SYNOPSISOn

RURAL MARKETING

For the partial fulfillment of the requirement of

MASTER OF BUSINESS ADMINISTRATION

IN

MARKETING AND HR

Affiliated to Mahamaya Technical University, Noida (U.P.)(2011-2013)

Under The Guidance of: Submitted by:DR. AVIJIT DEY ANUJ KUMAR (Faculty Guide) Roll No.1168470034

RURAL MARKETING

CONTENTS

S.NO. SUBJECTS PAGE NO1 INTRODUCTION

2 OBJECTIVE OF THE STUDY

3 PROBLEM/SCOPE OF THE STUDY

4 RESEARCH METHODOLOGY5 DATA ANALYSIS6 IMPORTANCE OF STUDY

7 SUGGESTION8 CONCLUSION

9 BIBILOGRAPHY

INTRODUCTION

The predominantly rural character of India’s national economy is reflected in the very high proportion of its population living in rural areas. The predominantly rural character of India’s national economy is reflected in the very high proportion of its population living in rural areas. With more than 700 million people living in rural areas, in some 5,80,000 villages, about two—third of its workforce was engaged in agriculture and allied activities with a contribution of 29 percent of India’s Gross Domestic Product (GDP), India’s economy is predominantly rural in character. India’s economy can be thought of as comprising of two main sectors, namely, the Rural Sector and the Urban Sector. The Rural sector is, in turn, composed of two main sub sectors i.e. the agricultural sub sector and the non-agricultural sub sector. Till recently, the focus of marketers in India was the urban consumer and by large number specific efforts were made to reach the rural markets. But now it is felt that with the tempo of development accelerating in rural India, coupled with increase in purchasing power, because of scientific agriculture, the changing life style and consumption pattern of villagers with increase in education, social mobility, improved means of transportations and communication and other penetrations of mass media such as television and its various satellite channels have exposed rural India to the outside world and hence their outlook to life has also changed. Because of all the above factors, rural India in now attracting more and more marketers.

Rural marketing has become the latest mantra of most corporate. Companies like Hindustan Lever, Colgate Palmolive, Britannia and even Multinational Companies (MNCs) like Pepsi, Coca Cola, L.G., Philips, Cavin Kare are all eyeing rural markets to capture the large Indian market. Coming to the frame work of Rural Marketing, Rural Marketing broadly involves reaching the rural customer, understanding their needs and wants, supply of goods and services to meet their requirements, carrying out after sales service that leads to customer satisfaction and repeat purchase/sales. Earlier, the general impression was that the rural markets have potential only for agricultural inputs like seed, fertilizers, pesticides, cattle feed and agricultural machinery. There is a growing market for consumer goods as well.

OBJECTIVE

The concept and scope of rural markets

The nature and attractiveness of rural markets

Roadblocks of Indian Rural Markets

Solutions to problems of rural markets

India is a land of diversity and about 70% of the Indian population lives in villages.

These villages contribute in the economic development of the nation through the

production of food grains, vegetables, fruits, etc. Export of these agricultural

commodities result in the generation of capital and earnings of foreign exchange.

Rural marketing involves the process of developing, pricing, promoting, distributing rural

specific product and a service leading to exchange between rural and urban market

which satisfies consumer demand and also achieves organizational objectives.

There are several roadblocks that make it difficult to progress in the rural market.

Marketers encounter a number of problems like dealing with physical distribution,

logistics, proper and effective deployment of sales force and effective marketing

communication when they enter rural markets.

Indian rural market has a vast size and demand base. Rural marketing involves the

process of developing, pricing, promoting, distributing rural specific product and a

service leading to exchange between rural and urban market which satisfies consumer

demand and also achieves organizational objectives. As part of planned economic

development, the government is making continuous efforts towards rural development.

PROBLEMS/ SCOPE OF THE STUDY

The rural market may be attracting marketers but it is not without its problems: Low per

capita disposable incomes that is half the urban disposable income; large number of

daily wage earners, acute dependence on the vagaries of the monsoon; seasonal

consumption linked to harvests and festivals and special occasions; poor roads; power

problems; and inaccessibility to conventional advertising media. However, the rural

consumer is not unlike his urban counterpart in many ways. The more marketers are

meeting the consequent challenges of availability, affordability, acceptability and

awareness in rural market.

Features of Rural market:

Large and scattered market socio economic background Changing demand pattern Major income come from agriculture Saving habit Low standard of living Poor infrastructure facilities Media reach Communication Electrification

Scope/ Attractiveness of Rural Market:

Large Population Rising Rural Prosperity Growth in Consumption Changing Lifestyle Life Cycle Advantage Market Growth Rate Higher than Urban Rural Marketing is not Expensive

RESEARCH METHODOLOGY

Type of Research : Descriptive and conclusive

Data type : Secondary

Data collection source : Magazines, journals, Books

And Internet.

Introduction:-

This chapter aims to understand the research methodology establishing a framework of

evaluation and revaluation of primary and secondary research. The techniques and

concepts used during primary research in order to arrive at findings; which are also

dealt with and lead to a logical deduction towards the analysis and results.

RESEARCH DESIGN

I propose to first conduct a intensive secondary research to understand the full impact

and implication of the industry, to review and critique the industry norms and reports, on

which certain issues shall be selected, which I feel remain unanswered or liable to

change, this shall be further taken up in the next stage of exploratory research. This

stage shall help me to restrict and select only the important question and issue, which

inhabit growth and segmentation in the industry.

The various tasks that I have undertaken in the research design process are:

Defining the information need

Descriptive and casual research.

DATA ANALYSIS

STEPS in the data analysis:

Statement of the problem

Identification of information needed to solve the problem

Selection or development of instruments for gathering the information

Identification of target population and determination of sampling Plan.

Design of procedure for information collection

Collection of information

Analysis of information

Generalizations and/or predictions

IMPORTANCE OF STUDY

The study is based totally on secondary data and such data relates to something of the past and not the exact present scenario. Hence totally depending on such given data could at timesbe misleading, that is no matter how good the report is one has to do certain amount of homework before jumping to conclusions on the basis of such study.

Marketing activity is something that is never stable and is constantly changing with

the changing circumstances, ever changing rules and regulations that control these

activities. Hence something which is very up-to-date as of now might become obsolete

in a very short span of time. One has to be very cautious before taking any decision

based on such data and has to think beyond what is given. No amount of data can be

accurate enough to give the desired results.

SUGGESTION

1. Advertisements on rural media like radio, press media has been increased .

2. Physical Distribution channel must be made strong.

3. Awareness about the product must be increased among the peoples.

4. Profit –margin percentage of the product for the retailers should be increased.

5. The rural customers are usually daily wage earners and they don’t have monthly

incomes like the ones in the urban areas have. So the packaging is in smaller

units and lesser-priced packs that they can afford given their kind of income

streams.

Then thing like the colour that attracts him is also important.

What Makes Rural Markets Attractive?Rural market has following attributes and the following facts substantiate this: -

742 million people

 

Estimated annual size of the rural market -

                            FMCG                                                                     Rs. 65,000 Crore

                Durables                                        Rs.5,000 Crore 

                   Agri-Inputs (including tractors)                       Rs. 45,000 Crore 

                           2 / 4 Wheelers                                                     Rs. 8,000 Crore

In 2001-02, LIC sold 55% of its policies in rural India.

Of two million BSNL mobile connections, 50% are in small towns / villages. 

 

Of the 6.0 lakh villages, 5.22 lakh have a Village Public Telephone (VPT).

41 million Kisan Credit Cards have been issued (against 22 million credit-plus-debit

cards in urban), with cumulative credit of Rs. 977 billion resulting in tremendous

liquidity.

Of the 20 million Rediffmail sign-ups, 60% are from small towns. 50% of transactions

from these towns are on Rediff online shopping site.

42 million rural households (HHs) are availing banking services in comparison to 27

million urban HHs.

Investment in formal savings instruments is 6.6 million HHs in rural and 6.7 million HHs

in urban.

Opportunities:-1. Infrastructure is improving rapidly -

In 50 years only, 40% villages have been connected by road, in next 10 years another

30% would be connected.

More than 90% villages are electrified, though only 44% rural homes have electric

connections.

Rural telephone density has gone up by 300% in the last 10 years; every 1000+ pop is

connected by STD.

 

Social indicators have improved a lot between 1981 and 2001 -

Number of "pucca" houses doubled from 22% to 41% and "kuccha" houses halved

(41% to 23%).

Percentage of BPL families declined from 46% to 27%.

Rural literacy level improved from 36% to 59%.

 

Low penetration rates in rural areas, so there are many marketing opportunities -

Durables Urban Rural Total (% of Rural HH)

  CTV 30.4   4.8   12.1    Refrigerator 33.5   3.5   12.0  

FMCGs Urban Rural Total (% of Rural HH)

  Shampoo 66.3   35.2                  44.2    Toothpaste 82.2   44.9                 55.6  

 Marketers can make effective use of the large available infrastructure -   

    Post Offices 1,38,000        Haats (periodic markets) 42,000        Melas (exhibitions) 25,000        Mandis (agri markets) 7,000        Public Distribution Shops 3,80,000        Bank Branches 32,000    

 Proliferation of large format Rural Retail Stores, which have been successful also - DSCL Haryali Stores M & M Shubh Labh Stores TATA / Rallis Kisan Kendras Escorts Rural Stores Warnabazaar, Maharashtra (Annual Sale Rs. 40 crore).

Rural Consumer Insights Rural India buys -

Products more often (mostly weekly).

Buys small packs, low unit price more important than economy.

In rural India, brands rarely fight with each other; they just have to be present at the

right place.

Many brands are building strong rural base without much advertising support.

Chik shampoo, second largest shampoo brand.

Ghadi detergent, third largest brand.

  Fewer brand choices in rural areas; number of FMCG brand in rural is

half that of urban. Buy value for money, not cheap products.

 

Why Different Strategies?Rural markets, as part of any economy, have untapped potential. There are several difficulties confronting the effort to fully explore rural markets. The concept of rural markets in India is still in evolving shape, and the sector poses a variety of challenges. Distribution costs and non-availability of retail outlets are major problems faced by the marketers. The success of a brand in the Indian rural market is as unpredictable as rain. Many brands, which should have been successful, have failed miserably. This is because most firms try to extend marketing plans that they use in urban areas to the rural markets. The unique consumption patterns, tastes,and needs of the rural consumers should be analyzed at the product planning stage so that they match the needs of the rural people. Therefore, marketers need to understand the social dynamics and attitude variations within each village though nationally it follows a consistent pattern. The main problems in rural marketing are: - Understanding the Rural ConsumerPoor InfrastructurePhysical DistributionChannel ManagementPromotion and Marketing Communication

Dynamics of rural markets differ from other market types, and similarly, rural marketing strategies are also significantly different from the marketing strategies aimed at an urban or industrial consumer.

Strategies to be Followed:- Marketing StrategyMarketers need to understand the psyche of the rural consumers and then act accordingly. Rural marketing involves more intensive personal selling efforts compared to urban marketing. Firms should refrain from designing goods for the urban markets and subsequently pushing them in the rural areas. To effectively tap the rural market, a brand must associate it with the same things the rural folks do. This can be done by utilizing the various rural folk media to reach them in their own language and in large numbers so that the brand can be associated with the myriad rituals, celebrations, festivals, "melas", and other activities where they assemble. 

Distribution StrategyOne of the ways could be using company delivery van which can serve two purposes - it can take the products to the customers in every nook and corner of the market, and it also enables the firm to establish direct contact with them, and thereby facilitate sales promotion. However, only the bigwigs can adopt this channel. The companies with relatively fewer resources can go in for syndicated distribution where a tie-up between non-competitive marketers can be established to facilitate distribution. Annual "melas"

organized are quite popular and provide a very good platform for distribution because people visit them to make several purchases. According to the Indian Market Research Bureau, around 8000 such melas are held in rural India every year. Rural markets have the practice of fixing specific days in a week as Market Days (often called "Haats') when exchange of goods and services are carried out. This is another potential low cost distribution channel available to the marketers. Also, every region consisting of several villages is generally served by one satellite town (termed as "Mandis" or Agri-markets) where people prefer to go to buy their durable commodities. If marketing managers use these feeder towns, they will easily be able to cover a large section of the rural population.

Promotional Strategy:-

Firms must be very careful in choosing the vehicle to be used for communication. Only 16% of the rural population has access to a vernacular newspaper. So, the audio visuals must be planned to convey a right message to the rural folk. The rich, traditional media forms like folk dances, puppet shows, etc., with which the rural consumers are familiar and comfortable, can be used for high impact product campaigns.

CONCLUSION

Thus, looking at the challenges and the opportunities, which rural markets offer to the

marketers, it can be said that the future is very promising for those who can understand

the dynamics of rural markets and exploit them to their best advantage. A radical

change in attitudes of marketers towards the vibrant and burgeoning rural markets is

called for, so they can successfully impress on the 230 million rural consumers spread

over approximately six hundred thousand villages in rural India.The growing opportunity in the rural market is no doubt the prime factor. The rural

demand has been growing rapidly and its composition has been changing for the better

in the recent years. The increased income/ purchasing power of the rural consumer and

the improved income distribution has enhanced rural demand for several products.

Better access to many modern products/brands has added to this growth.

The heat of competition in the urban market actually serves as the stronger driver

behind the growing interest of cooperates in the rural market. The fact that the rural

market is still largely an untapped as well as the early entrants can tap it without

having to face intense competition as in the case of the urban market, makes the rural

market all the more attractive to them.

Corporate have been finding the going increasingly tough in the urban market ,

especially for the products in respect of which penetration levels are already high .

BIBLOGRAPHY

Study books:

David H Maister, "Marketing Professional Services”,”Forward-Thinking

Strategies for Boosting Your Business, Your Image, and Your Profits," 2nd

Edition. Sep 2002. Edition. 13, Is. 3; p. 57.delhi.

Ali Abdulla, “The Marketing of Nations”, “A Strategic Approach to Building

National Wealth”, Aug 1997, Edition 122, pg. 104, Delhi.

T P Gopalaswamy, “Rural marketing environment, problems and

strategies” third edition published by Vikash publishing house pvt. Ltd. Noida.

Nargundkar, “Market research” second edition Tata Mc Graw Hill.

Bucklin and Lattin, “A Study of the demographic and psychographic

factors”: Journal of Marketing Vol.65, (January 2007).