Wednesday, March 19, 2014

STEPS FOR TAPPING THE RURAL MARKETS


STEPS FOR TAPPING THE RURAL MARKETS


 While rural India does constitute an attractive and sizeable market, firms have to strive hard for securing a share of it. For, the market bristles with a variety of problems. The firm has to grapple with them and find innovative solutions. Practically in every task of marketing, rural marketing poses some unique problems. The major steps that need to be followed in rural marketing are:



  SEGMENTATION AND TARGETING

Firms have to analyze the consumers in-depth, carry out thorough market segmentation and select relevant segments as target markets. And, they have to develop a distinctive positioning and a distinctive marketing mix for each target segment.

Geographic segmentation: In the first place, the rural market can be segmented geographically, using different geographic bases.

Climate and level of irrigation: For example, climate can be one of them; regions endowed with favourable climate are usually more prosperous compared with climatically handicapped regions. Level of irrigation can be another base; irrigated areas and dry land areas pose different economic and marketing environments.

Nearness to a feeder town/industrial project: Firms can also segment the rural market using 'nearness to a feeder town/industrial project' as the base. Consumers located close to a feeder town visit it at least once a month to sell their product and/or to buy their requirements, and in buying habits, they differ from those living in the interior areas. It will thus be meaningful to segment the rural market into consumers located closer to a feeder town and consumers located away from them. Similarly, nearness to an industrial project centre can also be used as the base for segmentation. Many rural parts are studded with industrial projects. There is a cross flow of population between these project centers and the rural hinterlands, and the centers act as conduits for the flow of products and ideas. As such, the proximity to such centers can be used as a base for segmenting the market. It must be noted that in essence these are cases of buying behavior-based segmentation, though a geographical base is used for the segmentation. The point is that the difference in buying behavior arises out of the geographical reality.


Demographic segmentation: The rural market can be segmented demographically too. In fact, there are many possibilities of segmenting the rural market demographically.


Population concentration: Population spread or population concentration can be one base. About 40 per cent of the rural population lives in 7 per cent of the villages in the country and remaining 60 per cent in the other 93 per cent of the villages. Thus, the market can be segmented on the basis of different size classes with regard to population.


Age: Segmentation using age as the base has also good scope in rural marketing. In particular, the youth in the rural areas can be picked up as a separate market. There is a population of more than 20 cores in the age group of 16-30 years in the rural market. Surveys have revealed that the younger generation dominates purchases in the rural market. This is due partly to their greater literacy and exposure, and partly to their changing values and lifestyles. We have also seen earlier that rural youth differ from their elders in their buying behavior and that they are closer to their urban cousins as far as aspirations go. It will thus be meaningful to segment the rural youth as a separate market.


Literacy level: Literacy level can be another demographic base for segmenting the rural market. Though rural India, in general, is characterized by low literacy, there are wide variations in the matter of literacy within rural India. For example, while the rural literacy rate in Kerala is 80 per cent that in Bihar is only 15 per cent.


Income: Income too can be a base. The rural consumers can be segmented into different income classes. It will be incorrect to paint the whole area with the same brush and call it a market with 'low purchasing power'. The rural consumers can also be segmented into regular income and seasonal income segments. Earlier, we talked about the seasonal nature of rural income and demand. All rural consumers are not characterized by seasonality of income. There is a sizeable salaried class in the rural area. There is also a sizeable self-employed group, consisting of shopkeepers and service providers. There is nothing seasonal about the income of such people. Obviously, those with regular income will differ in buying habits compared with those whose income is seasonal.


Buying behavior segmentation: Earlier, we saw that rural consumers differ in their buying behavior from their urban counterparts as well as among themselves. This fact too could be factored into the segmentation exercise. Firms should, however, generate relevant data on the rural consumers and their buying behavior, perceptions and attitudes, and then segment them using their buying behavior as the base.


Sources of data on rural consumers: Luckily, India has a rich source of data on rural consumers in the form of census data. Reports of the Centre for Monitoring Indian Economy (CMIE) also form a useful source. As these are not usually in a user-friendly format, firms have to discern the needed insights from them and use them as the base for segmentation.