods due to the advent of green
revolution in India which has lead to enhanced marketing skills and strategies known
as rural marketing. As rural market environment keeps on changing, market profile
also changes so as people. Hence companies are applying various strategies and modes
to be a winner in rural market. Rural market also exhibits regional, linguistic,
economic disparities and cultural diversities. Recently growth in buying power has
brought lot of interest for major companies like ITC, HUL, Godrej, Colgate, BPCL
and Nokia which are exploring cost effective distribution channels. The present
paper brings in review of rural market environment, opportunities and major problems
in India. Research paper also describes various strategies and major challenges
of rural marketing in India.
Keywords : Rural Market, Marketing strategies, Challenges, opportunities,
untapped population
Introduction
Consistent overall growth is witnessed by the Indian economy in recent year’s especially
in rural areas and rural market is termed as the key to survival in India. Improved
and enhanced communication network has already given large insight to economy and
income in rural areas thus resulting in higher involvement and high consumption
rate. Due to increase in agriculture productivity buying power of the rural people
has grown enormously in recent years. India’s economy as such relies on agriculture;
majority of sectors of economy relies and is dependent on rural demand. Slowly and
steadily majority of urban markets is reaching maturation point, thus creating an
immediate urge to emphasize on rural development. Because of increasing awareness
level and disposal income majority of India’s population near about 70% lives in
villages and constitute big market for industry. Today majority of consumers almost
¾ dwell in rural areas from where more than half of the Nations national income
is generated. Hence to survive in today’s strong and competitive world there is
an urgent need to tap markets in rural areas for organizations. Over the past few
years rural market has been growing steadily and is now even bigger than the urban
market. ‘Go rural’ is marketer’s new mantra. Major multinationals and Indian companies
such as Colgate from Palmolive group, Hindustan Lever as well as Godrej all have
concentrated on rural markets. However it can be foreseen that upcoming day ahead
looks very committed for those companies who are looking at the opportunities which
markets in rural areas offer to the marketers and also for those who understand
that dynamics of rural market as well as exploit them to their own advantage. Company’s
broad strategy of marketing rural products and service includes selling of agricultural
based products, services rendered by rural industries and products of such kind.
Various types of commodity market for trade channels which are available in rural
areas are co-operative, regulated markets, processing industries, private institutes
and similar state agencies. Without efficient and effective rural marketing strategies
it is presumed that in a social cluster or village economy as a whole can be developed.
However in planning era very little attention has been paid for the overall development
of rural marketing. In true sense rural marketing is dynamic state of affairs and
is also part and parcel of whole economy. Hence marketing and production are two
facets of one coin and rural marketing constitutes the nerve centre of various rural
development activities.
Review of Literature
Many studies have been carried out in Indian context in connection with rural marketing
which has also revealed a major setback of temperamental attitude of underrating
potential source like rural marketing. Various studies have thrown light on rural
marketing pros and cons and also its dimensions in different manner. Some of the
major ones are highlighted below
Rana J (2012) studied that, Rural Indian market is quite challenging
and attractive. Eventough marketers are taking essential and necessary steps to
capture this market the scope is still wide and companies have tremendous opportunities.
Premium FMCG brands are concerned, only few consumers are there from this market.
Companies should also decide in advance their target market for premium brands and
also approach them. Rural youths certainly can be of great help in this direction.
Also marketers can also come up with innovative proposals through which target market
for premium brands can be convinced.
Venukumar G (2012) through his studies concluded that it is very
much certain that FMCG companies will have to gain inroads in rural markets in order
to achieve double digit growth targets in future. He opines that definitely there
is lot of money and huge potential in rural India. Also companies entering rural
market must go for strategic reasons and not for tactical reasons as rural consumer
is considered as closed book and it is also through unwavering commitment that companies
can make inroads into rural market. Ultimately a company will win in the rural market
which has innovative ideas to tap the market and also with required resources.
Rahman M et.al, (2012) through his study found out that in India
the market share of hair care segment contributes about 9% to FMCG sector which
is continuously increasing from 6230.8 crores of rupees to 8417.79 crores of rupees
between commercial years 2008-09 to 2010-11. In India shampoo market is dominated
by HUL with market share of 46% followed by P&G with 24%. Some of the major
top shampoo brands are Pantene, Sunsilk, Clinic Plus and Head & Shoulders which
are placed in ‘Stars’ cell of BCG Matrix of Shampoo brands in India.
Dr. Singh P. et.al (2012) opined through his findings that issue
of rural product generation through industrialization needs to be viewed from a
new angle and perspective far more on scientific lines. Understanding the market
opportunities for rural products along with country’s development priorities is
the core of scientific approach keeping in mind country’s development priorities
and also chalks out a strategy where rural industries have a major role to play.
Rural products need to adapt themselves not only according to changing tastes of
national market, but also according to changes in tastes in international market
as rural products are forced to increasingly become part of global supply chains.
Kavitha T (2012) through her studies suggested that new phase of
rural consumption appears to provide great opportunity for FMCG sectors. To connect
and communicate with consumer who is more aware and unreserved than ever before
the study found that rural marketers need to evolve new strategies. Product and
brand development cycles need to undergo a dramatic change as today’s rural consumer
is not just indulgent but “smart” too as he wants those products which carry the
best of traditional wisdom and modern science providing individualism and convenience
in one go. Those products and brand strategies that which respond to these demands
are more likely to succeed in market.
Dixit D (2011) through his studies found out that bottom line or
top line growth should not be the primary objective of getting into rural markets.
One can’t make fortunes out of these markets as yet because these markets offer
future opportunity. Investment in these markets is being made both in turns of effort
and capital which certainly might take time before showing desired results. Rural
marketing however is all about seeding the markets, creating awareness regarding
brands and also promoting a culture for consumption purpose.
Badagu D and Chauhan S (2011) concluded in their study that looking
at the major challenges and opportunities which rural markets offer to marketers
it can be said that future is very promising for those who can understand the dynamics
of rural markets and exploit them to their best advantage. Further he also stated
that a radical change in attitude of marketers towards vibrant and burgeoning rural
markets is called for, so that they can successfully impress on 230 million rural
consumers who are spread over approximately near six hundred thousand villages in
rural India.
Size of Rural market in India :
According to latest Census of India, village is one with clear surveyed boundaries
not having a municipality, corporation or even a board having density of population
which is not more than 400sq.km and around 75% of the working populations are male
who are engaged in agriculture related activities.
Present Need of the study
Having learnt the paradigms to urban markets with reasonable success as urban markets
are becoming competitive perhaps saturated. Indian rural market has caught attention
of many marketers and corporations. Coupled with increase in purchasing power, social
mobility, increasing literacy level and improved means and modes of communication,
the tempo of development is accelerating in rural India. These factors have readily
contributed to change the pattern of rural demands. Earlier days the general impression
was that the rural markets had potential for agricultural inputs because of which
there is growing market for consumer goods today. Today lots of marketers are quite
enthusiastic to enter the rural market and are also looking for opportunities to
exploit to the best of their advantage. Marketers thus need to understand the dynamics
of rural market as rural consumers differ from their urban counterparts on a large
number of important attributes as their buying behaviour is different which has
got important implications for markets. For exploring marketing opportunities in
widely scattered Indian rural market there has been increasing thrust about how
to develop a proper marketing framework. If marketers want to tap the potential
of rural market in India they should understand the rural culture and also treat
it on priority. Rural market poses a distinct challenge for marketers who are interested
to tap the goldmine the path to which is paved with thorns. In order to successfully
enter the rural market marketers need to be aware of the major challenges that which
lies in the way and they should also be adequately equipped with tactics and strategies
in order to combat them. Besides marketers are also considering serious all out
efforts to tap rural markets and are also likely to face some challenges in their
rural endeavors.
Present Status of Rural Marketing in India:
The concept of rural marketing environment is quite complex in India which has been
changing continuously since last few years. Hence marketing organizations who want
to target the rural market should foresee and adapt such strategies to make some
necessary changes in market. An adaptive organization can always have modest growth
and can stand competition by making effective marketing plans and also creating
own strategies in a more creative way and also creating opportunities in the market
with change in the dynamic environment as it might prove profitable for them. Hence
in India there are various factors which affect consumer behaviour, some of the
major ones are discussed below:
a. The environment in which consumer dwells: In India, environment or the surrounding
in which the consumer lives or dwells certainly has a strong influence on buyer
behaviour. Various such factors like electrification, water supply do effect demand
for durables
b. Influence of consumer’s occupation: Occupation as such is the main source of
income for any individual living in a society and the same applies to rural areas
also wherein owners of land buy more consumer durables than agricultural labourers.
c. Brand Preference and Loyalty: People in rural areas will not give much preference
to branded products but certainly give importance to loyalty for a product. Hence
more than 80% of sales in rural areas come from branded items in 16 various product
categories
d. Place of purchase: Company needs to access those products to rural consumers
which mostly influences purchase decision of rural consumer. Hence and organization
having its presence in rural area should develop various shops and outlets where
retailers can avail better services.
e. Geographic influence: The geographic location wherein the consumer is located
also affects the taught process of consumer buying behavior. To cite and example
most of the rural villages in South India accept technology quicker compared to
other parts of India. Hence HMT sells more winding machines in north while they
sell more quartz watches in south.
Major Marketing Strategies for Rural Market in India :
Image to show Rural Marketing strategies adopted my companies in India
Some of the major strategies for rural market in India are as follows:
a. Rural Market Segmentation: It is one of the major factor which leads to influence
the behaviour of rural consumer which necessarily requires better effort from company’s
point of view to make rural consumers satisfy their demands. Besides in recent years
majority of the organization’s are focusing on segmenting the market which are as
follows:
1. Demographic factors: This is one of the major factors which is taken into consideration
for segmenting consumer goods and fast moving consumer goods (FMCG’s). Demographic
profile of consumers comes into picture to sell goods in rural areas in case of
rural marketing.
2. Occupational or Sociological Segmentation: This type of segmentation is based
on economy vise categorization which necessarily reflects the purchasing power of
farmers which includes Small farmers, artisans, tenant farmers, large level farmers,
medium level farmers and very large farmers (Zamindars)
3. Artisans: These category of workers comprise of blacksmiths, carpenters, handicrafts
and other people who are unemployed
4. Small farmers: Comprises of farmers who own small farms and jointly owned farms
for getting food
5. Medium level farmers: Comprises of small farmers who are jointly owning farms
for getting food
6. Large scale farmers: Comprise of farmers who have large lands and are also local
leaders who spend their time in urban areas doing other occupation besides agriculture
7. Very Large farmers, Land Lords (Zamindars): Zamindars, businessmen and rich money
lenders own big size lands and also maintain large size farm labour. Zamindars spend
time in nearby urban areas doing some part time occupation. Small farmers and tenant
farmers struggle for basic needs, middle level farmers struggle for comforts but
very large farmers struggle for enjoyment and lavish living.
Rural Branding : Branding is a process which is involved in creating
a unique name and image for a product in consumer’s mind mainly through advertising
campaigns which are consistent with theme. Branding necessarily aims to establish
significant and differentiated presence in the market that which attracts and retains
loyal customers. Hence the term brand is generally applied to trade names, trade
symbols, trademarks etc. For instance Pepsi, Lifebuoy brand names are recognizable
by sight normally and rural consumer likes to associate himself to such brands that
which give more value for money. Some of the major brand names which have created
long lasting impact on rural consumers are Everyday batteries, Asian Paints, Lifebuoy,
Parle, Dabur Chawan Prash, Parachute , Tata Salt, Amul, Nirma, Zandubalm, Chermas
and Kumar shirts in textiles.
Rural Market Research :
By 2025 it is predicted that FMCG sector in rural and semi urban India is estimated
to cross US$100 billion. Also rural FMCG market is anticipated to expand at CAGR
of 17.41 percent to US$100 billion during 2009-25. In terms of revenue rural FMCG
market accounts for 40 percent of overall FMCG market in India. Amongst leading
retailers, Dabur generates over 40-45 percent of its domestic revenues from rural
sales. HUL rural revenue necessarily accounts for 45% of its overall sales while
other companies earn around 30-35 percent of their overall revenues from rural areas.
Also since 2000 India’s per capita GDP in rural regions has grown at Compounded
Annual growth rate (CAGR) of 6.2 percent. As a result of government’s increased
focus towards rural jobs and MGNREGA Scheme India’s unemployment rate has declined
to 4.8 percent in Febraury 2017 compared to 9.5 percent in August 2016. Rural communication
campaigns communicate for rural markets call for different kind of outlook. For
products to be easily accepted and made easier to reach the customers company’s
operating in rural areas should develop regional languages and also set in local
culture. Besides mass media and outdoor media rural extravaganzas like melas, festivals
and other events should also be taken as an opportunity by companies to promote
their goods and services where villagers come together.
Rural Events :
One of the best ways to capture the attention of rural audience is through event
management. As rural areas do have limited venues for entertainment, conducting
and implementing a successful event in rural area can certainly bring a good response.
Direct marketing campaigns in rural areas :
Direct marketing as such is one of the most reliable and powerful way to meet target
customers requirement as well as to build product awareness and promotion. Also
success of any marketing campaign depends on fieldworkers and their emotional and
sensitivity connection towards rural markets.
Creation and Management of Database Systems :
Promotional related activities and marketing branding in rural context can be highly
effective and companies should create likely database of prospects in order to capture
the rural market. The data in turn will be essential for marketers to reach their
target accurately and also can help companies in implementing effective marketing
plan and communication strategies.
Product strategies in Rural Markets :
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Type of Product
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Description of Product
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Sturdy Product
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More Durable, heavier and long lasting
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Designing Product
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Development of new products
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Small Unit Packaging Product
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Use of Small containers or packets
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Utility Products
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More Usable Products
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Sturdy Products :
Rural consumers do believe that heavier the item, more higher the power and durability
as they prefer tough and long lasting product. For instance Bullet motor cycle still
continues to be popular in villages. Royal Enfield sells about 65% of two wheelers
in semi urban and rural areas and ambassador as well as fiat cars continue to be
popular in rural areas.
Designing Products :
To suit themselves to the field conditions in rural areas company’s can come out
with new products or even promote existing products. To quote some instance LG electronics
came out with unique product for rural markets wherein it launched Sampoorna India’s
first T.V with Devanagari script on screen display. A refrigerator has been introduced
in rural areas by Voltas company with cold technology which keeps the refrigerator
cold for several hours in case of long power cut. For rural consumers Nokia has
designed a basic model which is dust resistant and also has a mini torch light
Small Unit Packing :
Majority of the companies are coming up with value added small packets in rural
areas. Small unit packaging certainly provides an opportunity for the consumers
to try the product and also help the company to reach to its consumers especially
daily wage earners. Over the past few years Ponds has gained a high market share
focusing on rural market and it has also introduced 20gm talcum powder. Rural buying
behaviour was studied by Cavinkare Company which introduced Chik Shampoo in small
sachets of 4ml at a price of just 50 paise. Rasna was made available in small sachets
priced at one rupee each and each sachet can make 2 glasses of soft drink.
Utility Products :
Rather than appearance or show rural people are concerned with utility of items
in rural areas. Philips Company introduced free power radio RL117 priced at 995
Rs for the first time in India. Radio required no external batteries or electricity
for its operation. HMT watches are much popular in rural areas for their utility
value.
Rural Market Opportunities:
The growth story of India is now spreading itself to India’s hinterland, not just
increasing only in its income but also in its production and consumption. Economy
is growing vibrant and habits, tastes, attitudes, preferences as well as income
of consumers is rising rapidly. These changes are also evident in rural areas. As
such companies are trying to trigger growth in rural areas. As banks are lending
finance at low rate of interest there has been a substantial increase in affordability
of purchasing costly products by rural people. Today Rural India offers a plethora
of opportunities with the substantial upgradation in purchasing power; increased
brand consciousness pattern and rapid spread of communication network all waiting
to be harnessed. By large India’s rural market offers huge potential for marketers
and also seems to be the replacement of urban market. With its vast demand base
rural market is extremely attractive and also offers various opportunities. As is
the trend with urban India, consumers in rural region are expected to embrace online
purchases overtime and also drive consumption digitally. Rural regions are very
well covered by basic telecommunication services and also slowly witnessing increasing
pattern of smartphones and computers. However taking advantage of this online web
portals are being used as key channels to enter and establish themselves in rural
market.
Conclusion
Indian rural market as such plays a pivotal role as it provides
greater opportunity to the companies to stretch their reach to nearly seventy percent
of the population. By uplifting the standard of the people, providing infrastructure
facilities, quality of life of people residing in rural area rural market benefits
the rural economy. Though the rural market has become a favourite destination for
every marketers but it’s important to realize that it has lot of challenges and
risk, therefore corporations should assess the obstructions as vigilantly as possible.
A thorough understanding of rural markets and systematic move towards are necessary
to penetrate rural market. In order to develop marketing strategies and action plans,
the corporations need to taken into account the complex factors that influence the
rural consumers buying behaviour.
The rural market is developed by rising purchasing power, changing consumption pattern,
increased access to information and communication technology, improving infrastructure
and increased government initiatives to boost the rural economy. The marketers tune
to their strategies in accordance to the rural consumer in the coming years. In
spite of all complexities involved in the rural marketing, the rural scene of rural
environment is changing steadily in India. The biggest challenge today is to develop
a scalable model of influencing the rural customer mind over a large period of time
and keep it going. Traditional urban marketing strategies will have to be localized
as per the demands of the rural markets. It has to reach out to rural consumers
and relate to them at an appropriate level, so that it can bring about the desired
behavioral change. Government support is necessary for the development of rural
market in India to face the emerging issues and challenges in the core areas like;
transportation, communication, roads, and credit institutions, crop insurance for
better utilization of land and water management. The future no doubt lies in the
rural market. In conclusion, the rural markets are enticing and marketing to rural
consumers is exciting. However, a clear understanding or the rural consumers and
their current and future expectations are the major part of strategies to tap the
rural market nowadays.
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