Challenges faced in Indian Rural Marketing
The concept of Rural Marketing has been evolving continuously over the years and can be classified into three major phases – pre 1960s when it was synonymous with agricultural marketing; 1960s-1990s which saw the growth in the marketing of non-farm rural products; and post 1990s, where the prime focus of the companies is to market FMCG and consumer durable goods in rural areas as a result of rise in income levels as well as the number of middle class families.
With about 60% of the Indian population living in rural areas and representing half of the country’s buying potential even today, the Indian economy can be developed by improving the living conditions in rural areas. Rural illiteracy is the prime area of concern and various projects have been undertaken time and again to improve the rural conditions. A recent study by NCAER (National Council for Applied Economic Research) reveals that the number of middle/ high‐income households in rural India is expected to grow from 130 Million to 172 Million by the end of 2012 as compared to nearly 71 million of urban India.
Despite the fact that India is unarguably one of the largest consumer markets in the world, it is difficult to tap the market. Various marketing theories and concepts have been directly implemented in India, but have met minimal success. This is due to wide variations in size and potential of different segments owing to various parameters like income levels, diversity in language & religion, geographical diversity etc. Even, a company like Kellogg’s had to face the consequences of the unpredictability of the Indian market. The sales of cereals were abysmally low and forced the company to introduce new eating habits in the country. However, in the meantime, a major chunk of the already existing cereal market (which was small in size), was taken away by imitators who introduced local cereal flavors at much lower prices. As a result, Kellogg’s had to realign their marketing strategies and introduce inexpensive biscuits meant for breakfast. It is therefore essential for the marketer to look beyond time tested concepts and reevaluate the entire approach. In order to tap the rural market adequately, the traditional marketing concepts should be modified. This is when the importance of Packaging, Retailer, Education and Empowerment comes into picture.
A rural consumer is always a budget seeking consumer. It is essential to first match a product’s expectations and its pricing structures. It is to be noted that most of the rural population comprises of daily wage workers who tend to have minimal stock of money. Depending on her daily income, she fixes a budget for the purchase and makes a decision after taking other parameters like after sales service, warranty period etc into picture. Thus, the products in the rural market should be able to meet the basic needs of the consumer, as a rural consumer shall not be willing to pay additionally for extra benefits. This makes pack sizes and price points all the more important. For instance, a rural consumer would prefer buying a shampoo sachet to a large bottle which could be used for over a month. Packaging should also be done accordingly in smaller units and lesser priced packs, thereby making them affordable.
Physical distribution becomes arduous due to high costs involved and the non availability of retail outlets. Melas & Haats, and Rural Marketing Vehicles (RMVs) could prove to be better means of distribution as the rural consumers prefer ‘touch and feel’ experience.
In rural markets, a consumer’s buying behavior is widely influenced by social customs and traditions. Higher levels of illiteracy and lack of exposure to traditional media practices further add to the problems. Hence, the advertising mix should be customized and contain other alternative forms like street plays, wall painting, posters etc.
A retailer’s importance should be clearly understood because he plays a vital role in influencing the customer’s decision making process. A rural consumer frequents the same shop in order to buy as per her daily requirements. As a result of the lack of brand awareness among the rural population, the amount of purchases is positively correlated with the extent to which a retailer pushes the product belonging to a particular brand. Effective incentive schemes and trade promotion activities should be developed to maintain a long lasting relation with the retailer.
The levels of unemployment are very high in the rural areas. Hence, any marketing strategy which involves the scope of income generation would be more preferable. The success of “Self Help Groups”, which helps in generating income apart from operating like direct to home distributors, is a reflection of this viewpoint.
The concept of “e-choupals” introduced by ITC is noteworthy in the context of Indian Rural Marketing. The presence of these e-choupals is increasing at a rapid rate. It helps in raising the income levels of farmers by providing better prices for their produce in comparison with auctions. These also provide high quality seeds and online advice on various agricultural practices. These practices enable the farmers to increase the consumption levels of the products and services offered by ITC.
A clear understanding of the “Value for Money” concept in the rural areas shall be the major differentiating factor between a successful brand and its competitors. This has been proved by HLL (Hindustan Lever Ltd). HLL discovered that Indians in the rural areas used soaps for multiple purposes. This resulted in the design of all-in-one soaps which was a huge success.
The writer, Siddharth Chhottray, is currently pursuing PGDM at T A Pai Management Institute / TAPMI (2010-2012) and is an alumnus of BITS, Pilani (Goa- Class of 2009)
Email : email@example.com