Rural Marketing Strategy

STP
Strategies at:

Planning

Execution

Feedback

Relevance & Importance of Rural Market

In present scenario, companies operating in India have
only two options: - go global OR go rural
Rural India is emerging as a large market for a number
of goods and services. Some more reasons to go rural:
Rising disposable income
Impact of media
Remittance from abroad
Huge size of market ( 60% of population live rural)
Saturated urban market
Improved infrastructure and communication
Consequently, rural markets have gained importance

Characteristics of Rural Markets

Rural markets are widely scattered
Culture, buying habits etc vary from region to region
Markets are therefore divided into sub-markets called
segmentation
Segmentation is sub total of:
Cultural & social values / income pattern / gender /
behaviour / preferences / religion / racial groups / place
of living / educational level / reference groups /
occupation / economic circumstances / personality /
motivation / value lifestyles / needs / usage pattern /
value proportion
The rural STP framework is shown in next slide

Strategies to Target Rural Market

Different target segments require different marketing approach
and rural market is no exception to it. So foremost task is Rural
Market Segmentation
Mere extension of urban marketing strategies in rural India will
fail unless they are customized to the needs and ethos of rural
India.

One of the best way to capture the audience and to bring a good
response is through Event Management and Demonstration.
Some of the interesting events are Road Shows, Melas, Street
Theatre, Film Shows and so on.

Several Agrochemical companies such as Rallis India Limited,

Wockhardt and tractor companies like Escort, Mahindras have
successfully employed melas using local communication to get
higher sales.

The stages of Strategies

Rural Marketing
Strategy

Planning stage

Execution stage

Feedback stage

Planning Stage
Profile of Rural Market

Segmentation,
Targeting,
Positioning

Profile of Rural
Consumer

Study Consumer Behaviour

and Market Research

Execution & Implementation Stage

Rural
Product

Rural
Communication

Rural sales
Force

Rural Pricing

Rural
Distribution

Feedback Stage
Monitor
Strategy

Feedback &
Control

Strategies to Tap Rural market

1. Need based :
When developing products in any category, marketers
must identify the typical rural specific needs.
Urban products cannot be dumped into rural markets
without modifications.
The rural audience better receives tailor-made products
as the consumers feel empowered and tend to identify
with the offering.
For instance, shampoos or soaps with distinctive, strong
rose or jasmine perfumes are popular with the rural
women in South India. The urban women do not identify
as strongly with these perfumes.

Strategies to Tap Rural market

2) Cost effective channels
Direct selling through company delivery vans, syndicated
distribution between non-competitive marketers, setting up of
temporary stalls in rural melas/haats are successful
examples.
Use of stockist for effecting direct sales to rural consumers is
successfully done by companies like Hindustan Unilever /
ITC / Colgate / Godrej.
Rural markets/mandis are emerging as the target centers for
direct sales.

Strategies to Tap Rural market

3. POINT OF SALE
Most rural consumers purchase their day-to-day goods is at
a kirana or street shop. These small open-stalls line the
streets , approximately the size of a living room.
Rural consumers purchase everything from bananas to
razors at these shops. There are over 2.5 million kiranas
throughout Indias rural towns and villages.
Keeping store shelves stocked (SKU) is one of the main
challenges to consumer goods manufacturers in order to
reach these local shops and establish a brand presence in
them.
Companies need substantial amounts of working capital and
a large committed sales force

Strategies to Tap Rural market

4. PACKAGING
Two of the most effective elements of a package designed for
rural India include the size and visual communication.
Think Small ! Due to the fact that rural Indians have small
disposable incomes and very little storage space, one of the
most popular concepts has been sachets .
By creating a bond with the consumer through the package,
companies are able to establish a relationship that encourages
repeat purchases. Material Re-usage is also another important
element for the packaging engineer to consider.
Examples: shampoos in sachets / Rs2 pack of biscuit/ 10gm
tooth powder/ vicks vaporub in 5gm tins/ single tablet vicks
cough drop/

Strategies to Tap Rural market

5. VISUAL COMMUNICTION
The rural area is a market where large portions of the
population are illiterate.
So, when packaging consumer products for rural markets,
companies must use prominent logo symbols and logo
colors to assure that illiterate consumers will be able to
recognize the products
Therefore, communicating brand values through the
package rather than with words becomes very essential.

Loud bright colors are typically used on packages to

differentiate a product from the others on the shelf and to
create a lasting impression in a rural consumers mind

Major Segmentation
To select the best product mix and target market , major
segment variables of rural markets are to be understood.
These are:

1)
2)
3)
4)
5)

Region ( North / East / West / South)

Size of population ( 1000 / 1500 / 5000 )
Climate ( hot / cold / moderate /rainy)
Demography ( age / family size / gender)
Income ( 2000 to 5000 / 5000 to 10000 /
10000 to 50000 / above 50000 per month)
6) Education ( Literate / semi literate / illiterate)
7) Occupation ( agriculture / non agriculture)

Factors for Segmentation

The segmentation factors are:
1.Psychographics
Lifestyle ( rigid / changing / imitating)
Personality ( authoritarian / ambitious)

2.Behavioural
Looks for benefits or quality

3.Others :
User status/ usage rate /loyalty rate/ attitude
to product / occasion

Characteristics for Market Segmentation

Characteristics to be considered for segmentation:
a)
b)
c)
d)
e)
f)
g)
h)
i)

Size of land holding

Irrigation facilities
Progressiveness of farmers
Cropping pattern ( cash crop / fruits / vegetables)
Education levels ( literate / illiterate)
Proximity to city/town
Proximity to mandi/market
Sociological factors ( landlord/tenant/farmer/labour)
Occupation categories( farmer/salaried/artisan/)

Since income is deciding factor for consumption, an

income based segmentation for rural market will be
appropriate

Segmentation as per land holding

Classification of farmers based on size of land holding is
used for segmentation
Marginal farmers:
Small farmers:
Medium farmers:
Large farmers:

holding upto one ha

holding upto two ha
holding upto ten ha
holding above ten ha

There are some flaws in this kind of segmentation, likea)

b)
c)
d)
e)

Land hold does not reflect areas cultivated

Data does not say about nature of land
Data does not indicate cropping pattern
Data does not indicate type of farming
Data does not indicate location of the land

Segmentation as per land holding

Segmentation as per land holding is appropriate for
marketing of :
consumable agri inputs ( fertilizer / insecticide /
pesticide/seeds)
durable agri inputs (tractor / pump / motors)

Sociological basis of segmentation of rural markets will

be appropriate for consumable or durable items.
Large land holders are rich farmers, affluent and live
close to urban style of living. One third of the rural market
belongs to this category. Remaining two thirds prefer for
low value items

Targeting:
Key Influencers for targetting Rural Market are:
1) PRICE

Rural consumer is not a miser. He is not simply looking

for the cheapest product in every category. He
understands and demands value for money in every
purchase that he makes.
Pricing therefore is a direct function of factors including
cost-benefit advantage and opportunity cost.
Pricing offered to consumers should be for value and
offerings that are affordable.
Price sensitivity is extremely high and comparison with
competitive prices is common.

Targeting
2) BUDGET

Rural consumer does not have a budget problem. He

has a cash flow problem.
This is because the village folk receive funds only twice
a year. At these times, he is capable of making high
volume purchases.
At all times, however, the unit price is critical and so is
the pack size.
Because of this, in the lean season when there is a
cash flow crunch, marketers need to provide financial
products, schemes or solutions that suit the needs of
the rural population

Targeting
3)

COMMUNICTION

Large proportion of the rural population cannot read or

write.
Several creative communication media have been used
by various companies to tackle the problem of using
visual communication and non-verbal communication to
reach the rural audience.
Getting together with small industries, dharmasalas, post
offices or other rural outlets for advertising and marketing
purposes can be quite useful.
Word of mouth is a big advantage in rural India.

Rural Market Positioning

Rural Market Positioning could be:
1.
Value for money ( in which product benefits
and prices are highlighted)
Eg. : Kevin care shampoo @ Rs1

2. Life style ( in which product is demonstrated to

check fitness) Eg. : pajama- kurta-jacket for a
teacher or short dhoti for farmer or lungi for
fisherman
3. Health Platform ( in which the product/ service
highlights the linkage with health)
Ex. : fat free food / diet coke / low calcium salt

HUL strategy
An innovative distribution model is the HULs Shakti
project, which connects Self-Help Groups (SHGs) with
business opportunities.
HUL promotes and uses the SHGs network present in
the villages for increasing its sales in the rural areas.

The SHGs are offered chance to become companys

local small scale distributor in the rural areas.
The groups, typically of 15 to 20 people, buy a small
stock of items such as soap, detergent or shampoo and
then sell directly to consumers .

The model is a win-win for the company and the village

SHGs

ITC Strategy
Rural Malls Chaupal Sagar by ITC is one of the first

organized retail effort in the rural area.

It extended its warehouse into rural shoppingcum
information centre to attend the needs of rural
consumers.
The size of the mall is very small with just around
7000sq. ft. as compared to ordinary mall sizes in urban
area.
It offers everything- from toothpaste to television, hair
oils to motor cycles, mixer grinders to water pumps,
shirts to fertilizers, whatever a rural consumer needs.
ITC started its first rural mall in Sehore, Madya Pradesh

DSCL Strategy
DCM Sriram Consolidated Ltd. (DSCL) opened Haryali
Bazaars in 2002 focussing mainly on agri-products.
These bazaars offer:
- Quality Agri- Inputs
- Financial Services
- Farm Output Services
- Other Product and Services
So far, 70 Haryali stores have been set up in different
states across India
Ranbaxys Fortis Health World is tying up with Haryali
Kissan Bazaar to enter the rural market

Other FMCG Strategy

Godrej Agrovet Ltd. has initiated its rural retail business
through Godrej Aadhar. These outlets offer rural
households, the basic food, grocery, apparel, footwear,
furniture, kitchen ware, and home appliances,value added
services and pharmacy.
HLL initiated Operation Bharat to tap rural market by rolling
out low priced sample packets of its toothpaste, fairness
cream, shampoo, cream and other products.
Chennai-based CavinKare Products which makes hair dyes,
organises live demonstrations in remote areas where villagers
get a free tinge of jet black or blonde or red free of cost.

Other FMCG Strategy

5.
6.
7.

8.

Brooke Bond Lipton India markets its rural brands through

magic shows and skits.
Reckitt and Coleman uses NGOs in rural areas to educate
customers about product benefits.
Tobacco and foods major ITC is focusing on the rural
segment to bring down its transaction costs. With a judicious
blend of internet kiosks - known as E-Choupals - to access
ready information in their local language on the weather &
market prices.
Indian Oil is tapping the rural market by opening Kisan Seva
Kendras across the rural areas to provide fuel and non-fuel
services to rural consumers.

Media and Communication for rural market

Impact of agricultural technology has not been felt uniformly
throughout the country
Rural consumers in Punjab / Haryana / Western UP are
compatible with their counterparts in urban areas. But it is not
so in many Eastern and southern states
Vast majority of rural people is tradition bound, mired in age
old customs/traditions/habits/practices /taboos and are not
financially stable
Communication and infrastructure has considerably improved
due to various government scheme ( PMGSY to connect all
villages of over 500 people by road)
While radio is still popular media for entertainment, secondary
viewing of TV is quite popular in rural areas

Media and Communication for rural market

Cinema is another popular mass media. To further boost
this, many cos. have their own mobile promotion vans. The
added advantage is that messages are delivered in local
language and dialects , though it is costly
Wide spread out distribution of population warrants special
SCM and promotion strategies to cover rural market
Even though 45% of GDP is generated in rural areas, it is
shared by 60% population. Hence per capita income is low
compared to urban areas. The distribution of income is
highly skewed since land holding pattern itself is skewed.
What will be the off take per month or what should be the
level of inventory or how long will it take to liquidate stock
are big questions before rural marketers

Attraction Factors
Global service providers (GSP) is making inroads to the
mass base of rural market. The characteristics for
attracting GSP are:
1) Growing population
2) Needs and wants are skyrocketing
3) Growing sense of consumerism
4) Replication of urban life style
5) Increasing literacy
6) Augmented growth in agriculture
7) Influence of cross culture
8) Liberalized government rules

Rural promotion Guidelines

Dont adopt a quick fix strategy
Dont strip the frills offered to urban consumers and think that
product is ready for rural market
Dont do cosmetic modification to the packaging (changing to
vernacular language)
Do not offer meaningless sales promotion give-ways
Non conventional media are extensively used to target rural
consumers
But before that, following aspects are to be kept in mind:
The target audience
Social class and intentions
Receptivity
Brand consciousness
Lifestyle
Purchase needs
Dont sell dreams demonstrate is the new mantra

Warehousing & Distribution

Non availability of good storage facilities ,poor transport facilities
to many inaccessible areas in rural areas and poor road
conditions are challenging to marketers
Willingness to enter rural market is not sufficient but the
identification of potential shopkeepers, offering them credit,
assuring them regular supplies & motivating them is important
Rural consumers have identified hierarchy of markets. Hence
extent of distribution system is further complicated
Size of market organisation and staffing is important to retain
control
Rural market is haterogeneous. Hence product positioning is
difficult. Numerous brands to suit different income segments is
essential. This calls for large product range. But this creates
problems in packaging, distribution and designing

Rural Distribution
Rural distribution is a nightmare to many marketers due
to its shear size and spread across India
Distribution in rural markets can be categorised into:

Rural
Distribution
Physical
Distribution

Channels of
Distribution

Transportation & Communication

Transportation infrastructure remains underdeveloped in
rural India.
All villages do not have rail heads. Only 50% villages have
all-weather roads.
Barring three states, transportation thru waterways is nonexistent.
Companies like LG and HUL have utilised animal carts to
carry their goods.
There are over 2 lakh mobile traders who sell brands like
Topaz, Lifebuoy on bi-cycle
Facilities like telephones, postal service, internet are still
non existent in many areas

Warehousing
Finding suitable godowns in rural India is a big challenge.
There are no public warehousing facilities in interiors of rural
India
Commonly practiced three tier pattern for warehousing in
rural India is shown below:
CWC /

SWC

Cooperatives

Rural Go-downs

Distribution Channels
Distribution establishes channels that handle:
The physical flow of goods from factories of manufacturers
to marketing channels which are approachable by end
users in the villages
It facilitates transfer of ownership from actual manufacturer
or middleman to the ultimate rural customer
It manages the backward flow of price of the goods
realised from the rural customer to the manufacturers
The channel regulates the flow of information about the
product performance and customer feed back to the
manufacturer and other agencies involved

Roles of Channels for Distribution

Channels play a pivotal role in marketing by performing a
no. of distribution functions
Firms rely on marketing channels to generate customer
satisfaction and to achieve differentiation over competition
The task of delivering goods to consumer across villages is
a specialists job since distribution channels are diverse,
vary from states to states and even within the states
In rural market, a company can not change an already
established distribution system, the environment, rural
customers attitude, efficiency level, logistic facilitators,
middle men, marketing legislations, labour laws, availability
of warehouse etc.

Problems of Rural Channels

1) Multiple tiers (higher costs & admin problems) : at the
minimum level, rural distribution channel needs-- village
level shopkeeper / mandi level distributor / town level
whole seller / district level stockist
2) Non availability of dealers : suitability with sense of
business
3) Poor viability ( retail outlets) : absence of manufacturer's
direct outlet or show room
4) Inadequate bank facilities
5) Inadequate credit facilities
6) Reliance on private village shops