– AN INSIGHT
RURAL MARKETING
© Harshit Ahuja

Table of contents
 Introduction
 Process of rural marketing
 Significance of rural marketing
 Rural consumer
 Strategies to capture rural market
 Rural Product Categories
 Rural marketing Strategies
 Product Strategies
 Consumer Adoption Process
 Product Life Cycle
 Packaging in Rural India
 Branding in Rural India
 Fake Brands
 The Fakes Market
 Distribution Models
 Some Noteworthy Success Stories

Introduction
Rural marketing is the
marketing for the customers
residing in rural areas. It
involves designing marketing
programe (4Ps) to arrive at
desired exchange with the
rural customers that satisfies
their needs and wants.

Process of Rural
Marketing
 It is a two-way marketing process wherein:
► Urban to rural - Major part of rural marketing. Includes
transactions of urban marketers who sell their goods and services in
rural areas pesticides, fertilizers, FMCG products, tractors, bicycles,
consumer durables, etc.
► Rural to urban - Basically falls under agricultural marketing. A
rural producer seeks to sell his produce in urban market like seeds,
fruits and vegetables, forest produce, spices, milk and related
products, etc.

Significance of Rural
Marketing
 Rural India accounts for more than 50% of the GDP.
 Out of total 62.97 million households, having income more
than 5 lakhs per annum; nearly 28.68 million households
(46%) live in Rural India.
 The rural market is projected to be bigger in India than the
urban market for the fast moving consumer goods, with an
annual size of Rs. 4,80,000 crore in 2015 and growing.
 Rural consumption expenditure is accounted for around 60
per cent, or Rs. 14,13,500 crore of the country’s total
consumption expenditure.

Rural Consumer
The rural consumers are classified into the following groups
based on their economic status:
The Affluent Group
► They are cash rich farmers.
► Very few in number.
► They have affordability but do not form a demand base large enough for
marketing firms to depend on.
► Wheat farmers in Punjab and rice merchants of Andhra Pradesh fall in
this category.

Rural Consumer
The Middle Class
► One of the largest segments for manufactured goods.
► It is fast expanding.
► Farmers cultivating sugar cane in UP and Karnataka fall in this category.
The Poor
► This constitutes a huge segment.
► Purchasing power is less, but strength is more.
► The farmers of Bihar and Orissa fall under this category.
► They receive grants from the government and reap the benefits of many such
schemes and may move towards the middle class.

Strategies to capture rural market
Marketing Mix Challenges
4 As Approach
► Availability – Poor road condition is a challenge to make the products available in
remote areas.
₪ HUL has built a strong distribution system that helps its brands reach the interiors of
rural market.
₪ Village stockiest use auto rickshaws, bullock carts and even boats to reach remote
areas.
₪ Coca Cola uses hub and spoke model to reach villages.

Strategies to capture rural market
Marketing Mix Challenges
► Affordability – Low disposable income of rural consumers. Small unit packs are
being introduced.
₪ Coca Cola has introduced 200 ml glass bottle priced at Rs. 5.
₪ Lifebuoy soap at Rs 2.
₪ Videocon washing machine without dryer at Rs. 3000.

Strategies to capture rural market
Marketing Mix Challenges
► Awareness – Only 41% of rural households have access to television-building
awareness is another challenge.
₪ Godrej consumer products, which is trying to push its soap brands into the interior
areas, uses radio to reach the local people in their own language.
₪ Haats are a good place to create awareness. There are 42000 rural haats which get
more than 4500 visitors per haat.

Strategies to capture rural market
Marketing Mix Challenges
₪ Coca Cola doubled its spend on advertising on Doordarshan, which alone reaches
41% of rural households.
₪ Melas are places where villagers gather once in a while for shopping. Companies take
advantage of such events to demonstrate and market their products.

Strategies to capture rural market
Marketing Mix Challenges
► Acceptability – There is a need to offer products that suit the rural market.
₪ LG developed a customized television for the rural market and named it Sampoorna.
₪ HDFC insurance tied up with non-governmental organizations and offered reasonably
priced policies in the rural market.

Strategies to capture rural market
Marketing Mix Challenges
Distribution strategy
► Using company delivery vans, melas, haats, and mandis/ agri markets.
Promotional strategy
► Rich traditional media forms like puppetry, folk dances, audio visuals,etc. should
be used to convey the right message to the rural folk.
► Forms with which the rural consumers are highly comfortable with should be used.

Rural Product Categories
Fast Moving Consumer Goods
Major players are HUL, Dabur, Marico, Colgate, Palmolive, Nirma, CavinKare and Godrej.

Rural Product Categories
Consumer Durables
Usha, Bajaj, Philips, Titan, Godrej, Videocon, Onida, Salora, Hero Cycles,Mahindra
& Mahindra and Tata.
New entrants – LG, Samsung and Maruti.

Rural Product Categories
Agricultural Products
Agricultural inputs seeds, fertilizers, pesticides, insecticides and implements
(tractors, tillers and threshers) Livestock, poultry and fishery.
Major players are Rallis India, Monsanto, Chambal Fertilisers, IFFCO,
Mahindra & Mahindra, Eicher and Escorts.

Rural Product Categories
Services
Telecommunications (BSNL), banking (SBI), insurance (LIC).

Rural Marketing Strategies
Degrees of Segmentation
Mass Marketing
► All consumers are being treated the same.
► Allows a company to target the maximum number of consumers.
Example –
₪ HUL offered only one detergent powder, Surf, to all consumers.
₪ But when Nirma entered the market and grabbed a sizeable market share of low-
income households.
₪ HUL woke up and introduced Wheel.

Rural Marketing Strategies
Degrees of Segmentation
Niche Marketing
► A very small group in a segment that has some specific need and the marketer has
specific skills to satisfy it.
Example –
₪ A Tractor that doubles up as a Thresher.

Rural Marketing Strategies
Segment Marketing
► Marketers have come to realize the potential of different consumer
segments, that are substantial enough to target and have responded by
offering low-priced sachets and appropriately designed products.
Micro Marketing
► Tailoring of the product to satisfy a particular taste or need.
Example –
₪ Dabur launched Anmol, a mustard and amla-based hair oil,
to target rural consumers in northern markets who used
loose mustard oil.

Rural Marketing Strategies
Products for price conscious segment
₪ Maharaja Appliance launched Bonus, a range of appliances for rural
market.
₪ Colgate’s 10 gm sachet of toothpaste.
₪ Asian Paints launched Utsav Distemper to target the chuna powder
popular in rural markets

Product Strategies
► New Product Development – Given the rising interest of companies in
the rural market, developing new products
suitable for the rural market has become an imperative.
Example –
₪ Philips free power radio does not require batteries or any external source
of electricity for operation.

Product Strategies
► Sturdy Products – Village people believe that the product should be
sturdy enough to withstand rough consumers
handling and storage.
Example –
₪Rajdoot Motorcycle manufactured
by Escorts Ltd. Is very popular in rural
areas because of its adaptability, low
maintenance costs, minimal breakdown
and easy accessibility of service and repairs

Product Strategies
► Brand Name – A brand should have short, simple, easy to pronounce,
can be remembered easily and should lend itself to
virtual interpretation.
► In rural markets, consumers do give their own brand name or the name of
an icon.
► Many a times rural consumers ask for peeli tikki or neeli tikki in case of
washing soaps.
Examples –
₪ LG Electronics branded one of the TV set as Sampoorna.
₪ Fertiliser companies normally use a logo on the fertilizer bag.

Product Strategies
► Small Unit Packings – Rural consumers receive daily wages and at the
same time their income is unsteady. Hence they
can’t make purchases in large quantities.
Example –
₪ HUL sells Shampoo and Hair oil in sachet packs in rural areas.
₪ Cavin Kare Ltd. has launched a sachet priced at 50 paise for its Chic
Shampoo.

Product Strategies
► Low Priced Packing –
₪ Tata Tea launched ‘Agni’ as an economy brand in rural areas to compete
with loose tea powder.
₪ ITC has launched ‘Hero’ containing blended tobacco and is priced just
for the pockets of rural consumers.

Consumer Adoption Process
► The adoption of new products and services is slow among rural
consumers in comparison to urban consumers.
₪ Poor awareness of new products because of low media access.
₪ Resistance to trying new products in the absence of demonstrations.
► The sarpanch, the school teacher, and salaried people who have better
media access and market exposure become early adopters.
₪ Some of them in turn act as opinion leaders for other potential buyers.
► The inducement of product trials and demonstrations works well in rural
for the adoption of new products.

Branding in Rural India
► Brand Association is mainly with Colors, numbers, and visuals and not
necessarily with the name of the brand.
► Retailers play a major role in brand promotion.
₪ Due to strong bonding and trust between customers and retailers, coupled with
low brand awareness, consumers often do not ask for the product by brand but
instead will request the retailer, ‘Paanch rupaye waali chai dena’.
₪ It is upto the retailer to push the brand.
► First mover brands become generic brands –
₪ Detergent powder came to be identified with Surf.
₪ Mosquito coil with Kachua Chaap.
₪ Vegetable oil with Dalda.

Fake Brands
► Rural markets suffer from the problems of low penetration and poor
availability of branded products.
► Although there exists a huge demand for branded products, there are no
distribution channels to make the product reach the customer.
► This has led to the growth of fake brands.
Examples –
₪ Ponds has been replaced by Bond’s talc.
₪ Fair & Lovely by Fair & Lonely.
₪ Lifebuoy by Likebuoy.

The Fakes Market
► Lookalikes – Products where the color scheme on the packaging material
closely resembles that of a popular brand but the pack
carries a different name.
Examples –
₪ Lalita Amla for Dabur Amla.
► Spellalikes – Fakes of original brands packaged in colors and designs
similar to those of the originals but have names that are
subtly and cleverly misspelt.
Examples –
₪ Paracute for Parachute.
► Duplicates – Exact replicas of original brands. The color, design, and
name on the package are the same as those of the original brands.

Distribution Model for FMCG Companies
Company
Clearing &
Forwarding Agents
Distributor
(Urban)
Wholesaler
Retailer
(Satellite market)
Retailer
(Rural)
Wholesaler
Retailer
(Urban)
Retailer
(Urban)
Distributor
(Rural)
Sub-distributor

Nirma Distribution System
Nirma
(Ahmedabad)
Depot
(Hyderabad, Kolkata, Kanpur)
Direct Distributor
(At the district level)
Sub – distributor / Big wholesalers
(At the tehsil level)
Wholesaler Retailer

Distribution Model of Durable
Goods Companies
LG
Depot
Clearing &
Forwarding Agents
New Rural
District Office
Warehouse
Multiple DealersExclusive Dealers
Consumer

Distribution of Fake Products
Manufacturer
Wholesaler in Big City
Wholesaler in small
town / Kasba
Village Retailer
Customer
Haat Retailer Mobile Trader

Some Noteworthy Success
Stories
► "Yaara da Tashan..." ads with Aamir Khan created universal appeal
for Coca Cola.
₪ Coca-Cola India tapped the rural market in a big way when it
introduced bottles priced at Rs 5 and backed it with the Aamir Khan
ads.

Some Noteworthy Success
Stories
► In 2000, ITC took an initiative to develop indirect contact with
farmers who lived in far-flung villages in Madhya Pradesh.
₪ ITC's E-chaupal was the result of this initiative.
► HUL with its Project Shakti has already has a reach of 1.7 lakh
villages, and aspires to reach 5 lakh villages by 2020.
► In 2014-15, LIC sold 55% of its policies in rural India.

► Out of two million BSNL mobile connections, 50% are in small
towns / villages.
₪ Of the 6.0 lakh villages, 5.22 lakh have a Village Public Telephone
(VPT).
► Out of the 20 million Rediff mail sign-ups, 60% are from small
towns.
₪ 50% of transactions from these towns are on Rediff online shopping
site.
► 42 million rural households are availing banking services in
comparison to 27 million urban households.
► Mahindra & Mahindra sells most of its SUVs in the rural market.
Some Noteworthy Success
Stories