Rural Marketing (Overview) There is no single definitions of the term ‘rural’ that suits all the stakeholders operating in the rural market. Rural areas constitute a distinct market; they are not just a poor extension of the urban areas.
Rural (Census of India (2001) defines rural is <ul><li>A population of less than 5,000 </li></ul><ul><li>Density of population less than 400 per sq km and </li></ul><ul><li>more than "25 per cent of the male working population'' is engaged in agricultural pursuits. </li></ul>
Some Impressive Facts About the Rural Marketing (contd..) <ul><li>There are 42,000 rural supermarkets (haats) in India that exceed the total number of retail chain stores in the United States. </li></ul><ul><li>In 2001-02 the Life Insurance Corporation (LIC) sold 55 percent are in small towns and villages. </li></ul><ul><li>Of the 20 lakh BSNL mobile phones connections, 50 percent are in small towns and villages. </li></ul><ul><li>The billing per cell phone in small towns in Andhra Pradesh is higher than the billing in the capital Hyderabad city. </li></ul>
<ul><li>Of the 2 crore who have signed up for rediffmail , 60 percent are from small towns, of the one lakh who have transacted on the rediff online shopping site 50, percent are from the small towns. </li></ul><ul><li>Internet access in semi-urban and rural areas has increased through the ‘ sanchar Dhabas’ of BSNL operating in 3,617 out of 6,332 blocks in the country. </li></ul><ul><li>The 41 million kisan credits cards (KCC) issued in rural India exceed the 40 million credit-plus debit cards issued in urban India. </li></ul><ul><li>Electricity consumption by the agricultural sector has shown a sharp increase from 17.6 percent of total consumption in 1980-81 to 29.2 percent in 1999-2000. During the same period the industry share has dropped from 58.4 percent to 38.8 percent </li></ul>
Rural Marketing <ul><li>Rural Marketing has been defined as the process of developing, pricing, promoting, distributing rural specific goods and services leading to exchange between urban and rural markets which satisfies consumer demand and also achieves organizational objectives. </li></ul><ul><li>As per the National Commission on Agriculture,” Rural marketing is a process which starts with a decision to produce a saleable farm commodity and involves all aspects of market structure or system, functional and institutional based on technical and economic considerations and includes pre and post harvest operations, assembling, grading, storage, transportation and distribution. </li></ul><ul><li>(Rural marketing in simple words, is planning and implementations of marketing functions for the rural areas). </li></ul>
Rural Marketing Vs Urban Marketing <ul><li>Factors Differentiating Rural Marketing from Urban Marketing </li></ul><ul><li>1. Infrastructure Availability: Electricity supply, availability of finance facility, education level, roads connectivity. In these infrastructural aspects, the rural market varies widely from the urban market. </li></ul><ul><li>2. Income Streams: The patterns of income generation areas based on agricultural is seasonal and highly unreliable unlike the fixed monthly income in the urban areas. This creates a consumption pattern that is quite different from the urban one. </li></ul>
<ul><li>3. Lifestyle: The lifestyle and daily routine of consumers in two markets is markedly different. This cerates significantly different profiles of urban and rural consumers for the same product. </li></ul><ul><li>4. Social – Cultural Background: Value system and thus perception towards goods/ services and consumption in general is quite different in the two markets. </li></ul><ul><li>5. Accessibility: The cost and logistics of accessing consumers in a highly widespread and heterogeneous rural market are very different from those involved in reaching urban consumers concentrated in good number in a single location. It demands two distinct marketing approaches. </li></ul>
<ul><li>6. Media reach and habits: The reach of media vehicle and media habits, varying widely in rural an urban markets, requires different types of promotional strategy in these two markets. </li></ul><ul><li>7. Nature of Competition : The nature and intensity of competition amongst the brands is very different in the two markets. </li></ul><ul><li>8. Consumer Behavior: The consumer’s response to marketing stimuli differs widely in two markets. The rural consumer's behavior is quite different from that of the urban buyer’s behavior. </li></ul>
This case study is about a product and service named Akashganga sold by a small, entrepreneurial business named Shree Kamadhenu Electronics Private Ltd. (SKEPL). Akashganga is for dairy farmers and it is intended to enable to them to increase their efficiency and productivity. The Indian diary industry is plagued by several problems, the major ones being low productivity of Indian cows, the delays in processing milk, low quality caused by manual handling, corruption and mismanagement, and, of course, endemic dilution of milk with water.
<ul><li>Akashganga attempts to alleviate some of these issues. </li></ul><ul><li>Akashganga is a computerized system. When a farmer gets </li></ul><ul><li>milk into the collection point, it's weighed and the amount of </li></ul><ul><li>fat measured and immediately an entry is made on the </li></ul><ul><li>farmer's swipe card. </li></ul><ul><li>The money can be collected immediately. This is marked </li></ul><ul><li>contrast to the previous system where the financial </li></ul><ul><li>calculation was done later to avoid holding up the </li></ul><ul><li>queue of farmers ready for milking; the calculation </li></ul><ul><li>was done by hand and was somewhat complicated. </li></ul>
<ul><li>With the new system, calculation is done Automatically which </li></ul><ul><li>makes it possible to pay the farmer on the spot rather than </li></ul><ul><li>having him wait for a couple of days. Also the potential for </li></ul><ul><li>cheating is reduced. An entry is made electronically on the </li></ul><ul><li>farmer's swipe card. </li></ul><ul><li>When SKEPL wanted to market this service, it ran up </li></ul><ul><li>against the skepticism of the Indian rural people </li></ul><ul><li>against unproven technology. This is the classic </li></ul><ul><li>catch-22 situation as the farmer does not trust the </li></ul><ul><li>tool till he tries it, and is reluctant to try it till he trusts </li></ul><ul><li>it. </li></ul>
SKEPL got around this problem by offering free trials and delayed payment schemes stretching up to several months. The company also provided responsive and efficient after-sales service. It established a service network covering the rural areas, and typically would attend to a compliant within a few hours of receiving it. It's important to note that the company's local presence whether for marketing, sales or service helped tremendously, since the villagers would not be disposed to make a journey to a town or city to learn about their products. The company also used a name Akashganga that Indian villagers can relate to. This helped earn the trust of the villagers.
Also, Shree Kamadhenu Electronics used local people for marketing, sales, service, etc. This was a very important factor that helped the farmers relate to and trust the company. Of course, the company had a solution that was superior in terms of time, transparency, fairness, etc, and that played a big role in their success. As a result of these factors, SKEPL gained a threshold in this large market and earned respect among farmers.
Evolution of Rural Marketing <ul><li>Phase I (Before the 1960s). </li></ul><ul><li>Phase II( 1960s-1990s). </li></ul><ul><li>Phase III( 1990s to Present) </li></ul>
Phase I (Before the 1960s) <ul><li>Rural marketing referred to marketing of rural products in rural and urban areas and agricultural inputs in rural markets. </li></ul><ul><li>Agricultural produces like food grains and industrial inputs like cotton , sugarcane etc. </li></ul><ul><li>The scope of farm mechanization equipment (tractors, pumps sets) and agricultural inputs like fertilizers seeds and pesticides was very limited. </li></ul>
Phase II (1960s-1990s) <ul><li>The green Revolution changes the face of rural India, ushering in scientific farming practices with the advent of agricultural inputs and implements. </li></ul><ul><li>During this phase , apart from conventional ‘agricultural marketing’, a new area’ marketing of agricultural inputs’ emerged . This period saw the emergence of companies such as Mahindra & Mahindra , Escorts, Sriram Fertilizers and IFFCO. </li></ul><ul><li>During this period the marketing of rural products received considerable attention through agencies like KVIC( Khadi and Village Industries Commissions) and handicrafts emporiums. </li></ul>
Phase III (1990s to the Present) <ul><li>The objective of rural marketing in the current phase is the improvement of the quality of life . </li></ul><ul><li>This approach has been demonstrated successfully by HLL’s Project Shakti, ITC e-choupal, AMARON Batteries. </li></ul>