National Conference on Marketing and Sustainable Development October 13-14, 2017

Development of Rural Marketing in India

V. Noorzia Nasreen
dr.vnnasreen@gmail.com.
Balaji Institute of I.T and Management

The paper describes the development of rural marketing in India. Indian rural marketing has
always been complex to forecast and consist of special uniqueness. However many
companies were successful in entering the rural markets. They proved that with proper
understanding of the market and innovative marketing ideas, it is possible to bag the rural
markets. Rural consumers are particularly aspiring or striving to purchase branded, high
quality products. Consequently, businesses in India are optimistic about growth of the
country’s rural consumer markets, which is expected to be faster than urban consumer
markets. The main aim of the study is to understand the rural market, importance of rural
marketing, development of rural marketing and to study the initiatives taken by the
government to improve rural markets.
Keywords: Rural Marketing, Importance, Development and Initiatives in Rural Marketing.

1. Introduction
Rural marketing is a two way marketing process. The content now encompasses not only
marketing of products which flow to rural areas, but also products which flow to urban areas
from rural areas. In addition, it also includes the marketing in the rural areas. A few years
back, the rural market in India was an unknown area and many companies were not interested
in entering the rural markets in India, as the demand pattern was fragile, seasonal, poor
purchasing power of people, etc. Communication, transportation and infrastructure were the
main blocks for growth of rural markets and penetration of urban products in rural markets.
But these things of the past have been changed. Now everyone is looking at rural markets as
the next growth driver in Indian market. Importantly, the wider reach of media and
telecommunication services has provided information to India’s rural consumers and is
influencing their purchase decisions. In line with general trend, rural consumers are evolving
towards a broader notion of value provided by products and services which involves aspects

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of price combined with utility, aesthetics and features, and not just low prices. The
hinterlands in India consist of about 650,000 villages. These villages are inhabited by about
850 million consumers making up for about 70 per cent of population and contributing
around half of the country’s Gross Domestic Product (GDP).
Consumption patterns in these rural areas are gradually changing to increasingly resemble
the consumption patterns of urban areas. Some of India’s largest consumer companies serve
one-third of their consumers from rural India. Owing to a favourable changing consumption
trend as well as the potential size of the market, rural India provides a large and attractive
investment opportunity for private companies. Rural marketing in India is sometimes
mistaken by people who think rural marketing is all only about agricultural marketing. Rural
marketing determines the carrier of business activities from urban sectors to the rural regions
as well as the marketing of various products manufactured by the non-agricultural workers
from rural to urban areas.

2. Objectives of the Study

1. To understand the rural marketing in India.
2. To study the importance of rural marketing.
3. To study the development of rural marketing and
4. To study the initiatives taken by the government to improve rural markets.

3. Methodology of the Study

The study is a descriptive method. The Secondary data were collected from different sources,
such as, text books, magazines, articles and websites.

Rural Marketing in India

The concept of rural marketing in Indian economy has always played an influential role in the
lives of people. In India, leaving out a few metropolitan cities, all the districts and industrial
townships are connected with rural markets. The rural market in India is not a separate entity
in itself and it is highly influenced by the sociological and behavioral factors operating in the
country. The rural markets in India bring in bigger revenues in the country, as the rural
regions comprise of the maximum consumers in this country. The rural market in Indian
economy generates almost more than half of the country’s income. Rural marketing in Indian

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economy can be classified under two broad categories. These are (a) the markets for
consumer goods that comprise of both durable and non-durable goods, and (b) the markets
for agricultural inputs that include fertilizers, pesticides, seeds, and so on. The concept of
rural marketing in India is often been found to form ambiguity in the minds of people who
think rural marketing is all about agricultural marketing. However, rural marketing
determines the carrying out of business activities bringing in the flow of goods from urban
sectors to the rural regions of the country as well as the marketing of various products
manufactured by the non-agricultural workers from rural to urban areas.

Indian Rural Market

 The Fast Moving Consumer Goods (FMCG) sector in rural and semi-urban India is
estimated to cross US$ 100 billion by 2025.
 The rural FMCG market is anticipated to expand at a CAGR of 17.41 per cent to US$
100 billion during 2009 – 2025.
 Rural FMCG market accounts for 40 per cent of the overall FMCG market in India, in
revenue terms.
 Amongst the leading retailers, Dabur generates over 40-45 per cent of its domestic
revenue from rural sales. HUL rural revenue accounts for 45 per cent of its overall
sales while other companies earn 30- 35 per cent of their revenues from rural areas.
 Market research firm Nielsen expects India’s rural FMCG market to reach a size of
US$ 100 billion by 2025. Another report by McKinsey Global Institute forecasts the
annual real income per household in rural India to rise to 3.6 per cent 2025, from 2.8
per cent in the last 20 years.

Market Size
India’s per capita GDP in rural regions has grown at a Compound Annual Growth Rate
(CAGR) of 6.2 per cent since 2000. The Fast Moving Consumer Goods (FMCG) sector in

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rural and semi-urban India is expected to cross US$ 20 billion mark by 2018 and reach US$
100 billion by 2025@.

4. Importance of Rural Marketing

There are a few things which make rural marketing important to the corporate (especially in
India) and lucrative for people hoping to make a career out of it.
1. It is very difficult to make the same marketing strategies to work in the efficient urban
space having a much higher level of media penetration like TV and broadband internet
which is lacking still to an extent in the rural areas. This makes reaching to the customer a
completely new problem.
2. Also, urban consumers have Hindi and English usually as a common language while the
rural areas may or may not respond favorably to only these two languages, which means
that the marketing content for rural consumers has to be customized to his culture and
language. This is the second major differentiator from traditional marketing which has
common content throughout the country.
3. The population density in the rural areas is very low as compared to cities, which means it
takes much more effort and resources to reach the same number of people as mass media
reaches in the cities.
The above factors make it important from a company’s perspective to have a specialized
person in a position handling rural marketing. From a person’s point of view it is becoming
more and more important because of the growth in the income levels and the propensity of
the rural consumer to buy high quality branded products. With the increase in demand for
these products from rural areas, the demand for rural marketing experts too would rise.

5. Developments of Rural Marketing In India

Following are some of the major investments and developments in the Indian rural sector
 India’s unemployment rate has declined to 4.8 per cent in February 2017 compared to 9.5
per cent in August 2016, as a result of the Government’s increased focus towards rural
jobs and the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)
scheme.
 The Ministry of Rural Development is expecting to achieve its annual targeted length of
48,812 kilometers of rural roads by March 31, 2017 under the Pradhan Mantri Gram

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Sadak Yojana (PMGSY), which has reached a completion stage of 67.53 per cent (32,963
kms) as on January 27, 2017.
 The National Bank for Agriculture and Rural Development (NABARD) plans to provide
around 200,000 point-of-sale (PoS) machines in 100,000 villages and distribute RuPay
cards to over 34 million farmers across India, to enable farmers to undertake cashless
transactions.
 Magma Fincorp, a Kolkata-based non-banking finance company (NBFC) plans to expand
its operations in South India, with specific focus on rural and semi-urban markets to help
the company grow rapidly.
 Bharti Airtel is applying for a payments bank license and has involved Kotak Mahindra
Bank as a potential investor in the venture, in a bid to tap significant revenue
opportunities from the Reserve Bank of India’s financial inclusion initiative. Payments
banks are meant to fan out into the rural, remote areas of the country, offering limited but
critical services such as money transfers, loans and deposit collection. While banks have
the knowhow, telecom companies have the network, making it an ideal match.

6. Government Initiatives
The Government of India has planned various initiatives to provide and improve the
infrastructure in rural areas which can have a multiplier effect in increasing movements of
goods, services and thereby improve earnings potential of rural areas subsequently improving
consumption.
 The Government of India has approved the proposal to construct 10 million houses for the
rural population, which will require an investment outlay of Rs 81,975 crore (US$ 12.7
billion) for the period from 2016-17 to 2018-19.
 The Government of India aims to provide tap water regularly to every household by 2030
in line with United Nations Sustainable Development Goals, requiring a funding of Rs
23,000 crore (US$ 3.57 billion) each year until the target is met.
 The Government has introduced various reforms in the Union Budget 2017-18 to uplift
the rural markets. Some of the key highlights of the Budget are:
 Rs 187,223 crore (US$ 28.08 billion) has been allocated towards rural, agriculture and
allied sectors.

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 The Allocation for Pradhan Mantri Aawas Yojana-Gramin has been increased from Rs
15,000 crore (US$ 2.25 billion) to Rs 23,000 crore (US$ 3.45 billion) in the year 2017-18
with a target to complete 10 million houses for the houseless by the year 2019.
 The pace of roads construction under Pradhan Mantri Gram Sadak Yojana (PMGSY) has
been accelerated to 133 kms per day as against an average of 73 kms per day during the
years 2011-14.
 The allocation to the Mahatma Gandhi National Rural Employment Guarantee Act
(MGNREGA) has been Rs 48,000 crore (US$ 7.2 billion) in the year 2017-18, which is
the highest ever allocated amount.
 The Government of India is looking to install Wi-Fi hotspots at more than 1,000 gram
panchayats across India, under its ambitious project called Digital Village, in order to
provide internet connectivity for mass use, as well as to enable delivery of services like
health and education in far-flung areas.
 In the Union Budget 2017-18, the Government of India mentioned that it is on course to
achieve 100 per cent village electrification by May 1, 2018.
 The Government of India has sought Parliament’s approval for an additional expenditure
of Rs 59,978.29 crore (US$ 8.9 billion), which will be used to support the government’s
rural jobs scheme, building rural infrastructure, urban development and farm insurance.

7. Conclusion
The rural market of India is fascinating and challenging at the same time. It offers large scope
on account of its sheer size and it is growing steadily. Even a small growth can push up the
sales of a product substantially, in view of the huge base despite the fact that there are
enormous amount of problems. It is an attractive market from this angle also that the urban
market is highly competitive whereas the rural market is relatively quiet. In fact, for certain
products, it is a totally virgin market. Economic reforms in India have brought about major
changes in the whole market environment.
With these changes, rural marketing will become an important playground for our
marketers. Successful rural marketing calls for a review of the rural marketing environment,
developing proper understanding of the nature and profile of rural consumers, designing the
right products to appeal to them, and adopting suitable media as well as appropriate strategies
for communication and distribution. It is generally believed that markets are created, not

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found. This is especially true in case of the rural market of India. It is a market for the truly
creative marketer.

8. References
1. Suchi K. Patel (2013), “The Challenges and Strategies of Marketing in Rural India”, Asia
Pacific Journal of Marketing & Management Review, Vol. 2(7), pp. 38 – 43.
2. Sudesh Kumar, Bimal Anjum, Suman Nayyar (2013), “Indian Rural Market: Challenges
and Ways Ahead”, Galaxy International Interdisciplinary Research Journal (GIIRJ), Vol.
1 (2), pp. 84 – 88.
3. Arshi Talwar, Shweta Popli and Sneha Gupta (2014), “Rural Marketing in India:
Challenges and Opportunities”, International Journal of Engineering and Computer
Science, Vol. 3, Issue. 12, pp. 9404 – 9407.
4. Preety Panicker, Anup Warrier (2015), “Rural Marketing – Profitability in Rural Sales”,
International Journal of Science and Research (IJSR), Vol. 4, Issue. 5, pp. 1359 – 1361.
5. https://www.ibef.org/industry/indian-rural-market.aspx.
6. http://www.ddegjust.ac.in/studymaterial/mba/mm-310.pdf.
7. https://www.quora.com/What-is-the-importance-of-rural-marketing.
8. https://www.tutorialspoint.com/rural_marketing/rural_marketing_in_indian_economy.ht
m.

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