This document discusses marketing innovation and rural marketing in India. It begins with defining marketing innovation as exploiting new ideas to create new products, processes or services. It then discusses various perspectives on marketing innovation including product development, marketing mix, culture, and integrated marketing campaigns. The document then highlights features of the rural market in India including that it is large and scattered, accounting for about 74% of the population and growing demand for products. It concludes that the rural market offers significant opportunities for marketers.

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Impact of Innovation on
Rural Marketing
SUBMITTED BY
SHREYA MISHRA
B.COM (H)-VI SEM
ENROLLMENT NO-A7004615106
Under guidance of:
Dr. Rajendra Kumar
Assistant Professor
ABS, Lucknow
(MINOR PROJECT REPORT IN PARTIAL FULFILMENT OF REQUIREMENT FOR THE
AWARD OF FULL TIME DEGREE BACHELOR OF COMMERCE {B.COM (H)}, 2015-18)
AMITY BUSINESS SCHOOL
AMITY UNIVERSITY UTTAR PRADESH
LUCKNOW CAMPUS

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DECLARATION
Title of project is “Impact of Innovation on Rural Marketing”. I
understand what plagiarism is and am aware of the University’s policy in
this regard
I declare that
(a)The work submitted by me in partial fulfillment of the requirement for
the award of degree B.COM (H), assessment in this MINOR PROJECT
is my own; it has not previously been presented for another assessment.
(b)I declare that this MINOR PROJECT is my original work. Wherever
work form other source has been used, all debts (for words data,
arguments and ideas) have been appropriately acknowledged.
(c)I have not used work previously produced by another student or any
other person to submit it as my own.
(d)I have not permitted, and will not permit, anybody to copy my work
with the purposeof passing it off as his or her own work.
(e)The work conforms to the guidelines for layout, content and style as
set out in the Regulations and Guidelines.
Date:
Signature
Shreya Mishra

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STUDENT’S CERTIFICATE
Certified that this report has been prepared, based on Minor
Project Report undertaken by Ms. Shreya Mishra on “Impact
of Innovation on Rural Marketing”.
The duration of this Project was from 15th January, 2018 to 10th
March, 2018 under the guidance of Dr. Rajendra Kumar
(Faculty Guide, Amity Business School) in the partial fulfilment
of the requirement for the award of the degree B.COM (H) from
AMITY UNIVERSITY UTTAR PRADESH.
Date:
Signature
Ms. Shreya Mishra
(Student)
Signature
Dr. Rajendra Kumar
(Faculty Guide)
Signature
Prof. (Dr.) Harsh Vardhan
(Director)
Amity Business School, AUUP

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FACULTY’S CERTIFICATE
Certified that this report has been prepared, based Minor Project
Report undertaken by Ms. Shreya Mishra on “Impact of
Innovation on Rural Marketing”.
The duration of this Project was from 15th January, 2018 to 10th
March, 2018 under my guidance in the partial fulfilment of the
requirement for the award of the degree B.COM (H) from
AMITY UNIVERSITY UTTAR PRADESH.
Date:
Signature
Dr. RajendraKumar
Assistant Professor,
Amity Business School,
Amity University,
Lucknow.

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ACKNOWLEDGEMENT
I’d like to express my greatest gratitude to the people who have helped &
supported me throughout my project. I’m grateful to Dr. Rajendra Kumar
(Faculty Guide, Amity Business School) for his continuous support for
the project, from initial advice & encouragement to this day.
Special thanks of mine goes to my colleague who helped me in
completing the project by giving interesting ideas, thoughts & made this
project easy and accurate.
I wish to thank my parents for their undivided support & interest who
inspired me & encouraged me to go my own way, without which I would
be unable to complete my project. At last but not least I want to thanks
my friends who appreciated me for my work & motivated me and finally
to God who made all the things possible…

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Contents
Chapter Topic Page
I Introduction 7
II Objectives 10
III Review of Literature 11-32
Marketing Innovation 11
Rural Marketing Mix 19
Challenges in Rural Marketing 23
Examples of Innovation in Rural
Marketing
31
IV Research Methodology 33
V Data Analysis and Interpretation 35
VI Findings 38
VII Conclusion 39
VIII Bibliography 40
IX Annexure 41

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Chapter I:
Introduction
India is a big country with 28 states, over one billion people and 120
dialects/languages. Three fourths of India’s population lives in rural areas, and
contribute one-third of the national income. This rural population is spread all over
India.
From the market perspective, people of India comprise different segments of
consumers, based on class, status, and income. An important and recent development
in India’s consumerism is the emergence of the rural market for several basic
consumer goods. India is a lucrative market even though the per capita income is low
and it remains a huge market, even for expensive products. Among the total 164.8
million households in India, 80.7 million households comes under low income group,
followed by 50.4 million lower middle income households, 19.7 million middle
income group, 8.2 million upper middle income group and 5.8 million high income
group.
Typically, from an Indian census point of view, “Rural” has been defined with a
'deprivation' orientation, rural being a landmass without access to continuous
electricity, water, the stock market. There has been a correction in this view, however.
Marketers today define rural as people living a different lifestyle as opposed to that of
those who have settled in the bigger cities and towns. Rural is defined as pastoral in
nature and as a mass of people who relate their income closely to the lands they till or
use to raise their cattle and livestock.
Urban India constitutes places with a population of more than 5,000, a population
density above 400 per square kilometer, all statutory towns, that is, all places with a
municipal corporation, municipal board, cantonment board, notified area council, etc.
and with 75% of the male working population engaged in non-agricultural
employment. All non-urban is rural.
In simple words, we can say that rural India is a less developed countryside where the
infrastructure is primitive, houses are of mud or brick but rarely painted well, the
primary source of livelihood is agriculture, employment opportunities in the

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organized sector are negligible, eating choices are restricted to home-cooked, simple
food, schools are far away, health facilities are rudimentary.
The Rural Marketing refers to the activities undertaken by the marketers to
encourage the people, living in rural areas to convert their purchasing power into an
effective demand for the goods and services and making these available in the rural
areas, with the intention to improve their standard of living and achieving the
company’s objective, as a whole. Rural marketing is now a two-way marketing
process. There is inflow of products into rural markets for production or consumption
and there is also outflow of products to urban areas. The urban to rural flow consists
of agricultural inputs, fast-moving consumer goods (FMCG) such as soaps,
detergents, cosmetics, textiles, and so on. The rural to urban flow consists of
agricultural produce such as rice, wheat, sugar, and cotton. There is also a movement
of rural products within rural areas for consumption.
The rural market has been growing steadily over the past few years and is now even
bigger than the urban market. About 70 per cent of India’s population lives in
villages. More than 800 million people live in villages of India. ‘Go rural’ is the
marketer’s new slogan. Indian marketers as well as multinationals, such as Colgate-
Palmolive, Godrej and Hindustan Lever have focused on rural markets.
Successful firms have come up with novel ideas right from designing rurally relevant
products to focused communications. Product development for rural context has been
a common feature of many successful companies. Be it soaps and detergents which
are effective in rural waters (literally) or mobile phones that can weather dust and
sweat, companies like HUL & Nokia have delivered products that hit home in the
rural markets. Another case in point would be CavinKare: its shampoo brand Chic is
the second largest shampoo brand in India mostly due to its strong grip on the rural
territory.
When it comes to marketing communications, many companies have come up with
culturally relevant campaigns. LIC used puppet shows to educate the masses about
life insurance policies. Coca Cola ran the ‘Parivartan’ programme for penetrating in
rural retail market and Eveready conducted light shows in the breaks to spread the

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word about its product. HUL ran Lifebuoy’s Swasthya Chetna Campaign in rural
villages and unique multi brand initiative ‘Khushiyon ki Doli’ in five states. 40% of
total consumer products of HUL are consumed in the fast growing markets of rural
India.
Thus, looking at 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.
Since ancient times, Indian villages had the concept of village markets popularly
known as the village haats. The haats are basically a gathering of the local buyers and
sellers. The barter system was quite prevalent, which still continues in a number of
places even today. Haats are basically a weekly event, and are central to the village
economy.

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Chapter II:
Objectives of the Study
The applications of principles of creativity and processes of innovation are the causes
of effectiveness in marketing. Innovation is defined as exploiting new ideas leading to
the creation of a new product, process or service. Another way of putting this is that
an innovation lowers the costs and/or increases the benefits of a task.
A wildly successful innovation increases the benefits-to-costs ratio. The innovation in
rural marketing is brought by significant changes in the marketing mixes and four
A’s. Innovative marketing of products is about leveraging the marketing mix, namely
the four P’s: Product (Design and Packaging), Price, Place, and Promotion in ways
that has not been before by the organization implementing the innovations.
The objective of this report is to study about the following dimensions.
 The emergence of rural markets in Indian Context.
 The present scenario of rural Marketing in India.
 The challenges faced by rural marketers in rural India.
 The Reasons of popularity of rural markets in India.

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Chapter III: Review of Literature
Marketing Innovation
The process of translating an idea or invention into a good or service that creates
value or for which customers will pay.
To be called an innovation, an idea should be replicable at an economical cost and
must satisfy a specific need. Innovation involves deliberate application of
information, imagination and initiative in deriving different and greater values from
resources, and includes all processes by which new ideas are generated and converted
into useful products.
In business, innovation often results when ideas are applied by the company in order
to further satisfy expectations and needs of the customers. In social context,
innovation helps create new methods for alliance creation, joint venturing, flexible
working hours, and creation of buyers’ purchasing power. Innovations are divided
into two broad categories.
Evolutionary innovations (continuous or dynamic evolutionary innovations) that are
brought about by many incremental advances in technology or processes and
Revolutionary innovations (discontinuous innovations) which are often disruptive and
new.
Innovation is synonymous with risk taking and organizations that create revolutionary
products and technologies take on the greatest risk because they create new markets.
Imitators take less risk because they will start with an innovator’s product and take a
more effective approach.
A marketing innovation is the implementation of a new marketing method (marketing
idea or strategy) that differs significantly from the previous marketing method used
by the enterprise and that has not been previously used by the enterprise. A
requirement for a marketing innovation is that it involves significant changes in the
product design or packaging, product placement, product promotion or
pricing. According to the “Opportunity View”, marketing is responsible for creating

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new opportunities with new products and services in existing markets or perhaps even
identifying new markets. From this perspective, marketing works with R&D
throughout the innovation process, through marketing research. Marketing helps
understand unmet needs, market segments, trends, technology adoptions, etc. with the
focus on developing innovative products and services.
The second view understands marketing innovation as it applies to the traditional
marketing mix, product, price, packaging, promotion and place or distribution.
Marketing innovation emerged as marketers figured out how to use the Internet to
have a significant impact on all of these variables. For example, the Internet has
enabled significant changes to a companies’ ability to distribute products as physical
points of distribution were no longer needed. The Internet made changes to channel
strategy possible as companies both disintermediated and reintermediated the value
chain. Pricing could be dynamic with auctions helping both consumers and
companies sell to the highest bidder or buy at the lowest cost. The Internet brought a
new level of transparency, which also had a major impact on pricing. Physical
products now contain an increasing amount of digital content, online, or as part of the
product e.g. cars with GPS and digital entertainment systems as part of their value
proposition. In terms of promotion, new digital marketing technologies emerged such
as SEO, PPC, affiliate marketing, new media, etc. Marketers have been very
successful in leveraging the Internet to drive marketing innovation.
Some see innovation as more of a culture or attitude where everyone is encouraged to
be creative or innovative as no one knows from where the next breakthrough idea will
come. Innovation goals and objectives may be a part of the company’s innovation
culture. For example, setting the goal that a certain percentage of revenues will come
from new products. Or providing employees time to work on projects outside of their
area. Another example would be providing recognition and reward systems to
encourage innovation and reinforce these objectives. In this perspective marketing
innovation occurs as a natural part of the culture and it is seen as better ways to do
what we are doing.
Marketing innovation can also be seen as part of the marketing or advertising
campaign. Usually the creativity or innovation for such campaigns are recognized
through awards, feedback in the press and sometimes with sales results. Marketing,
advertising and PR agencies are hired for their ability to be creative or innovative

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when it comes to developing and executing an integrated marketing campaign. Some
of the best ads and campaigns go viral, which is the dream of most marketers.
These definitions make sense, if we have an innovative culture, we will have
innovative marketing, we have innovative marketing because we hire an agency that
helps us innovate aspects of the marketing has the resources to focus full-time onthe
latest advances in marketing and the ability to incorporate those advances into our
campaigns, or to improve our marketing innovation, we are reengineering our
marketing and product development processes so they are more integrated thus
improving our ability to create breakthrough products.
While logical and internally consistent, these are woefully inadequate definitions of
marketing innovation given the current context and will limit a company’s ability to
create strategic, competitive advantage using marketing. Marketing is a discipline
consisting of both art and science and technology is having an unprecedented impact
on the field. As a result, companies need a strategy for how they will evolve their
marketing capabilities over time, how they will interact with and perhaps drive
technological changes. For our purposes we define marketing innovation strategy as
The plan that helps companies incorporate advances in marketing science, technology
and engineering into their marketing strategy, research, communications, operations
and analytics, to improve both efficiency and effectiveness, as a way to obtain
competitive advantage and/or create shareholder value.
While identifying potential opportunities in the market is critical for growth, making
sure your marketing strategy incorporates the changes occurring in the field marketing
is also critical for success and why it is important to have the right definition of
marketing innovation.
Highlighting Features of Rural Market
Large and Scattered Market:
The rural market in India is vast and scattered, and offers a plethora of opportunities
in comparison to the urban sector. It covers the maximum population and regions, and

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thereby, the maximum number of consumers. Rural market is account for about 74%
of total Indian population.
According to the 2001 census, 740 million Indians forming 70 per cent of India’s
population live in rural areas. The rate of increase in rural population is also greater
than that of urban population. The rural population is scattered in over 6 lakhs
villages. The rural population is highly scattered, but holds a big promise for the
marketers.
India’s per capita GDP in rural regions has grown at a Compound Annual Growth
Rate (CAGR) of 6.2 per cent since 2000. The Fast Moving Consumer Goods (FMCG)
sector in rural and semi-urban India is expected to cross US$ 20 billion mark by 2018
and reach US$ 100 billion by 2025@.
The rural market is growing steadily over the years. Demand for traditional products
such as bicycles, mopeds and agricultural inputs; branded products such as toothpaste,
tea, soaps and other FMCGs; and consumer durables such as refrigerators, TV and
washing machines have also grown over the years.
Major Income from Agriculture:
The hinterlands in India consist of about 650,000 villages. These villages are
inhabited by about 850 million consumers making up for about 70 per cent of
population and contributing around half of the country's Gross Domestic Product
(GDP). Consumption patterns in these rural areas are gradually changing to
increasingly resemble the consumption patterns of urban areas. Some of India's
largest consumer companies serve one-third of their consumers from rural India.
Owing to a favorable changing consumption trend as well as the potential size of the
market, rural India provides a large and attractive investment opportunity for private
companies.
Purchasing power of the rural people is on rise. Marketers have realized the potential
of rural markets, and thus are expanding their operations in rural India. In recent
years, rural markets have acquired significance in countries like China and India, as
the overall growth of the economy has resulted into substantial increase in purchasing
power of rural communities.

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Low Standard of Living:
The standard of living of rural areas is low and rural consumers have diverse socio-
economic backwardness. This is different in different parts of the country. A con-
sumer in a village area has a low standard of living because of low literacy, low per
capita income, social backwardness and low savings.
Seventy-five percent of rural households in India have a monthly income of less than
Rs 5,000 ($79), 51 percent of households make a living from manual labour, 28
percent (over 50 million) of households do not have mobile phones or any form of
communication.
Traditional Outlook:
In the rural India, majority of the rural consumers value old customs and traditions.
They purchase the product which does not violate their old customs and traditions and
once they start using certain products, they do not prefer changes. Marketers design
their products according to this traditional outlook to gain more customers in the rural
India.
Gradually, the rural population is changing its demand pattern. They are getting
influenced by the urban markets and its products. There is demand for branded
products in villages which gives a good scope for the companies to design and launch
their products in the rural India.
Infrastructure Facilities:
There is a lot of development of infrastructure facilities such as construction of roads
and transportation, communication network, rural electrification and public service
projects taking place in rural India. This has increased the scope of rural marketing.
Now new brands and companies can get easy access to these rural areas and can
develop a supply chain management of their products.
These developments help in attracting the companies to get in involved in rural
marketing as major population of India belongs to the rural India which means rural
India has more customers to deal with.
Large Population
According to the 2001 census, 740 million Indians forming 70 per cent of India’s
population live in rural areas. The rate of increase in rural population is also greater
than that of urban population. The rural population is scattered in over 6 lakhs

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villages. The rural population is highly scattered, but holds a big promise for the
marketers.
Higher Purchasing Capacity
Purchasing power of the rural people is on rise. Marketers have realized the potential
of rural markets, and thus are expanding their operations in rural India. In recent
years, rural markets have acquired significance in countries like China and India, as
the overall growth of the economy has resulted into substantial increase in purchasing
power of rural communities.
Market Growth
The rural market is growing steadily over the years. Demand for traditional products
such as bicycles, mopeds and agricultural inputs; branded products such as toothpaste,
tea, soaps and other FMCGs; and consumer durables such as refrigerators, TV and
washing machines have also grown over the year.
Employment Opportunities
The income from new employment schemes and rural development efforts of the
government and the corporate sector efforts has increased the purchasing power of
rural people.
Agricultural Revolution
Due to green revolution and white technological breakthrough in the form of green
and white revolutions have taken place in rural India, which results into substantial
wealth generation in these areas.
Favorable Government Policies
Tax exemption in backward areas, subsidy, concession, incentives and heavy
investment in rural development programmes have brought rapid growth of rural
markets and capital investment plans of Consumer Goods Companies.
Literacy Growth:
Literacy rate is increasing in rural areas. According to Census 2011 it stood at 68.9%
(2001 census 58.7%). There are now more graduates in rural than in urban India. This
brings social and cultural changes in buying behavior of the rural customers.

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Rising Disposable Income:
Good monsoons, green revolution and Administered Pricing Mechanism (PAM), and
NREGA have led to rising disposable income in rural areas. According to Advanced
Estimates of National Income released by the Central Statistical Office (CSO) “The
per capita income at current prices during 2011-12 is estimated to be Rs 60,972
compared to Rs 53,331 during 2010-11, showing a rise of 14.3 per cent,” Roughly 50
to 60% of people are employed in other businesses.
Many of the second generation are getting white collar jobs in nereby towns. They
earn urban salaries but continue to live in self-owned homes in the villages, they have
high purchasing power. Thus, with a growing middle class with a monthly income
there is a drastic change free from monsoon or cropping pattern. The rural income
pyramid is fast morphing into a diamond with 150 million people crossing BPL.
These will be first time users of national brands and therefore, offer a huge
opportunity to large companies.
Attraction of Higher Standard of Living:
Education, constant touch with urban areas, and Hindi Movies has motivated rural
people to change their lifestyles and have higher standard of living.
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.
New growth avenues for the corporate:
It appears that the corporate will have to look at rural customers for increasing
demand for their products, after all urban demand has its own limitations. Now
manufacturers go in for forward innovation approach instead of ‘globalization’. It
calls for developing products for rural consumers. Presently sale for Dabur, Jyothi
Laboratories, and Wipro Consumer Care from rural areas comprises 50%.

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Market Size is ₹ 1,23,000 crores
65000
45000
8000
5000
0
10000
20000
30000
40000
50000
60000
70000
FMCG Agri-Inputs 2/4 Wheelers Durables
Size of Indian Rural Market
Size of Indian Rural Market

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Rural Marketing Mix
Rural markets are becoming important for reasons of economic growth in these areas
and increasing interfirm rivalry in urban market. The rural buyer is less educated,
price sensitive, more traditional and is keen viewer of T.V and video programmes.
Products for rural markets have to be simpler, easy to use, visually identifiable,
affordable, communicated in an interesting style and available at the customers' door
step.
Rural consumer behaviour is a very complex phenomenon, which needs more efforts
to understand, explain & predict. In order to get a clear understanding of the same,
every marketer should realize that consumer behaviour is, in fact, an assumption
every marketing manager must make, if he plans to hit the rural market.
The marketing program consists of numerous decisions on the mix of marketing tools
to use. These tools consist of 4P's of marketing i.e. product, price, place and
promotion. The marketing mix is considered as the sole vehicle for creating and
delivering customer value.
Marketing mix comprises of various controllable elements like product, price,
promotion and place. Success of any business enterprise depends on marketing mix
and these four elements are like powerful weapons in the hand marketers.
Since behavioral factors of rural consumers are different and almost unpredictable in
nature, the marketers have a challenging task to design marketing mix strategies for

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the rural sectors. Due to considerable level of heterogeneity, marketers need to
design specific programs to cater needs and wants of specific groups.
Product Mix
Product is a powerful tool of an organization’s success. The products must be
acceptable to rural consumers in all significant aspects. The firm must produce
products according to the needs and future demands of rural buyers. The product
features like size, shape, color, weight, qualities, brand name, packaging, labeling,
services, and other relevant aspect must be fit with needs, demands and capacity of
buyers.
Product must undergo necessary changes and improvements to sustain its suitability
over time. The effectiveness of other decisions like pricing, promotion and place also
depends on the product.
Price Mix
Price is the central element of marketing mix, particularly, for rural markets. Rural
consumers are most price sensitive and price plays more decisive role in buying
decisions.
Pricing policies and its strategies must be formulated with care and caution. Price
level, discounts and rebates, then credit and installment faculties are important
considerations while setting prices for rural specific products.
Normally, the low-priced products always attract the rural buyers, but rarely some
rural customers are quality and status conscious.
Promotion Mix
Rural markets are delicately powerful to cater to the rural masses. The promotion
strategies and distribution strategies and Ad makers have learned to leverage the
benefits of improved infrastructure and media reach.
Most of the companies advertise their products and services on television and they
are sure it reaches the target audience, because a large section of the rural India is

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now glued to TV sets. Marketers have to decide on promotional tools such as
advertisement, sales promotion, personal selling and publicity and public relations.
The method of promotion needs to meet the expectations of the market. Vehicle
campaigns, edutainment films, generating word of mouth publicity through opinion
leaders, colorful wall posters, etc. — all these techniques have proved effective in
reaching out to the rural masses.
Village fairs and festivals are ideal venues for projecting these programs. In certain
cases, public meetings with Sarpanch and Mukhiya too are used for rural promotion.
Music cassettes are another effective medium for rural communication and a
comparatively less expensive medium.
Different language groups can be a low budget technique and they can be played in
cinema houses or in places where rural people assemble. It is also important that in
all type of rural communication, the rural peoples must also be in the loop. The
theme, the message, the copy, the language and the communication delivery must
match the rural context.
Eventually, the rural communication needs creativity and innovation. In rural
marketing, a greater time lag is involved between the introduction of a product and
its economic size sale, because the rural buyer’s adoption process is more time
consuming.
Nowadays, educated youth of rural area can also influence decision-making of the
rural consumers. Rural consumers are also influenced by the western lifestyle they
watch on television. The less exposure to outside world makes them innocent and the
reach of mass media, especially, television has influenced the buying behavior
greatly.
Place Mix
Rural market faces critical issues of distribution. A marketer has to strengthen the
distribution strategies. Distributing small and medium sized packets through poor
roads, over long distances, into the remote areas of rural market and getting the
stockiest to do it accordingly.
Both physical distribution and distribution channel should be decided carefully to
ensure easy accessibility of products for rural consumers. Choosing the right mode

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of transportation, locating warehouses at strategic points, maintaining adequate
inventory, sufficient number of retail outlets at different regions, and deploying
specially trained sales force are some of the critical decisions in rural distribution.
Normally, indirect channels are more suitable to serve scattered rural customers.
Usually, wholesalers are located at urban and semi urban to serve rural retailers. Not
only in backward states, but also in progressive states, local rural producers
distribute directly to consumers.
For service marketing, employees of rural branches can do better jobs. Various
sectors like banking, insurance, investment, satellite and cable connection, cell
phone, auto sales and services etc. — the market for these sectors is booming in
villages of some states in a rapid speed. Service industries are trying to penetrate into
rural areas by deploying specially trained employees and local rural area agents.
Nowadays, online marketing is also making its place gradually in rural areas of the
progressive states. Marketers must design and modify their distribution strategies
time to time taking into consideration the nature and characteristics prevailing in
rural areas, may be quite differently than that of urban markets.

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Challenges in Rural Marketing
At present, three out of four of country’s consumers are in rural market and one-half
of national income is generated there. A number of corporate units have been trying to
get grip on the rural market in a variety of ways. There is no doubt that rural market
reveals opportunities and great attraction to marketers. But, it not as easy as it seems
on surface. It is not so simple to enter and succeed in this market in a smooth way.
This market poses a variety of challenges, and, therefore, the marketer has to work
hard to tackle these challenges tactfully. A company planning to enter and/or expand
rural market must consider these problems seriously.
1. Deprived people and deprived markets:
The number of people below the poverty line has not decreased in any appreciable
manner. Thus, poor people and consequently underdeveloped markets characterize
rural markets. A vast majority of rural people is tradition bound, and they also face
problems such as inconsistent electrical power, scarce infrastructure and unreliable
telephone system, and politico-business associations that hinder development efforts.
2. Lack of communication facilities:
Even today, most villages in the country are inaccessible during the monsoons. A
large number of villages in the country have no access to telephones. Other
communication infrastructure is also highly underdeveloped.
3. Transport:
Transportation is the nerve center for any type of business. Most of villages are not
properly connected with main roads. Every year during monsoon thousands of
villages are disconnected for a longer time. Lack of proper transportation hinders
marketing activities. Agro-based products cannot be sent to marketing centers, and
industrial products cannot be supplied to rural population safely in time. In certain
areas, even construction of road or railway is difficult to construct and maintain.
Many rural areas are not connected by rail transport. Many roads have been poorly
surfaced and got severely damaged during monsoons. The use of bullock carts is

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inevitable even today. Camel carts are used in Rajasthan and Gujarat in both rural and
urban sectors.
4. Many languages and dialects:
Language is a main constrains in communication strategies. Multiplicity of languages
spoken in rural areas makes marketing activities difficult. Languages differ from state
to state, and area to area in the same state. While designing advertising, personal
selling, and publicity strategies, marketers cannot fulfill linguistic expectation of all
rural people. Promotion programme always lacks versatility.
The languages and dialects vary from state to state, region to region and probably
from district to district. Since messages have to be delivered in the local language, it
is difficult for the marketers to design promotional strategies for each of these areas.
Facilities such as phone, telegram and fax are less developed in villages adding to the
communication problems faced by the marketers.
5. Dispersed markets:
Rural population is scattered over a large land area. And it is almost impossible to
ensure the availability of a brand all over the country. District fairs are periodic and
occasional in nature. Manufacturers and retailers prefer such occasions, as they allow
greater visibility and capture the attention of the target audience for larger spans of
time. Advertising in such a highly heterogeneous market is also very expensive.
Wide and scattered market is difficult to reach in both the aspects – promotion and
distribution. Rural India is spread in the entire county in around 6 lakhs villages of
different sizes while urban population is concentrated in around 3200 cities. Most of
villages are extremely small with population less than 500 people. Only one percent
(6300) villages have a population of more than 5000. It is challenging tasks to choose
target markets and to serve them effectively.
6. Low per capita Income:
Rural customers are economically backward. More than 30 per cent of the rural
masses live below the poverty line. Poverty confines them to spend even for basic
necessities. Backwardness also affects their mentality to change. Their poor
purchasing power and rigidity are main constraints for marketers to serve them.

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The per capita income of rural people is low as compared to the urban people.
Moreover, demand in rural markets depends on the agricultural situation, which in
turn depends on the monsoons. Therefore, the demand is not stable or regular. Hence,
the per-capita income is low in villages compared with urban areas.
7. Low levels of literacy:
The level of literacy is lower compared with urban areas. This again leads to a
problem of communication in these rural areas. Print medium becomes ineffective
and to an extent irrelevant, since its reach is poor.
8. Prevalence of spurious brands and seasonal demand:
For any branded product, there are a multitude of local variants, which are cheaper
and hence more desirable. Also, due to illiteracy, the consumer can hardly make out a
spurious brand from an original one. Rural consumers are cautious in buying and their
decisions are slow, they generally give a product a trial and only after complete
satisfaction they buy it again.
9. Different way of thinking:
There is a vast difference in the lifestyles of the people. The choice of brands that an
urban customer enjoys is not available to the rural customer, who usually has two to
three choices. As such, the rural customer has a fairly simple thinking and their
decisions are still governed by customs and traditions. It is difficult to make them
adopt new practices.
10. Warehousing problem:
Warehousing facilities in the form of godowns are not available in rural India. The
available godowns are not properly maintained to keep goods in proper conditions.
This is a major problem because of which the warehousing cost increases in rural
India.
11. Problems in sales force management:
Sales force is generally reluctant to work in rural areas. The languages and dialects
vary from state to state, region to region, and probably from district to district. Since
messages have to be delivered in the local language, it is difficult for sales force to

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communicate with the rural consumers. Sales force finds it difficult to adjust to the
rural environment and inadequate facilities available in rural areas.
12. Distribution problem:
Effective distribution requires village-level shopkeeper, toluka-level
wholesaler/dealer, district-level stockist/distributor, and company-owned depot at
state level. These many tiers increase the cost of distribution.
Rural markets typically signify complex logistical challenges that directly translate
into high distribution costs. Bad roads, inadequate warehousing and lack of good
distributors pose as major problems to the marketers.

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Examples of Innovations in Rural
Marketing Mix
Corporate Initiatives and Innovations in Rural Marketof India
Coca-Cola India
Innovative marketing at its best can be understood from Coca-Cola India’s venture
into rural India in the year 2002, with an innovative promotion and marketing strategy
that differentiated it from its competitors.
Prior to 2002, for people in villages and small towns ‘Cola’ signified ‘Pepsi-Cola’ and
Coca-Cola India was pretty much determined to break this jinx. However, the task
was not easy and there were too many issues to be addressed beforehand. Poor rural
infrastructure, consumption habits (preference of traditional cold beverages -lassi
and Neembu pani), awareness of the product, mercurial electric supply and
apprehension among shopkeepers added to Coca-Cola India’s dilemma. It started its
rural campaign with strategy focused around three A’s of marketing.
Availability
The centralized distribution system of transporting the product directly from the
bottling plants to retailers, as used in urban market was futile for rural market which
resulted in innovative “Hub and spoke” distribution system. The stock was
transported from the bottling plants to hubs and then from hubs to spokes (situated in
small towns) and from spokes to retailers who catered to the demands in rural areas.
A well designed marketing strategy with strong and efficient supply chain and
logistics ensured Coca-Cola’s presence with increase in coverage of 81,383 villages
in 2001 to 1,58,342 villages in August 2003.

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Affordability
A survey by Coca-Cola in 2001 revealed that 300 ml bottle priced at Rs 10/- was not
popular with rural and semi-urban price sensitive customers. In reply to that, Coca-
Cola launched 200 ml bottles (Chota Coke) priced at Rs 5/- . Coca-Cola achieved
affordability by economies of scale. Then the next big task at hand was increasing
brand awareness among the target segment in rural areas.
Acceptability
Coca-Cola backed up its pricing and distribution by extensive marketing in the mass
media and outdoor advertising. Hoardings with painted name Coca-Cola on the
compounds of the village residence, participation in annual haats and television
commercials (TVCs) on Doordarshan were all set to mark Coke’s presence in a big
way.
TV commercial for North Indian people referring Coca-Cola as ‘thanda’ was flooded
on television with Amir Khan as brand ambassador. Progressive advertising ensured
easy brand recall and top of mind awareness among customers.
ITC Limited
ITC is setting up e-Choupals, which offers the farmers all the information, products
and services they need to enhance farm productivity, improve farm-gate price
realization and cut transaction costs. Farmers can access latest local and global
information on weather, scientific farming practices as well as market prices at the
village itself through this web portal - all in Hindi. It also facilitates supply of high
quality farm inputs as well as purchase of commodities at their doorstep.

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Hindustan Unilever Limited
Shakti is HUL's rural initiative. It seeks to empower underprivileged women of
villages with populations of 2000 or less by providing income-generating
opportunities, health and hygiene education through the Shakti-Vani program, and
creating access to relevant information through the i-Shakti community portal. Shakti
is a pioneering effort from the private sector in creating livelihoods for rural women.
Started in 2001, Shakti has already been extended to about 50,000 villages in 12 states
– Andhra Pradesh, Karnataka, Gujarat, Madhya Pradesh, Tamil Nadu, Chhattisgarh,
Uttar Pradesh, Orissa, Punjab, Rajasthan, Maharashtra and West Bengal (respective
state governments and several NGOs are also actively involved in the initiative). For
HUL, it is "enlightened self-interest"—creating opportunities to increase the rural
family income; putting more money in their (rural people) hands to purchase the
range of daily consumption products-from soaps to toothpastes-that HUL makes. It
also enables HUL to access hitherto unexplored rural hinterlands.
Maruti
Maruti has been organizing road shows with film screenings. This is much like a
travelling cinema that rural India is already quite familiar and fascinated with. The
only difference being that the film is not set up in a tent, but inside a TATA truck
fitted a Samsung LCD TV, an air conditioner and reclining seats. The film strikes a
chord with the villagers because it tells a simple story of an average villager who buys
a Wagon R after being persuaded by a friend who also bought a Wagon R.

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Tata Tea
"Gaon Chalo" is a distinctive rural marketing initiative started in the year 2006 in
Uttar Pradesh by Tata Tea. For penetrating the rural market, the company partnered
with NGOs with wide reach among Uttar Pradesh's rural masses. The "Gaon Chalo
project has created employment opportunities to the youth of villages and small
towns. It has brought steady income to those who are distributors of Tata Tea. Tata
Tea's consolidated market shares from rural areas rose from 18% to 26.6%.
Nokia
According to marketers, rural India has a huge progressive customer base for mobiles.
As most rural consumers are price-sensitive, Nokia has launched seven handsets in
the price range of Rs. 1500 to Rs. 5500 targeting rural customers. Further, Nokia is
promoting a subscription-based service called "Life Tools" which provides
information about agriculture and education that is helpful to rural people. It also
provides entertainment services. The "life Tools" service is priced between Rs.30 to
Rs. 60 per month, based on the package an individual opt for.

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Dabaur-India Oil Partnership
In order to tap India's rural market, Dabur India Ltd. Has tied up with Indian Oil
Corporation (IOC). According to the agreement between the two companies, IOC's
retail outlets all over the country will stock and sell Dabur's products consisting of
healthcare, oral care, personal wash, skin care and home care products. The Kisan
Seva Kendra is a one-stop rural retail outlet of IOC, which offers fuel and non-fuel
products like fertilizers, grocery, tools used for cultivation, seeds, personal care
products, auto spares, etc. There are 1600 such IOC outlets across India.
Airtel India
Airtel's rural start up package offers its customers a Motorola handset for just Rs.
1599. Its recharge cards come in a minimum denomination of Rs.10, so that even
daily wage earners can afford to use the service, Airtel is spreading awareness in
villages by its roadside advertisements highlighting its red and white logo. It is also
increasing its business network through commission-based retailers, who can be
anyone who is selling cigarette, paan, textiles, etc. The company already has 55000
retailers in Bihar and Jharkhand, and is planning to expand the network by
approaching 5000 more cigarette and paan sellers.

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Mahindra
After launching its Super Turbo 595 DI Tractor, Mahindra wanted to create awareness
about its new technology and high efficiency to farmers and thereby sell the tractor.
It, therefore, identified opinion leaders and progressive farmers and organized
interactive discussions between the company (Mahindra) and its target audience
(farmers and opinion leaders). It gave free test rides and thereby sold the tractor
initially to opinion leaders. This marketing activity was carried out in Maharashtra,
Haryana and Punjab. After using the tractor for a reasonable time period, the initial
buyers were glad to have the product and expressed their positive word-of-mouth
about the tractor to their friends, relatives and neighbors. This initiative has helped the
company to a great extent.

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Chapter V:
Research Methodology
The nature of this research is exploratory and descriptive in nature.
Research comprises creative work undertaken on a systematic basis in order to
increase the stock of knowledge. A research project was also an expansion on past
work in the done in rural market area. Research projects can be used to develop
further knowledge on a topic
Data Collection
Data collection is the systematic approach to gathering and measuring information
from a variety of sources to get a complete and accurate picture of an area of
interest. Data collection enables a person or organization to answer relevant questions,
evaluate outcomes and make predictions about future probabilities and trends.
For the purpose of data analysis I prepared a questionnaire and distributed it to some
people around my Amity University Campus. Actually, Amity University Lucknow
Campus is situated in the outskirts of Lucknow city. It is situated near Malhaur
Village so it was quite convenient to find village based crowd. As my questionnaire
was in English language, I translated the questions in Hindi and helped them to
answer the questionnaire without any kind of hindrance.
The required information for the report was collected through the various sources:
 Primary Data
Primary data is information that we collect specifically for the purpose of our
research project and collected with the help of structured and close ended
questionnaire through interview of 46 people selected as sample.

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 Secondary Data
Secondary data refers to data that was collected by someone other than the user.
Common sources of secondary data for social science include censuses, information
collected by government departments, organizational records and data that was
originally collected for other research purposes. Secondary data analysis can save
time that would otherwise be spent collecting data and, particularly in the case of
quantitative data, can provide larger and higher-quality databases that would be
unfeasible for any individual researcher to collect on their own
The secondary data were collected from following sources:-
 Online Journals
 Research Papers
 Websites
Statistical tools: - Simple statistics was used for simplification data and
analyzing.

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Chapter VI:
Data Analysis and Interpretation
For the purpose of data analysis I prepared a questionnaire and distributed it to some
people around my Amity University Campus. Actually, Amity University Lucknow
Campus is situated in the outskirts of Lucknow city. It is situated near Malhaur
Village so it was quite convenient to find village based crowd. As my questionnaire
was in English language, I translated the questions in Hindi and helped them to
answer the questionnaire without any kind of hindrance.
After collecting the data via questionnaire successfully, I analyzed the data.
According to the data collected, I came to the following findings and learnings.
How often do Rural India buy their regular products?
Bases Number of People
Daily 14
Weekly 20
Monthly 12
Total 46
14
20
12
0
5
10
15
20
25
Daily Weekly Monthly
Number of people
Number of people

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According to the questions asked in the questionnaire , Rural India buy their regular
products mainly on weekly bases. Out of 46 people, 20 people said that they buy
their regular products on weekly bases.
What quantity of product do the Rural India prefer?
Quantity Number of People
Small 20
Large 14
Medium 12
Total 46
According to the questions asked in the questionnaire, rural India prefer buying
products in small quantities rather than medium and large. Out of 46 people, 20 said
that they prefer buying smaller quantities.
20
14
12
0
5
10
15
20
25
Small Medium Large
Number of People
12

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How the new innovative products has an impact on their lives?
Bases Number of People
Very Useful 27
Moderate 15
No Impact 4
Total 46
According to the questions asked in the questionnaire , 59% of 46 people i.e. 27
people found the innovative products which are designed particularly for rural India
very useful. Others found it moderate or had no impact in their lives.
59%
32%
9%
Impact of Innovation on Rural India
Very Useful Moderate No Impact

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Chapter VII:
Findings
Followings are the findings from the data collected:
 Rural India buys products more often where most of the people purchase
products on weekly bases.
 People in India prefer buying smaller quantities rather than larger quantities.
 In Rural India, brands rarely fight among each other like they fight in Urban
India as there is not much competition in rural areas.
 Most brands develop their strong rural base without doing much
advertisement.
Some common characteristics that doexist amongst most ofthe rural markets in India areas follows:
 Population: 83.3per cent of the villages have apopulation ofless than 2000
 Levels of education: Although the percentage of literates has increased, there is still
approximately 60 per cent of the rural population who lies below the middle education
bracket.
 Occupational pattern: Almost 76 per cent of the rural population depends on
cultivation or wages for their living.
 Characteristics: in terms of occupation, consumption and buying behaviour change
prominently from urban to rural in locations with population more than 10000.
 Income level: Thoughrural incomes have grown manifold in the last one decade,
still an average rural consumer has a much lower income than his or her urban
counterpart. Still a large part of his income goes to provide the basic
necessities, leaving smaller income to be spent on other
consumer goods. This makes the rural consumer more price sensitive than the
urban consumer.

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Chapter VIII:
Conclusion
Today, the rural market is blooming with the increase in the disposable incomes of the
households. By nature, rural marketing is complex and studying the perception of
rural consumers is always a difficult task unlike that of urban consumers. An effective
communication not only provides information about products, but also educates the
consumers regarding the use of products. Therefore, it is necessary that rural
consumers have to be thoroughly studied so as to have better knowledge of rural
marketing and work out appropriate marketing strategies.
The essence of modern marketing concept is to satisfy the customer, and naturally all
the marketing activities should revolve around the customers and their buying
behaviour. The consumers need to be guided in the proper direction in order to make
a decision. There's a necessity to raise the emotional involvement of consumers in
order to prevent brand defection.
The marketers must recognize that rural marketing is primarily developmental
marketing & must be willing to take an approach of 'market seeding' in the initial
stages.
It is often said that markets are made, not found. This is particularly true of the rural
market of India. It is a market meant for the truly creative marketer.
The key challenge that companies face in the rural market is to identify and offer
appropriate products without hurting the company's profitability or margins.
Companies should recognize that rural consumers are quite discerning about their
choices and customize products and services accordingly. Product awareness
campaigns and advertising communications too need to be designed and executed
keeping in tune with the context. The products should not only be made available at
the right time and at the right place but should also be affordable and acceptable to the
rural people.

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Chapter IX:
Bibliography
Singh, Surabhi. (2013).Impact of Innovation in Rural Marketing-A case study of HUL
http://www.publishingindia.com/jrid/64/impact-of-innovations-in-rural-
marketing-a-case-study-of-hul/223/1700/
Chandan, Puri,(2015).Recent innovation in rural marketing
https://www.slideshare.net/chandanpuri/recent-innovations-in-rural-
marketing
Jaideep, S. (2016).Rural Marketing-Introduction, Concepts and Definitions
http://www.yourarticlelibrary.com/marketing/rural-marketing/rural-
marketing-introduction-concept-and-definitions/48725
Brainkart. (2016). Scope of Rural Marketing
http://www.brainkart.com/article/Scope-of-Rural-Marketing_6063/

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Chapter X:
Annexure
Questionnaire Sample
Name:
Occupation:
Age:
1) How often do you buy your regular products?
(Daily/Weekly/Monthly)
2) What quantity of product do you prefer?
(Small/Medium/Large)
3) Do you mind switching the brands?
(Yes/No)
4) How many brand choices do you get for a particular product?
(Few Options/Many Options)
5) How the new innovative product has an impact in your life?
(Useful/Moderate/No Impact)