Rural sector marketing
The concept of rural
marketing differs from different things to different persons who are active
participants in marketing. This confusion leads to distorted understanding of
the problems of rural marketing and, more often perceptions. However, rural
markets and rural marketing have special features as compared to urban markets.
Rural markets offer
great scope for concentrated marketing effort because of the recent increase in
the rural per capita incomes and the likelihood that incomes will increase
faster because of better production and higher prices for agricultural
products.
The rural market has
drastically changed in the past one decade. A decade ago, the rural market was
more unstructured target location for corporate. Very less agro-based companies
were concentrating in these markets. Illiteracy and lack of technology were the
other factors leading to the poor reach of products and lower level of
awareness amongst rural peoples.
Gradually the corporate
realized that there was saturation and stiff competition in the urban market,
but a demand was building up in rural areas. Seeing the vast potential of 72
percent Indians living in rural areas, many corporates started focusing on
these unexplored and high-potential areas.
Companies came up with
special products which are only meant for rural people, like Chik Shampoo
sachets @ Re 1, Parle G Tikki Packs @ Rs 2 and customized TVs by LG, Shanti
Amla oil by Marico etc.
Packaging and FMCGs
Let us now understand
packaging in FMCGs. The following are the different packaging strategies −
Small Units
This packaging strategy
is now widely adopted by every FMCG company is successful not only in rural
area but also in urban area especially among the middle and lower income
groups. Large packs are out of reach for rural consumers because rural people
have very less cash reserve with them.
Rural people make
purchases in small lots to meet their day to day requirements. Now many
companies sell their products in quantities; products such as hair oil,
biscuits, and fairness creams. These companies have joined the race of Low
Unit Packs (LUP) not only to penetrate into the rural market but also
to motivate people to try the new brand.
Refill Packs
The concept of refill
packs of toothpowder, tea, talcum powder and other FMCGs are promoted by the
marketer as the money saving options. Consumers once purchase the product which
is packed in bottle of either plastic or glass and then they need not purchase
a whole new bottle for their next use. They can just refill the bottle with
refill packs which comes in poly packets. The price of such refill packs is
lower than the price of the products that are available in bottles. Such
strategy works well in case of toothpaste, powder, spices, health drinks etc.
Storage of the Products
Because of interrupted
power supply in rural areas; it is also a point to work on for marketers to
make proper arrangements for storage of products which require special storage
like ice creams and cold drinks etc.
Companies now provide
ice boxes to retailers of remote areas for storage of cold drinks, ice creams
etc. Those ice boxes are usually made of thick thermocol and keep the products
always cool and also increases their shelf life.
Consumer Durables
Most rural families don’t
yet have consumer durable products like televisions, washing machines, gas
stoves, refrigerators, etc. So there is a big potential market waiting to be
served. But this all huge market will not accept existing models of these
consumer durable products because of the following reasons −
Supply of Electricity
In India, most of the
villages do not have reliable supply of electricity. Many villages may be
connected to the grid but the supply is very erratic.
Reluctance
Most rural families are
reluctant to buy consumer durable items because they have the mindset that they
will not be able to use them. These products have to be built to run on
batteries which last for long periods and get charged without being taken to
cities.
Different Uses of Consumer Durables
Rural life is completely
different from urban life and hence the consumer durable products will be used
differently. For some instance, rural consumers will not use refrigerators for
storing fruits and vegetables because they pluck these from their farms when
they require, but they may have surplus milk that they may need to preserve.
Refrigerators with
special cooling mechanisms for preservation of milk products will be more
attractive to rural consumers than the basic all-purpose refrigerators. Simple
products like fans also have to be different for rural peoples.
Variation in Product Requirement
People in villages don’t
like sleeping in closed rooms, because they prefer to sleep in the open or in
verandas which are open at least from one side. Fans which may work well in
closed rooms may not be effective in open areas. The idea is that different
types of products have to be designed for rural consumers because they will use
these products differently.
Pricing Strategy for Consumer Durables
Rural people have been
managing their lives with or without these consumer durable products and most
of the rural people consider such products to be for luxury. To make them buy
these products, these products have to be priced low. The best way to enter
rural markets is by offering them simple, functional and less price products.
Primary Services
There is a huge market
in rural areas for services like telecommunication, health, education,
transport, drinking water, housing, electricity etc. Many organizations still believe
that these services cannot be provided profitably to rural consumers and these
services can be provided only by the government.
It also defines the
logic that the organizations consider the rural consumers to be prosperous
enough to buy consumer durables, automobiles etc., but they do not consider the
same rural consumers rich enough to send their children to private schools or
to buy an apartment or to avail expensive medical treatment.
All these services can
be profitably distributing in rural areas because rural consumers are now eager
to go for these kinds of services. Good private schools in cities attract
children from the outskirts too.
Rural consumers have now
realized that government provides them free services but they are not of good
quality. These days they do not want to send their children to the local
village primary schools because they know that teaching quality does matter for
the development of their children.
They also do not want to
take any risk when it comes to the health of their loved ones. They would
rather get examined at a private hospital instead of going to the local
government run hospitals and risk wellbeing.
The less efficiency and
ineffectiveness of government as a service provider has opened up the rural
market as a huge scatter market for primary services for the private
organization. Because the rural people want these services as equally as urban
people and are willing to pay the right amount for them.
Rural markets are the
most attractive markets for service industries. The Jajmani system which was
prevalent in many villages a few years back — where lower castes performed
various functions for upper castes and received grain in return created a big
vacuum in the rural service sectors. In some villages, it has become a hard
task to have a haircut or a shave, if the local barbers have left the villages.
It is difficult to
conduct a marriage ceremony in a village, because all the traditional service
providers have left and professional services are still not completely
available.
The traditional rural
family members are not extending any unsolicited help to each other that they
provided in the past, especially during celebrations. Rural family members are
likely to become isolated just as the urban families in the near future.
Professional services
would now be required in most of the rural areas very soon. It is important
that service companies like those in hospitality industry and event management
should take a look at the rural market as a big opportunity in the near future.
Agricultural Inputs
There is a requirement
of farming equipment like tractors and farming products like fertilizers in
rural markets. Due to growth in rural population, the land owned by ancestors’
families is also decreasing.
Just a generation back
these undivided families could buy tractors or at least have a few pairs of
bullocks to do farming in their land. But after division of the land, the new
generation later cannot afford to buy even a pair of bullocks or a tractor.
These families make use of tractors available on rent to practice farming on
their lands.
There is also this
problem of finding labor to work in fields. They are not as easily available
and also charge high which was very unlikely in the past. In some rural areas
where Naxalite movement is strong, land has not been farmed for years because
laborers are not willing to work. Some agriculture work like sowing paddy is so
intensive that these crops cannot be grown if laborers are not available.
There is a huge
opportunity for companies in these type of areas for farm mechanization to
design equipment’s practically work for all farming work like sowing and
harvesting, which was being done manually. They can create small equipment and
make them available on lower prices. This will not burn a hole in the pockets
of the farmers. These farmers and their families should able to do all the
farming works by themselves.
The farm equipment
companies also have to manage the leasing of these equipment to small farmers,
because there is a big market where farmers are looking out for mechanization
of farming.
The current generation
of farmers own smaller pieces of land. But they are keen to improve their
living conditions. They are also enthusiastic about providing quality education
to their children. Probably they do not want their children to become farmers.
Since many of them are
also educated to some extent, they are very open to new methods of farming that
will improve their level of income from farming. They are also ready to make a
change in the crops that they have been growing traditionally in their farms
and are willing to grow crops which give them more income. In the pursuit of
great income from their farms, they are willing to do experiment in their
farming traditions.
Companies that produce
seeds, fertilizers, pesticides, irrigation equipment etc. have a huge
opportunity to penetrate into the rural market in a big way. They should come
up with high yielding variety of seeds, better fertilizers and pesticides in
the market and make profitable partnerships with the farmers who are eager to
use their products.
