The document discusses definitions of rural areas according to different organizations in India and their limitations. It provides definitions from the NSSO, Planning Commission, LG Electronics, NABARD, Sahara, and FMCG companies. Most definitions are based on population size, with cut-offs ranging from populations less than 5,000 to 20,000 being considered rural. However, the definitions are limited as they do not fully characterize rural versus urban areas. The document also examines reasons for marketing to rural areas, such as untapped potential, rising incomes, and success stories of companies gaining 40-60% of sales from rural markets.

1. Rural Marketing

2. Defining Rural India
Organisation
Definition
Limitations
• rural not defined
NSSO
(Census)
Population less than 5000
• Population density < 400 / Sq Km
• 75 percent of the male working population is
engaged in agriculture
•No Municipal corporation / board
Planning
Commission
• Towns upto 15,000 population are considered Town characteristics
rural
not defined

3. Cont’d
LG Electronics
All places other than the 7
metros
Only clarifies what are the
cities
NABARD
All locations with a
population upto 10, 000
considered “ rural”
Village & town
characteristics not defined
Sahara
Commercial
establishments located in
areas servicing less than
1000 population
Population characteristics
unknown
FMCG COS
Any area with primarily
agricultural based
occupation and with a
population of less than
20,000 as rural
Source: The Rural Marketing Book- Text & Practice, Kashyap. P and Raut. S (
2007)

4. (Cont.)
Durables &
Agri-input cos
Population upto
20,000 is rural
Marketing
Parlance
Organised
distribution &
media reach
ends
Urban, Rural &
Rurban
Jha, 2003
Rurban being
the overlap
between urban
& rural

5. Size of the market
Largely Untapped
Too crowded Urban Market
Income on the rise/disposable income
Reasons
for
Going Rural
BOP_Rural.wmv
Income from other than agriculture
Great success stories
HLL
50%
Colgate
50%
LG
50%
Asian Paints
60%
Dabur
40%
Videocon
40%
Cadbury’s
25%
Hero Hona
40%
Sorce ORG Marg and Fransis Kanoi

6. Encouraging Indicators/Initiatives for Rural Market Growth
Scientific methods – major impetus to Production of
food grains
Initiatives taken by banks for more branches and Kisan
credit card to buy seeds, fertilizers, consumer goods on
installment basis
Reputed Companies helping in changing lifestyles – Levers
Britania ,Dabur, LG, Honda,Videocon
Government Policies – White Revolution – Milk products
Yellow Revolution (poultry and edible oils); Blue Revolution – Aqua culture
Employment Schemes – JRY(Jawahar Rojgar Yojna,
PMRY,Small Industries Training,
Rural Electrification, Spend on Health and Sanitation,
Medical and Health, Primary Education, Credit card for farmers; Waiver of Loans
 Initiatives by leading organization in spreading awareness
Hindustan Levels Shakti, ITC Reliance etc; Media creating an
impact-creating awareness levels

7. Low per capita income/ Low
disposable income
Inadequate fixed income
(daily wages)
PROBLEMS
IN
RURAL
MARKETING
Majority – depends on Agricultural
Income
Acute dependence on monsoon
Consumption linked to harvest
Infrastructure problems
Roads, power
Low awareness
Too many languages
Communication- difficult & expensive
Geographic Spread
Digging for Diamond

8. Profile of the Rural Consumer
>Low Literacy Level
>Low Income Level p.doc
>Massive Geographic Spread & heterogeneous market
Urban population concentrated 3200 cities town
Rural scattered over 630000 villages
>Reference Group
Health Workers
Doctors
Teachers
Panchayat Members
Rural Bank Managers
District Managers
Occupation – Principal Farming
Trading
Handicrafts
Cattle & Poultry Farming
>Media Habits Fond of music T.V Radio Video Films
Generally they have a lot of reservation/inhibition
rigid in their behaviour

9. RURAL CONSUMER CLASS
The Affluent Class
The Middle Class
The Poor
RURAL CONSUMER BEHAVIOR
How does an individual decide to spread his
Available resources (time,money effort) on Consumption-related products.
That is – what they buy
why they buy
when they buy
where they buy it
how often they buy it
how often they use it
Very Rich
Well Off
Aspirant
Poor
Climbers

10. Simple Model of Rural Consumer Behaviour
Need Recognition
Pre Purchase Search
Evaluation of Alternatives
Purchase Decision
Post purchase behaviour

11. Factors that Influence Rural Behaviour
Attitude
Stimuli
Inputs to any senses
Products
Package
Commercials
Brand image
Reference
Information cues about
the characteristics of the
product
Exposure
Eg IFB had not adequately educated
farmers about the washing machine
-they thought It was a churn for making
large quantities of lassi (prosperous
village of Punjab)
>Consumer belief
Consumer feelings
Perception
Depends on
Interpretation
Iodex – muscular pain
reliever used on animals
after hard days work in MP
Godrej hair dye on Buffaloes
To make them look better in
Village haats in Raichur

12. RURAL MARKET RESEARCH

13. Primary Sources
Retail shops/STD booths/ Mobile recharge points
Tea Stalls
Playgrounds/schools
SOURCES
FOR
CONDUCTING
RURAL
MARKET
RESEARCH
Chaupals (meeting point
old/middle aged/
influential)
Haats & Melas
Influence Group
Secondary Sources Major sources providing rural data.doc
Government website
www.censusindia.com
www.indiastat.com
www agroindia.com
Private bodies (market research
advertising agencies
Indian Market Research Bureau
Thompson Rural Index Guide to Rural Markets
Publications

14. Thomson Rural Market Index (TRMI):
•
Hindustan Thompson Associates ltd.
developed TRMI
– guide to segment markets in the rural areas
in 1972
– improved it in 1986, they compiled a data
out of 335 districts based on 10 variables.
– Thomson Rural market Index.doc

15. SEGMENTATION
Very Varied –hence proper segmentation very essential
Geographic:
Region
Village size
Climate
North, East, West and South
Demographic
Age
Family Size
Gender
Income
Occupation
Education
Caste
Psychographics
(consists of psychological: sociology: anthropological)
Lifestyle
Rigid ,changing attitude, urban influence
Personality Authoritarian, Ambitious
Behavioral
Occasions Regular, special occasion Benefits
User status regular user, first time user, non user
Usage rate Light, medium, heavy
Loyalty
None, medium, strong
Attitude to Product ( positive, negative, hostile)
Different variables could be used.. multilevel segmentation

16. Approaches for segmenting the
rural markets
•
Size of village Population (ORG-MARG)
– Class I villages (>5,000)
– Class II villages (1,000-5,000)
– Class III villages (<1,000)
•
Based on location w.r.t nearby town
– Villages nearby Urban Centres
– Villages in Developing Districts
– Immobile & self-sufficient Asiatic villages
•
Based on size of Farmland
–
–
–
–
–
Marginal farmer (upto 1 hectares)
Small farmer (1 hectares-2 hectares)
Small & Marginal farmers (2 hectares-4 hectares)
Medium Farmer (4-10 hectares)
Large Farmer (> & equal to 10 hectares)

17. Approaches for segmenting the
rural markets (cont.)
•
Based on Sociological Characteristics
–
–
–
–
–
–
•
•
Proprietors of Land
Rich Farmers
Small & Marginal Farmers
Tenant Farmers
Agricultural Labourers
Artisans & Others
Oglivy Rural has divided India into 56 distinct socio-cultural regions
Income
– Rural rich/Around Urban area/Above poverty line/below poverty line
•
NCAER
– Destitutes (<16,000), Aspirants (16,000-22,000);Climbers (Till 45,000);
Consumers (Till 2,15,000) & Very rich

18. Approaches for segmenting the
rural markets (cont.)
• Based on Development Level
– R1/R2/R3/R4product categories & R1.doc
• Based on Age Group Perspectives
– Pre-Independence
– Pain of Nation Building
– Pain of Liberalization (1985 onwards)
– Liberalization Children (1990 onwards)
– Millennium Children (1997 onwards)

19. DEVELOPMENTAL MARKETING
Developmental marketing is a process through which
awareness is created
>could be demonstration
>could be presentation
>Free samples
>could be through eg tie up with Bank
tie up with Petrol/Diesel pumps
(Hyundai did with IOC and PNB and SBI subsidiaries
>30% sale of Hyndai from Rural/Semi Urban areas)
Awareness
Trial
Purchase
Post-Purchase Satisfaction
Colgate – program Operation Jagruti
Switch from Charcoal to Colgate tooth powder
HLL
Free samples of Lifebuoy
Cavin Kare – Free sample of Chik Champoo
Marico Industries – Parachute coconut oil
“Sudhata ki pehchan” –smell to differentiate between real and spurious

20. Rural Marketing Mix

21. Rural Product
Product to be marketed with the requirements of the Rural Consumer should not be an
extension of urban offerings
(Philips launched Free Power Radio – does not require
Battery/electricity you wind it with a lever and radio runs
For approximately 30 min.
FMCG
(HLL, Dabur, Marico, Colgate=Palmolive
Coke, Pepsi)
Consumer Durables
TV ,Fridge, Fan, Presssure Cooker,
Cycle, Two wheelers, Sewing machines,
watch, mixer grinder, radio, music system,
Fans, Washing machines
(Philips, LG, Videocon, Onida )
Services
Telecom, Banking, Health care ,Insurance
(Airtel, BSNL, SBI, PNB,Dena bank,)
Classification
Of
Rural
Products
Product
Life
Cycle
(PLC)
Agri-inputs
Seeds, pesticides, tractors
(Rallis India, Bayer,)
Take Off
Launch
Maturity
Decline

22. Corporate Responses to Fakes
• Look-alikes- Spell-alikes & Duplicates
• Prices range from MRP to 60 % of MRP
• Margins range from 60 % to 300 %
• Legal action – awareness programmes – New
Package Development

23. Pricing
HP Rasoi Ghar.mpg

24. RURAL DISTRIBUTION
Physical Distribution
Channel of Distribution
PHYSICAL DISTRIBUTION
Transportation
Warehousing
Communication
Transportation
Railways, Roads ,Waterways, Animals
Communication
ITC using internet, Mobile users by fisherman
Warehousing
(Three Tier Rural Warehousing Set Up)
Central/State Warehousing
Cooperatives
Rural Godowns

25. Levels of Distribution
Level
Partner
Location
1
Company Depot/ C &
FA
National/ State level
2
Distributor/ Van
Operator/ Super
Stockist/ Rural
Distributor
District level
3
Sub Distributor/ retail Tehsil HQ, towns and
Stockist/ sub
large villages
stockist/star seller
4
Wholesaler
Feeder towns, large
villages, haats
5
Retailer
Villages, haats
The Great Rural Mall Hindi.mpg

26. Distribution Adaption( Indicative)
•
•
•
•
Hub and Spoke Model, Example: Coca Cola
Use of Affinity groups, Example: Project Shakti
Haat Activation, Example: Colgate
Syndicated distribution, Example: Cavin Care &
Amrutanjan
• Use of marketing co-operatives, Example:
Warna Bazaar in Rural Areas
• Mobile traders, Example: FMCG companies
ITC e-Chaupal.wmv

27. TRAITS OF A RURAL SALESPERSON
Hardworking
Have Empathy
Enthusiastic
Common to both
Urban & Rural Sales person
Perseverance
Knowledge
Attitude
Skills
Additional traits for making it Big in Rural Areas
Willingness to work in Rural Areas
Adopting to cultural differences
Down to earth approach
Fluent in local language
Developmental approach – Create not only Communicate

28. RURAL COMMUNICATION
Effective Communication goes a long way in establishing the right
Messages and thereby more interaction with Potential Customers
Communication, however, is not complete if there is no feedback
It is very important to re enforce messages in Rural areas
Factors Affecting Rural Communication
Literacy level
Media Habits
Traditional approach
High resistance – more so initially
Lavish at occasions (eg Marriage)
Purchasing power also depending on weather- the crops
Inequitable distribution of wealth
Too many languages
Culture

29. Promotion- Adaptations for
Rural Markets
Conventional
Non- Conventional
Personalised
Television
Haat and Mela
Direct mailer
Radio
Folk Media( puppet and
magic show)
POS (demonstration,
leaflet)
Press
Video Van
Word of mouth
Cinema
Mandi
Interpersonal
communication
Outdoor: Wall Painting,
Hoarding
Animator

30. Melas & Haats
Melas
1. 25,000 melas
2. Companies can concentrate
on the top 100 melas
Haat
1. Periodic markets located in larger
villages(> 40,000)
2. 10 – 50 villages are serviced
3. Pushkar Mela in Rajasthan
3. Sunday markets are most popular
4. Organised by the state
4. Average number of outlets is 315
veterinary department
5. Product sales, promotion,
demonstration and database
generation
6. Cultural activities and rural
sports
and average daily sales is about Rs
2 lakhs
5. Traders participate in at least 4
haats
6. 81 percent of the visitors are repeat
customers