Tuesday, March 18, 2014

RURAL MARKETING and features


Rural demand has grown steadily over the years. Not only has the market grown in quantitative terms, but qualitatively too it has undergone a significant change. The composition of rural demand has also been changing significantly. The products that are already well established in the rural market include: Textiles, bath soaps, washing soaps, washing powder, detergents, and detergent cakes, medicines and hygiene products, toothpowder/toothpaste, razor blades, packaged tea, other beverages, including alcoholic beverages, tobacco and tobacco products, agricultural inputs like fertilizers, pesticides, cooking utensils, pressure cooker, ornaments and jewellery, agricultural capital goods such as tractors, trailers, harvesters, pump sets, pipes and pipe fittings, bicycles, scooters and motorcycles, wristwatch radio/transistor/tape recorder, fans and TVs (B&W).

Many new products have entered the consumption basket of the rural consumer; and the relative shares of the different categories of products in the consumption basket have also recorded a good change. The upper segments, in particular, have started buying and using a variety of modern consumer products, which were till recently unknown in the rural market.

Marketers cannot now go by the perception of yesteryears and assume that rural India consumes only certain traditional. Essential products and that its share in other product categories is meager. Rural India now accounts for a sizeable share of the total consumption for a variety of consumer goods, such as packaged tea, washing products, including detergents, toiletries of various kinds, popular as well as premium bath soaps, toothpaste, tooth powder, safety razor blades, shaving rounds, talcum powder, hair oil, OTC products, and durables like electric irons, bicycles, scooters and motorcycles.

It is perhaps well known that products like packaged tea, bath soaps and washing prod-ucts, including detergents/detergent cakes, are popular items of consumption in rural market. What is not known perhaps is that products like shampoo, toothpaste and talcum powder, and durables like electric irons, bicycles, mopeds, scooters, and motorcycles have joined this category in recent years. The rural demand for electric irons, mopeds, and motorcycles are now between 30 and 50 per cent of the all-India demand. Interestingly, in many products, rural consumption now accounts for a larger share than urban. Washing soaps (cakes bars); the rural share is over 60 per cent. Popular bath soaps, it is more than 50 per cent and in batteries, it is more than 56 per cent. Similar is the case with packaged tea and hair oils.

It is observe red that more than the land-owning class, those engaged in services (government staff, teachers and self-employed service providers including shopkeepers) are the major buyers of the high-priced durables in the rural market. The shopkeepers and service people together account for 45, 55 and 60 per cent of the market for television, two wheelers and refrigerators respectively, though they account for just 21 percent of the rural households. Between the two groups, the service class seems to have far greater potential for high-priced durables than the shopkeepers. The service class comprises just 13 percent of the rural households but owns 30 to 40 per cent of these durables. Within the service class, those who work outside the villages but live in the villages seem to be a far more fertile consumption group. Owner farmers continue to be a significant consumer group. They comprise one-third of rural households (their estimated number being 43 million households), and own one-third of the stock of these durables.


The features found in the rural consumers are discussed below:

Location pattern: Practically, the whole of India, barring the metros and towns, constitutes the Indian rural market. In other words, the market is spread through the length and breadth of the vast country.

A scattered market: It is thus evident that the rural market of India is a geographically scattered market. Whereas the urban population of India is concentrated in 3,200 cities and towns, the rural population is scattered across 570,000 villages. And, of them, only 6,300 villages, or less than 1.1 per cent, have a population of more than 5,000 each. More than 3 lakh villages, or more than 55 per cent of the total number of villages, are in the category of 500 people or less and more than 1.5 lakh villages, or 25 per cent, are in the category of 200 people or less. The inference is clear; unlike urban demand, which is highly concentrated, rural demand is scattered over a large area.

Socio-economic position: By and large, rural consumers continue to be marked by low purchasing power/low per capita income. Similarly, they continue to be a tradition-bound community, with religion, culture and tradition strongly influencing their consumption habits. However, as we shall see in detail in this chapter, a sizeable segment of rural consumers defy this description. Nearly 60 per cent of rural income comes from agriculture. Rural prosperity and discretionary income with rural consumers are thus linked to sizeable extent with agricultural prosperity. More than half the households are in the income category of less than Rs 25,000 per annum, but about 14 per cent of the households have an annual income that exceeds Rs 50,000 per annum. Remittances from Indians working outside have made a sizeable contribution to the growing rural income/purchasing power in some states. Analysis reveals that, in recent years, rural consumers have been increasingly drawn into the savings habit. Nearly, 70 percent of rural households now save a part of their income. The habit is relatively more widespread among salary earners like government staff, teachers, and self-employed non-farmers, who include in the main, shopkeepers and service providers.

Culturally a Diverse and Heterogeneous Market: The rural market is not only a scattered market, but is also diverse and heterogeneous. Rural consumers are diverse in terms of religious, social, cultural and linguistic factors. The diversity is manifest in a more intense manner among the rural segments. It can be said that heterogeneity is the No. I hallmark of the rural market- 5, 70,000 villages, half a dozen religions, 33 languages, 1,650 dialects and diverse sub-cultures characterize the market.

State-to-State Variation in Extent of Development: There is also a great deal of difference between different states in extent of development. It varies on various parameters, such as availability of health and education facilities, availability of public transport, electricity. TV transmission, banks, post offices, water supply and so on. A weight was decided upon for each facility based on the relative importance of that facility in indicating the extent of development of the village. While the average village in India has 33 development index points, villages in Kerala had an average of 88 points while those in Bihar had just 22; Mp, Rajasthan and UP were close to Bihar; and states like Maharastra, Haryana, Karnataka had points ranging between 40 and 50.

Literacy Level: It has been estimated that rural India has a literacy rate of 28 percent compared with 55 per cent for the whole country. The rate is certainly on the low side. However, such statistics do not reveal the whole picture. A number of aspects as shown below need to be emphasized specifically with regard to rural literacy. The picture has been changing over the years. For example, a decade ago, the literacy rate in rural India was only 20 per cent. Year-to-year too, there is a change. Every year about eight million people get added to rural India's literate population. The adult literacy programmes launched in the rural areas are bound to enhance the rural literacy rate in the years to come. In absolute numbers, already there are more literate people in rural India (16.5 crore) than in urban India (16 crore). The picture also differs from state to state and even from district to district.

Lifestyle: By and large, the rural consumers are marked by a conservative and tradition-bound lifestyle. But, what is striking today about this matter is not the basic conservative characteristic, but the fact that the lifestyle is undergoing a significant change. The lifestyle of a sizeable segment of rural consumers has already changed significantly in recent years, and that of a much larger segment is currently going through the process of change. As such, the earlier practice of bracketing all rural consumers as people with a tradition-bound lifestyle does not hold good in the new context.

Buying Behavior: To understand the buying behavior of rural consumers, we must go to the factors that influence their buying behavior. The factors include: Socio-economic environment of the consumer, cultural environment, geographic location, education/literacy level, occupation, exposure to urban lifestyles, exposure to media and enlarged media reach, the points of purchase of products, the way the consumer uses the products, involvement of others in the purchase, and marketers' efforts to reach out the rural market. In recent years, many corporate have been trying hard to develop a market for their products in the rural areas, investing substantially in these areas. This has brought about some change in the way buyers purchase different products. Developmental marketing has created discriminating buyers and hitherto unknown demand in the rural market. All the above factors influence the buying behavior of rural consumers and hence their responses to the marketing mix variables, and the reference points they use for purchase decisions.

No Stereotype Rural Consumer: The interesting position that finally emerges about the profile of the rural consumer is that one cannot proceed on the basis of a stereotype of the rural consumer or of rural consumer behavior. This signals problems as well as opportunities for the marketer. When we use the broad brush, we may be tempted to say that low purchasing power/low per capita income and low literacy level, are the common traits of rural consumers. Similarly, we may also say that the rural consumers are a tradition-bound community, with religion, culture, and tradition strongly influencing their consumption habits. None of this, however, constitutes the representative picture of rural consumers as a whole. A sizeable segment of rural consumers defy this description. We have to recognize that all rural consumers do not share a common buying behavior. There are consumers who can afford high-priced brands and are also willing to buy. There is thus great scope and need for segmenting the rural market on the basis of buying behavior.