Indian Rural Market
Rural marketing is a type of marketing in which activities are planned according to the needs and requirements of the people living in the rural areas. Marketing is the process of identifying the needs and wants of the consumers, then prepare that particular product or service in order to satisfy them, keeping in consideration the benefits of the organization. This concept applies to every type of marketing, whereas when we talk of rural marketing the emphasis is to be given on the rural areas.
The focus remains on the people who are living in the remote areas, and the marketing activities should be planned accordingly. Seeing this, now-a-days many companies are turning towards the rural market to expand their scope, and to overcome competition or to restart or give new shape to competition. A lot of focus is required to be given on the rural markets because rural markets are the “tomorrow’s markets”.
The rural market is quite different from urban markets. Agriculture is the chief economic activity in rural areas, the entire village population is associated directly or indirectly to agriculture. In the process of development of civilisation agriculture and pastoral life along river banks are the first form of settled life.
In the Bronze Age, major civilisation evolved. Archaeological evidence reveals that bronze industry supplied tools and implements to agriculture. Textiles, paper, iron and furniture making developed to lid man in his economic activities.
Agriculture supplies inputs for fabrication into manufactures cotton, oil seeds spices etc. All food items had a marl origin. Villages were self-contained units, which traded their produce for gold, arm and precious stones. The rural society has high status persons and the poor ones.
The distribution of land was made by state, which belonged to the state- The British rule for more than three centuries was the worst blow to the rural society. The worst blow was to cottage and small scale industries, cultivation of indigo, tea and jute, development of timber trade and denudation of forests.
The terms of trade were not favourable to Indian farmers. In these circumstances farmers were forced to live in deprivation and poverty. British India was with the princely states under the administration of Rajas and Nawabs; the big states had all the powers except defence and foreign affairs.
Agriculture and industries based on raw-materials and local skills are identified for the development of the rural economy. An integrated approach was evolved to take care of projects ranging from milk and milk-products to horticultural products like fruits, vegetables, flowers, herbs, etc.
The processing of these is not widespread in rural areas. Modern technology is too accessible to enterprises there. It is beyond the financial capacity of an average entrepreneur. The low cost and labour based technologies have been the common mode of village industry. As a result, the rural products do not enjoy competitiveness in a wider market. Most of the products are consumed locally.
Rural marketing in Indian economy can be classified mostly under the following two categories:
- The markets for consumer durables consist of both durable and non-durable goods
- The markets for agricultural products which include fertilizers, pesticides, seeds, and so on.
Rural marketing in India is sometimes mistaken by people who think rural marketing is all only about agricultural marketing. Rural marketing determines the carrier of business activities from urban sectors to the rural regions as well as the marketing of various products manufactured by the non-agricultural workers from rural to urban areas.
The following are the characteristics of rural markets:
- Here agriculture is first and also the main source of income.
- This income is seasonal in nature and fluctuates as it depends on crop production.
- Though it is large, the rural market is geographically scattered.
- It shows religious, cultural and economic disparities.
- The market is not much developed, because the people here exercise adequate purchasing power.
- These markets have their orientation in agriculture, with poor standard of living, low per capital income and backwardness.
- It shows sharper and different regional preferences with distinct predictions, habit patterns and behavioral aspects.
- Rural marketing process is an outcome of the general rural development process initiation and management of social and economic change in the rural sector is the core of the rural marketing process.
Challenges 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:
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.
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.
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.
Transportation and Warehousing
Transportation and supply chain management are the biggest challenges in rural markets. As far as by road transportation is concerned, 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.
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.
Many Languages and Diversity in Culture
Factors like different behavior and language of every respective area increases difficulties to handle the customers. The sales force is required to match the various requirements of the specific areas according to their culture.
Lack of Communication System
Quick communications facilities like computer, internet and telecommunication 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 behavior is kind of traditional, which is a cause of problem for effective communication.
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.
Demand may be seasonal in rural market due to dependency on seasonal production of agricultural products and the income due to those products. Harvest season might see an increase in disposable income and hence more purchasing power.
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:
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.
Periodic markets are the important characteristic feature of the rural marketing in India. In spite of urbanisation and development of retail stores, periodic markets are also playing an important role in rural economy as well as in social life of the rural masses. The periodic marketing function is performed by two institutions, viz., fairs, and weekly markets.
A fair denotes a gathering of people who assemble at regular intervals in certain fixed places generally around shrines or other religious institutions. Although, by far the largest number of fairs have a religious background, there are some which owe then origin to purely economic considerations.
A general concept regarding Inn is that they are simply an occasion for the recreation of rural folk. These fairs provide an opportunity for rural people for yearly and half-yearly, sometimes be-biennial or once in 12 years like that of Kumbha-Mela, Godavari Pushkarmas, etc.
The various types of fairs include:
- On the basis of Primary Purpose:
(a) Religious fair
(b) Commercial fair
(c) Commodity fair
(d) Cattle fair
(e) Exhibition fair
(f) Mixed fair
2. On the basis of the periodicity:
(a) One-day fair
(b) Short- duration fair
(c) Long-duration fair
3. On the basis of their importance or area of influence:
(a) Local fair
(b) Regional fair
(c) Inter-regional fair or national fairs
Type 2. Mobile Traders:
There is another important agency known as mobile traders to fulfill the limited needs like vegetables, fruits, clothes, utensils, cosmetics, spices, toiletries etc. of rural consumers. The practice of mobile trading is not a new one, but even in ancient India this phenomenon was common.
The mobile traders are those merchants who move from one place to another, from one house to another in order to sell those commodities which are often required by rural masses. As it is rightly observed by Stine, important reason for the existence of mobile trader is that when the maximum range is smaller than the threshold requirement of the firm, the firm either ceases to function or else it becomes mobile.
Even in those villages where there are permanent shops and weekly markets, there is a phase for mobile traders because of behavioural pattern of rural masses. Mobile traders move from one village to another on foot or bicycle or buses, bullock carts, etc. They visit the villages once or twice in a week. Sometimes, they visit those villages which are on the way of weekly markets in return direction after attending these weekly markets.
Type 3. Permanent Retail Shops:
Permanent retail shops are developed as the population of villages increased, their incomes improved, the demand for goods and that too on daily basis increased. The traditional fairs, weekly markets or peddlers were not able to meet the situation and this led to the emergence and growth of permanent shops.
Permanent shops were set up as a result of the demand of the rural inhabitants primarily of the same village. The number of shops, their various forms largely depends upon the size of the population of the village, their incomes, purchasing power, their preferences, etc.
In the Indian context, the most sophisticated types of retail outlets comparable to that of western countries are found in metropolitan cities, while in rural areas (with population less than 10,000), only the traditional independent general stores or small-scale retailing are prevailing.
In rural areas, only traditional methods of distribution, i.e., wholesaler and retailers are working as usual. The modern methods of distribution, such as chain stores, super markets and franchise shops are not existing in rural areas because of small size of villages and lower income of rural folk.
Reasons for Increase in the Importance of Rural Markets
- Cut Throat Competition in Urban Markets:
Now-a-days people say that there is lot of competition in the market. Actually it is not only lot of competition but cut throat competition, especially in the urban areas. Companies are playing on the basis of price. Every big company is trying to swallow the small and new companies. Prices are going down steeply just because of the tough competition.
Apart from the price factor, companies have started increasing product features and added value to their products to compete in the market, without increasing the prices. The concept is increase the utility and value and decreases the prices. Irrespective of the above facts, there are certain products which have already achieved the maturity level or have reached the saturation level. Demand is not increasing in these sectors so the best strategy is to explore new markets for the products.
So rural marketing is turning out to be a market for the packaged products with a minimum or no competition. Firms can generate demand and increase profits.
- Socioeconomic Changes:
Today a revolution has come in the rural areas which in turn have brought a change in the socio-economic conditions. This is basically in terms of increase in the productivity of the agriculture. Most of the income of people residing in rural areas comes from agriculture. Due to the adoption of the latest technology the yield per acre or animal has increased considerably.
One of the major reasons behind these changes is the Government Policies to uplift the agriculture and remote areas, and the opening of the cooperatives in some major belts of India. Because of adoption of latest technology, production has increased which has resulted in the increase in income of farmers. Due to increase in income the rural customer also wants to be in the same frame as the urban customer.
Urge for increasing income and better standard of living by the rural customers has motivated the companies to go and spread their business activities in these areas. Some fertilizer companies have started adopting villages for increase in their production. Some companies have taken it as a social cause for the upliftment of remote areas. Integrated rural development programs encompass health, education, latest technology farming products sales, development of industry etc.
Another reason for this change is the media which has reached in the rural areas. Specially Television has brought a revolution in this area. Today we have so many regional channels. Customer can be made aware of the latest products, their utility, new brands, etc. With the increased income and aspiration for standard of living, with this kind of awareness provided by the media, the companies are motivated to go and take charge of the rural areas.
- Scope and Size of Rural Market:
Today the size and scope of rural market is increasing at a very fast pace. A major part of Indian population lives in the rural areas which are now turning as a new market. Now the rural market is not limited to the sale of fertilizers and pesticides but it is going beyond that with the increase in the income and the aspiration level.
Urge for good standard of living has opened the rural market as an opportunity for the companies to come and grab the market. Now in rural areas also there is a demand for TV, Cars, Shampoo, packaged goods etc.
Most of the rural customers are engaged in farming, trading, poultry work, plumbing, electric works, dairy, etc. We have different varieties of the occupation in the rural areas. In rural areas also big farmers usually possess almost everything like TV, fridge, furniture, and other home appliances etc. of the major brand. Small farmers have scarcity of resources and funds etc. so there is no question of possessing almost any branded products, specially costly products.
- Reference Groups:
In rural areas there are totally different reference groups. Any person who is having a say in their area, a respect in the society and a place in the hearts of the residents form a reference group. Higher the profile and requirement of these people in the society, higher will be their influence on them. They are basically health workers, doctors, teachers, panchayat members, local bodies, samiti members, bank managers etc.
- Media Types:
Now-a-days televisions, presentations, display, radio etc. has taken the place of old traditional folk programmes like ‘Nautanki’. Because of the literacy rate being so low, print media is not so effective.