Confluence of Rural Marketing & 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 population in India accounts for around 627 million, which is exactly 74.3 percent of the total population. 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. In recent years, rural markets have acquired significance, as the overall growth of the economy has resulted into substantial increase in the purchasing power of the rural communities. On account of green revolution, the rural areas are consuming a large quantity of industrial and urban manufactured products. In this context, a special marketing strategy, namely, rural marketing has emerged. But often, rural marketing is confused with agricultural marketing - the latter denotes marketing of produce of the rural areas to the urban consumers or industrial consumers, whereas rural marketing involves delivering manufactured or processed inputs or services to rural producers or consumers.
Rural market has following attributes and the following facts substantiate this: -
742 million people
Estimated annual size of the rural market -
FMCG Rs. 65,000 Crore
Durables Rs. 5,000 Crore
Agri-Inputs (including tractors) Rs. 45,000 Crore
2 / 4 Wheelers Rs. 8,000 Crore
In 2001-02, LIC sold 55% of its policies in rural India.
Of two million BSNL mobile connections, 50% are in small towns / villages.
Of the 6.0 lakh villages, 5.22 lakh have a Village Public Telephone (VPT).
41 million Kisan Credit Cards have been issued (against 22 million credit-plus-debit cards in urban), with cumulative credit of Rs. 977 billion resulting in tremendous liquidity.
Of the 20 million Rediffmail sign-ups, 60% are from small towns. 50% of transactions from these towns are on Rediff online shopping site.
42 million rural households (HHs) are availing banking services in comparison to 27 million urban HHs.
Investment in formal savings instruments is 6.6 million HHs in rural and 6.7 million HHs in urban.
Infrastructure is improving rapidly -
In 50 years only, 40% villages have been connected by road, in next 10 years another 30% would be connected.
More than 90% villages are electrified, though only 44% rural homes have electric connections.
Rural telephone density has gone up by 300% in the last 10 years; every 1000+ pop is connected by STD.
Social indicators have improved a lot between 1981 and 2001 -
Number of "pucca" houses doubled from 22% to 41% and "kuccha" houses halved (41% to 23%).
Percentage of BPL families declined from 46% to 27%.
Rural literacy level improved from 36% to 59%.
Reasons for improvement of business in rural area
Socio-economic changes (lifestyle, habits and tastes, economic status)
Literacy level (25% before independence – more than 65% in 2001)
Infrastructure facilities (roads, electricity, media)
Increase in income
Increase in expectations
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.
Some of the important features or characteristics of Rural Marketing in India Economy are being listed below:
With the initiation of various rural development programmes there have been an upsurge of employment opportunities for the rural poor. One of the biggest cause behind the steady growth of rural market is that it is not exploited and also yet to be explored.
The rural market in India is vast and scattered and offers a plethora of opportunities in comparison to the urban sector. It covers the maximum population and regions and thereby, the maximum number of consumers.
The social status of the rural regions is precarious as the income level and literacy is extremely low along with the range of traditional values and superstitious beliefs that have always been a major impediment in the progression of this sector.
The steps taken by the Government of India to initiate proper irrigation, infrastructural developments, prevention of flood, grants for fertilizers, and various schemes to cut down the poverty line have improved the condition of the rural masses
Rural Stats & Initiatives By Entrepreneurs
Adi Godrej, chairman of the Godrej group that is in a range of businesses from real estate and personal care to agri-foods, has no hesitation proclaiming, It is a myth that rural consumers are not brand and quality conscious. A survey by the National Council for Applied Economic Research (NCAER), India's premier economic research entity, recently confirmed that rise in rural incomes is keeping pace with urban incomes. From 55 to 58 per cent of the average urban income in 1994-95, the average rural income has gone up to 63 to 64 per cent by 2001-02 and touched almost 66 per cent in 2004-05. The rural middle class is growing at 12 per cent against the 13 per cent growth of its urban counter-part. Even better, the upper income class those with household incomes of over Rs one million [$22,700] per annum is projected to go up to 21 million by 2009-10 from four million in 2001-02. It will have a 22 to 23 per cent rural component. Higher rural incomes have meant larger markets. Already, the rural tilt is beginning to show. A study by the Chennai-based Francis Kanoi Marketing Planning Services says that the rural market for FMCG is worth $14.4 billion, far ahead of the market for tractors and agri-inputs which is estimated at $10 billion. Rural India also accounts for sales of $1.7billion for cars, scooters and bikes and over one billion dollars of durables.