Contents Chapter Subject Matters Page No 1 Introduction 1.1 Introduction 1.2 History of Rural Marketing 1.3 Rural Marketing Meaning &Concept 1.4 Characteristics of Rural Market 2 Objective & Literature Review 2.1 Objective of the Study 2.2 Review of related Studies 2.3 Methodology 3 Principle & Design 3.1 The 4A’s Approaches 3.2 The 4 P’s Strategy 3.3 Rural V/s Urban Market 3.4 Problems in Rural Market 3.5 Opportunity in Rural Market 4 Result &Discussion 4.1 Result 4.2 Discussion 5 Conclusions 5.1 Conclusion Bibliography

1. 1
A Project on Rural Marketing in India: It’s
Potential& Challenges
Project Submitted for the Partial Fulfilment
Of
Bachler in Commerce
Submitted by
Purendra Behera
Roll No- 15COH011
Under Guidance
Of
Miss. Salila Ghadai, Faculty in Commerce
Department of Commerce, Government Autonomous
College, Panposh, Rourkela – 769004, Odisha, India
2018

2. 2
Salila Ghadai
Faculty in Commerce
Government Autonomous College, Panposh
Rourkela, Odisha
CERTIFICATE
Certified that the project entitled “RURAL MARKETING IN INDIA:
IT’S POTENTIAL& CHALLENGES “Submitted for award of the
degree of commerce to government Autonomous College, Rourkela
embodies result of bonafide project work carried out by Purendra behera
under my guidance and supervision. No part of the report on work has been
submitted for any other degree on diploma earlier.
Salila Ghadai

3. 3
DECLARATION
I Purendra Behera hereby declare that the projects entitled
“RURAL MARKETING IN INDIA: IT’S POTENTIAL &
CHALLENGES” is submitted to Government Autonomous College
Rourkela for award of the degree of bachelor of commerce, is an original
piece of work done by me and has not been submitted for award of any
degree or diploma or other similar title earlier.
Purendra Behera
COLLEGE ROLL NO- 15 BC 011
EXAM ROLL NO- 15 COH 011

4. 4
ACKNOWLEDGEMENT
I express my deep sense of gratitude to K.C Jena co-ordinator of
commerce department of Government autonomous college Rourkela for
his kind permission and valuable advice for undertaking project work.
Again I am deeply indepted to my guide Miss. Salila Ghodai who
has helped me and given me consistence guidance and enlighten direction
in preparing project report on” RURAL MARKETING IN INDIA: IT’S
POTENTIAL& CHALLENGES”.
Lastly, the blessing of my parents and god in their
encouragement uprooted all sorts of trouble in completing my project
work.

5. 5
Contents
Chapter Subject Matters Page No
1 Introduction (01-09)
1.1 Introduction 02
1.2 History of Rural Marketing 02-03
1.3 Rural Marketing Meaning &Concept 04-05
1.4 Characteristics of Rural Market 05-09
2 Objective & Literature Review (10-12)
2.1 Objective of the Study 11
2.2 Review of related Studies 11
2.3 Methodology (11-12)
3 Principle & Design (13-27)
3.1 The 4A’s Approaches 14
3.2 The 4 P’s Strategy 15-21
3.3 Rural V/s Urban Market 22-23
3.4 Problems in Rural Market 23-24
3.5 Opportunity in Rural Market 25-27
4 Result &Discussion (29-31)
4.1 Result 29
4.2 Discussion 29-31
5 Conclusions (32-33)
5.1 Conclusion 33
Bibliography 34

6. 6
Chapter-1
INTRODUCTION

7. 7
1.1 Introduction
'India lives in villages is still true. Approximately 70 percent of the
India's population lives in rural areas, and accounts nearly for more than
half of Indian consumption. As per McKinsey, even with increasing
urbanization and migration, it is estimated that 63 percent of India's
population will continue to live in rural areas in 2025.
Around 12.2 percent of the world’s population resides in rural India.
Many multinational organizations are recognizing enormous opportunity
and are stepping up efforts to gain a stronger foothold in the rural markets.
There is a significant rise in the penetration of mobile telephony, direct-to-
home (DTH) television services and internet services due to the
technological advancements. Access to technology has transformed the
decision-making behaviour of rural households. Today, a large chunk of
rural consumers is aware, aspirational, and has the ability to pay. The
attractiveness of rural India has further increased due to the recent efforts
of Indian government towards inclusive growth. Central and State
governments have launched several schemes such as Mahatma Gandhi
National Rural Employment Guarantee Scheme (MGNREGA), Jan Dhan
Yojna, Direct Benefit Transfer (DBT) etc. that have changed the dynamics
of rural India. The government's intention to create the JAM (Jan Dhan,
Aadhar and Mobile) ecosystem is further going to change the rural land
scape in India.
Rural markets in emerging economies such as India have been seen
as both an opportunity and a challenge. The opportunity is based on the
sheer population which resides in around 6,38,596 villages in India, and
the challenges terms from the fact that reaching out to the consumers in
these villages spread across the country is not easy. These villages are
inhabited by about 833 million consumers making up for about 68.8
percent of the population (Census of India, 2011).
1.2 History of Rural Marketing
The rural market of India started showing its potential in the 1960s.
The 70s and 80s witnessed its steady development. And, there are clear
indications that the 21st century is going to see its full blossoming. In our

8. 8
country, where research on consumer behaviour has been nominal, not
much systematized information is available about the rural consumers.
Few companies, namely, Hindustan Uniever, Philips India, Asian Pants,
and Singer have made concrete efforts in this direction.
The term ‘rural marketing’ used to be an umbrella term for the
people who dealt with rural people in one way or other. This term got a
separate meaning and importance after the economic revaluation in
Indian after 1990. So, before venturing into the other aspects of rural
marketing let us discuss the development of this area in different parts
which is briefly explained here.
PHASE ORIGIN FUNCTION MAJOR
PRODUCT
SOURCE
MARKET
DESTINA
TION
MARKET
Phase I Before
mid1960(From
independence
to Green
revolution)
Agricultural
Marketing
Agricultural
produce
Rural Urban
Phase II Mid sixties
(Green
revolution to
Pre-liberalization
period)
Marketing of
agricultural
inputs
Agricultural
inputs
Urban Rural
Phase III Mid
nineties(Post-
liberalization
period in 20th
century)
Rural
marketing
Consumables
and durables
for
consumption
and
production
Urban and
rural
Rural
Phase IV 21st century Development
al marketing
All products
and services
Urban and
rural
Urban and
rural
While rural markets offer big attractions to the marketers, it is not
easy to enter the market and take a sizeable share of the market within a
short period. This is due to low literacy, low income, seasonal demand and
problems with regards to transportation, communication and distribution

9. 9
channel. Further there are different groups based on religion, caste,
education, income and age. There is a need to understand the rural markets
in terms of buyer behaviour, attitudes, beliefs and aspirations of people.
1.3 RURAL MARKETING MEANING
Rural marketing involves the process of developing, pricing,
promoting, distributing rural specific product and a service leading to
exchange between rural and urban market which satisfies consumer
demand and also achieves organizational objectives.
Rural marketing is a two way marketing process. Which includes
the flow of goods from rural to urban areas and the flow of goods and
services from urban to rural areas. In addition the flow of goods and
services within the rural areas itself.
1.3.1 Concept
The Concept of “Rural Marketing” means making different products
to reach local villages and customers bringing the villagers in the main
stream of Marketing. The rural markets offer a great scope for a
concentrated marketing effort because of the recent increase in the rural
incomes and the standard of living which will help to increase income level
and production of agricultural commodities in rural area. The trade
channels for different types of commodities available in rural areas private,
cooperatives, processors, regulated markets and state agencies. In no sense,
a social cluster or village economy as at whole can be developed without
effective and efficient rural marketing. Very little attention has been hold
on the planning towards the development of rural marketing.
Rural marketing can be seen as a function which manages all those
activities involved in assessing, stimulating and converting the purchasing
power into an effective demand for specific products and services, and
moving them to the people in rural area to create satisfaction and a standard
of living for them and thereby achieves the goals of the organization

10. 10
1.3.2 Definition Rural India
Some of the key opportunities and challenges are elaborated further,
starting with the definition of ‘rural’. The word ‘rural’ has been defined
different government agencies such as the census of India, Reserve Bank
of India, etc. The census definition which is the most used one does not
define what is rural but defines what is not rural.
Census of India Definition of Rural
Town - Areas which satisfy the following criteria:
1. Minimum population >= 5000
2. Population density >= 400/sq.km.
3. 75percentofthemalepopulationengagedinnon-agriculturalactivities.
Rural - All other areas which can't be defined as a town.
Reserve Bank of India
Locations with population up to 10000 will be considered
rural.
Private companies have their own way of defining rural markets. They
follow the approach which is convenient and suitable for their
requirements. Hence, there is a lot of confusion as various public and
private agencies have different definition of rural India. His leads to lack
of quality data required to gain consumer insights. There is a need to
develop uniform parameters to identify a particular area as rural or urban.
1.4 Characteristics of Rural Markets
The main reason why the companies are focusing on rural market
and developing effective strategies is to tap the market potential, which
can be identified as follows:
1.4.1 Large number of consumers:
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.Theruralpopulationis
scatteredinoverlakhsvillages.Theruralpopulationishighly scattered, but holds
a big promise for the marketers.

11. 11
1.4.2 Occupation pattern:
There is much difference in occupation pattern in rural and urban
region. In urban region, occupation is diverse, and ranging from
professionals, skilled, semi-skilled to unskilled workers. Specialization is
achieved through higher education, training and skill development.
In rural region, predominant occupation is agriculture but now
people are shifting to non-traditional occupations like shop/trade, skilled
work, and salaried job. Skill up gradation in rural region is gradually
improving with exposure to new technology. The agricultural sector is
gradually contracting both in terms of its output and employment shares.
The big expansion has occurred in the service sector. The industrial sector
has also expanded but at a far lower pace. The expansion in blue-collar
occupations jobs (primarily production and service workers) in rural areas
is at a significantly faster rate than the corresponding expansion of blue-
collar occupations in urban areas.
1.4.3 Literacy level:
It has been estimated that the rural literacy level is growing as
compare to urban areas. Literacy is one of the important factors in
developing awareness and knowledge about technological changes. As
many as 16 major languages are spoken adding to the complexities in rural
communication.
1.4.4 Low standard of living:
Low income, low purchasing power, overall social and economic
backwardness lead to low standard of living. In general a rural consumer
spends less on non-food items.
1.4.5 Media reach:
The media reach in rural household is low. Statistics indicates that
the reach of Print media is 10%, followed by TV 31%, Radio 32% and
Cinema 36%. Therefore the marketer has to consider rural specific
promotion media and methods to reach the villagers.

12. 12
1.4.6 Transportation facilities:
About 50% of the markets are not connected by road. Most of the
roads are kachha and become unusable during rainy season. Many farmers
use bullock cart for transporting their produce from village to the market.
This means of transport is time consuming.
1.4.7 Rural electrification:
The main objective is to provide electricity for agricultural
operations and for small industries in rural areas. About 5 lakh villages
(77%) have electric supply and this has increased the demand for electric
supply and this has increased the demand for electric motors, pumps and
agricultural machinery.
1.4.8 Medical facilities:
Medical facilities are quite inadequate and the villagers have to
travel long distances for getting medical treatment.
1.4.9 Distance:
Village nearer to towns has elements of the urban life. Interior
villages are more traditional. Informal/Rural Specific Media. These media
with effective reach and personalized communication will help in realizing
the promotional objectives. Companies to suit the specific requirements of
rural communication are using a variety of such media effectively and
some of the more important media and methods are given below.
1.4.10 Group meeting:
Group meetings of rural customers as well as prospects are an
important part of interpersonal media. The company is able to pass on the
message regarding benefits of the products to a large number of customers
through such meetings. Group meeting of key customers are conducted by
banks, agricultural inputs and machinery companies in rural areas. The
bankers visit an identified village, get the village people in a common place
and explain the various schemes to the villagers. Such meetings could be
organized in prosperous villages for promoting consumer durables and two
wheelers also. Example: MRF Tyres conduct tractor owners meet in
villages to discuss repairs and maintenance of tractors.

13. 13
1.4.11 Opinion leaders:
Villagers place more emphasis on the experience of others who have
used a product/brand to make purchase decision. Opinion leader is a person
who is considered to be knowledgeable and is consulted by others and his
advice is normally followed. Such opinion leaders could be big landlords,
bank official, panchayat-president, teachers, extension workers etc.
Examples: a) Mahindra Tractors use bankers as opinion leaders for their
product.
1.4.12 The Melas:
Melas are of different types i.e. commodity fairs, cattle fairs and
religious fairs and may be held only for a day or may extend over a week.
Many companies have come out with creative ideas for participating in
such melas. Examples: a) Britannia promotes Tiger Brand Biscuits through
melas.
1.4.13 The Haats:
Traditionally on certain days of week, both the sellers and buyers
meet in the village to buy and sell goods and services. These are the haats
that are being held regularly in all rural areas. The sellers arrive in the
morning in the haat and remain till late in the evening. Next day they move
to another haat. The reason being that in villages the wages are paid on
weekly basis and haat is conducted on the day when the villages get their
wages. For the marketer, the haat can be an ideal platform for advertising
and selling of goods. By participating in haats and melas, the company can
not only promote and sell the products but also understand the shared
values, beliefs and perceptions of rural customers that influence his buying
behaviour.
1.4.14 Audio Visual Publicity Vans (AVP Vans):
AV unit is one of the effective tools for rural communication. The
van is a mobile promotion station having facilities for screening films
slides and mike publicity. The sales person makes a brief talk about
situation in the village, the products and the benefits. The ad film is
screened along with some popular film shots and this continues for about
30 minutes. At the end of the film show, he distributes handbills and
answers queries of the customers. The whole operation takes about 1-2

14. 14
hours depending upon the products under promotion, number of
participants in the meeting and time taken for question and answers. The
vans move to the next village for the second show. The cost of running a
fully equipped AVP unit is about Rs.4000 per day and AVP van operation
has to be considered as an investment for business development in rural
areas. Example: Companies such as HLL, Colgate, and Phillips have made
effective use of AVP vans for popularizing their products in rural areas.
1.4.15 Product display contests:
Package is an integral part of the product. Its main purpose is to
protect the product during transit, to preserve the quality and to avoid any
loss in quality and quantity. The main purpose of this contest is to remind
the customer to buy the product as soon as he enters the shop. Another
objective is to influence the dealer to stock the product and support the
company in increasing the sales. The display contest has to be announced
well in advance and promotional materials to be distributed to all the
selected dealers in a geographical area. Prizes for best displays are
announced to motivate the dealers; the contest lasts for about a month. A
well-planned product display contest not only increases the involvement
of dealers in the company's products but also increases the sales during the
contest period. This is used for promoting consumer goods such as
shampoos, soaps and toothpaste.

15. 15
Chapter 2
LITERATURE REVIEW

16. 16
2.1 OBJECTIVES OF THE STUDY
The purpose of this paper is to achieve the following objectives:
1. To access the potential of Indian rural market.
2. To gain an understanding of changing Indian rural consumer and rural
markets.
3. To understand the rural marketing environment in India
4. To offer suggestions to overcome the problems
2.2 METHODOLOGY
The analysis performed and the conclusions drawn in this paper are
primarily based on the collection of secondary data. The approach
undertaken involved collection of secondary data from various sources of
publications, including magazines, books, journals, research articles, the
internet and published records of Government of India.
2.3 LITERATURE REVIEW
In the words of Beshouri (2006), “the size of the rural Indian
market is estimated to reach US$577 billion in twenty years, which is
larger than the total consumer markets in countries such as South Korea or
Canada, and is almost four times the size of the urban Indian market today.
This means that businesses can no longer ignore rural markets and “going
rural” is not just an option but a business necessity for businesses operating
in India”.
In the words of Manwani (2012), “By 2025, the Indian rural
market is expected to grow more than tenfold, to become a US$ 100 billion
opportunity for retail spending”.
Marketing can be defined as the process of identifying, anticipating
and knowing customer needs, and organizing all the resources of the
company to satisfy them. Satisfying the customer’s need is primary
condition of marketing and essential for existence of any organization. In
order to achieve marketing goals, knowledge of consumer behaviour is
must. The consumer’s behaviour comprises the acts, processes and social

17. 17
relationships exhibited by individuals, groups and organizations in
searching, obtainment, use of, and consequent experience with products
and services.
A wide array of problems hinders marketers in approaching rural
areas with confidence. The lack of fair weather roads, widely dispersed
villages, low density of population, lack of bank and credit facilities,
multiple tiers, higher costs and administrative problems, and lack of
retailers are the problems in rural distribution. Intelligent way of
approaching rural areas is required. The emerging distribution approaches
include: Cooperative societies, petrol bunks, agricultural input dealers,
NGOs, etc. Latest approaches include the direct to home selling methods:
network marketing and internet marketing.

18. 18
Chapter 3
Principle & Design

19. 19
3.1 Indian Rural Market – The 4 A’s approach
The rural market may be appealing but it is not without its problems:
Low per capita disposable incomes that is half the urban disposable
income; large number of daily wage earners, acute dependence on the
vagaries of the monsoon; seasonal consumption linked to harvests and
festivals and special occasions; poor roads; power problems; and
inaccessibility to conventional advertising media. However, the rural
consumer is not unlike his urban counterpart in many ways. The more
daring MNC’s are meeting the consequent challenges-availability,
affordability, acceptability and awareness. (The so-called 4 A’s)
3.1.1 Availability
The first challenge is to ensure availability of the product or service.
India’s 627,000 villages are spread over 3.2 million sq. km; 700 million
Indians may live in rural areas, finding them is not easy. However, given
the poor state of roads, it is an even greater challenge to regularly reach
products to the far-flung villages.
3.1.2 Affordability
The second challenge is to ensure affordability of the product or
service. With low disposable incomes, products need to be affordable to
the rural consumer, most of who are on daily wages. Some companies have
addressed the affordability problem by introducing small unit packs. Most
of the shampoos are available in smaller packs. Fair and lovely was
launched in a smaller pack. Colgate toothpaste launched its smaller packs
to cater to the travelling segment and the rural consumers.
3.1.3 Acceptability
The third challenge is to gain acceptability for the product or service.
Therefore, there is a need to offer products that suit the rural market. With
large parts of rural India inaccessible to conventional advertising media —
only 41 per cent rural households have access to TV — building awareness
is another challenge.

20. 20
3.1.4 Awareness
Brand awareness is another challenge. Fortunately, however, the
rural consumer has same likes as the urban consumer - movies and music
- and for both the urban and rural consumer, the family is the key unit of
identity. However, the rural consumer expressions differ from his urban
counterpart. Outing for the former is confined to local fairs and festivals
and TV viewing is confined to the state-owned Doordarshan. Consumption
of branded products is treated as a special treat or indulgence.
3.2 Rural Marketing Strategies:
Rural marketing concept is a customer-cantered ‘sense and respond’
philosophy. The following section deals with how MNC’s and local
companies have successfully established themselves in the rural market.
3.2.1 Product Strategy:
The rural consumer is very conscious about getting ‘value for
money’. Low price, high quality and multiple uses is basic principles rural
product design.
Case 1: Nokia 1100
Nokia 1100 has so penetrated in to the rural market. Nokia had to
stop its production of 1100 because as its
own product has become its toughest
competitor. Nokia’s low-end cell phones
are used as radios, alarm - clocks and flash
lights by the rural customers.
Strategy: “digital convergence at
the bottom of market”

21. 21
Case 2: LG sampoorna TV
LG Electronics launched a
customized TV sampoorna’. A more
important aspect of customization is to
make TV set which can appeal to local
needs, it facilitated on screen display in
vernacular language like Hindi, Tamil
and Bengali. Selling 1,00,000 sets in
the very first year.
Strategy: “thinking locally, succeeding globally”
Case 3: HUL Breeze 2-in-1
HUL developed a combined soap
and shampoo that was cost-effective and
also less harsh on hair than ordinary
soaps. HUL launched the new soap-cum
shampoo ‘Breeze 2-in-1’
Strategy: “value-added product
would create a loyal customer”
Case 4: HUL pure-it [a water purifier brand]
HUL launched an innovative
product ‘pure-it’ a water Purifier
brand. Pure-itis available at
economical price for the rural
consumer as there is no clean drinking
water in villages.
Strategy: “Corporate social
responsibility means come up with
business models to cater to the BOP”
Case 5: TATA Nano
Tata Motors launched ultra-low
cost Nano. Nano is a low-end ‘rural
car’, hence it’s creates a new segment of
people of buying car. It is a victory for

22. 22
all those who have been advocating making available cheaper products
for customers at the BOP.
Strategy: “we needed to create a safer journey of transporting a
family”
3.2.2 Price Strategy:
Rural markets are low price high volume growth markets. The
rural markets being intensely price-sensitive in comparison to urban
markets, reaching at a lower cost is a major challenge.
Case 1: Nirma
Nirma’s yellow detergent powder- a
mass- market Phenomenon. Nirma’s low
price policy has penetrated into the deepest
rural markets in India.
Strategy: “value- for- money”
Case 2: Cavinkare’s Chik shampoo
Cavinkare launched Chik in 1 rupee
sachets. Cavinkare targeted rural and small
town customers who used soaps to wash their
hair. It became the market leader in the rural
markets with over 50% market share. It create a
‘sachet revolution’.
Strategy: “low unit price packs.” (LUP)
Case 3: P&G price cut strategy
P&G in 2004 started price cut strategy in
their detergent brands. P&G’s increase in the
market share was more at the cost of the low-
priced detergents. There was a 200% increase in
Tide after the price cut.
Strategy: bring in the required ‘Economies of Scale’ which would
lead to profitability.

23. 23
Case 4: Britannia Tiger biscuits
Britannia also tasted success because of
small affordable packaging of ‘Tiger’ biscuits it
is specially design to the rural market, it’s
helping the poor become consumers.
Strategy: “low price strategy is begun to appeal target segment”
Case 5: Nestlé’s Maggi
Nestle’s rural initiatives have largely
been based on Price-led initiatives. Brand such
as Maggi noodles are priced at Rs.5. It helped
Nestle in making inroads in to rural market.
Strategy: “small pack - lower price”
Case 6: Marico parachute
Marico launched ‘parachute mini’ a bottle
shaped small pack being sold at an MRP of RS.1,
20 ml parachute a RS 5 that enables loose oil
users ad to parachute.
Strategy: “consumers to trail out the
products with very little risk”
3.2.3 Promotion Strategy:
The challenge is to create communication that would help the rural
consumer in recognizing brands, logos, visuals and colours. To effectively
tap the rural markets, a brand must associate with their culture and
personality.
Case 1: Idea cellular
Idea’s aggressive promotion
campaigns ‘what an idea sirjee’ ad
creates a real rural feel came through
Strong advertisement.
Strategy: spreading a social
message “each one has aimed at the changing someone’s life for better”

24. 24
Case 2: Coca-Cola
Coca-Cola ad ‘thanda matlab coca-cola’
caught attention of the rural consumers so much.
Aamir khan playing foot sic with village bells.
Strategy: “Using a renowned celebrity
from in rural background”
Case 3: HUL Lifebuoy
HUL launched a direct rural contact
program called ‘Lifebuoy Swasthya
Chetana’ campaign, made sales goes up
by 20% in 17,000 villages.
Strategy: “lifebuoy has always
been positioned on the platform of health
and hygiene”
Case 4: MRF Bullock cart Tyres
MRF introduced nylon tyres for
bullock carts with real life pahalwans.
MRF use the communication through
wall paintings in villages association
with the muscleman symbol, (i.e.
Pahalwan=Muscleman).The result was
that the MRF bullock cart tyres became
the brand leader in this segment.
Strategy: “Rural consumers
understands symbols better and looks for endorsement by icons”
Case 5: HUL Vim
HUL launched a dish washing bar
Vim. HUL Started to communicate the
brand in rural area through public
challenging campaigns. In this campaigns
is succeed people washing utensils with
sand are being educated to shift to
dishwashing bars.

25. 25
Strategy: “Brand awareness creates people using local unbranded
products to national brands”
Case 6: Dabur Chyawanprash
Dabur Chyawanprash was able
communicate its core benefits of energy and
immunity by involving locals in a game of
bowling wherein, the nine pins, symbolizing
various diseases, were demolished by a
chyawanprash ball.
Strategy: “For a brand to succeed in
India, its communication and image must
respect Indian values and serve to uphold them”.
Case 7: HUL Surf
Surf used the ‘Lalitaji; campaign to
communicate the message of ‘getting more for
your money’ to housewives and this message is
well received by them.
Strategy: “value for money need not
necessarily mean cheap”
3.2.4 Place strategy:
Planning physical distribution, managing logistics and controlling
marketing communication are major impediments for entering rural
markets. The distribution structure involves stock points in feeder towns
to service these retail outlets at the village levels.
Case 1: Coca - Cola
Coca -Cola is a pioneer
company in distribution network.
Coca-Cola has evolved a ‘hub and
spoke ‘distribution model for
effectively reaching and serving
rural markets. Coca-Cola provides
low-cost ice boxes to the small
distributors in rural areas because of

26. 26
the lack of the electricity. In this marketing strategy a wakeup call for
coke’s rural focus.
Strategy: “Coke is available where, even water is not available”
Case 2: HUL
Hindustan unilever, the pioneer and a large player in India’s
FMCG market. HUL is the first
company to step into the Indian rural
marketing. HUL launched ‘operation
stream line’, distributed HUL’s
products in villages using
unconventional transport like ‘bullock
carts’, ‘tractors’ and cycles. Today
HUL’s products touch the lives of two
out of every three Indians.
Strategy: “HUL product can reach a place, where you cannot reach”
Case 3: CSC
A CSC is a low-cost setup and
distribution center for government
institutions to deliver e-governance
services to the rural population. The
CSC-SPV (special purpose vehicle) has
been established by the Indian
government under the National e-
Governance Plan. To monitor and
supervise the progression of CSC-
SPVs, a State Designated Agency
(SDA) acts as a nodal agency, and the
Service Centre Agency (SCA) becomes the implementing agency which
provides the required investment budget and the functional specification
of the CSC as identified by the SDA.
Strategy: “Common Service Centres (CSC) are physical facilities
for delivering Government of India e-Services to rural and remote
locations where availability of computers and Internet was negligible or
mostly absent.”

27. 27
3.3 RURAL V/s URBAN MARKETING
NO. ASPECT URBAN RURAL
1 PHILOSOPHY
Marketing &
Societal
Concepts &
Relationship
Marketing
Marketing &
Societal Concepts,
Development
Marketing &
Relationship
Marketing
2
MARKET
DEMAND High Low
COMPETITION Among Units In Mostly From
LOCATION Concentrated Widely Spread
LITERACY High Low
INCOME High Low
EXPENDITURE Planned, Even Seasonal, Variation
NEEDS High Level Low Level
INNOVATION/ADOPTION Faster Slow
3
PRODUCT
AWARENESS High Low
CONCEPT Known Less Known
POSITIONING Easy Difficult
USAGE METHOD Easily Grasped Difficult To Grasp
QUALITY PREFERENCE Good Moderate
4 PRICE
SENSITIVE Yes Very much
LEVEL DESIRED Medium-high Medium-low
5 DISTRIBUTION
CHANNELS
Wholesalers,
stockists, retailer,
supermarket,
specialty stores, &
authorised
showrooms
Village shops,
“Haats”
TRANSPORT FACILITIES Good Average
PRODUCT
AVAILABILITY
High Limited

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6 PROMOTION
ADVERTISING
Print, audio visual
media, outdoors,
exhibitions etc.
few languages
TV, radio, print
media to some
extent. More
languages
Door-to-door,
frequently
Occasionally
Contests, gifts,
price discount
Gifts, price
discounts
PUBLICITY Good opportunities Less opportunities
3.4 Problems in Rural Market
There are various challenges that hinder the progress of rural
market. Marketers face a number of problems like physical distribution,
logistics, no proper and effective sales force and no effective marketing
communication when they enter into the business of rural markets.
The following are the major problems faced in the rural markets:
3.4.1 Standard of Living
A large part of the population in rural areas lies below poverty line.
Thus the rural market is also underdeveloped and the marketing strategies
have to be different from the strategies used in urban marketing.
3.4.2 Low literacy levels
The low literacy levels in rural areas leads to problem in
communication with the market and the print media has less utility as
compared to the other media of communication.
3.4.3 Low Per Capita Income
In rural market, agriculture is the main source of income and hence
expense capacity depends upon the agricultural produce. Demand may or
may not be stable.
3.4.4 Transportation and Warehousing
Transportation and supply chain management are the biggest
challenges in rural markets. As far as by road transportation is concerned,

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about 50% of Indian villages are connected by roads to the nearest big
cities. The rest of the rural markets do not have proper road linkage to other
cities which causes problems in physical distribution. Many villages are
located in hilly remote areas which is difficult to connect with them
through roads. Warehousing is another major problem in rural areas, as
there you will hardly get any organized agency to look after the storage
issue. The services given by central warehousing corporation and state
warehousing corporations are limited only to urban and suburban areas.
3.4.5 Ineffective Distribution Channels
The distribution chain is not organized and also requires a large
number of intermediates, which in return increases the cost. Due to lack of
appropriate infrastructure, manufacturers are giving back steps to open
outlets in these areas. That is why they need to dependent on dealers, who
are rarely available for rural area which increases the challenges for
marketers.
3.4.6 Lack of Communication System
Quick communications facilities like computer, internet and tele-
communication systems etc. are the need of rural market which is a biggest
problem due to lack of availability. The literacy level in the rural areas is
quite low and consumer’s behaviour is kind of traditional, which is a cause
of problem for effective communication. Also different behaviour and
language of every respective area increases difficulties to handle the
customers.
3.4.7 Dummy Brands
Cost is an important factor for rural consumers which determine
purchasing decision in rural areas. A lot of fake brands or products that
look similar to the original one are available, providing low cost options to
the rural consumers. Most of the time, the rural consumers may not be
aware of the difference due to illiteracy.
3.4.8 Seasonal Demand
Demand may be seasonal in rural market due to dependency on
seasonal production of agricultural products and the income due to those

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products. Harvest season might see an increase in disposable income and
hence more purchasing power.
3.4.9 Inadequate banking and credit facilities
In rural markets, distribution is also handicapped due to lack of
adequate banking and credit facilities. The rural outlets require banking
support to enable remittances, to get replenishment of stocks, to facilitate
credit transactions in general, and to obtain credit support from the bank.
Retailers are unable to carry optimum stocks in the absence of adequate
credit facilities. Because of this problem, they are not able to offer credit
to the consumers. All these problems lead to low marketing activities in
rural areas.
3.5 Opportunities in Rural Market
To solve the problems of rural market and rural marketing in India,
the following points need to be considered by marketers:
3.5.1 Physical Distribution and transportation
Regarding the problems of physical distribution, the marketers may
have stockiest/clearing-cum-forwarding (C&F) agents at strategic location
for facilitate the physical distribution for its products in the rural market.
The important advantage of this scheme is that the costs of physical
distribution can be shared between the companies and stockiest.
The different modes of transportation based on availability of tracks
should also be beneficial to the companies. Even to this day, bullock-cart
plays a very vital role in physical distribution where the roads are not
available. Some of the leading MNCs use delivery vans in rural areas.
These delivery vans take the products to the retail shops in every corner of
the rural market and enable the companies to establish direct sales contact
with majority of the rural consumers. This in turn helps in sales promotion.
3.5.2 Rural Market and Retail Sales Outlets
The rural market consists of a number of retail sales outlets along
with low price shops under the public distribution system. The government
should take initiatives to encourage private shopkeepers and cooperative
stores to come forward and establish their business in rural areas. Fertilizer
companies should open their outlets for proper distribution of fertilizer to
the farmers. In addition, the companies dealing in consumer goods can also

31. 31
apply this model and appoint a number of retailers in rural market and
attach them to the stockiest who distributes the goods to the retailers as per
the potential demand of the market. This approach will help the companies
penetrate into the interior areas of the rural markets.
3.5.3 Sales Force Management
To solve the problems of sales force management, the company
takes due care in the recruitment and selection of sales people because the
traits they require are different from that of the urban sales persons. These
sales people must be fluent in the local/regional language and also have
patience to deal with rural consumers.
Controlling and operating of such a large and scattered sales force,
supervising them insoles calls, guiding and attending to their official and
personal problems, and motivating them for getting better results should
be an exciting and challenging task for the sales manager. Thus, the people
operating in rural areas should have an inherent zeal to serve the rural
peoples and to connect with them.
3.5.4 Marketing Communication
For marketing communication in rural areas, the companies should
use organized forms of media like TV, Radio, cinema and POP (point of
purchase) advertising. In recent times, television is gaining popularity in
rural areas but due to lack of supply of electricity, radio is performing quite
better. The rural people need demonstration, short-feature films and direct
advertisement films that combine knowledge and perform as better rural
marketing communication.
3.5.5 Demand Base and Size
Indian rural market has a vast demand base and size. Rural
marketing involves the process of developing, promoting, distributing
rural area specific products and service exchange between rural and urban
market which satisfies customer demand and also achieves organizational
goals. As a part of development program economic development is
concern, government is making continuous efforts towards rural
development.

32. 32
3.5.6 Government Initiative
The Government of India has planned various initiatives to provide
and improve the infrastructure in rural areas which can have a multiplier
effect in increasing movements of goods, services and thereby improve
earnings potential of rural areas subsequently improving consumption.
E-commerce players like Flipkart, Snapdeal, Infibeam and mobile
wallet major Paytm have signed Memoranda of Understanding (MoUs)
with the government to reach rural areas by connecting with the
government’s common service centres (CSCs) being setup in villages as
part of the Digital India‟ initiative.
3.5.7 India Budget 2018-19
Record allocation of Rs 14.34 lakhs crore for Rural development &
Agriculture.22,000 Gramin Agricultural Markets to help farmers sell their
produce. More than 1 crores houses to be constructed in rural areas. 5 lakhs
wi-fi hotspots to be set up to provide broadband access to five crore rural
citizens.

33. 33
Chapter 4
Result & Discussion

34. 34
4.1 Result
 Customer satisfaction is the key to building a profitable and sustainable
relationship with rural consumers. Marketers need to understand the
product specific evaluation process from primary research to mapping
the succession of their brand from consideration set to choice set. This
deals with the product deficiencies in relation to competition and
improves its chances of selection during evaluation.
 Lack of choice is a major problem in the rural areas as the consumers
do not have access to a variety of products. The dependence of the rural
consumers on the neighbourhood shops, who sell on credit, is adding to
the problem. There for standardization of products and availability of
packed commodities will help the rural consumers to a large extent.
 Awareness using various medium has to be created among the rural
consumers. So far the consumer movement has largely been confined
to the urban canters, and with the expanding rural markets now the
focus has to shift to protect the rural consumer. In generating awareness
at grass root levels both traditional and contemporary media can play
an important role. Community radios local cable TV channels and local
newspapers can also be good medium for generating consumer
awareness as they are communicating with the people in the local
language. With increasing reach of IT even internet and social media
can be used for educating rural consumers.
4.2 Discussion
4.2.1 Suggestions on Product Strategy:
 Innovative product designs and packaging.
 Avoid the marketing myopia, which means the costumer will have the
same need but will want the new product.
 Application of value engineering, which means costly metal being
replaced by cheaper reinforced plastic. This technique does not
sacrifice the functional efficiency of a product but lower the product
price.
 Using Chinese product design strategy and raw material.

35. 35
 Be care full on product duplicates and using security features.
Marketers must often understanding rural customer’s needs and
aspirations even better than customers themselves do and creating
products and services that meet existing and latent needs, now and in
the future. A fair amount of research is required to understand the latent
needs and desires of rural customers and provide suitable products.
4.2.2 Suggestions on Price Strategy:
 Use backward and forward integration.
 Using value-based pricing strategy. That means fixing of price, starting
with customer and end with product.
 Use psychological tricky pricing strategies. That means method of odd
number pricing etc.
 Effective total quality management is helps to low price high quality
product.
Companies should focus on creative solutions and product
engineering to reduce their cost. Second, the company can design basic
models minus frills to save cost.
4.2.3 Suggestions Promotion Strategy:
 Provide social outlet campaigns, the outlet provide free to any one, what
brand they choose. It’s creates a ‘trust factors’ to the consumers.
 Be care full on retail margins otherwise they promoted local brands.
 Face-to-face ‘below the line’ touch, that means feel and talk mode at
heats, Melas and mandis.
 To capture the local sprit in the communication. Using local language.
 Patience is the name of the game. That means a rural consumer is not
in a hurry and you can take your time in communicating the message.
 Developed a website, which gathers valuable feedback from satisfied
customers and also display the total amount saved by consumers with
the product impact. World-of-mouth communication strategy works

36. 36
better in rural markets as these markets enjoy limited reach media. Once
people become familiar with these products, they would perceive them
as necessities.
4.2.4 Suggestions on Place Strategy:
 Best solution for enter into the rural markets, that is the company should
start the production in rural areas. Then it is easy to distribute and also
its increase the local sprit.
 Tie up with public distribution system (Fair Price Shops). In our
country, the public distribution system is fairly well organized. The
revamped PDS places more emphasis on reaching remote rural areas of
hills and tribes. So FMCG companies collaborated with the PDS to
utilize its well-established sales and distribution network in the rural
markets.
 Develop rural shopping malls. Rural shopping malls act as a two-way
supply chain. While selling goods to the farmers and also buy their farm
produce.
 Use a combination of wholesalers and retailers to penetrate every nook
and corner of rural market.
Going paces ahead of small packs and sachets’ the corporate world is
now coming out with ‘Rural Malls’ and ‘Self-help groups’ as channel
partners to promote consumer products in rural India. Unilever and ITC
are working towards increasing their visibility and reach through
marketing - cum social responsibility projects such as ‘Shakti and e-
choupal’ respectively.

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Chapter 5
CONCLUSION

38. 38
5.1 Conclusion
While rural consumers in emerging marketing economies offer
tremendous potential, yet capitalizing on this potential necessitates the
formulation of a well thought out and creative strategy, which must focus
on such aspects of marketing, such as the product suitability, relationship
building, promotion and distribution. Mere modification of existing urban
plans to rural markets would not serve the purpose. The government needs
to play a positive role in the development of rural markets in association
with the local NGO’s. Improving infrastructure capacities, initiating
community development programs, offering better employment
opportunities, simplifying credit availability and so forth would make such
markets ever more attractive. The future of businesses operating in India
lies in rural markets and those that fails to accept and adapt to this fast
approaching reality run the risk of being rendered irrelevant.
Low literacy level, poor media reach and exposure and the huge and
diverse rural audience characterized by variations in language, culture and
lifestyle poses multiple challenges for communicating with the rural
audience. For rural consumers the message has to be simple and logical.
The use of education with entertainment gets more acceptances. In the
emerging scenario it is necessary to protect the rural consumers by
educating them about their rights and empowering them to make decisions
based on information about the goods and services. Awareness has to be
created among the rural consumers. So far the consumer movement has
largely been confined to the urban canters, and with the expanding rural
markets now the focus has to shift to protect the rural consumer.

39. 39
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