What do you understand by the term ‘rural markets’? What are the implications for an FMCG company wanting to enter rural markets, in terms of

 For the rural India have their basis in two major developments. The first is that on account of rising purchasing power in the rural India, corporate sector is discovering the huge potential that must be realized by creating access and focusing marketing efforts in the rural segment.

The second reason is that rural markets and the rural consumers are different enough to demand differential marketing effort and it is important for you to be able to understand these differences as well as the marketing implications that flow from them. The infrastructure and the marketing institution that characterise the rural markets are very different from the urban setting which the marketers are used to.

Another development which has focused marketer attention now on to the-rural markets is that slowly but surely the infrastructural scenario in the rural India is changing. Supported by thirteen consecutive good monsoons (barring the bad patch of 2002-2003), the rural economy is definitely looking up. A look at the successive plan outlays will demonstrate the attention that the policy makers are now directing at Rural Devel6ment. The plan outlays have progressively escalated from Rs. 14,000 crores in the seventh plan to Rs. 30,000 crores in the eighth plan, and Rs. 60,000 crores in ninth plan to a mammoth 90,000 crores in the tenth plan.

This resource allocation is expected to be invested in the road network, communication linkages, power, health and educational services, making incremental changes to the rural lifestyles. Added to all this, has been the growth in institutional credit for agriculture in rural India, a sector typically dependent on unorganized credit services. There was a 250% increase in institutional credit for agriculture between 1995 and 2000, and a total of 24 million kisan credit cards have been issued since the inception of the scheme in 1998.

Let us look at some interesting facts about the rural India which were presented as part of the background paper at the FICCI Conference Rural Marketing and Communication on 24’h April 2003, by Pradeep Kashyap, President, Marketing and Research Team, New Delhi.

Consider the following: The number of transient rural supermarkets in India (haats) is around 470,000, which is more than the total number of retail chain outlets in the US (35000).  The Life Insurance Corporation of India in the year 2001-2002, sold 55% of its policies in rural India. The 24 million kisan credit cards issued in the rural sector far outstrip the 17.7 million credit+debit cards issued in the urban sector. The amount of money sanctioned under the KCC scheme is a phenomenal Rs. 52,000 crores.

The consumption of electricity by the agriculture sector went up from 17.6% of the total consumption in 198081 to 29.2% in 1991-2000. During the same period the industry share has dropped from 58.4% to 34.8%. These indicators show a definite trend towards growth of markets and indicate towards the potential of rural India. We must however, while looking at these statistics be always conscious that these figures are contributed by more than 70% of the population and therefore while indicative of the directions of growth, are still, in per capita terms, small.

Efforts at market making and creating wider access may create a far more healthy picture but only if these developments are also accompanied by a parallel accretion of income and purchasing power in the rural sector.

It is, however, important for you to understand at the very outset that rural market are not linear extensions, in more difficult terrain, of the urban market and since the context of the marketing effort and the consuming behaviour of the target segment are both different, specific efforts to analyse the dynamics of the, rural market are required to be made, hence the need to study rural marketing as a specialized course of study

(a) its rural product mix

Ans:- Marketing mix comprises of various controllable elements like product, price, promotion and place. Success of any business enterprise depends on marketing mix and these four elements are like powerful weapons in the hand marketers.

Since behavioral factors of rural consumers are different and almost unpredictable in nature, the marketers have a challenging task to design marketing mix strategies for the rural sectors.  Due to considerable level of heterogeneity, marketers need to design specific programs to cater needs and wants of specific groups.

Product Mix :

Product is a powerful tool of an organization’s success. The products must be acceptable to rural consumers in all significant aspects.

The firm must produce products according to the needs and future demands of rural buyers.

The product features like size, shape, color, weight, qualities, brand name, packaging, labeling, services, and other relevant aspect must be fit with needs, demands and capacity of buyers.

(b) its pricing strategy

Ans:- (a) Low Price:- A rural customer is price-sensitive mainly because of his relatively low level of income and unit price of a product will have an impact on sales. Pricing the product at a lower price really attracts rural population for trying the products. Though rural incomes have grown in the past decade, the money earned by the average rural consumer is still much lower than that of his urban counterpart. A large part of the income is spent on the basic necessities, leaving a smaller portion for other consumer goods. 

Examples- (1) Bharath Petroleum has introduced five kg gas cylinders to reduce initial deposit and refill cost for rural consumers. The deposit for 5 kg cylinder is Rs.350/- against Rs.700/- for 14 kg cylinder and refill cost is Rs.90/- against Rs.250/- for 14 kg cylinders.

(2) Small unit packs of shampoo, hair oil, toothpaste, biscuits and bathing soap.

(b) No-Frills Product: The production cost can be lowered by using less sophistication and rather concentrating on sturdiness and utility of the product. Examples-

1. Maharaja Appliances Ltd., sells a sturdy Bonus washing machine, without a drier for rural market at Rs.2,990/-.

2. The rural markets operate on a price-value proposition. LC Electronics has knocked off some of the frills in the products.

The idea is to give features that are absolutely indispensable. The rural consumer does not require Colden Eye feature and therefore base models do not have this feature. Again not all consumers need 200 channels and therefore they have provided 100 channels in the base model. Everybody may not require a sound output of 350 watts and therefore they have given an output of 200 watts in base sets. The rural consumer is value conscious. He will buy the product that gives value for money.

(c) Refill/Reusable Packaging: By giving refill packaging marketers can add value to the pricing of the product. Examples- Bourn vita available in refill pack and detergents made available in reusable packaging.

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