The document discusses opportunities and challenges in the Indian rural market. It outlines objectives related to studying the current rural market scenario in India. It examines the scope, needs, features and importance of rural markets. Some key opportunities in rural markets include rising incomes, improved infrastructure, and changing consumption patterns. However, marketers also face challenges such as low literacy, distribution issues, and seasonal demand fluctuations. Innovative rural marketing practices adopted by companies are also described.
2. Objectives
To study the current scenario of Rural Market in India
To study the scope, need & features of Rural Market in India
To study the reasons why Rural Markets are becoming
important destination for Marketing companies
To study the reasons for greater business confidence in Rural
India
To study the innovative practices adopted in Rural Market
To study the major Challenges faced by Marketers in Rural
Market
To identify major opportunities available in Rural Market
To find the strategies for improving business in Rural India
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3. Contents
What is Rural
Rural marketing
Current scenario of Indian Rural Market
Scope ,Need and Features of Rural Market in India
Why Rural Markets are becoming important destination for
Marketing companies
Reasons for greater business confidence in Rural India
Innovative practices adopted by companies in Rural
Marketing
3
5. What is a Rural
RBI: Locations with population up to 10,000 will be
considered as rural and 10,000 to 100,000 as semi-urban.
NABARD: All locations irrespective of villages or towns, up
to a population of 10,000 will be considered as ‘rural’.
Planning Commission: Towns with population up to 15,000
are considered as rural.
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6. Rural Marketing
Rural Marketing can be defined as a function that manages all
activities involved in assessing, stimulating, and converting the
purchasing power of rural consumers into an effective demand
for specific products and services and moving these products
and services to the people in rural areas to create satisfaction
and a better standard of living and thereby achieving
organizational goals.”
- Pradeep Kashyap
6
7. Today the growth of rural market is improving as compared to
urban. As change in life style and the level of income of rural
people is improving.
The rural market are basically in three economic pyramid.
1) Top 48 cities (25% Purchasing Power)
2) 7500 Small Towns (25% Purchasing Power)
3) 6,40,000 villages (50% Purchasing power)
FMCG Grew 11% in Urban market & 18% in Rural market.
Durable market growth of last year 12% in urban and 27% in
rural.
Current Scenario of Indian Rural Market
7
8. Conti…
The Indian rural market has gained significance in the recent
economic growth of the country and improvement in the living
standards of the rural people.
Government initiatives such as subsidies, loan waivers,
minimum support prices (MSP) and employment schemes
(MGREGS) have caused an increase in purchasing power.
The real income of rural households is projected to rise from
2.8% in the past two decades to 3.6% in the next two year.
Improve their quality of life by gaining access to new
technologies, products and services.
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9. Conti…
Rising urbanisation, 63% of India’s population will continue to
live in the rural areas even in 2025. Further, the number of
consumers earning over $5 in a day is projected to scheme
from 50 million today to 150 million by 2020.
The purchasing power of rural families has grown rapidly.
Rural Marketing Association of India (RMAI) confirms that
rural income levels are on a rise. Income from non-farm sector
is likely to touch 66% of net rural income by 2020. Market
size would thus, nearly double.
Lastly, the per capita income of top 20%-30% of rural segment
is not much different from urban middle class. This means that
the affordability of the segment of rural consumers will be
almost equal to that of the urban middleclass.
Source: GIIRJ, December 2013 9
10. Rural market facts:
About 833 million people reside in rural area as compared to
377 million people in urban area.
53% of all FMCGs and 59% of all consumer durables are sold
in the rural market.
Estimated annual size of rural market:
FMCG Rs. 65,000 crore
Durables Rs. 5,000 crore
Agri-inputs and Tractors Rs. 45,000 crore
2/4 wheelers Rs. 8,000 crore
Close to 10% of Maruti Suzuki's sale come from rural market.
50% of BSNL mobile connections in small towns/ villages.
Conti…
10
11. 42million rural households availing banking services in
comparison to urban households.
Indian rural market is almost twice as compared to the entire
market of USA and Russia.
46% of soft drinks sales come from rural areas.
49% of motorcycles sales come from rural areas.
In 20 years, rural Indian market will be larger than the total
consumer markets in countries such as South Korea and
Canada and almost 4 times of the size of today’s urban market.
Source: IJMSSR, August 2013
Conti…
11
12. Conti…
1. FMCG:
FMCG companies have realized a significant proportion of
their sales from rural markets. They account for 70% of toilet
soap and 50% of TV, fans, bicycles, tea and wrist watch
consumption. At present rural India accounts for 34% in
FMCG consumption.
HUL has launched special initiatives to push its rural sales
through “Project Shakti” and “Shakti Amma” television
channel.
Examples are Parle-G priced at Rs. 2, Chik Shampoos sold in
priced at 50 paisa and 500gm packs of Godrej soaps priced at
Rs 5.
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13. Conti…
2. TELECOM:
RNCOS, a research agency, states that as penetration in the
urban region has saturated, operators are vying for rural India
and estimates that the subscriber’s base in rural markets will
grow at a CAGR of 35% during 2011-12 to 2013-14. Mobile
device manufacturers are also tailoring their products to this
market.
3. RETAIL:
The rural retail market is currently estimated at US$ 112
billion, or around 40 per cent of the Indian retail market.
Traditionally, people in rural areas purchase products in
mandis and melas. Today many companies are entering the
rural markets with a retail. Examples include: Hariyali Kissan
Bazaar. 13
14. Conti…
4. AUTOMOBILES:
Rural areas have traditionally been major markets for
automobiles such as tractors and cars. But rising incomes and
people’s aspirations have led to an increased demand for cars
as well.
Market leader in the small car segment, Maruti Suzuki India
Limited, has registered almost a fifth of its sales from the non-
metro areas across the country.
Also, Mahindra & Mahindra is now selling more Scorpios in
rural and semi-urban markets.
5. CONSUMER DURABLES:
Many companies are committed to modify their products to
openly suit rural demands. 14
15. Scope, Need & Features of Rural Market in India
Scope of Rural Marketing
Large population
Rising rural prosperity
Growth in consumption
Change in life style
Market growth rate higher than urban
Life cycle advantage
Rural marketing is not expensive
15
16. Conti…
Need of Rural Marketing
The Rural Indian population is large and its growth rate is also
high which shows that the Indian rural market has great
potential which needs to be captured.
The purchasing power in rural India is on stable rise and it
has resulted in the growth of the rural market.
The rural audience has matured enough to understand the
communication developed for the urban markets.
Television has been a major effective communication system
for rural people with their advertisements. Socio-economic
changes (lifestyle, habits and tastes, economic status).
16
17. Conti…
Infrastructure facilities such as roads, electricity and media in
rural India has improved.
Literacy level among the rural mass is increasing day by day.
Rural consumer can understand the message given by the
producers in the advertisements.
Expectations of the people living in rural India have increased.
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18. Conti…
Features of Rural Marketing
Large and Scattered market
Major income from agriculture
Low standard of living
Traditional Outlook
Diverse socio-economic backwardness
Infrastructure Facilities
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19. Why Rural Markets are becoming important
destination for Marketing Companies
The Rural markets have become a favourable destination for
marketing companies in view of the following reasons:
Competition in Urban Markets:- The level of competition in
the urban markets has intensified and is increasing extremely.
It is also stated by many experts that the urban markets are
almost saturated.
Huge Population Base:- The huge population base in rural
India provides a massive opportunity for the companies to sell
their products and services on a sizeable scale.
Rapidly Growing Market:- The rural consumer is changing
and is now willing to experiment with new products. On the
one hand, they purchase products of basic necessity, while on
the other hand they are even buying luxury products. 19
20. Conti…
Improved Lifestyle:- The rural consumer is no longer
dependent only on traditional products. For instance, in most
villages, shampoos have substantially replaced the traditional
product shikakai which the rural people have been using since
years. Similarly, the use of gas cylinders has become popular
in place of conventional chulas
Changing Consumption Pattern in Rural Areas:- The
consumption pattern in rural India and the demand for new
products have shown an encouraging trend. The purchasing
power of rural consumers has increased significantly over the
past decade. This, in turn, has transformed the consumption
pattern.
20
21. Reasons for Greater Business Confidence in
Rural India
(1)Rural spending is now less dependent on farm income, which
now constitutes less than 50 percent of the total rural income.
Income remittances from migrant rural populations and
increases in nonfarm activities such as trading and agro-
processing are boosting nonfarm income.
(2)The increase in procurement prices (the minimum price that
farmers earn on produce sold to the government) is putting
more money into the hands of the rural population.
(3)The government has increased spending in rural areas, from
US$9 billion for the financial year ending March 2007 to an
anticipated US$16 billion for the financial year ending March
2010.
21
22. Conti…
(4)Improved access to finance and institutional credit has brought
greater cash inflows to rural households.
(5)Policy measures such as the agricultural loans and the National
Rural Employment Guarantee Scheme (NREGS), which
guarantees 100 days of employment to one member of every
rural household, have helped to reduce rural under-
employment and raised wages.
22
23. Innovative Practices Adopted in Rural Market
1) E - Choupal :
Is an initiative of ITC Limited, a large multi business
conglomerate in India, to link directly with rural farmers via
the Internet for procurement of agricultural and aquaculture
products like soybeans, wheat, coffee etc...
It is characterized by fragmented farms, weak infrastructure
and the involvement of numerous intermediaries.
The programme involves the installation of computers with
Internet access in rural areas of India to offer farmers up-to-
date marketing and agricultural information.
23
24. Conti…
2) Bhoomi:
Bhoomi is a project jointly funded by the Government of India
and the Government of Karnataka to digitize the paper land
records and create a software mechanism to control changes to
the land registry in Karnataka.
The project was designed to eliminate the longstanding
problem of inefficiency and corruption in the maintenance of
land records at dispersed and poorly supervised and audited
block-level offices known as "taluka" offices in South India
and "tehsildar" offices in North India.
24
25. Conti…
3) HKB ( Hariyali Kissan Bazaar):
Is an innovative effort aimed at empowering farmers and
meeting the needs of rural households by providing access to
agricultural products, services and retail. Established in the
countryside, the stores offer:
Quality inputs (fertilizers, seeds, pesticides, tools, veterinary
products, animal feed, irrigation items, diesel, petrol)
Financial products (crop insurance, credit, banking,
investments, money transfers)
Consumer goods (groceries, home appliances, garments)
Trading information (weather forecasts, market prices,
farmers‟ databases)
25
26. Conti…
4) HUL(Project Shakti):The company aims to increase the
number of Shakti entrepreneurs 45,000 in 2010 to 75,000 in
2015.
India has more than 6,30,000 villages, most of these are 'hard
to reach' and offer relatively lower business potential.
Hindustan Unilever Limited (HUL), believes in an approach of
doing business which they call “doing well by doing good”.
Project Shakti is a rural distribution initiative that targets small
villages.
The project benefits HUL by enhancing its direct rural reach
and also creates livelihood opportunities for underprivileged
rural women.
26
27. Conti…
5) Drishtee:
Drishtee establishes kiosks that offer affordable Internet
access, consumer products and community services to rural
Indian villages.
The Drishtee network is vast, with more than 14,000
entrepreneurs registered to date.
Offerings include computer education, English education, e-
governance, health check-ups, and a wide range of consumer
goods such as groceries, cosmetics, mobile phone recharge
coupons, and rechargeable torches and batteries.
27
28. 6) N-Logue: N-Logue Communications (P) Ltd has taken over
the much-talked about Warna wired village project. Vinay
Kore, chairman of the Warna Cooperatives will be the local
service provider and partnering n-Logue’s project here.
The Warna project will be getting a new lease of life with this
tie-up. This will be the fifth site for the n-Logue project in
Maharashtra. Two projects are already being implemented in
Baramati with the Vidya Institute of Information Technology
and in Pabal with Vigyan Ashram as its local service provider.
This technology has been deployed in 1500 towns in India and
in 12 countries outside.
Conti…
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29. 7) TARAhaat: Is a for-profit social enterprise which delivers
education, information, services and other opportunities to
rural areas, through internet.
TARAhaat mostly utilizes India's existing telecom
infrastructure, such as telephone lines.
The most interesting aspect of TARAhaat is strong focus on
developing products and information content relevant to rural
consumers.
For example, its TARAgyan products offer customized
computer education to rural areas. Information is also offered
in a few local languages.
Conti…
29
30. 8) Community Information Centre:
The Community Information Centre Townsville Inc (CIC) is a
not-for-profit community organisation funded primarily by
Townsville City Council.
The service is free (except for cost of publications),
confidential and available to any member of the community.
The types of requests received by the CIC are many and
varied.
They cover a diversity of issues, including employment
services, tenancy rights, family and individual crisis referral,
disability access and services, and new residents' information.
Conti…
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31. 9) E-Mitra - Lok Mitra and Jan Mitra
With a view to deploy IT for the benefit of citizens of the
states, Government of Rajasthan launched two citizen friendly
projects in the year 2002, namely Lok Mitra and Jan Mitra.
LokMitra
An urban centric e-Governance project and successfully
operationalized in March 2002 at Jaipur City. Currently
operationalized at Ajmer, Bikaner and Udaipur.
JanMitra
A rural centric e-enabled service delivery system running
successfully at Jhalawar & Jaipur.
Conti…
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32. It provides a wide range of social services & information on
relevant topics to citizens and successful Public Private
Partnership model.
It has provided direct employment to about 350 rural youths
since inception in March 2002.
The services being offered by JanMitra are as follow
Online submission of application forms.
Access to Land & Revenue Records (ROR).
Access to Government Information.
Development schemes.
BPL List.
Agriculture information & Mandi rates.
Conti…
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33. E-Mitra integrated LokMitra & JanMitra:
E-Mitra Project integrates LokMitra and JanMitra initiatives
under a single umbrella to bring together all the departments
under one single umbrella and give citizens of the state a
multi-service single-window experience.
The key objectives are to
Public-Private Partnership model for Front Offices.
Back Office to be owned by Government but operated by
Technology Partner.
Will provide employment to over 2000 educated youths.
Uses real time, Internet & batch processing modes.
Conti…
33
34. Major Challenges Faced In Rural Marketing
Understanding the Psyche of the Rural Consumer
Low literacy rate
Distribution
Fake products
Inability of the small retailer to carry stock without adequate
credit facility
Urban orientation and bias
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36. Major Opportunities Available in Rural Market
Increase in Literacy Rate
Increasing in disposable income and purchasing power
Reduction of Risk during Recession
Infrastructure improving rapidly
Increase Population and hence Increase in Demand
Lesser dependence on agriculture and monsoon
Increasing rural consumption
Increasing sales of branded product
36
37. Strategies for Improving Business in Rural India
Product Strategies
1. Small unit and Low price packing: By making the product
available in small and low price packing, a company can
attract villagers to at least try its product.
2. New Product Design: A company can opt for new product
designs or modified designs that are specially meant for rural
areas keeping their lifestyles in view.
3. Sturdy Products: Sturdiness of a product either in terms of
weight or appearance is an important fact for rural consumers.
The product meant for rural areas should be sturdy enough to
stand rough handling and storage. People in rural areas like
bright flashy colours such as red, blue, green etc.
4. Brand Name: The brand name awareness in the rural areas
has fairly increased. A brand name is very essential for rural
consumers to remember the product.
37
38. Pricing Strategies
1.Low cost Products: This strategy can be adopted by both,
manufacturing and marketing men. Price can be kept low by
small unit packing.
2.Simple Packaging: Sophisticated packing should be avoided
and Simple packaging should be adopted to cut down the cost.
3.Reusable packaging: Packaging that is reusable and can be
refilled attracts the attention of rural buyers.
Conti…
38
39. Distribution Strategies
1.Using Own Delivery Vans: One of the way of distribution to
rural area can be using delivery vans which can serve two
purposes-it can take product to consumer.
Direct contact with consumer and thereby facilitate sales
promotion. However, only big companies can adopt this
channel.
2.Annual Melas: Annual melas organized are quite popular and
provide a very good platform for distribution because people
visit them to make several purchases.
3.Paintings: A picture is worth thousand words. This way of
conveying message is simple and clean.
Conti…
39
40. Promotion Strategies
1.Promoting Products with Indian Models and Actors:
Companies should picking up Indian models, actors for
advertisements as this will help them to show themselves as an
Indian company.
2.Promoting Indian Sports Team: Companies may promote
Indian sports teams so that they can associate themselves with
India.
Conti…
40
41. Sales Strategies
1.Understanding Cultural and Social values: It is recognized
that social and cultural values have a very strong hold on the
people. Cultural values play major role in deciding what to
buy.
2.Changing Perception: Today, in villages villagers are using
Toothpaste, even when they can use Neem or Babool sticks
villagers are using soaps like Nima rose, Breeze, Cinthol etc.
Source: IJMS, 2013
Conti…
41
42. From this study it could be concluded that, the rural
market is where the markets of the future are likely to be.
Urban markets are becoming increasingly competitive for
many products. In some cases they are even saturated. On the
other hand, rural markets offer growth opportunities.
Thus, looking at the challenges and the opportunities,
which rural markets offer to the marketers and the
manufacturers, it can be said that the future is very promising
for those who can understand the dynamics of rural markets
and make use of them to their best advantage.
42
Conclusion
43. References
Richika, R., (2005). “Rural Marketing in India: Strategies and
Challenges”, New Century Publication, pp. 78-90.
Sharma, R., (2009). “Unique Issue in Rural Marketing and
their Implication”, Gyanpratha Accaman Journal of
Management Science, Volume: 1 :( 2), pp. 75-79.
Vaswai, L. K.; Aithal, R.; Pradhan, D., and Sridhar, G., (2005).
“Rural Marketing in Development Paradigm”, International
Journal of Rural Management, Volume: 1: (2), pp. 245-262.
International Journal of Management and Social Sciences
Research (IJMSSR),volume 2, No.8, August 2013. ISSN:
2319-4423.
43
44. Conti…
International Journal of Applied Research and Studies (IJARS)
ISSN: 2278-9480 Volume 2, Issue 6 (June- 2013)
Asia Pacific Journal of Marketing & Management Review
,ISSN 2319-2836, Vol.2 (7), July (2013)
Dogra B. & Ghuman K., (2008), “Rural marketing concepts
and practices”, Tata McGraw-Hill, New Delhi, p 44-55.
Retrieved From:
www. indianresearchjournals.com
www.ijars.in
www.irjcjournals.org
www.rmai.in 44
