Rural Agricultural Marketing - Strategies for Improving Marketing within Rural Areas

Considering the environment in which the rural market operates and other related problems, it is
possible to evolve effective strategies for rural marketing. The strategies discussed here though
not universally applicable depend upon product characteristics, the targeted segment of the rural
market, the choice of the rural area and its economic condition.

Some of the typical characteristics which will help in rural market segmentation are land holding
pattern, irrigation facilities, progressiveness of farmers, cropping pattern; mix of enterprise,
education levels, proximity to cities/towns, sociological factors, occupation categories. The small
and marginal farmers, agricultural labourers and artisans forms the largest segment in rural
market (about 2/3rd) where as rich farmers constitute about one third of rural market.

An appropriate segmentation of the highly heterogeneous rural market and identification of the
needs and works of different segments will form the very basis for rural market strategies. For
rural market, it will be ideal to think of strategies from the marketing mix point of view, main
strategies are related to product, price, place and promotion which are described as follows.

A. Product strategies

Meaningful product strategies for rural market and rural consumers are discussed here.

1. Small unit and low priced packing

Larger pack sizes are out of reach for rural consumers because of their price and usage habits.
This method has been tested by other products like shampoos, biscuits, pickles, vicks five gram
tins, etc.

In the strategy of keeping the low priced packed the objective is to keep the price low so that the
entire rural community can try. This may not be possible in all types of products, but wherever
this can be resorted to, the market is bound to expand.

2. New product designs

A close observation of rural household items indicates the importance of redesigning or

modifying the products. The manufacturing and marketing men can think in terms of new
product designs specially meant for rural areas keeping their lifestyles in view.

3. Sturdy products
Sturdiness of a product either in terms of weight or appearance is an important fact for rural
consumers. The product meant for rural areas should be sturdy enough to stand rough handling
and storage. People in rural areas like bright flashy colours such as red, blue, green etc., and feel
that products with such colours are sturdy but they are more concerned with the utility of the
item also.

4. Brand name
The rural consumers are more concerned with the utility of the products. The brand name
awareness in the rural areas is fairly high. A brand name and/or logo is very essential for rural
consumers for it can be easily remembered.

B. Pricing strategies
Pricing strategies are very much linked to product strategies. Some of these strategies are
mentioned here.

1. Low cost/cheap products

This is a common strategy being adopted widely by many manufacturing and marketing men.
Price can be kept low by small unit packings.

2. Avoid sophisticated packing

Simple package can be adopted which can bring down the cost as it is presently being done in the
case of biscuits. Some innovation in packing technology is very necessary for rural markets.

3. Refill packs/reusable packaging

Such measures have a significant impact on the rural market. By such technology also the price
can be reduced. In addition the packaging material used should preferably lend itself for reuse in
rural areas. An ideal example in this direction can be the packing of fertilizers. Now companies
have started packing fertilizers in LDPE or HDPE sacks, which are not only tamper proof but
also reusable.

4. Application of value engineering

This is a technique which can be tried to evolve cheaper products by substituting the costly raw
material with the cheaper one, without sacrificing the quality or functional efficiency of the
product, for example in food industry, 'soya protein is being used instead of milk protein. Milk
protein is expensive while soya protein is cheaper but the nutrition value is same. This technique
yields itself for application in many engineering or product designed areas so that the price can
be kept at an affordable level. These areas have to be explored by manufacturing and marketing
men in the context of rural markets.

The pricing strategy for rural market will depend upon the scope for reducing the price of the
product to suit the rural incomes and at the same time not compromising with the utility and
sturdiness of the product.

c. Distribution strategies
Most manufacturers and marketing men do have a distribution arrangement for village with a
population of at least 5000 people. While it is -essential to formulate specific strategies for
distribution in rural areas, the characteristics of the product, its shelf life and other factors have to
be kept in mind. The distribution strategies that are specifically designed for rural areas are:
through co-operative societies, public distribution system, multi-purpose distribution centres,
distribution up to feeder markets/mandi towns shanties/hat/jathras/melas, agricultural input
dealers etc.

Experience has shown that the cooperatives have played a useful role in improving the marketing
services in the regulated markets. The fact, however, remains that these societies command only
a small share of the total markets and do not present any challenge to the private trade at inmost
places. The Gujarat Cotton Cooperative Marketing Societies set a good example of vertically
integrated markets. The cooperative marketing institutions have to introduce scale economies in
their marketing operation and provide efficient and comparable services to the customers in
competition with the private trade. Cooperative institutions would do better if the state level
marketing federations enter into multilevel activities to improve the turnover of their business.
The non-govemmental organizations can anchor a key role in conscientizing the rural people to
form into cooperatives highlighting the possible benefits without being exploited.

D. Promotion strategies

Mass media is a powerful medium of communication. It could be television, cinema, print media, radio
and so on. The other means of mass media available are hoardings/wall paintings, shanties/hats/melas,
non-price competition, special campaigns etc. Besides these, other mass media like hand bills and
booklets, posters, stickers, banners of the schemes etc.

For disseminating the information, related to agricultural and other rural industries products, the
government should circulate pamphlets either to panchayati raj office or to schools where it can be
documented for the reference.

While making efforts to improve the marketing system within rural areas and the marketing of rural
produce to other areas, we should foresee the forces of globalization affecting the market forces. The
implications of globalization are explained in the following chapter.

PRESENT SCENARIO

The rural market has changed drastically in the past one decade. A decade ago, the rural market
was more unstructured and was not a prioritised target location for corporates. Very few
companies, mainly the agro-based ones, were concentrating in these markets. Their were no
innovative strategies and promotional campaigns. A distribution system did exist, but was feeble.
Illiteracy and lack of technology were the other factors leading to the poor reach of products and
lower level of awareness amongst villagers.
Gradually, corporates realised that there was saturation, stiff competition and clutter in the urban
market, and a demand was building up in rural areas. Seeing the vast potential of 75 per cent
Indians living in rural areas, they started focusing on these unexplored, high-potential areas.

Companies came up with special rural products, like Chic Shampoo sachets @ Re 1, Parle G
Tikki Packs @ Rs 2, customised TVs by LG, Shanti Amla oil by Marico. All these brought
positive results for them.

Also, campaigns like Project Bharat by Hind Lever, where trials were generated across India in
1999, saw 30 per cent of its total personal products growing to contribute 50 per cent five years
down the line. In the first phase, they covered 11.5 million rural households and increased
awareness by 41 per cent.

Project Jagruti in the second phase by Colgate Palmolive India was a village consumer contact
programme in 2001. It increased penetration of Colgate Dental Cream by doubling the villages
from 33,000 to 55,000, reaching to a million houses. Such projects lead to increased penetration
of products in rural areas.

As a result, retail outlets have sprung up in practically all the villages that store products of
various brands and categories. Also, high congregation areas, like fairs, haats, markets etc. are
proving to be an important marketing tool since clusters of target audience can be tapped at the
same time and place.

Location plays a big role in marketing. Therefore, if a product is for kids, anganwadis and
schools are a good place tap them and their mothers. Similarly, mandis and village influencers
act as a catalyst in pushing a brand/product.

The various points that affect rural marketing are:

Reach
For a product to reach six lakh villages, one needs to know that 700 million villages are spread
over 3.2 million sq. metre of area. The road conditions are usually poor. It is, therefore,
important for the marketer to have a good distribution system.

Pricing

: a product needs to be low and affordable. For example, FMCGs have creams and soaps@ Rs 5,
hair oil and shampoo sachets @ Re 1 and small Coke @ Rs 5. To develop a product to suit the
rural scenario, the focus should be on items of necessity.

Product awareness
This is very important for the marketer to induce a trial. Rural consumers visit high congregation
areas like haats/fairs etc. where product awareness can be created. Therefore, the right product
needs to reach the right person at the right time and place.
Hurdles
The rural population is spread over a large area where reach is expensive and the mass is
heterogeneous. The spending power of rural population fluctuates with the agri-yield. Hence,
demand is not consistent. Besides this, low level of product exposure, poor standard of living,
spurious products with high margins for retailers and lack of infrastructure leads to low
penetration.

Strategies
The base work should be extremely clear — distribution, visibility and the right communication
can make a product. One needs to educate the target audience and pick up self-help
groups/villages between entrepreneurs/literate unemployed youth for sustainable distribution
channel.

Consumer behaviour
Over the years, the attitude and lifestyle of rural folk has changed due exposure through TV and
awareness through an increase in literacy level. Also, consumers are becoming brand loyal.

With the constant invasion of corporates, the rural customer has started taking in “what was
educated to him”, the media, newspaper, cable, IT developments, mobiles have lead to increased
awareness. Besides, due to increase in purchasing power and literacy level of a section, the rural
consumer has become more receptive. S/he is highly influenced by “word of mouth” and has
started looking at value for money.

With the changing market scenario, introduction of new products, increasing awareness amongst
customers and the overall development in rural sector, required a change in corporate marketing
strategies, and this was done. The sales team was asked to be more aggressive. With distribution
in place, communication was simpler and had a regional flavour. The strategy to tap the rural
market has to be more customised, simpler and based on one-to-one communication. One has to
reach the doorstep of the rural consumer to educate him on brands. It is said that brand loyalty is
higher in the rural customer. S/he might not be able to read but would ask Parle ka glucose
biscuit dena or would recognise the pack by...

: its yellow stripes and the Parle baby. Even in big villages and kasbas, consumers refer to Nirma
as the peela powder.

Thus, changes occurred over the years at both the ends — the consumer and the market. The
corporates witnessed a growth in rural products, their distribution system got more aligned with
innovations in packaging and pricing. Today we see the rural market share as follows: 50 per
cent of total FMCG, 38 per cent of two-wheelers, 55 per cent of LIC policies, 70 per cent of
toilet soaps, 50 per cent of TV, fans, bicycles, tea and wrist watches.

The writer is business head, Rural Communication & Marketing (RC&M)...

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