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Rural Marketing, 2e

Chapter 1The Call of Rural India

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Rural Marketing, 2e

Learning Objectives

• Define rural India and rural markets

• Identify common rural myths

• Understand the rural marketing myths and the challenges related to it

• Understand the characteristics of the evolving rural consumer

• Describe the emerging rural India

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Rural Marketing, 2e

Definition of RuralOrganization Definition of Rural Limitation

Census

• Several hamlets demarcated by physical boundaries

• Towns are urban areas that satisfy:Minimum population 5,000Population density > 400 per sq.

Km.75% of the male population

engaged in non-agricultural activities

The term “rural” is not defined, nor is the upper limit of population for villages

IRDA• Similar to Census except that the

percentage for male population in towns is 25% and not 75%

Widening of definition allows a larger market to be considered as rural

RBIRural: All locations with a population of up to 10,000Semi-urban: All locations with a population between 10,000 and 100,000

Distinction defined only by population

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Rural Marketing, 2e

Definition of Rural

Organization Definition of Rural Limitation

Planning Commission

Towns with population up to 15,000 are considered rural

Town characteristics not defined

SaharaLocations with shops/commercial establishments up to 10,000 population.

Town or village characteristics not defined

LG ElectronicsAll population centres other than the 7 metros are considered rural or semi-urban

Population criteria is not considered

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Rural Marketing, 2e

Rural Myths

Rapid urbanization• Urban increase rate only 0.75% higher than rural and

showing a slowing trend largely due to the National Rural Employment Guarantee Scheme (NREGS)

An agrarian economy• Non-farm activity already 60%; expected to rise to 70% by

2020• This increases family income and provides a more constant

stream of income to rural households.• A higher buffer from risks involved in farming

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Rural Marketing, 2e

Rural Marketing Mix

The 4 Ps of marketing – price, product, place and promotion – replaced by 4 As in rural markets

Affordability Availability

Awareness Acceptability

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Rural Marketing, 2e

Rural Marketing Mix

•Rural consumers are driven by value proposition and not by costAffordability

•Single largest challenge for marketers in rural markets•Paucity of data for villages and small towns is a hindranceAvailability•Media reach is increasing•Need for specific messages aimed at the rural psyche•Use of alternative rural means of communicationAwareness•Rural consumers look for productive assets•Specific needs should be looked into while designing products for rural consumersAcceptability

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Rural Marketing, 2e

The Evolving Rural Consumer• Value driven and looks for products that add to earning

capabilities or to status

• Increasing literacy and exposure to mass media, increasing aspiration levels

• Better road infrastructure leading to increased mobility

• Highest change amongst children and youth, increasing their role as influencers

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Rural Marketing, 2e

The Evolving Rural Consumer• Changing cultural and social norms

• Rise in nuclear families creating new roles for women

• High use of self-help groups (SHGs), especially for women

• Marketers need to focus on creating awareness and excitement amongst women and youth

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Rural Marketing, 2e

Rural India: The Exploding Middle Class

• 164 million households accounting for 56% of India’s total income, 64% of expenditure and 33% of savings

• 67% road connectivity, 30% tele-density, 60% electrification

• 200 million mobile users

• 14 million DTH subscribers

• 87 million Kisan Credit Cards

• Higher growth in durables as well as FMCGs as compared to urban

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Rural Marketing, 2e

Rural India: The Exploding Middle Class

• Pyramid transforming into a diamond2020

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Rural Marketing, 2e

• Lower cost of living leads to higher proportion of disposable income

• Government rural thrust boosting bottom of pyramid (BoP) incomes

• Rural infrastructure being developed in the areas of roads, electrification, education and health

• Increase in agricultural productivity and shift to cash crops increasing agricultural income

Rural India: The Exploding Middle Class

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Rural Marketing, 2e

Rural Marketing Case Rural Markets

Refer to video case and answer the following questions:

• Despite the diverse heterogeneous nature of rural markets, why are marketers focusing on rural markets?

• How should marketers tackle the huge diversity seen in rural markets?

• What steps should a company take to tap the huge potential in rural markets? Discuss this with regard to the 4 Ps of marketing.

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Rural Marketing, 2e

Successful Mantra for Entering Rural Markets

Think like a businessman with the feelings of a social worker