Thomas Asha E. (2013). Innovative Practices in Rural Marketing: An Indian Perspective.

CAMS Journal of Business Studies and Research. 2, (4), 48-54. ISSN:0975-7953

INNOVATIVE PRACTICES IN RURAL MARKETING:

AN INDIAN PERSPECTIVE

Dr. Asha E. Thomas

Assistant Professor

Post Graduate Department of Commerce

St. Paul’s College

Kalamassery

KERALA
asharoms@gmail.com

Electronic copy available at: https://ssrn.com/abstract=3138608

 INNOVATIVE PRACTICES IN RURAL MARKETING:

AN INDIAN PERSPECTIVE

Abstract: Villages constitute the integral part of any nation. They are even more important in the
Asian and African context, where majority of the population lives in villages. A marketing
innovation is all about introducing significant changes in product design or packaging, product
placement, product promotion or pricing. It involves leveraging on the marketing mix namely
product, price, place and promotion to bring positive changes. Rural marketing is all about
planning and implementing marketing function for the rural areas. The key to succeed in rural
market always depends on how efficiently you can comprehend the psychology of rural
consumers and their needs. The rural market in India is vast and scattered. It offers a plethora of
opportunities in comparison to the urban sector. Primary aim of the study is to assist the
marketers who are interested in rural markets. The researcher has studied the emergence of
rural markets in India context and the possible challenges and issues that will be faced by the
companies trying to enter Indian rural markets. The study has also looked in to the innovative
and successful marketing practices of the existing players in rural India and their by evolving
some successful strategies that can be adopted. Developing a model to encourage successful rural
marketing is also an objective of this research. In Indian perspective innovations in rural markets
should be based on 4 As namely: Awareness, Acceptability, Affordability and most importantly
Availability. Exploiting new ideas should always lead to creation of new product or service
which lowers the cost at the same time has the potential to meet the demand.

Key Words: Indian Rural Market, Innovation, Rural Marketing, Rural Consumers, Emerging

Economies.

Electronic copy available at: https://ssrn.com/abstract=3138608

 INNOVATIVE PRACTICES IN RURAL MARKETING:

AN INDIAN PERSPECTIVE

“There has been no impact of the economic slowdown on the rural economy. On the other hand,
rural markets offer great opportunities to marketers trying to find a way out of the economic
crisis”

----- Mr.Pradeep Kashyap,CEO MART,President of Rural Marketing Association of India

Introduction

Rural Marketing can be defined as “the process of developing, pricing, promoting and
distributing rural specific products and services leading to consumer satisfaction and
achievement of organisational objectives”. It involves the process of delivering better standard of
living and quality of life to rural environment. It encompasses social interactions between the
rural and urban as well as within the rural areas, which may be spontaneous or planned. (Rao
1985).Due to various developmental programmes, today, the rural markets offer vast untapped
potential. The increased per capita income and improved standard of living has helped in
changing the lifestyle of village people for the better.

It can be said that understanding the marketing environment holds the key to effective
marketing management. The rural market environment needs a separate examination as it varies
remarkably from that of urban markets in India. The major factors to be examined are
demographics, occupation pattern, income generation, expenditure pattern, rural communication
facilities, infrastructure facilities available, rural consumer behavior, above all the aspirations of
rural consumers. Almost 70 percent of Indian population lives in villages and the rate of increase
of rural population is much higher than that in urban area. Majority of the people in rural area are
engaged in agriculture and related activities and their by the income generation has a seasonal
nature. Compared to the concentration of urban population in smaller geographical areas, the
population in rural India is spread over 6 lakh villages and the density of population depends to a
greater extent on the availability of irrigation facilities.

The total expenditure on food items is more than Rs.15 crore in rural India which is around
Rs.8000 crore in the urban counterpart. The share of non-food expenditure is also comparatively

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higher than the urban population. Rural literacy rate is on an increasing trend indicating the
possibility of better communication than the previous years. Media penetration is also much
higher than the previous years and television offers better coverage than others. With the
government intervention, infrastructural facilities in rural areas like roads, rural electrification,
public distribution system and communication networks have developed to a greater extent.
Educational facilities have improved and banks and other financial institutions have paved the
way for easy credit facilities. Almost all the nationalised banks have extended their branches to
rural areas. All these factors together have led to the increase in demand for products and
services in rural areas. But the greatest challenge for marketers lies in understanding the
aspirations of rural consumers before offering the products or services. It is a challenge
because in India ‘NO TWO VILLAGES ARE IDENTICAL TO EACH OTHER IN ALL
ASPECTS’. Each one needs special consideration before deciding the marketing mix.

The present paper is an attempt to help the marketers who are interested in Indian Rural Markets.
The researcher has studied the emergence of rural markets in India context and the possible
challenges and issues that will be faced by the companies trying to enter Indian rural markets.
The study has also looked in to the innovative and successful marketing practices of the existing
players in rural India and their by evolving some successful strategies that can be adopted here.
Developing a model to encourage successful rural marketing is also an objective of this research.

Challenges in Indian Rural Marketing

Today almost all of corporate India is falling head over heels to reach out to rural India, as it can
help in adding substantially to their bottom lines. However the overall successful rate in rural
markets is not so appealing. The problem in reaching out to the rural masses equals the
prospects in the rural land. Very few corporate like Hindustan Unilever is on top list triumphant
through their rural marketing projects like ‘Shakti’ ‘Operation Bharat’, Amul with their
aggressive marketing strategy and ITC with their e-choupal. Many others like Coca-Cola,
Colgate, Britannia, BSNL .LIC, Hero Honda, LG Electronics e.t.c are striving successfully to
climb the rural ladder. The major challenges they face includes:

 Resistance to Change exhibited by rural community

 Seasonal Demand

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  Lack of adequate infrastructure facilities including warehousing facility
 Lack of Effective Communication System
 Comparatively Low Literacy Rates even though it is improving with constant
intervention by government
 Improper Distribution Channel Management

In-depth study of consumer buying pattern of the rural market is the most important prerequisite
for marketers to succeed in Rural India. However, the success depends on how effectively they
are able to overcome the above mentioned challenges.

Innovative Rural Marketing Practices

Rural India is considered today as a huge store house of untapped marketing opportunities.
Almost three-fourths of India’s population lives in rural areas. During initial days rural
marketing was considered only as marketing of agricultural produce. However, now it is a two-
way marketing process. There is inflow of products into rural markets for production or
consumption and there is outflow of products especially agricultural products to urban areas. The
urban to rural flow mainly consists of agricultural inputs, FMCG products like soaps, detergents,
cosmetics, textiles ,consumer durables like two wheelers and cars, television sets, other
electronic appliances. So today rural marketing is concerned with flow of goods and services
from urban to rural and vice versa.

“Capital isn't so important in business. Experience isn't so important. You can get both these
things. What is important is ideas. If you have ideas, you have the main asset you need, and there
isn't any limit to what you can do with your business and your life.”

— Harvey Firestone

Doing the same thing over and over, yet expecting different results is not a wise idea. Innovation
involves deliberate application of information, imagination, and initiatives in deriving greater or
different value from available recourses and encompasses all processes by which new ideas are
generated and converted into useful products and services.
A variety of factors have made the rural market quite attractive to corporate in recent years. The
growing opportunity can be quoted as the main driver. The increased purchasing power of the

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rural consumer and the improved income distribution has enhanced rural demand for several
products and services. Heat of competition in the Urban Market is another strong driver. The fact
that the rural market is largely an untapped market and the fact that the early entrants can tap it
without having to face intense competition as in the case of the urban market, makes the rural
market all the more attractive to them.
Many Companies have already taken to the rural market in a big way. It can be seen that in
FMCG category, half of the revenue of Hindustan Unilever and Colgate comes from the rural
market. In case of many other companies too, the countryside accounts for a substantial that is 20
to 30 percent of their total sales volume. About one-fifth of pharma sales occur in the rural India.
One-fourth of the television sales happen in rural India. Kinetic sells about 30 percent of its
scooters and Toyota nearly half of its vehicles and Hero Honda 50 percent of its bikes.Major
brands that rule rural India includes:
 Amul
 Britannia
 Lifebuoy
 Colgate
 Eveready
 BSNL
Some of the innovative ideas which could work wonders in rural India are as follows:

CavinKare is the company responsible for the small sachet revolution in India. It was an
important insight in to mass marketing at that time. The successful brands of the company like
Chik, Nile, Meera, Fairever ,Spinz are all good examples. They entered rural India when people
used to wash their hair with soaps .The could communicate well that the use of shampoo will
leave hair silky and soft and there was a revolution. To develop a product to suit the rural
scenario, companies came up with special rural products, Parle-G Tikki Packs @Rs 2,
customised TVs by LG, Shanti Amla oil by Marico. All these brought positive results for them

ICICI BANK customised their rural ATMs, so they can operate biometric authentication. ICICI
rural ATMS are battery operated so that power failure is not issue. Nokia developed affordable
mobile phones for rural markets with unique features such as local language capabilities, present

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time/ call limits e.t.c. They launched a model ‘1208’ which is priced at Rs.2000 and has special
features like colour screen and dust free mats. These phones have the first call-time tracking
application and multi-phonebooks to make phone sharing simpler and more efficient. The call-
tracking feature allows users and village phone entrepreneurs to pre-set a time or cost limit on
individual calls.
Philips developed a television model ‘ Vardaan’ for rural market. This television works on the
voltage of 90-270 volts. They could also develop ‘Free Power radio’. This radio does not require
power and battery also. It runs on simple winding of level provided in the set. The price of this
attractive set is just Rs. 995.

ITC e-choupal, an initiative by ITC, by which they link to rural farmers via internet for
procurement of agricultural and farm produce.
“Before ITC introduced us to e-Choupal, we were restricted to selling our produce in the local
mandi. We had to go through middlemen and prices were low. ITC trained me to manage the
Internet kiosk and I became the e-Choupal Sanchalak in my village. Today we are a community
of e-farmers with access to daily prices of a variety of crops in India and abroad – this helps us
to get the best price. We can also find out about many other important things – weather
forecasts, the latest farming techniques, crop insurance, etc. e-Choupal has not only changed the
quality of our lives, but our entire outlook”. Abishek Jain , Soya Farmer.
Godrej ‘Aadhaar’ the rural retail initiative of Godrej Agrovet Ltd, introduced in 2009 was for
staring stores across rural India in the next five years. Positioned as `Godrej Aadhaar -
Khushiyon Ka, Khushhali Ka', the new format stores mark the beginning of a chain which shall
form the farmer's Aadhaar for `Unnati, Ghar Sansar & Gaon', a move from being just a complete
agricultural solution provider to being a multi category retail outlet with wide range of products
and services housing a fair mix of brands and private labels. The new format Aadhaars is aimed
at providing a very conducive retail atmosphere and women-friendly interface in rural areas.
Till now, number of corporates tapping the rural India has only increased. However there lie some
important questions which need to be answered properly. “How is that some brands have taken rural
customers into their hands while majority of them failed even to get the attention of the rural mass”?

Effective Strategies for successful implementation

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Strategic choice is normally influenced by competitive situation. Researcher has identified some
strategies which can help in targeting rural population effectively.

a. Primary concern for marketers approaching rural customers should be in knowing

the aspirations of such people. Matching these aspirations with the value offered
through products or services is vital for success in rural markets.
b. Quality products at affordable prices should be incorporated through appropriate
marketing mix.
c. Understanding of available competitive situations and also about the available
substitutes can help in communicating to rural consumers effectively. eg.Chik as a
shampoo could penetrate well because they effectively replaced soap which was
in use till then for washing hair. For this they brought advertisements which could
easily educate people with method of using the product as well as in
understanding the benefits derived from the usage which can never be offered by
the current ones (soaps) i.e a silky and flowing hair.
d. Delivering superior value product at a price point which is appealing to the rural
consumer is the punch in all successful brands.
e. Language used in communicating to rural consumers should be simple and very
plain. The good examples can be the one used by HUL for its various brands.
Interactive and entertaining formats of ads also brought very positive results.
f. Innovative promotional techniques used by companies like HindustanUnilever
(HUL) and Colgate for reaching to the rural mass helped to improve the bottom
line considerably. For example the ‘Home to Home’ contact program launched by
HUL for its fairness cream Fair & Lovely was a grand success.

Strategies which can be adopted to ensure success in rural markets can be put under the broad
heading of 4 As namely: Awareness, Affordability, Acceptability and Availability. Market
Segmentation is the key mantra in proper awareness of the need of rural consumers.
Segmentation can be based on geographic areas, demographic profile, socio-economic
characteristics, income levels or even on the basis of exposure to modernisation (like nearness to
city area).The second challenge is to ensure affordability of the product or service. With low
disposable incomes, products or services need to be affordable to the rural consumer. Some

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companies have addressed the affordability problem by introducing small unit packs. Godrej
recently introduced three brands of Cinthol, Fair Glow and Godrej in 50-gm packs, priced at less
than five rupee.

Acceptability and Availability depends to a greater extent on excellent Channel Management.

Channel Management in rural market has to consider the characteristics of the product durability,
shelf life e.t.c. However the marketers also have to consider the existing guidelines issued by
concerned government in this context. For example as per Essential Commodities Act fertilizers
should be made available to the farmers within a range of four to five kilometers from their place
of residence. Because of this rule at present there are about 2.6 lakh fertilizer dealers in India.

Rural Marketing Model

The aim of this model is to assist the marketers by providing them a definite guideline of how to
proceed and be successful in marketing to rural consumers.

Conclusion

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Innovative and Efficient marketing in Rural India will result in overall betterment of the society
on one side and on the other side it will also lead to better market opportunities and competitive
prices. Economic development of rural areas has a definite link with poverty reduction in the
country. Rural marketing in India has a long way to go and innovative ideas can put things in a
better place. However any new idea in general course will not be accepted at first. It takes
repeated attempts, endless demonstrations, and monotonous rehearsals before innovation can be
accepted and internalised by an organisation. This rule applies to rural marketing also.

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