Chapter – 1

Rural Marketing
Meaning and Definition of Rural Marketing
Rural marketing involves the process of developing, pricing, promoting, distributing rural
specific product and a service leading to exchange between rural and urban market which satisfies
consumer demand and also achieves organizational objectives.

The rural market is made up of two broad components:

(1) The market for consumer goods which includes both durable and non-durable goods, and
(2) The market for agricultural inputs (fertilizers, pesticides, seeds, etc.) and other investment
goods.

Definitions
Marketing
Marketing Identifying the needs of customers and potential customers, providing
products/services that satisfy their needs, and developing efficient processes or systems to deliver
your product/service to the market when, where, and how consumers want it.

Rural market Definitions

According to G.N. Murthy – “Rural marketing is the study of all the activity, agency and policy
involved in the procurement of farm inputs by the farmers and the movement of rural products
from farmers to consumers”.
According to T.P Gopalaswamy – “Rural Marketing is a two-way process which encompasses
the discharge of business activities that direct the flow of goods from urban to rural area
(manufactured goods) and vice versa (agriculture products) as also with in the rural areas”.

Characteristics of Rural Marketing

The rural market of India consists of about 65 per cent of the population of the country spread
over nearly 630000 villages.
Rural markets may be considered as the nerve centers of the economic, social and cultural
activities of the rural life of the country. It is scattered and widespread into many villages and
unlike the urban market not confined to a handful of metros, cosmopolitan cities and towns. The
demand for products including consumer non-durables and durables are seasonal and therefore
uneven in a year.
1. Large, diverse and scattered market – The rural market in India is large and scattered into
a number of regions. There may be less number of shops available to market products.
2. Major income of rural consumers- agriculture – Rural prosperity is tied with agricultural
prosperity. In the event of a crop failure, the income of the rural masses is directly affected.
3. Standard of living and rising disposable income of the rural customers – It is known that
a majority of the rural population lives below the poverty line and has a low literacy rate, low
per capital income, societal backwardness, low savings etc., but the new tax structure, good
monsoon, government regulation on pricing has created disposable incomes. Today the rural
customer spends money to get value and is aware of the happening around him.
4. Traditional outlook – Villages develop slowly and have traditional outlook. Change is a
continuous process but most rural people accept change gradually. This is gradually changing
due to literacy, especially in the youth who have begged to change the outlook in the villages.
5. Rising literacy levels – It is documented that approximately 45 per cent of the rural Indians
are literate. Hence, awareness has increased and the farmers are well- informed about the
world around them. They are also educating themselves on the new technology around them
and aspiring for a better lifestyle.
6. Diverse socio-economic background – Due to dispersion of geographical areas and uneven
land fertility, rural people have disparate socio-economic background, which ultimately
affects the rural market.
7. Infrastructure facilities – The infrastructure facilities like cemented roads, warehouses,
communication system and financial facilities are inadequate in rural areas. Hence, physical
distribution is a challenge to marketers who have found innovative ways to market their
products.

Nature of Rural Marketing

The rural market is quite different from urban markets. Agriculture is the main economic activity
in rural areas. In the process of development of civilization, agriculture along river banks was the
first form of settled life. Archaeological evidence reveals that bronze industry supplied tools and
implements to agriculture.

Agriculture supplies inputs for fabrication into manufactures cotton, oilseeds, spices etc. All food
items had a rural origin.

The rural society has a very high status in this regard. The distribution of land was made by the
states which belonged to the state. The British rule was the worst blow to the rural society in the
last three centuries.

The worst blow was to cottage and small scale industries, cultivation of indigo, tea and jute,
development of timber trade and denudation of forests. The terms of trade were not favourable to
Indian farmers. In these circumstances farmers were forced to live in deprivation and poverty.

Agriculture and industries are identified for the development of the rural economy. An integrated
approach was evolved to take care of projects ranging from milk and milk-products to
horticultural products like fruits, vegetables, flowers, herbs, etc. The processing of these is not
widespread in the rural areas. The
low cost and Labour based technologies have been the common mode of village industry. As a
result, the rural products do not enjoy competitiveness in a wider market. Most of the products
are consumed locally.

Understanding the potential of rural market

1. Large population: 742 million Indians constituting 138 million households reside in
6,38,365 villages (Census, 2001). The size of rural market itself speaks of its potential
2. Saturation of Urban Markets: The metropolitan areas are well-equipped with different
products and services. Therefore, the companies rescue to the rural markets to increase sales.
3. Better Employment Opportunities: The government is engaged in developing job
prospects other than agricultural activities for the rural population through Jawahar Rozgar
Yojana (JRY). It provides an opportunity for the companies for entering the rural markets.
4. Increase in Rural Income: As modern agricultural practices have emerged in rural areas,
the farmers have been able to produce a better harvest and reduce crop failures. This has
ultimately increased the disposable income of the villagers.
5. Change in Rural Consumer Behaviour: The demand for goods or services in rural areas
is immensely pricing sensitive. However, consumers are moving towards the purchase of
technical products, like mobiles and computers. Thus, expanding the growth scope for the
companies.
6. Favourable Government Policies: The government carry out varied programmes and
frames various policies to develop job opportunities and promote the sale of goods and
services in rural markets.
7. Improvement in Infrastructure Facilities: The infrastructure growth, i.e., construction of
roads and warehouses, transportation services, developing communication network, etc. in
the remote areas, is another benefit for the companies investing in these areas.
8. Penetration of Information Technology: The rural population is slowly upgrading to
technology and using new modes of communication and media like mobile phones,
television, etc. Thus, creating enormous opportunities for business organizations.
9. Assistance from Financial Institutions: The banks and other financial institutions
encourage the rural population for purchasing more goods by facilitating the loans and
advances at an attractive rate of interests.
10. High Competition in Urban Markets: In urban areas, the people have complete knowledge
about the goods or services and are highly brand conscious. However, rural markets are still
in need of better products or services.
11. Large Rural Population: The significant advantage of entering the rural markets is that the
company gets exposure to a large population with many potential consumers.
12. Huge Uncaptured Market: There is vast scope for the companies to introduce new products
in the remote areas of the country to build up their market.

Socio-cultural Factors
Socio-cultural environment is an important part of environment — culture, traditions, beliefs,
values and lifestyle of the people within a limitation of society constitute the socio-cultural
environment.
The following elements play a big role in the decision making stage to a large extent as to what
the people will buy and how they will consume.

Culture
Culture is the combination of factors like religion, language, education and upbringing. Accurate
information on the consumption habits, lifestyle and buying behavior of the rural people can be
obtained through a survey of the socio-cultural environment.

Cultural shifts carry the marketing opportunity as well as threats and also carry the cultural
dynamics, the needs and feelings of rural people which need to be understood.

Social Class
Social class is one of the main concepts in socio-cultural environment. A society consists of
different social classes and all social classes are determined by income, occupation, literacy level
etc. of its members. Each class has its own class values according to lifestyle, behavior etc. These
values have a strong consumption pattern and paying behavior of the member of the class.

Social and Cultural Environment

The society and polity (organization) across the country varies between different religions, castes
and linguistic groups. Common socio-cultural behavior has been mapped as distinct
sociocultural regions, which may be spread across political boundaries. The influence of social
practices shows itself in consumer preference for product features, product size, shape and color.

The source of information also gets influenced by social practices. Along with cultural dynamics,
the needs feelings of rural people also need to be understood. Marketers would first understand
this and then design and launch products accordingly. For example, Cadbury’s has launched
Chocobix, a chocolate- flavored biscuit, on the basis of research theory and understanding that
rural mothers will always opt for biscuits instead chocolates for their children.

Caste System
Marketers have to be sensitive towards the caste systems and accordingly products in rural areas.
While developing advertisements, brand communication and promotion plans, marketers should
have to be sensitive to ensure relevance of characters and message which doesn’t affect any caste
system.

Rural Marketing Environment

All markets exist in an external environment where the business organizations function. The
following are the environmental factors which influence the trade practices in rural marketing:
Political Changes
The government’s intervention in the trade and commerce practices promoting the small scale
rural industries and penetration of other business units in the rural areas to enhance the condition
of people living in these areas, influence the rural markets to a great extent.

Social Changes
The social environment consists of the following:

 sociological factors, i.e., rural consumer’s lifestyle, preference and habits;

 anthropological factors determine the culture and the way of living of the consumer and;

 psychological factors constitute of the attitude, perception, behaviour, personality and

mental soundness of the consumer.
All these factors also influence the rural markets.

Technological Changes
With technological advancement, marketers make use of the latest marketing tools and strategies.
Also, the modes of communication and transportation have been improvized to produce the goods
or services available to rural consumers in a short period.

Economic Changes
The marketers need to consider economic factors, including a
healthy competition, consumer welfare and optimal price to conquer the rural markets.

Physical Changes
Another essential factor is the physical distribution of the goods or services into the rural markets,
which can be achieved through the development of infrastructure.

Ethical Changes
Business ethics are essential for achieving the long-term goals of the organization. Thus, the
moral values of the company play a key role in marketing the products in rural areas.

Rural Marketing – Attitude and Behaviour

Attitude
Attitudes influence behavior and have an impact on the perception of objects and people, and
also exposure to information, choice of friends, co-workers etc. Attitude has been comprehended
in different ways by various researchers and defined as both conceptual and operational. It is
also common to define attitude as affect toward an object.
Attitude as Set of Readiness
Attitude was first conceived as a tendency to respond to some social object. It was conceived
that all the definitions of attitude had the component of readiness/disposition to act. According
to this, the following is the definition of attitude −

Attitudes are mental states of readiness, organized through experience, exerting a dynamic
influence upon an individual response to all objects and situations with which it is related. This
point of view considers attitude as a response to certain stimuli.

Attitude as Effect and Evaluation

Many researchers define attitude in terms of their effects and evaluation. Some of the definitions
highlighting this point of view are −

 Attitude is an enduring operation of motivational, emotional, perceptual and cognitive

processes with respect to some aspect of the individual world.
 Attitude is also a tendency to evaluate an object or symbol of that object in a certain way.
That evaluation consists of attributing desirable and undesirable qualities to an object.
Although these definitions closely relate, but there is a difference between them. While attitude
is often seen as a disposition of act, an opinion is generally considered as an expression of
someone’s judgment of a particular set of facts and an evaluation of the circumstances presented
to him.
In simple words, opinions are expressions of attitudes may be observed that the attitudes are
basic to opinions and can influence them. A belief is an organization of perception and cognition
about some aspects of an individual’s world. It is a cognitive component of attitude and reflects
in the manner in which an object is perceived.
For an example, cow is a sacred animal for the Hindus. They have had a high positive attitude
towards the animal over centuries. Their attitude is expressed in their opinions to respect and
look after the animals.

Consequent to the attitude, that they do not want to hurt or kill this animal, which is expressive
of their sacred belief. For a marketer, all three i.e. the opinion, attitude and belief are important
because they have a role in the buying and decision making process.

Attitude and Socialization

Consequent to attitude and belief system, certain social classes exhibit a high degree of
participation in social and community life while certain societies are individualistic and have
low community affection. The role of influencers varies in such societies and also can influence
the buying process of individuals.

Marketers study the importance of socialization and relate it with buying processes. Some of the
characteristics in which attitudes shape up the socialization of an individual are his identification
with the reference groups, family, role and status. Each of these identifications has an influence
on one’s purchase and consumption behavior.

Reference Groups
An individual’s reference group consists of all the persons that have a direct or indirect influence
on the person’s behavior. In rural markets, people mostly belong to the direct groups and cherish
personal relations.

Marketers should take these relations to their advantage. They can take the help of opinion
leaders such as the sarpanches or community leaders to push forth their products.

Family
Family is the most influential reference group. Family consists of people related by blood,
marriage and adoption. The influence of family in India still continues to influence purchase
behavior significantly.
Family influences utilitarian effect, value expression and interpretation of information. In rural
markets, the male members, particularly the head of families have a very strong influence on the
purchase decision-making process. The marketers have to understand this and design their
strategy accordingly.
Role and Status

The person’s position in each group can be defined in terms of his/her role. A role consists of
the activities that a person is expected to perform according to the persons around. Role is an
indicator of a person’s position and people often express it through their purchase process.
Rural people are very sensitive of their role and status and work very hard to preserve the same.
They might go to every extent to maintain their position in the society. For example, Punjabis
have a high propensity towards show off. They purchase expensive brands to maintain their
status. This explains why there is a highest penetration of mobile phones, big cars and luxury
items in rural Punjab. Marketers should understand these cues and design the strategies
accordingly.

Rural Consumer Behavior

Attitude occupies a central position in the process of transforming the work needs into efforts
and it has a profound influence on one’s behavior. Attitudes serve the following four functions
of an individual −

 Instrumental function
 Ego defensive function
 Value orientation function
 Knowledge function
Instrumental Function
Attitudes serve as means to reach a desired goal or to avoid an undesired goal. Instrumental
attitudes are made by the activation of need that are associated with the attitude objects and
arouse favorable or unfavorable feelings.

For example, most traditional Indian people do not think the soft-drinks as very good for health.
Their propensity to cause acidity reinforces the attitude. When the news came that there are
pesticides in the soft-drinks, most people stopped their consumption because they derived their
cues towards such behavior from the unfavorable characteristic of the product.

On the basis of this function of attitude, the marketers should design their communication in the
form of advertisements and make use of the right media and motivate the rural consumers to
showcase a favorable behavior.

For example, Honda motorcycles has a very high penetration in rural markets. It has designed
its message of durability of their bikes, even on bad rural roads and the superstar message. Their
distribution network ensures easy availability of the product. In certain areas, their easy finance
has helped in enabling the consumers to purchase the same.
With the initial penetration, the word-of-mouth communication helped in making a rapid inroad
into the market. The attitude has been highly instrumental in eliciting the desired response from
the consumers. It is the entire marketing strategy, which has worked for achieving the results
and not just a few activities of the company.
Ego-defensive Function

The ego-defensive function of attitude shows the importance of psychological thoughts.

Attitudes may be required and maintained to protect the person from facing threats from
becoming aware of his own unacceptable impulses.

Ego-defensive attitudes may be external or internal threats, frustrating events, to build up of the
impulses and suggestions by authorized sources. The attitudes influence one’s behavior by
affecting one’s perception of the situation accordingly.

For example, popular cigarette manufacturer ‘Red and White’ had instituted a bravery award
keeping in consideration the ego-defensive role. By this type of attempt to relate bravery as a
characteristic of the smoker of their brand, they were trying to create a positive attitude.

Rural people are very particular about protecting their ego and any suggestions to this matter can
work against the marketers. It is important to note that rural consumers tend to exhibit a
collective ego, where the role of the group becomes very important.
The marketing strategy must not be suggestive of anything that influences the egodefensive
aspects carried out negatively. The rural people do not show their expressions of liking as well
as disliking. This characteristic makes them accept as well as reject a product.
Value Orientation Function

The value orientation function takes into consideration the attitudes, which are held because they
express an individual’s values and enhance his self-identity. These attitudes arise by conditions
that threaten the self-concept, restart the person’s selfimage by the cues that increase the person’s
value and make them salient to him.

For example, most Indians are not comfortable to purchase contraceptives openly. By the
advertisements, the marketers are trying to project the consumers that there is nothing bad to
purchase them and get the advantages of safety and birth control.

Another example is the marketing of eggs NECC. Traditionally, Indians are not eager to
consuming eggs on certain days or in certain seasons considering their beliefs. By influencing
people to eat eggs daily, they are being motivated to give their value system and adopt a more
rational approach towards such behavior.

As was in the case of ego-defensive function, the rural consumers also influence collective value
systems. The marketers must understand the social satisfaction and segment their markets
accordingly.
Knowledge Function

This function is based on a person’s need to maintain a stable, organized and meaningful
structure of life. Attitudes that provide a standard by which a person evaluates every aspect of
the world around him serve as the knowledge function as well.

For example, despite a massive and lots of campaign by the Government for the caste system,
the Indian psyche is till filled with it. This is because people take the messages with their pre-
dispositions and it might take a long time before these are modified.
These functions of the attitude influence an individual’s interpretation of the information he has.
Since attitudes intervene between the work needs and the work response, information about how
people feel about their purchase can be quite useful in predicting their response to work.
Thus, knowledge of attitude can help the marketers to devise means to make more compatible
policies for their customers and get more profit out of them.

Characteristics of Rural Buyer

The characteristics of the buyer that affect the buying process include:
(a) Age group and gender of the buyer: The buying power and decision is influenced by the
age and life cycle stage of the buyer. Generally in rural areas males play a dominant role in
taking buying decision for a product as they are the earning members of the family.

(b)Profession of Rural Consumers: Generally the rural consumers are engaged in farming and
so their demands are also according to their occupation.
(c) Financial Position: The amount of finances available with the consumers depends on their
income and this defines their purchasing power .This clearly indicates that the purchasing
power of high income group is more and so they can purchase few comforts and luxurious
goods.

(d)Lifestyle: Life style denotes an individual style and standard of living .Generally rural people
are very simple, not having much knowledge about the technical world and so they have a
simple lifestyle .

(e) Personality of an Individual: The buying decision of customers is influenced by his/her

personality as the usage of particular products depends on their thinking , their attitude , their
perception , etc
(f) Psychological Factors: The psychology of an individual plays a major role in taking any kind
of decision i.e., it can be for purchase of any goods or usage of those goods . Mostly in rural
areas people are narrow minded and that is why they don’t easily accept the products with
latest technology as they have a fear in their mind that whether they will be able to use it
properly and whether it will not cause any kind of harm to them.

Factors affecting rural Consumer behavior and attitude

The factors include:

1. Socio-economic environment of the consumer
2. Cultural environment
3. Geographic location
4. Education/literacy level
5. Occupation
6. Exposure to urban lifestyles
7. Exposure to media and enlarged media reach.
8. The points of purchase of products.
9. The way the consumer uses the products
10. Involvement of others in the purchase.
11. Marketers effort to reach out the rural markets