Everything you need to know about the challenges of rural marketing.
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”.
Marketing in rural areas has a varied conceptual dimension as the events occurring in markets are necessarily taking place in a set of conditions affecting the rural dwellers and institutions hinterlands.
Many marketers seem to take rural market as agricultural marketing, but it is a wrong view of the subject.
In fact, by rural market, we mean the performance of business activities that direct the flow of goods from urban to rural areas (for manufactured goods) and vice versa (for agricultural produce) and products manufactured by rural non-agricultural workers. Rural market is not an independent entity by itself.
In fact, there are sociological and behavioural factors which affect the economy of rural market. By and large, markets may be described as an environment of the country side and the habitants thereof.
People are the market for marketers. Rural marketing is basically dealing with various inputs, projects and services meant for the rural market.
Sometimes rural marketing is confused with agriculture marketing but there is difference between the two. The later denotes marketing of produce of rural areas to the urban consumers or industrial consumers while rural marketing involves delivering manufactured or processed input or service to rural consumers and also include outflow of rural product into urban market. Agricultural marketing is the part of rural marketing.
Some of the challenges of rural marketing are:
1. Understanding the Rural Consumer 2. Seasonal Demand 3. Undeveloped People and Underdeveloped Markets 4. Many Languages and Diversity in Culture 5. Ineffective Distribution Channels
6. Inadequate Media Coverage 7. Warehousing Problems 8. Low Literacy Levels 9. Inadequate Banking and Credit Facilities 10. Rural Sales Management
11. Standard of Living 12. Spurious Brands 13. Vast and Scattered Market 14. Transportation Bottlenecks.
Challenges of Rural Marketing: Understanding the Rural Consumer, Seasonal Demand, Undeveloped People and a Few Others
Present Scenario of Rural Market – Problems and Challenges of Rural Market:
Prima facie the rural markets appear to be virgin lands just waiting for the marketers to move in and cash on them. However getting into the rural market and capturing a sizeable share is not an easy task. It is indeed a lot of hard work. A lot many problems are encountered. These problems of rural marketing can be basically grouped under six different heads.
They are:
1. Problems connected with ‘Physical Distribution’.
2. Problems related to Channel of Distribution.
3. Problems associated with the Sales Force.
4. Problems of Marketing Communication.
5. Problems of Market Segmentation.
6. Problems related to Product Management.
Challenge # 1. Problems Connected with ‘Physical Distribution’:
While undertaking rural marketing a marketer faces three different problems connected with the Physical Distribution of goods.
They are:
(a) Problems of Transportation – Not all villages in India are connected by railways and waterways. The only reliable means for transportation of goods are the road ways and they too are not all-weather. The transportation infrastructure of rural India is poor and inadequate to transport people and goods effectively.
(b) Problems of Warehousing – The facilities for storage in the rural areas, are even worse than the transportation facilities. Neither the Central nor the State Warehousing Corporation has been able to extend storage facilities to the rural areas. Though there are private warehouses in rural areas, they are meant for their exclusive use.
(c) Problems of Communication – The rural areas either do not have the basic minimum postal services like telephone and telegraphs, or if they are available they are very inadequate and not very effective. Communication is the basic requirement for marketing activities.
Due to lack of these infrastructural facilities, a marketer entering the rural market has to incur additional expenditure or compromise on the quality in either case it is the rural customer who suffers, in the form of higher prices and poor quality.
Solution:
The solution to the problems of physical distribution lies in the fact that the government needs to set up Rural Warehousing Corporations exclusively to meet the needs of the rural market. Further, the responsibility for physical distribution can be shared with the stockiest and stockiest cum forwarding agents. A group of companies can come together to undertake common rural distribution.
Challenge # 2. Problems Related to Channel of Distribution:
It is very obvious that the channel of distribution for rural marketing will be longer than the channel for urban marketing.
This increased channel props up problems as mentioned below:
(a) Costly channel of Distribution – A long channel automatically means a costly channel as a large no of middlemen are to be given their commission, furthermore, larger the channel, larger the number of administrative problems.
(b) Heavy dependence on intermediaries – As far as rural marketing is concerned there is very little or no scope for the manufacturers to approach the customers directly. Thus they have no option but to depend upon the intermediaries.
(c) Feeble viability of retail outlets – Rural markets are scattered, as such a large number of retail outlets are required to cover these markets. Moreover the rural areas are much more thinly populated as compared to urban areas. Thus these retail outlets are not commercially viable. Add to this a large number of intermediaries, the picture then is anything but rosy.
(d) Non-availability of dealers – One of the major problems faced is the non-availability of dealers in the rural market. The manufacturers have no choice but to make do with the available dealers.
(e) Non availability of banking and Credit facilities – Retailers require credit facilities if they are to extend credit to their customers. If this facility is not available it will result in limited stock carrying and limited business. This basic facility is also not available in the rural areas.
Solution:
The solution to the above mentioned problems lies in understanding the distribution system existing at the local village level. At this level there are the following available channels. They are private shops, cooperatives, fair price shops and village weekly markets popularly known as “village mandies”. From all these, the manufacturer of consumer products has to rely on the private village shops, as the co-operatives are known for distribution of agricultural inputs, and the weekly mandies are meant for disposing off locally produced products.
The fair price shops deal in items like wheat, sugar, atta, edible oil and sometimes cheap cloth. The village private shops are the most convenient and cheapest channel. Here the “Satellite distribution”; system works well. Under this system the manufacturer appoints stockiest at fewer towns who bridge the gap between the manufacturers and the retail outlets in the villages.
Challenge # 3. Problems Associated with the Sales Force:
Rural marketing demands heavy doses of personal selling efforts. In this area too quite a number of problems are faced.
(a) Getting salesmen to work in rural areas – Those salesmen will be successful in the rural areas who will blend and mix with the rural population. Not only is this a very difficult task for the urban salesmen, but few urban salesmen are willing to move to the rural areas.
(b) Matching with cultural differences – The rural market itself is a diverse fold of different cultures. It is very difficult for any salesmen to master the different cultural heritages existing in the different rural areas.
(c) Command over local languages – In the vast rural areas of India a number of different languages is spoken. This also creates a problem for the salesman.
(d) Greater creativity – The job of a rural salesman becomes more difficult because many a times the products that he has to sell are totally new to the rural customer. Hence it requires a greater creativity on his part if he is to perform his function of creating needs, wants and desires.
Solution:
The main solution to all these problems lies in proper recruitment, selection and training. Agreed, it is a herculean task but nothing is impossible. What can be done is that qualified people from the rural areas itself can be selected and proper training can be given to them in order to increase their efficiency.
Challenge # 4. Problems of Marketing Communication:
Problems of marketing communication or sales promotion, in the rural areas also deserve attention. These problems arise out of the barriers to market communication.
These barriers can be divided into two:
(a) Barriers arising out of rural market structure – The rural market structure is such that it is very diverse, scattered and full of people with different languages and cultures. Thus no advertising or promotional literature can be made available in any one language for the entire rural market. A number of local languages have to be used. Further the rate of illiteracy in the rural market is very high and thus the printed communication has little or no impact on the rural markets.
(b) Barriers arising out of available media – Even though media such as radio, TV, cinema, print and outdoor advertising are available in the rural areas, none of these has a total coverage of the entire rural area. Even though radio covers 90% of the rural areas its actual listenership is quite lower. TV covers 27%, cinema too has its share but not more than 35%, whereas print media covers 20% of the rural population. Outdoor advertising has its potentialities. Thus the real problem here is that of selecting the right media mix.
Solution:
The solution lies in combining media like radio, television, cinema, outdoor advertising and point of purchase. In addition to these formal media vehicles other non-formal ones can also be used like musical shows, puppet shows, street plays, door to door campaigning etc. The advertising theme should be simple and straight forward stressing more on the product and its usage.
Challenge # 5. Problems of Market Segmentation:
Market segmentation in rural marketing is more important than perhaps even in urban marketing. This is because there is a great amount of diversity in the various rural markets. They are by no means homogeneous. Further identifying and cultivating rural markets requires a huge amount of investment and hence due importance should be given to this aspect. There are various bases on which a rural market can be segmented.
Market segmentation can be done either on a primary basis like geographic and demographic, or on a secondary basis. The secondary basis for geographic segmentation would be level of irrigation, vicinity to fewer towns etc. The secondary basis for demographic segmentation would be age, sex, literacy levels. The major problem as far as market segmentation is concerned would be a choice of the basis of segmentation. However, much would depend upon the attitude and philosophy of the company on one hand and the resources available on the other hand.
Challenge # 6. Problems Related to Product Management:
Another problem faced in rural marketing is the decision of whether the same product, as is marketed in the urban area should be marketed in the rural areas also, or changes should be made. Taking into account the vastly different features of the rural markets certain changes in the colours, size and packaging will have to be made. However, as the rural consumer just like the urban consumer is a human being with the same desires and wants the basic product will be the same.
A rural customer like the urban customer wants quality at a lower price. Thus this aspect has to be borne in mind. However the rural customer has a low purchasing power and limited storage capacity and hence prefers to buy in small lots and small packages. Thus this aspect has to be given due attention. As the rural customer is poor it would pay the company to come out with cheaper products for this particular market.
Even though the rural customer is by now used to branded products he is more carried away by the price factor. Further he gives more importance to regional or local brands. Thus while taking a decision to introduce a particular product in the rural market; these considerations should be paid attention to while deciding upon the changes to be made in the product.
Thus it can be concluded that rural marketing is both enchanting and challenging. However, they are fraught with challenges and problems which need to be overcome if the joys of profits are to be reaped.
A marketing strategy is the total plan, shaped and designed specifically for attaining the marketing objective of the firm. A marketing objective tells us where we want to go and the marketing strategy provides us with the grand design for reaching there.
Usually a strategy is viewed as a system of building the defenses of a company against competitive forces. It stands for the competitive market actions taken by a firm either to counter competition or to evoke a response from the competition. Thus marketing strategies gain importance in rural marketing as rural markets are those virgin markets in which various companies are moving in, in order to capture the demand. Thus when we talk of marketing strategies for rural markets, we have to take into consideration the special characteristic features of the rural market.
Taking into account the great increase in exposure, fast changing expenditure pattern buying habits and increasing health care and consciousness of the rural consumer, a production driven marketing strategy will not hold for a long period of time. Thus a marketer will have to adopt either a Market driven strategy or a market driving strategy.
A market driving strategy aims at shaping the existing and potential demand in such a way that this demand matches the products offered by the company. Thus in this strategy the company has to make the buyer aware of new needs which can be fulfilled by consuming the products of the company. Or this strategy makes the consumer hunt for better products to satisfy their existing needs.
Again this hunt for better products should end with the product of the particular company. Thus the demand driving strategy is more difficult than the demand driven one. A demand driven strategy would aim at providing those goods to the consumer that are needed, required and demanded by the consumer.
As far as the rural market is concerned, a market driving strategy would be more suitable as most companies enter the rural market in order to widen their markets. Thus their already existing products can be marketed with a little bit of variation. However for some products, a market driven strategy would also prove to be very useful because first and foremost it is easier and secondly taking into account the problems existing in the rural market it would be the best strategy.
However, the strategy adopted would depend upon the characteristics of the rural market and the extent and nature of the competition in existence.
Challenges of Rural Marketing – 11 Main Reasons for Inadequate Performance of Rural Marketing: Poor Infrastructure, Poor Market Planning, Product Design and a Few Others
Factors/Reasons for Inadequate Performance of Rural Marketing:
(1) Poor infrastructure.
(2) Poor market planning and awareness.
(3) Product design.
(4) Price of the product.
(5) Poor means of distribution.
(6) Poor means of communication.
(7) Consumer behaviour.
(8) Cultural factors.
(9) Demographic factors.
(10) Purchasing decision.
(11) Buying motives.
1. Poor Infrastructure:
The infrastructure broadly includes, roads, transport facilities, electricity, telecommunications, etc. However, these basic facilities are missing in most of the rural areas of India. The roads are not there, and if they exist, their condition is poor. Still, there are many parts in central and north-east India, which are totally untouched by the development in the outside world.
Many areas are simply inaccessible. In such a scenario, the rural marketing concept appears unpromising.
2. Product Design:
A product which is selling well in urban markets, may not necessarily be a success in rural markets, the reason being the difference in the utility value of the product. For example, consumer goods which are becoming more or less a necessity in urban areas as a result of changing life-style may still be categorised as luxuries in rural areas.
3. Poor Market Planning Awareness:
Rural markets are different from urban markets. Unlike urban markets, they are unplanned in nature. Till your years back, rural markets were simply not cared about companies which have been household names for decades in urban areas, were not even heard of in the rural markets.
But, with the increase in competition in urban areas, emphasis on rural areas has emerged. However, the executives in the companies do not understand the consumer psychology in rural markets, and it makes the planning process all the more complex. Lack of awareness and understanding of consumer behaviour in rural markets, creates problems in formulating strategies and plans for these.
4. Price of the Product:
‘Price’ is a tool with which companies can compete with one another. It is a sensitive index, while considering the product. Price plays an important role in urban as well as rural markets, but, it is more crucial in rural areas because the income is low. Moreover, price has to justify itself.
The consumer must feel satisfied and benefited after paying the price for a particular product. Thus, price remains the point of contention.
5. Poor Means of Communication:
With the given level of literacy and awareness of rural population, communication constitutes a major hurdle in exploiting rural markets. Various factors, like language, religion, superstitions, rigidity, etc. make communication in rural markets more difficult
The messages used in urban areas for communication purposes, if used into rural markets, may lead to negative marketing. Thus, due consideration needs to be given while communicating with rural masses.
6. Consumer Behaviour:
In addition to physical constraints, various other factors exercise power influence over consumer behaviour, these are known as “attitudinal factors”.
The specific environment in which rural masses reside decides the attitudinal bent of mind of rural consumers. Consequently, the rural markets flourish or collapse, mainly on account of how the rural consumers feel about a particular product.
7. Poor Means of Distribution:
Nobody ever thought of developing the channels of distribution in rural areas till the focus of the executives shifted from urban to rural areas. Only those companies which were directly related with agricultural activities, e.g. insecticides, fertilizers, seeds etc., contacted the rural markets.
The consumer goods companies had not focussed their activities in the rural areas. Thus, adequate channels of distribution do not exist, and this restricts the exploitation of the rural markets to the full.
8. Cultural Factors:
Culture affects the behaviour of individuals. The consumers in the rural areas are much under the influence of traditional cultural values. The culture at present is more or less the same as it was some 50 years back. Consequently, their buying decisions are the result of the culture they hail from that is Hindu culture, which restricts meat-eating habits. As a result, the fast food culture has remained restricted to urban areas.
9. Demographic Factors:
The various demographic factors like age, sex, education, income, etc., also account for consumer response. This is trine for both urban and rural consumers. In rural areas, the educational level is very low in a majority of the rural areas. The income level also is very low.
The main occupation continues to be agriculture, and the level of advancement in agriculture is also low. This results in lesser output, and consequently low income, resulting in low purchasing power.
Moreover, the rural population is heterogeneous in nature. It consists of either younger or elderly people. The people in the age group 18-40 migrate to nearby towns or cities in search of livelihood. Besides, women outnumber men in rural areas because male members move out of their places.
10. Buying Motives:
Marketers have been using buying motives to handle the consumers. ‘Buying Motive’ provides the psychological justification for the acceptance of a product. This tool has proved a success with urban consumers, but its application to rural markets needs to be studied.
It is necessary for the marketer first to identify the psychological characteristics which can act as the buying motives. Luxury is a buying motive which has been widely exploited by marketers in urban markets, but it may not prove that effective in the case of rural consumers, because of a different style of living.
11. Purchasing Design:
One of the important factors affecting consumer’s behaviour in rural markets is the right to take the purchase decisions. In most rural families, it is the head of the family who decides what to buy and when to buy.
Consequently, his purchase decisions are influenced by his own personality traits, rather than the aptitude and perception of the actual consumers of these .goods. Thus, while venturing into rural markets, this fact needs probing.
Suggestions for Rural Marketing Development:
The above explanation of the rural marketing background, clearly shows that it needs careful planning at Macro level for the development of rural marketers. The Government and other public agencies can play an important, role in the execution of the various developmental programmes.
Suggestions at Micro Level:
The main recommendations in this respect areas:
The strategies will have to be designed keeping an eyeview on- (a) pricing of product, (b) means of distribution, (c) product design, and (d) communication. These will improve the organisational performance in the market.
Marketing Planning:
Rural marketing needs adequate marketing planning with regard to design of product, utility of product. Price incentives in the rural areas be given due care. Hindustan Lever has followed this technique successfully in rural areas.
Improving Channels of Distribution:
Marketers need to be more effective by importing skill and training to the wholesalers and retailers so that these are able to perform their jobs efficiently and effectively.
Some progress has been made by Hindustan Lever Ltd. in terms of the introduction of the concept of satellite marketing in rural areas, wherein a wholesaler is appointed in rural area, he further appoints sub-wholesalers in the interior, and these sub-wholesalers contact the local markets. This way, a link is formed between the company and the rural markets.
Communication Strategies:
The messages being communicated are influenced by western culture, to which the rural consumer is alien. The messages to the rural markets, should be such that they are acceptable in them. The images appearing in the advertisements should be identifiable by the consumers.
In order to improve communication, the media mix should also be taken care of. The media mix applicable to urban markets is not appropriate for the products marketed in rural markets, e.g. newspapers are not sufficient to cover the total rural population.
Advertisements on national channels and regional channels of television and radio, bill-boards, theatres, etc. would provide a good means of communication. Finally comes the language in which the message is to be conveyed. Besides Hindi, the national language, and English, regional languages should be used more often.
Consumer Behaviour:
With regard to handling the attitudinal problem, the consumer behaviour in rural markets should be understood. However, in order to do this, the marketing personnel should have thorough knowledge of the concept and techniques of studying behaviour.
In this context, special training and development programmes should be conducted by the organisations with the main focus on developing analytical and behavioural skills. Concepts like Transactional Analysis, Cultural Analysis, and inputs-on Attitudinal Surveys should form the major contents of such training programmes.
With the development of such skins in the marketing personnel, the task of formulating appropriate strategies to venture successfully into rural markets would be facilitated.
Challenges of Rural Marketing – Understanding the Rural Consumer, Seasonal Demand, Undeveloped People, Underdeveloped Markets and a Few Others
Undoubtly, the rural market of India offer a big opportunities and attractions to marketers. But the peculiarities of rural markets and rural consumers pose challenge to marketers in reaching them effectively. There are a large number of small villages which are not easily-accessible because of all weather roads.
The main challenges or problems of rural marketing are described below:
1. Understanding the Rural Consumer:
The main challenge that one faces while dealing with rural marketing is the basic understanding of the rural consumer with regard to the particular category in a given region. The challenge is to understand the perceptions, viewpoints and the actual needs of the rural people which are totally different from urban people. There is a wide gap in consumer behaviour in rural areas and urban areas. Therefore, a thorough knowledge of the nuances of language and dialects and familiarity with the prevailing customs in that region is essential to order to successfully execute a marketing campaign.
2. Seasonal Demand:
Rural demand is more seasonal as compared to urban demand. Demand for goods in rural markets depends upon agricultural situation, as agriculture is the main source of income.
Agriculture to a large extent depends upon monsoons and therefore, the demand is not stable or regular. The relatively greater influence of marriages and festivals on the purchase pattern is another. Interestingly, marriages and festivals often coincide with the harvest. Besides being seasonal, rural demand is somewhat irregular as well. So, during harvest and festivals season, demand increases substantially and vice versa.
3. Undeveloped People and Underdeveloped Markets:
Rural society in India is underdeveloped. Modern technology has tried to develop the people and markets in rural areas. But the technology has made very less impact on rural areas.
4. Many Languages and Diversity in Culture:
India is a country of many languages. Language becomes barrier in effective communication in the market area. Multiplicity of languages spoken in villages is another difficulty faced by marketing people. This poses a great threat in designing the communication strategy. More than 30 languages and about 1700 dialects make rural communication difficult. In the urban areas, marketing communication can be managed by and large with English and Hindi.
However, marketing communication in rural areas has to necessarily be in local language. Not only language but culture also affects the marketing strategy. Rural consumers are a tradition bound community. Their culture, religion and even superstition strongly influenced their purchasing decision. There is a dominance of traditionality in rural areas. Traits among the sales force are required to match the various requirements of those specific areas.
5. Ineffective Distribution Channels:
The distribution chain is not very well organized and requires a large number of intermediaries which in turn increases the cost. Multiple tiers add to the cost. At minimum, the distribution chain in the rural context needs three tiers, like the village shopkeepers, the mandi level distributor and wholesaler/Stockiest in the town. In addition, it involves the manufacturer’s branch office operations in the territory.
Producers, who can reach the customers through the shortest distribution channel, can do better in this market. They are mainly dependent on dealers, who are not easily available for the rural areas. Due to lack of proper infrastructure, manufacturers are not motivated to open outlets in these areas.
6. Inadequate Media Coverage:
Media have lots of problems in rural areas. Television is a good source to communicate the message for rural people. But due to non-availability of power as well as television sets, majority of rural people cannot get the benefits of various media.
7. Warehousing Problems:
A storage function is necessary because there is a time gap between production and consumption of commodities. Agricultural commodities are produced seasonally but they are demanded over the year, so there is need to store them. But in rural areas, there is lack of public as well as private warehousing. In warehousing too, there are special problems in the rural context.
Business firms find it difficult to get suitable godowns in many parts of rural India. There are no sufficient storage and warehousing facilities in rural areas. Of course, there is a corporate body named ‘Hindustan Warehousing Corporation Ltd.’ but, it is of no use of the people working in remote rural areas. This problem adversely affects the services as well as the cost aspect in distribution.
8. Low Literacy Levels:
The literacy rate is low in rural areas as compared to urban areas. Marketers faces communication problem due to the lack of literacy rate. Print medium is not much effective and it is irrelevant since its reach is poor because majority of villagers are uneducated. So, low level of literacy becomes challenge for marketers in rural areas.
9. Inadequate Banking and Credit Facilities:
A large majority of the villages, especially those with 2000 population or less, do not enjoy banking facilities. Whatever, RRBs (Regional Rural Banks) are operating under the various nationalized commercial banks might be quantitatively satisfactory but subject wise their performance is not up to expectations. In the process, the rural retailers experience several problems not only in financing their business operations, but also in making payments to the suppliers. For want of credit facilities, retailers are unable to carry enough stocks with them.
10. Rural Sales Management:
Rural marketing involves greater amount of personal selling efforts compared to urban marketing. The rural salesman must be able to guide the rural consumers in the choice of products. The rural salesman has to be a patient listener as his customers are extremely traditional. He may have to spend a lot of time on customer’s visits to gain a favourable response from him. It has been observed that rural salesman do not properly motivate rural consumers because they are trained according to the urban consumers.
11. Standard of Living:
The rural consumers are having low per capita income, low purchasing power, low literacy rate and therefore, low standard of living. The per capita income of rural people is low as compared to urban counterparts. The number of people below the poverty line is more in rural markets. Due to this, standard of living in rural areas is low as compared to urban areas. Uncertainty in income makes the rural people more conscious about purchasing the products. But the picture is changing and rural markets are offering greater opportunities.
12. Spurious Brands:
The brand is the most important means of conveying quality to rural consumers. Day by day, though national brands are getting popular, local brands are also playing a significant role in rural areas. This may be due to illiteracy, ignorance and low purchasing power of rural customers. Local brands are becoming popular in rural markets in spite of their lower quality.
Cost is an important factor that determines purchasing decision in rural areas. A lot of spurious brands or look a likes are available providing a low cost option for rural consumers. Many a time the rural customer may not be aware of the difference due to illiteracy.
13. Vast and Scattered Market:
A vast and scattered market exists in rural India. About 75% of the total population is spread in rural areas. Whereas the urban population of India is concentrated in 3200 cities and towns, the rural population is scattered across 5,70,000 villages and of them only 6300 villages or less than 10% have a population of more than 5000 each. The inference is clear unlike urban demand, which is scattered over a large area which creates problem in marketing of products in rural areas.
14. Transportation Bottlenecks:
Transportation is the nerve centre for any business centre. But most of the rural markets are paralyzed in the absence of proper working of this nerve centre. This problem is more deeply felt by the rural marketing system as it mostly deals in a few based products like fruits, vegetables, fish, poultry and dairy products which get spoiled if not transported efficiently and quickly. Lack of proper roads and transportation facilities creates difficulties in entering into rural market.