Indian Rural Markets – 3EA

Introduction
The diversion of interest and enthusiasm of business towards rural markets is not a one-day miracle but is a sign of revolution in worldwide marketing in the forthcoming era as marketing gurus consider it. The marketing strategies for the world are weighing the opportunities of rural markets in light of the intense and growing competition in urban markets.

Understanding the Rural Markets
In India, two-thirds of the country’s consumers are living in rural areas divided into 450 districts and further in approximately 6,00,000 villages, which generates nearly half of the national income. Almost, 12.2 percent of the world’s consumers live in rural India i.e. about 120 million households that can possibly be divided on various bases like literacy levels, accessibility, income levels and distance from feeder town, etc. 25% of all villages account for 65% of the total population. Theoretically, this constitutes a huge market potential, marketers will tend to throw in their hooks to catch the fish. Now with the urban demand reaching a plateau, rural markets are gaining more importance and that cannot be ignored.
The rural markets cannot be treated as a homogenous entity and it is not possible to club so many people under one category. The demographic profile, psychographic profile, income profile, and age profile have also to be looked into.
Below are some graphs which give a clear image of income profile bifurcations in Rural Areas:

The above figures show that maximum income in rural areas is through cultivation i.e. 35% followed by wage labor which is 34% in figures. The least income can be seen in other small enterprises which are only 5%.

The above graph depicts that in non-agricultural households the biggest source of income is Wage Labor i.e. 54%, followed by Service in different Govt. and Pvt. Organizations i.e. 32%.

After deducting the expenses incurred in course of economic activity the average net monthly income of Indian rural households was Rs.8059 and the highest share of this (Rs.3504) was accounted for by wage labor (both farming and non-farming), followed by govt./ Pvt. Service jobs (Rs.1906).
The agriculture income, i.e. Income from crop cultivation and livestock rearing contributed only Rs.1832. Within agricultural households, the share of average income from cultivation and livestock rearing was just over 43%. The balance of 57% of income was from non-agricultural sources. [1]

Changing Profile of the Rural Consumer
In a time of stiff competition in the urban markets, the rural market is emerging as a promise with its vast size huge demand, and untapped potential. The rural consumer is changing and is catching up with the urban consumer. Penetration levels of consumer durables have risen significantly in the last decade, in the rural sector. Even the rural woman is gradually coming out of the closet. Today, she is exercising her choice in selecting categories of products though the choice of brands may still be with the males of the household. The youth has certainly begun to play a decisive role in making brand choices in some product categories. Although, the prerogative of making the final purchase decision still rests with the chief male. In other words, the “chief wage earner” syndrome still applies in the rural markets; they are the ones who actually travel out from the village frequently. So they are the real drivers of the rural market. They may not be the final consumers (those who pay the money) but often they are the people who influence the purchase of high-value products and they decide on which brands to choose. It has been often observed that there is a tendency to follow the trends of the nearest metro. This is like a yardstick the city plays the yardstick in terms of the development in the village.

Another significant aspect of the changing rural consumer is that there is no singular definition that fits all rural consumers in our country. It varies from one state to another and from one culture to another. Media exposure, education levels, and many other factors come into play when we describe rural consumers. So, while the profile of the rural consumer is changing, they are becoming more aware, that they are buying more luxuries than ever before. Yet certain basic beliefs and values are still the same.

While the rural market attracts many marketers, it has its own attitude and temperament. Not every brand can enter and claim a share in a rural market. The reason, why marketers relate rural market success to fate is no other than its unpredictability. Actually, the market has the potential to decide the future of any brand as a major hit or an acute flop. To overcome the unpredictability, the need is to understand rural psychology and philosophy. While studying the rural dynamics, the challenges that come across are:

Management of channels of distribution adversely affects the service as well as the cost aspect. The existing marketing structure consists of marketing points at feeder town to further reach the retail outlets at the village level but this structure is very time consuming and still does not cover the delivery delays and other complexities completely. Rather, it becomes difficult to maintain the required service level in the delivery of the product at the retail level.
Further, these many middle points emerging in absence of direct and short accessibilities result in an undue increase in the cost of transportation. It, finally, either reduces the profit margin or increases the selling price.
One way could be the firm taking a direct vehicle to make direct contact with the rural customers to get closer to them i.e. more accessible, covering every corner of the market, and fetch instant feedback. But, this mode is possible for hip-ships and for relatively smaller ones; searching for local non-competitive marketers can be of help.
Reluctance towards acceptance of a few brands. A study of rural psychology is a must to ensure brand acceptance. As rural consumers are more loyal to their brands and once settling with a brand, become reluctant towards other competitive brands e.g. Fair and Lovely still claims the biggest market share in fairness creams and the rural market is behaving reluctantly towards forever, Fair Glow, etc.
As a way out a new brand must take gradual steps and instead of a competitive strategy, substitution strategy should be considered in which new brand should be made available to the consumer as a substitute of the brand with few added benefits like free sample schemes, free gifts, etc.
Lack of proper marketing strategy. Personal selling is the most effective tool for rural markets. Intensive personal selling efforts in order to understand the psyche of the rural consumer really facilitate the task. To tap the rural market a brand must associate itself with the rural folks by having personal relations and conversations with them. Further, the marketing strategy can be modified as per the requirement and feedback of the rural consumers. Also, discussing the various queries of the consumer regarding the product can generate awareness about the product.
Selection of proper communication techniques. Selection of the right communication technique is again an important issue as the rural market is very sensitive. A single offending gesture of marketing can close all future prospects of any brand. A fair communication technique can be adopted by utilizing various rural folk media to reach the target consumers in their own language and in large numbers so that the brand can be associated with their ritual celebrations, festivals, meals etc. e.g. Rajdoot – with punch line ‘Jandaar Sawari, Shaandar Sawari’ where the campaign basically came to the local melas and grabbed 95,000 annual sales, only by putting the bike as a tough vehicle for rough roads. Also, the face of Dharmendra was an added advantage for the rural people.
Choice of Sales Promotion Tools. Again effective sales promotion technique is to be observed very acutely when people don’t wish to invest a large amount in FMCG products. So as a way, small size sachets, low priced or free sample packs, free gifts with the purchase can be considered as fruit fetching practices. Taking an example HLL, which started ‘Operation Bharat’ one year back, to tap the rural market, brought low-priced small sachets of toothpaste, cosmetics, shampoos, soaps etc., and captured 20 million households.
One area that urban marketing companies should be careful when looking to enter the rural markets is to distance themselves from what they know and should start a new one. One needs a particular way of fresh thinking a mindset that understands the rural context. That’s the starting point. Everything else follows. Philip Kotler is as relevant as ever just that one needs to apply these principles differently.

References
1. Sanal Kumar Velayudhan ‘Rural Marketing’.
2. C.S.G. Krishnamacahryulu & Lalitha Ramakrishnan ‘Rural Marketing’.
3. G. Krishnan ‘Challenges of Rural Marketing’
https://www.nabard.org/auth/writereaddata/tender/1608180417NABARD-Repo-16_Web_P.pdf

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Article by: Marketing Advisory, 3EA