1. RURAL MARKETING IN INDIA
Suchiradipta Bhattacharjee
School of Social Sciences
College of Post Graduate Studies
Central Agricultural University

2. RURAL MARKETING IN INDIA
Definition of rural marketing
According to NCAER, a rural market is any market that exists in the rural area with a
population less than 10,000, where the real density of population at any population
nucleation is low without any significant infrastructure. Rural marketing is planning and
implementation of marketing function for the rural areas. It is a two way marketing process
which encompasses the discharge of business activities that direct the flow of goods and
services from urban to rural areas and vice-versa. According to Mr. Adi Godrej, Chairman,
Godrej group, “the rural consumer is discerning and the rural market is vibrant. At the current
rate of growth it will soon outstrip the urban market. The rural market is no longer sleeping
but we are”. Kashyap has defined rural marketing as a function which manages all those
activates 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 to them and thereby achieves the goals of
the organization.
Concept of rural marketing
The meaning and concept of rural marketing has changed with changing times, especially
gaining impetus after the globalization and liberalization of economy since 1990s. The
changing pattern and face of rural marketing is discussed here.
Phase I (before 1960): Rural marketing referred to selling of rural products in rural and
urban areas and agricultural inputs in rural markets. It was treated as synonymous to
‘agricultural marketing’. Agricultural produces like food grains and industrial inputs like
cotton, oil seeds, sugarcane etc. occupied the central place of discussion during this period.
The supply-chain activities of firms supplying agricultural inputs and of artisans in rural areas
received secondary attention. This was totally an unorganized market where all banias and
mahajans (local business people) dominated this market.
Phase II (1960-1990): In this era, green revolution resulted from scientific farming and
transferred many of the poor villages into prosperous business centres. As a result, the
demand for agricultural inputs went up especially in terms of wheat and paddy. Better
irrigation facilities, soil testing, use of high yield variety seeds, fertilizers, pesticides and
deployment of machinery like powder tillers, harvesters, threshers etc. changed the rural
scenario. In this context, marketing of agricultural inputs took the importance. Two separate
areas of activities emerged during this period - ‘marketing of agricultural inputs’ and the

3. conventional “Agricultural Marketing”. Village industries flourished and products like
handicrafts, handloom textiles, soaps, safety matches, crackers etc. hit the urban market on
a large scale from rural areas.
Phase III (Post 1990s): Marketing of household consumables and durables gained
momentum in the rural areas with increase in economic stability of the rural households and
liberalization of Indian economy. But as the industrial sector gained momentum during this
period and increased its contribution to GNP, a new service sector had emerged signifying
the metamorphosis of agricultural society into industrial society. The economic reforms
further accelerated the process by introducing competition in the markets. Steadily, the rural
market has grown for household consumables and durables.
Table 1 Changing concept of rural marketing in India
Phase Origin Function Major
Products
Source
Market
Destination
Market
I Before 1960 Agricultural
marketing
Agricultural
produce
Rural Urban
II 1960s-1990s Marketing
of agricultural
inputs
Agricultural
inputs
Urban Rural
III Since 1990s Rural
marketing
Consumables
and durables
for consumption
and production
Urban/
Rural
Rural
Scope of rural marketing
Rural Urban
Rural
Market
Urban
Production
Figure 1 Rural marketing matrix
Farm and non-farm and
services
(Unorganized sector)
Brand consumables and
durables
(Organized sector)
Handicrafts, handloom,
textiles, leather products
(Semi-organized sector)

4. As the line between the consumption pattern of rural and urban population is thinning, the
scope of rural marketing is widening gradually in India. Depending on the production and
consumption market, the rural marketing sector can be identified into organized, semi-
organized and unorganized sector.
Organized sector: This sector has the production centre in the urban areas and the
consumer market in rural areas. The goods mainly consist of brand consumables and
durables. The Fast Moving Consumer Goods (FMCG) are the main products of this market
and are gaining much popularity in recent times.
Semi-organized sector: With production in rural areas and consumers in urban areas,
these markets mostly deal with handlooms, handicrafts and other products of the village
industries. Proper organization and facilities in this sector does not only have the potential to
increased opportunities for the village industries but exporting the products in overseas
markets can bring in high profits.
Unorganized sector: This market has both producers and consumers in the rural markets
and the main products are farm and non-farm products and services. Since agriculture and
allied activities is the principle occupation of the rural people, farm products and services are
the principle products in this sector.
Classification of rural markets
1. Consumer market: The major constituents of consumer market are individuals and
households. Consumables like food products, toiletries, textiles, footwear, etc. and durables
like watches, two wheelers, TV, refrigerator, washing machines, etc. day to day things are
the major products of this market. It forms one of the major chunks of rural market in India.
2. Industrial market: The markets concentric to different industries like agriculture and allied
activities, cottage industry, health industry/pharmaceutical industry, educational institutions,
etc. form the industrial markets. Consumables like seeds, fertilizers, pesticides, animal feeds
and medicines, etc. and durables like tractors, pump sets, harvesters, generators, etc. are
the major products of industrial market. With gradual urbanization and shifting focus to the
rural markets, the industrial market is slowly getting popularity in the rural areas.
3. Service market: With changing consumer behaviour and increasing purchasing power of
the rural masses, their lifestyle is getting diversified increasing the need of the service
sector. The service market serves individuals, households, offices, production firms, etc. The
services offered are repairs, transport, banking, credit, insurance, repairs, healthcare,
education, communication, etc.

5. Nature of rural markets
1. Elastic: Rural marketing has changed in nature from being transactional to developmental
and from going alone to partnerships. It has benefitted from information technology
developments to find out the solutions of rural problems.
2. Developmental: Rural marketing is more developmental than transactional. It is a
process of delivering a better standard of living and quality of life to the rural consumers.
3. Social process: The vital element of rural marketing is communication. It should serve to
resolve social conflicts and strengthen competitive spirit during interactions between rural
and urban areas as well as within rural areas.
4. Innovation: Innovation is the essence of marketing. Innovative methods of social change
are vital for the successful transformation of traditional society.
5. Discipline: Rural marketing has emerged as a separate discipline and now it is offered as
a subject of study in many colleges and universities. Several textbooks are also available in
the market on the subject. The subject has also caught the attention of researchers.
6. Social status: The job opportunities in rural areas are increasing. It is reported that Shakti
Ammas of HUL’s Project Shakti have gained new respect in their areas. A survey revealed
that rural retailers influence 35% of purchases.
7. Association: Every profession has an association which creates a forum for exchange of
ideas and improvement of practices. Such associations lay out a code of conduct for its
members to follow and also design standards for excellence. The formation of Rural
Marketing Agencies Association of India (RMAAI) is such an association.
Characteristics of rural marketing
1. Large, diverse and scattered market: Rural marketing in India is large, and scattered
into a number of regions. There may be less number of shops available to market products.
2. Major income of rural consumers is from agriculture: Rural prosperity is tied with
agriculture prosperity. In the event of crop failure, the income of masses is directly affected.
3. Traditional outlook: Villages develop slowly and have a traditional outlook. Change is a
continuous process but rural people accept change gradually. This is gradually changing due
to literacy especially in the youth who have begun to change the outlook in the villages.
4. Standard of living and rising disposable income of the rural customers: It is known
that majority of the rural population lives below poverty line and has low literacy rate, low
savings etc. Today the rural customers spend money to get value and are aware of the
happening around him.
5. Rising literary levels: It is documented that approximately 45% of rural Indians are
literate. Hence awareness has increase and the formats are well informed about the world

6. around them. They are also educating themselves on the new technology for a better
lifestyle.
6. Diverse socio economic background: Due to differences in geographical areas and
uneven land fertility, rural people have different socio economic background, which
ultimately affects the rural markets.
7. Infrastructure facilities: The infrastructure facilities like warehouses, communication
systems and financial facilities are inadequate in rural areas and physical distribution is a
challenge to marketers.
Potential of rural markets
1. Large population: A staggering 12 per cent of world’s population and according to 2011
census, 69 per cent of the country’s population lives in rural India and it is scattered over a
large geographical area.
2. Rising rural prosperity: Average income level of the rural people have improved due to
modern farming practices, contract farming, industrial growth, migration to urban areas, etc.
Since 2000, the Compounded Annual Growth Rate (CAGR) has been 6.2 % for rural India
and 4.7 % in urban India.
3. Growth in consumption: 56 % of India’s consumption comes from rural areas. Between
2009-2010 and 2011-2012, rural consumption grew annually at 19 % whereas urban growth
has been 17 %. Between 2009 and 2012, the spending in rural India was $ 69 billion and for
urban India it was $ 55 billion.
4. Change in life style: Life style of rural people has changed considerably and rural
consumption has increased shift to discretionary items like electric fan, bi-cycle, TV, two and
four wheeler, mobile phones, etc.
5. Higher market growth rate: The growth rate of Fast Moving Consumer Goods (FMCG)
market and durable market is high in rural areas. The rural market share is more than 50 %
for products like cooking oil, hair oil, etc. The growth of rural market has been 5 time more
than the urban market in recent times.
6. Life cycle advantage: The products which have attained maturity stage in the urban
market are still in growth stage in rural market giving the manufacturer and marketer a good
scope for profit making.
7. Rural marketing is not expensive: Cheap labour in the rural areas make promotion and
movement goods within the rural markets much less expensive compared to urban markets.
According to Labour Bureau of India, in 2012 the daily wages of men and women in rural
areas was ` 194 and `132 respectively which is much cheaper than the urban areas.

7. 8. Remoteness is no longer a problem: 1433577 km of rural roads as per Census 2011
has made rural connectivity much easier and reaching the rural markets in many parts of the
country is no longer a problem. This has also contributed to the influx of FMCG and durables
in rural markets.
Rural marketing environment
Rural marketing environment is a complex and ever changing one and the marketing
organizations need to continuously keep pace with it, adopt strategies accordingly and
employ creative marketing strategies to strive in the rural marketing environment. The major
components of rural marketing environment are
a) Social environment
b) Economic environment
c) Ethical environment
d) Political environment
e) Physical environment
f) Technological environment
SOCIAL ECONOMIC
Psychological factors
Sociological
factors
Anthropological
factors
Price
Competition
Consumer
ETHICAL
POLITICAL
PHYSICAL
TECHNOLOGICAL
Marketing
organizations

8. Figure 2 Rural marketing environment
A. Social environment: The main components of social environment are discussed below:
1. Psychological factors: Consumer behaviour, attitudes, personality and mental make-ups
are unique. These factors greatly influence the buying and spending behaviour of the rural
consumers. The study of these behaviour is also vital to plan strategic marketing mix.
2. Sociological factors: Consumer society or the community is important. The consumer life
style is influenced by the social set-up. The social constitution and changes influence
customer habits, taste, and lifestyles.
3. Anthropological factors: The reasonable cultures and subcultures and living patterns
influence advertising sales promotion, selling strategies and packing. The consumers in East
India have different taste than consumers in South India and these factors are important
considerations in marketing.
4. Demographic factors:
1971 1981 1991 2001 2011
Total population (million) 548.2 683.3 848.3 1026.9 1210.2
Rural population (million) 524.0 628.8 741.6 833.1
Proportion of rural population to total
population (million)
80.1 76.6 74.3 72.2 68.9
Decadal variation (%) 19.8 16.7 15.2 9
Source: Census, 1991, 2001, 2011
5. Education:
Rural literacy 1981 1991 2001 2011
% of literates 36 45 59 67.77
Source: Census, 1991, 2001, 2011

9. 6. Household number
Particulars 1991 2001 2011
Rural Urban Total Rural Urban Total Rural Urban Total
Household
number
(million)
112 40 152 138 54 192 220 110 330
Family size 5.55 5.32 5.36 5.31 5.08 4.81
Source: Census, 1991, 2001, 2011
7. Rural housing pattern
House type 1981 1991 2001 2011
Pucca (%) 22 31 41 55.4
Semi-pucca (%) 37 36 36 27.6
Kuccha (%) 41 33 23 17
Total 100 100 100 100
Source: Census, 2001, 2011; NSS 2009
8. Occupational pattern
Occupation Population in million
Total Rural Urban
Ain worker 362 245 116
Marginal worker 119 102 17
Cultivators 118 114 4
Agricultural labourers 144 136 8
Household industry worker 18 11 7
Other workers 200 85 115
Source: Census of India, 2011

10. B. Economic environment: The components of economic environment are as follows:
1. Price: Pricing is a delicate issue in rural markets where it should be market-friendly and
consumer-friendly as the rural consumers are more price sensitive compared to their urban
counterparts. The marketers have to keep in mind to get descent returns on investment and
effects of producers and marketers.
2. Competition: Compared to the urban market, rural market has much less competition
mostly because of the late attention it received from the marketing agencies and the
organized sector. But currently with saturation of the urban markets, the competition is rising
in rural markets mostly among the FMCG.
3. Consumer: The awareness level of the rural consumers are increasing everyday thanks to
increasing literacy levels, increased exposure to mass media channels, Information and
Communication Technology and shifting attention of the marketing agencies.
4. Consumer’s expenditure pattern
Composition of rural per capita expenditure
Food Non-food
1983 66 34
1991 63 37
2001 59 41
2013 49 61
Source: NSSO, 2001, 2013
5. Size of rural market: Total size of the rural market in 2012 was worth US$ 425 billion
Annual size of rural market in 2012-’13
FMCG US$ 14.8 billion
Durables US$ 604 billion
Seed US$ 2 billion

11. 6. Rural development
Population below the poverty line (Rural)
Period No. of Persons
(Million)
% of Persons Poverty line
(Rs.)
1983 252 46 89.5
1993-94 244 37 206
1999-2000 193 27 328
2013 270 22 368
Source: Human Development Report, 2001; Economic Times, 2013
7. Five Year Plan allocations
Sectoral allocations during the five-year plans (Rs. crore)
Head of
Development
7th
FYP 8th
FYP 9th
FYP 10th
FYP 11th
FYP 12th
FYP
Agriculture 105 225 372 589 1,165 2,840
Rural
Development
89 344 890 1,219 3975 6730
Source: Planning Commission 2002; National Development Council, 2013
C. Ethical environment: Business minus ethical values brings degeneration. In the long run
it brings problems. Lack of standardization, exploitation, falsification, etc. disenchants the
rural consumers towards a product or a brand or company itself.
D. Political environment: The government policies towards trade and commerce, internal
taxation and preferential treatments have a influence on the marketing strategies. The
marketing environment has to meet the political frame work in which a government is made
to work.

12. E. Technological environment: The fast changing science and technology gives a cutting
edge to the marketing of products. These changes warrant changes in marketing inputs and
strategies. Faster and efficient communication and transport systems have speeded up the
marketers. The capital is made to work faster and harder .So the marketer has to use these
new marketing tools and facilities in designing and implementing his marketing strategies
which are adaptive to the change in environment and ensure success.
F. Physical environment: The infrastructure availability for movement and storage of goods
play an important role in the physical distribution of goods and reaching the consumers.
Efficient and cheaper logistics helps the market in a big way to keep prices in limits.
1. Distinguishing features of rural and urban life
Population Density (Urban + Rural) (Per Sq. Km.)
1971 1981 1991 2001 2011
Population Density (Total) 177 216 267 312 382
Rural 171 214 253
Distribution of Towns and Villages
1991 2001 2011
No. of Towns 3,697 5,161 7,935
No. of inhabited Villages 580,779 593,154 597,608
Total no. of Villages 634,321* 638,588* 6,40,867*
* The total number of Villages also includes non-inhabited Villages.
Source: Census of India 2001, 2011
2. Road connectivity
Road Connectivity at the Village level
PMGSY roads Non-PMGSY roads
2011 3,20,000 1,10,000
Source: Census, 2011

13. 3. Telephone connectivity
Telecom Density (Phone per 100)
2000 2005 2013
Urban 8.2 26.2 144
Rural 0.7 1.74 41.70
All 2.9 9.08 73.32
Source : Telecom Regulatory Authority of India Report, 2005, 2013
 Rural vs. Urban market
Sl.
No.
Factors Urban Rural
1 Philosophy Marketing and societal concepts,
Green marketing and relationship
marketing
Marketing and societal concepts,
development marketing, and
relationship marketing.
2 Market demand High demand for luxury items,
FMCG, etc.
Low demand for luxury items and
FMCG but the demand is
increasing
Competition Since urban markets are mostly
dominated by the organized
sector, so high competition
among the organized sector
Rural market is mostly
dominated by the unorganized
sector and so the competition is
high in it
Consumer
a) Location Mostly concentrated location of
urban areas due to highly defined
and organized infrastructure
Wide spread location of rural
market due to wide spread rural
areas and large number of
village and village markets
b) Literacy 85 % of urban population are
literate
68.9 % of rural population are
literate
c) Income Per Capita Income in rural areas
in 2004-’05 was Rs. 44,223.
Per Capita Income in rural areas
in 2004-’05 was Rs. 16,327
d) Expenditure MPCE is Rs 1,984.46 in urban
India according to NSSO 2009-
2010
MPCE is Rs 1,053.64 in rural
India according to NSSO 2009-
2010

14. The expenditure in urban areas is
mostly planned and even
throughout the year
Expenditure in rural areas has
seasonal variations due to the
seasonal income related to farm
outputs
e) Needs For urban consumers the needs
are generally high because of
high income, easy awareness and
availability and planned marketing
strategies
For rural consumers the needs
are generally low due to lower
income, Limited awareness and
availability and neglected
marketing strategies
f) Innovation adoption Due to higher exposure and
awareness, the urban consumers
are mostly innovative in nature
Due to high tradition orientation,
lack of exposure and awareness,
the rural consumers are sceptical
and laggard in nature
4 Products
a) Awareness Product awareness is high due to
better marketing, higher exposure
to mass media channels like TV,
internet, etc.
Product awareness is low due to
low exposure to mass media
channels and lesser marketing
b) Positioning The positioning of the urban
markets are easier due to their
concentrated nature
Because of their diluted or wide
spread nature, the positioning of
the rural markets are difficult
both for producers and
consumers
c) Quality preference It is high in urban markets due to
high degree of awareness
It is low in rural markets due to
low degree of awareness
d) Features Features of products are very
important in urban market as
quality preference is high
Features are less important in
rural markets as quantity
preference is high
5 Price sensitivity Because of higher income, the
urban consumers are moderately
price sensitive
Because of lower income, the
rural consumers are highly price
sensitive
6 Price level desired Generally medium to high price
level is desired in urban markets
due to higher per capita income
and expenditure
Generally low to medium price
level is desired due to low to
medium income and expenditure
of majority of customers
7 Distribution channels Large arrays of distribution
channel are in urban markets due
to high demand of products.
Distribution channels generally
found are wholesalers, stockists,
retailers, supermarkets, specialty
stores and authorized show
rooms
Distribution channels are
generally limited to Village
shops, Shandies, Haats and
Jatras

15. 8 Transport facility In urban markets transport
facilities are good
In rural markets the transport
facilities are generally moderate
9 Product availability Due to high demand, a large
range of products are available in
urban markets
Due to less demand, generally
moderate range of products are
available in rural markets
10 Advertising Print, audio-visual media, outdoor
hoardings and posters, exhibitions
etc. wide range of advertising
strategies are available in urban
markets
Few dialects are used in urban
markets due to highly diverse
population and high concentration
TV, Radio, print media to some
extent are used for advertising
the products in rural markets
More languages are used in rural
markets due to mostly
homogenous population
11 Personal selling Door-to-door selling is frequent in
urban market due to high
concentration of population
Because of their wide spread
nature, door-to-door selling is
very rare in rural markets
12 Sales promotion Contests, gifts, price discounts
are the most frequently used
means of sales promotion
Gifts and price discounts are
mostly used but contests are
rarely used in rural markets
13 Publicity Because of a large number of
media present in urban market
and their access to the consumer,
scope of publicity is high in urban
markets
Scope of publicity is less in rural
markets due to less exposure to
mass media channels of the rural
customers
Consumer behaviour
Consumer buyer behaviour refers to the buying behaviour of the final consumers –
individuals and households who buy goods and services for final consumption and all these
consumers make up the consumer market. Rural India id much larger than the urban India
and this huge segment of the rural population displays vast difference in their purchase
decisions and product use. Villagers react differently to different products, colours, sizes, etc.
in different parts of India. Thus utmost care is needed in terms of understanding consumer
psychology for marketing products in rural India. Factors influencing the buying behaviour of
the rural people are discussed below:
a) Environment of the consumer: The environment or the surroundings, within which the
consumer lives, has a very strong influence on the buyer behaviour. For example,
electricity increases the demand for TV, mobile phones, etc.

16. b) Geographic influence: The geographic location in which the rural consumer is located
influences the thought process of the consumer.
c) Family: Family size and role played by family members exercise considerable
influence in the purchase decisions. It has been observed that, purchase of durables
has less to do with income and more with size of the family.
d) Economic factors: The quantum of income and earnings stream are one of the major
deciding factors which determine to a great extent what the consumer will be able to
buy. Many people in the rural market are below poverty line and for large number of
people agriculture is the primary occupation. More than 70 per cent of the people are
in small scale agricultural operation and these factors influence their buying process.
e) Place of purchase: A consumer is buying the product from the village haat, retailer or
wholesaler also influence his thought process and ultimately buying behaviour.
f) Multiple use of product: In rural markets, products with multiple use are more popular
and likely to gain market faster.
Characteristics of rural consumer: The rural customer shows distinctive characteristics,
which makes him different from the urban buyers.
a) Education Profile: Nearly 45% of the rural Indians are literate (men 59%, women
31%). The rural customer has much lesser education than his/her urban counterpart.
Generally, the maximum education that one sees among rural areas is still primary
school or high school level. Though rural literacy programmes have made significant
headway, we are still confronted with a customer who is illiterate. This comes in the
way of the marketer using print media and handbills to promote the product. Visual
displays and phonetics become important in promoting the product in the rural areas.
Demonstration on product usage and even on how to use it becomes integral to the
marketer’s promotion strategy.
b) Low income levels: Though rural incomes have grown manifold in the last one decade,
still an average rural consumer has a much lower income than his or her urban
counterpart. Still a large part of his income goes to provide the basic necessities,
leaving smaller income to be spent on other consumer goods. This makes the rural
consumer more price sensitive than the urban consumer. Marketers have evolved
various strategies to lower the final prices. One such strategy is designing special
products as reflected by Hindustan Lever’s strategy of developing Sunlight Detergent
Powder and the other in even reducing the size of the product. Another aspect of this
low income is that an average rural customer buys a single unit of the product and not in
bulk.

17. c) Occupations: Typically, in the rural area one finds that the principal occupation is
farming, trading, crafts, and other odd jobs like plumbing, electric works, etc. One also
finds primary health workers and teachers in the rural areas. Since farming, animal
husbandry and poultry farming are the principal occupations we find that even here we
have different types of farmers. The basis for differentiation is obviously their size and
ownership of land. We have their consumption patterns differ mainly because of their
income levels. For example, a large or a big farmer will have almost everything that an
urban consumer will have. He is an affluent farmer and represents the highest end of
the rural income continuum.
d) Reference Groups: Typically in rural area, the reference groups are the primary health
workers, doctors, teachers and the Panchayat members. One may even observe that
the village trader or the grocery shop owner, commonly called the “baniya” or the
“mahajan”, may also be an important influence in the rural customers decision-making.
This is because the trader extends credit to the farmers. Today, another person is also
considered as a change agent and that is the rural bank’s officer or manager. A
marketer needs to be aware of these influences that can effect a change in the rural
customers’ consumption patterns.
e) Media Habits: A rural customer is fond of music and folklore. In a state like
Maharashtra the rural theatre called “Tamasha” has held sway with the people.
Likewise, “Nautanki” in which the artists are a part of the audience entertains the rural
Uttar Pradesh. Today, television and radio are important forms of media, which hold the
attention of rural folks, so is the video. Radio programs reach almost 95% of the Indian
population, while television programs is now as high as 85%. As we mentioned earlier
because of a low education level print media does not have that much of an impact as
the audio and the audiovisual media does.
f) Importance of customs: Basic cultural values have not yet faded in rural India. Buying
decisions are still made by the eldest male member in the rural family whereas even
children influence buying decisions in urban areas. Further, buying decisions are highly
influenced by social customs, traditions and beliefs in the rural markets. Many rural
purchases require collective social sanction, unheard of in urban areas. The rural
attitude towards consumption has been traditionally based on the values of restrain and
self-denial. But the high exposure to T.V advertising in recent years where brands are
working relentlessly to loosen this restraint by communicating escape/release and self-
confidence messages is having its effect, particularly on the youth. But Caste and
family are still paramount in rural life.

18. Buyer decision making process: The decision making in consumers is generally a five
step process discussed below:
a) Problem recognition: This is the first stage where a person recognizes that there is a
problem or a need to fulfil. This may either be an actual state where a problem has
arisen and needs to be sorted out; the product is failing, or the consumer is running
short of it, and thus needs a replacement. A problem could also be a desired state
where there is an imbalance between the actual state and the desired state; another
product seems better and superior to the one that is being currently used, and so the
consumer wants to buy it. A need could be triggered off by an internal stimulus or an
external stimulus. Marketers need to identify what could trigger a particular need.
b) Information search: After a need is recognized, the consumer goes for an information
search, so as to be able to make the right purchase decision. He gathers information
about the product category and the variations, various alternatives and the various
brands. Such a search could be ongoing, specific or incidental. The consumer could
recalls information that is stored in his memory (comprising information gathered and
stored, as well as his experiences, direct and indirect). He could also seek information
from the external environment. The sources of information search could be personal
(family, friends, peers and colleagues), commercial (marketers’ communication in the
form of advertising, salespersons, publicity etc), public (mass media, consumer
forums, government rating agencies) and experiential (self and others’ experiences).
Personal contacts are highly influential sources, public sources are highly credible.
c) Evaluation of alternatives: Once the consumer has gathered information and identified
the alternatives, he compares the different alternatives available on certain features.
These are those features that a consumer considers in choosing among alternatives;
these could be functional/utilitarian in nature (benefits, attributes, features), or
subjective/emotional/hedonic (emotions, prestige etc.).The consumer also uses
decision rules that help a consumer simplify the decision process. At the end of the
evaluation, purchase intentions are formed.
d) Purchase decision: After the consumer has evaluated the various alternatives, he
selects a particular brand. Consumer purchases may be trials/first purchases or
repeat purchases. The consumer may further have to make decisions on where to
buy from, how much to buy, whom to buy from, when to buy and how to pay. It is
noteworthy that a purchase intention (desire to buy the most preferred brand) may not
always result in a purchase decision in favour of the brand; it could get moderated by
attitudes of others and unexpected situational factors.

19. e) Post purchase behaviour: After the purchase, the consumer uses the product and re-
evaluates the chosen alternative in light of its performance viz. a viz. the expectations.
He could be experience feelings of neutrality (Performance meets expectations),
satisfaction (Performance exceeds expectations) or dissatisfaction (Performance falls
short of expectations). This phase is significant as it (i) acts as an experience and
gets stored in the memory; (ii) affects future purchase decisions; (iii) acts as a
feedback.
Consumer behaviour pattern: Consumer behaviour pattern can be classified under two
types:
A. Degree of involvement
B. Amount of time spent
A. Degree of involvement: Different pattern of behaviour on purchasing different types of
products and services. They buy from nearby shops and don’t deliberate much on the
characteristics of products. Individual decisions are made. In case of durables they visit
different shops and opinions of others and evaluate product characteristics and benefits,
their financial, payment schedule is decided and then decide.
Depending on high and low degree of involvement and difference among brands, buying
behaviour can be classified into following four types:
High involvement Low involvement
Significant differences
among brands
Complex buying behaviour Variety seeking behaviour
Few differences among
brands
Dissonance reducing
behaviour
Habitual buying behaviour
i) Complex buying behaviour: Consumers engage in complex buying behavior when
they are highly involved in a purchase and aware of significant differences among
brands. This is usually the case when the product is expensive, bought infrequently,
risky and highly self-expressive. The marketer needs to differentiate the brand’s
features, use print media to describe the brand’s benefits and motivate store sales
personnel and the buyer’s acquaintances to influence the final brand choice. This
kind of buying behavior is seen in case of purchasing computers, refrigerators,

20. automobiles, etc. Marketers should help consumers learn about the product,
attributes, uses and benefits; make comparative analysis of features and benefits of
products in print media and train and motivate personnel.
ii) Dissonance reducing behaviour: Sometimes the consumer is highly involved in a
purchase but sees little difference in the brands. The high involvement is based on
the fact that the purchase is expensive, infrequent and risky. For example, carpet
buying. After the purchase, the consumer might experience dissonance that stems
from noticing certain disquieting features of the carpet or hearing favorable things
about other carpets. Thus marketing communication should aim at supplying beliefs
and evaluations that help the consumer feel good about his or her brand choice.
The marketers should be intelligent in knowing probable arguments in favour and of
against the product. On what grounds product may be appreciated or discounted,
the marketers must know.
iii) Habitual buying behaviour: Many products are bought under conditions of low
consumer involvement and the absence of significant brand differences. Consider
salt. Consumers have little involvement in the product category. They go to the
store and reach for the brand. If they keep reaching for the same brand, it is out of
habit, not strong brand loyalty. It happens with most low-cost, frequently purchased
products. Marketers find it effective to use ad repetition, price and sales promotion
to stimulate product trial. Habitual buying behavior is rational and emotional. The
marketers make rational appeal and raise consciousness levels for rational buying
behavior and emotional buying behavior is associated with individual emotions like
love, fear, jealousy and wisdom.
iv) Variety seeking behaviour: Some buying situations are characterized by low
consumer involvement but significant brand differences. Here consumers often do a
lot of brand switching. For example in cookies, consumer may reach for another
brand out of boredom or a wish for a different taste. The marketer will try to
encourage habitual buying behavior by dominating the shelf space, avoiding out of
stock conditions, sponsoring frequent reminder advertising, offering lower prices,
deals, coupons and free samples.
B. Amount of time spent: Purchase behaviour is classified into three types depending upon
nature of purchase action:
i) Planned buying: Purchase is budgeted and scheduled in advance, well thought out
and predetermined. For example, camera, computers, etc.
ii) Emergency buying: Purchase made in hurry to avoid stock outs. For example,
buying provisions that are out of stock, buying electrical bulb at night when it fuses,
etc.

21. iii) Impulse buying: Purchase made spontaneously, amused or bewitched by the
product item. For example, handicrafts, ice creams, fairness creams, textiles and
garment.
 Rural marketing strategy
Rural marketing strategies can be sub-divided into:
a) Segmentation: Heterogeneity in rural, prerequisites for effective segmentation,
degrees of segmentation, basis of segmentation and approaches to rural
segmentation – geographic segment, demographic segmentation, psychographic
segmentation, behavior segmentation, multi attribute segmentation
b) Targeting: Evaluation and selection of segments, coverage of segments
c) Positioning: Identifying the positioning concept, selecting the positioning concept,
developing the concept and communicating the concept.
Prerequisites for effective segmentation:
a) Measurable – Variables should be distinct, clear and measurable. Only then can
segments be described in exact terms and the differences between them understood
properly. Factors measurable in urban (eg. Monthly income)cannot be measured
directly in rural due to non-uniform income patterns and multiple sources of income.
b) Accessible – Marketers should ensure that the segmented market is conveniently
reachable for the quick and efficient delivery of products. With significant
improvement in connectivity of villages and increased interest in using traditional
haats and other new channels for distribution, rural markets are becoming more and
more accessible.
c) Differentiable – Rural consumers are identified as a separate segment as their
responses are likely to be different from those of urban customers, at least for some
products. For instance, while buying a motorcycle, rural consumers give more
importance to the sturdiness, mileage and carrying capacity of the vehicle, whereas
urban consumers look for style, power and looks.
d) Substantial – A segment is attractive to the marketer only when it is profitable.
Type of segmentation:
a) Geographic segmentation:
i. Regions : East, West, North and South
ii. Village size : <500, 501-1000, 1001-2000, 2001-5000, >5000 . Rural lifestyle
changes with village size due to variation in the level of infrastructural and
economic development.

22. iii. Density: Low, moderate, high (Villages with high population density have better
infrastructural facilities and higher purchasing power.
iv. Climate: Summer, Rainy, Winter (Talcum Powder is used more in hot and humid
regions)
v. Culture: culture affects language, dress, food habit and location
a. Demographic segmentation:
i. Age and life cycle: Children, teenagers, young adults, elders, seniors
(Confectionary and toys are more desirable in childhood, whereas young adults
seek motorcycles, soft drinks, trendy clothes and music systems)
ii. Family structure: Nuclear, joint (Family pack or economy refill packs work very
well with joint families, Joint family translates to greater consumption of products)
iii. Gender: Male, female
iv. Income: Due to irregular income patterns and multiple sources of income,
assessment of rural income is difficult.
v. Landownership: Land owners, rich farmers, small or marginal farmers,
agricultural laborers. Segmentation on the basis of size of landholding, area of
land under cultivation, irrigation method, crop mix and rate of money realisation.
vi. Education & House type
vii. Occupation: Cultivators, shopkeepers, poultry, artisans
viii. Religion & Caste: Settlement of villages on the basis of religion and caste. Eg.
Rajput village.
b. Psychographic segmentation:
i. Social class: Social class is determined by a combination of factors like education,
occupation, income, wealth and others. Classified rural consumers into five
classes- Affluent, The Well off, The Climbers, The Aspirants and the Destitutes on
the basis of three variables : Education of the chief wage earner, Ownership of
durables, and Type of house.
ii. Lifestyle: Overall manner in which a person lives and spends time and money.
iii. Personality
c. Behavioural segmentation:
i. Occasions: Festival, mela, jatra, weekly haat. In rural areas, most durables are
purchased during or after the harvest season because this is when farmers have
cash in hand after selling their agricultural produce. Melas offer products at
attractive prices and weekly haat days are the time to purchase daily-use
products, vegetables and spices.

23. ii. Benefits sought: Quality, convenience, value for money, service. Rural consumers
are more concerned with the utility of the product than its appearance and
sophistication.
iii. User status: Rural consumers fall into the category of first-time users for most
product categories. Therefore, the focus on product trials and demonstrations is
very crucial in rural market.
iv. Usage rate: Usage for most FMCG products is relatively low among rural
consumers due to poor affordability. Marketers have launched sachet packs for
rural consumers and family packs for joint families.
v. Loyalty status: Rural buyers take a long time to decide on a particular brand, but
once they are convinced, they are more brand loyal than their urban counterparts.
vi. Place of purchase: Village shops (Tea, kerosene), Haats (Food grain, pulses,
vegetables), Nearest town (Fertilisers, seeds), Melas (Clothes, cheap jewelry)
Degrees of segmentation:
a) Mass marketing – All consumers are being treated the same. Allows a company to
target the maximum number of consumers. Eg. 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.
b) 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.
Type of marketing strategy
a) Niche Marketing – A very small group in a segment that has some specific need and
the marketer has specific skills to satisfy it. Eg. a tractor that doubles up as a
thresher.
b) Micro Marketing – Tailoring of the product to satisfy a particular taste or need. Eg.
Dabur launched Anmol, a mustard and amla-based hair oil, to target rural consumers
in northern markets who used loose mustard oil.
c) Local Marketing – Involves designing brands and promotions to suit the needs and
wants of local customer groups on a geographical basis.
d) Individual Marketing – Tailoring and carpentry are examples of individual marketing.
An individual can get the product made exactly according to his specific need.
Product strategy: It refers to the long range competitive plan involving decisions on
products, product line and product mix to make proper utilization of resources and achieve
marketing goals. It is important because:

24. i) It achieves product market fit
ii) It encourages innovativeness
iii) It provides competitive edge
iv) It makes better use of resources
Product concept and classification:
a) Based on tangibility of goods
i) Tangible goods also called products which can be felt and touched and have
quantitative measures
ii) Intangible goods, also called services which have qualitative measures
b) Based on purpose of use
i) Consumption purpose, generally bought by the consumers for direct
consumption in households, offices, etc.
ii) Production purpose, generally raw material for industrial or agricultural
purposes
c) Based on shopping habit
i) Convenience goods
ii) Shopping goods
iii) Speciality goods
d) Based on price of products
i) Mass product which are used by the masses and price is low to medium
ii) Premium products are high quality and high price products used for special
purposes
e) Based on product development
i) Innovation: Development of novel products
ii) Imitation: Imitating an already accepted product and developing on it or selling
it as it is with slight modifications
f) Based on brand hierarchy level
i) Global brands that are used worldwide and has same price and quality
everywhere. For example, Pepsi, Coke, LG, etc.
ii) National brands are generally confined within the boundary of a nation. For
example, Godrej, Tata, etc.
iii) Regional brands are confined within a region and are generally targeted
towards a specific group of people.
iv) Local brands are generally confined in a very small localities or areas.
v) Unbranded products like oil, food grains, etc.
vi) Commodities like tamarind, fish, meat, eggs

25. Product mix: It is a set of all product lines and items offered by the company. Product mix
decisions depend on the following factors –
i) Length of product line: The total number of products sold in all lines is referred to
as length of product mix.
ii) Line stretching: A company stretches its product line beyond the current range of
products. It can stretch its product line either down market, up market or both
ways.
iii) Line pruning: Removing the unnecessary products in the product line which yield
lower or no profit.
iv) Line modernization: Modernizing the product line with innovation or imitation
Pricing strategy: Price is a major element of the marketing mix. It is an important strategic
issue because it is related to product positioning. Pricing is a determinant of the market
demand for the product. But before any pricing decisions are undertaken, it is important that
the factors influencing price are understood. These factors can be categorized as internal
and external:
a) Internal factors: The internal factors affecting price include cost and the company’s
pricing objectives.
b) External factors: These factors include customers, suppliers, competitors and legal
environment..
The different pricing strategies are:
a) Optional product pricing: It is the pricing of optional or accessory products along with
the main product like a company selling tractors for a low sticker price but charging
high prices for serving and spare parts.
b) Captive product pricing: It is setting a price for products that must be used along with
the main product, such as blade for a razor and film for a camera.
c) Product bundle pricing: It is combining several products and offering the bundle at a
reduced price. Companies very commonly use this pricing strategy during periods of
inflation it helps to generate sales and attract customers in a highly competitive
market; it is mostly used in festival.
d) Penetration pricing: It involves setting prices of products relatively low compared to
those of similar products. This pricing policy is appropriate when demand is elastic.
For example, Anchor white and Ajanta tooth pastes used this pricing to enter the
crowded dental cream market.
e) Economy pricing: It is no-frills low price, the cost of marketing and manufacturing are
kept to a minimum. Regional and local manufacturers usually follow this economy

26. pricing strategy as they have limited investments to make on building brands and
developing channels.
f) Value pricing: When economic recession or increased competition forces a company
to provide value products and services to retain sales. For example, Godrej No.1
soap placed their offering containing rose, sandalwood, neem and other ingredients
at a very economical price.
g) Coinage pricing: Prices are set of a coin value. Coinage price is directly proportionate
to the package size. These packs are small in size and are normally meant for one
time consumption (shampoo sachet) or day’s consumption (tea bag) or a week’s
consumption (bathing or washing soap).
h) Psychological pricing: The price quality relationship refers to the idea that consumers
tend to equate product quality with the price charged. In the color TV segment LG at
a higher price is considered a better buy than Texla and Jolly brands particularly in
rural households.
i) Discriminatory pricing: Price discrimination exists when sales of identical goods or
services are transacted at different prices from the same supplier; different prices are
charged on the basis of different consumer groups, location, product form etc.
discriminatory pricing may take the following norms - consumer segment pricing,
product form pricing and location pricing.
j) Product form pricing: Different versions of the same product are priced differently but
not proportionately to the increase in costs. For example, Microsoft sold different
versions of its operating software WindowsXP at different price level. Windows vista
home basic version is sold at $200 and with some variations the same operating
software windows vista ultimate version is sold at $320.
 Product promotion strategy
The promotion measure should be cost effective. Word of mouth is an important message
carrier in the rural areas and ‘opinion leader’ play a significant role in influencing the
prospective rural consumers about accepting or rejecting a product or a brand. Other
attributes are explained as under:
a) Mass media: Mass media is a powerful mode of communication. The media mostly
used are television, radio, print media like handbills, leaflets, folders, etc.
b) Personal selling and opinion leaders: In personal selling it is required that the
potential users are identified and awareness is created among them. A highly
motivated sales person can achieve this. Word of Mouth holds a lot of validity in the
rural areas. This is the reason why opinion leaders are thriving among rural
consumers.

27. c) Special campaigns: These should be undertaken during harvest & marketing
seasons in rural areas. E.g. Tractors owners meet (tonee) conducted by MRF.
d) Haats or weekly markets: here people from surrounding villages conduct trade on
fixed days covering the need of 10 to 50 villages at a time.
e) Melas: These are gathering of people for entertainment as well as purchase and sale
of goods and services.
f) Wall paintings: One of the most widespread form of advertising and a favourite
among the rural Indians.
g) Van campaigns: It is one of the most popular forms of communication with rural
consumer regarding new products. They are basically done for better brand building,
creating awareness, product sampling, and retail merchandising.