Everything you need to know about the problems of rural marketing in India. Rural marketing is a process which starts with a decision to produce a saleable farm commodity and it involves all the aspects of market structure or system, both functional and institutional, based on technical and economic considerations, and includes pre- and post-harvest operations, assembling, grading, storage, transportation and distribution
Rural retail markets as an integral part of the Indian consumer market, suffer from the similar problems of national market.
The problem arise basically out of the peculiar dynamics of the rural market of India the uniqueness of the rural consumer, the uniqueness of the structure of the rural market, and the peculiarities of the distributional infrastructure in the rural areas. These are special to the rural market; and these require unique handling.
The problems of rural marketing are:-
1. Lack of Proper Communication 2. Low Literacy Level 3. Distribution Problems 4. Highly Dispersed and Thinly Populated Markets 5. Different Religions, Languages, Cultures, Social Customs and Traditions 6. Lower per Capita Income
7. Seasonal Demand 8. Problem of Transportation in Rural Areas 9. Warehousing 10. Availability of Appropriate Media 11. Village Structure 12. People and Underdeveloped Market
13. Many Languages and Dialects 14. Market Organisation and Staff 15. Logistics, Storage, Handling and Transport 16. Product Portioning 17. Hierarchy of Markets 18. Lack of Bank and Credit Facilities
19. Regional Differences 20. Negligence of Consumer Research 21. Brand of Product 22. Problems of Market Segmentation in Rural Markets 23. Problems of Packaging in Rural Market 24. Multiple Tiers, Higher Costs and Administrative Problems
25. Non Availability of Dealers 26. Scope for Manufacturer’s Own Outlets Limited; Greater Dependence on Dealers Inescapable.
Problems of Rural Marketing in India: Lack of Proper Communication, Low Literacy Level, Distribution Problems and a Few Others
Problems in Rural Marketing in India – 6 Important Problems from the Point of View of Marketing Management
The problem arise basically out of the peculiar dynamics of the rural market of India the uniqueness of the rural consumer, the uniqueness of the structure of the rural market, and the peculiarities of the distributional infrastructure in the rural areas. These are special to the rural market; and these require unique handling.
Practically, in every aspect of marketing, rural markets post certain special problems, but the following are found to be important from the point of view of marketing management-
(a) Transport- Distribution logistics, storage, transport and handling.
(b) Location- Location and degree of concentration of demand;
(c) Attitudes- Dealer’s attitude and motivation;
(d) Habit- Mass communication media, their reach and influence;
(e) Media- Mass communication media, their search and influence; and
(f) Arrangements of Products- Organisational alternatives.
For any marketer, covering the 5.75 lakh villages of the country is a formidable task. Many villages are not connected by rail or road. Further, storage facilities in rural areas are inadequate and of poor quality. One also faces a high degree of conservatism and reluctance on the part of rural people to take major risks. Another problem is their low level of literacy which makes it difficult to communicate with them through various media.
The rural market of India is fascinating and challenging at the same time. It offers large scope on account of its sheer size. And it is growing steadily. Whereas the urban market is highly competitive, the rural market is relatively quiet. In fact for certain products, it is totally virgin market. The market pioneers can certainly reap rich rewards from the market.
Simultaneously, the market also poses several problems and hurdles. The firms have to encounter them squarely and put in a great deal of effort, if they have to get a sizable share to the market.
It is often said that markets are made, not found. This is especially true of the rural market of India. It is a market for the truly creative marketer.
Problems in Rural Marketing in India– Main Problems: Lack of Proper Communication, Low Literacy Level, Distribution Problems, Seasonal Demand and a Few Others
The main problems are as:
The Indian rural market is characterised by:
1. Lack of proper communication
2. Transportation and
3. Distribution facilities,
4. Low Literacy level
5. Lack of extensive banking facilities
6. Highly dispersed
7. Thinly populated,
8. Scattered markets
9. Low per capita income,
10. Poor standards of living.
11. Strikingly diverse religions, languages
12. Social customs and traditions,
13. Seasonal demand for goods and services.
As such, it poses a number of complex problems and the main problems and difficulties arising out of these characteristic features of the Indian rural markets that a marketer may face in cultivating the rural market are examined below-
Problem # 1. Lack of Proper Communication:
Transportation and Modern means of fast communication, viz. telephone facility, is yet to reach our villages. Hence, marketer cannot easily contact or communicate with the rural folk. Most of the villages are inaccessible, particularly during the rainy season, as they are yet to be linked to the main roads with pakka link roads.
Problem # 2. Low Literacy Level:
Most of the villagers are still illiterate and, therefore, it is very difficult to convince them of the utility or usefulness of a product. Advertisement through print media is of little use in rural areas. It may be observed here that success in the American rural market was achieved through mail order, which was possible because of the high literacy level.
About 85 per cent of 200 rural persons, interviewed at the Hyderabad city bus station for the purpose of a study, could not distinguish between a commercial and a programme.
Problem # 3. Distribution Problems:
Supply of goods becomes difficult due to this. Retailers serving as distribution outlets in the villages are unable to stock goods due to inadequate working capital, and favour those products on which they get higher margins. Moreover, retailing is only a side business for many of them, who are money-lenders, beedi makers, bicycle mechanics or farmers.
Problem # 4. Highly Dispersed and Thinly Populated Markets:
Indian’s rural market is very vast spread throughout its length and breadth dotted by about six lakh villages. About 81 per cent of these villages have a population of less than 500 each. As such, rural markets are viewed as uneconomic and unmanageable by both manufacturers and middlemen.
In Uttar Pradesh, 27 percent of villages account for 65 percent of the population. In Madhya Pradesh, 40 per cent of the villages account for 71 per cent of the population. In other words, if 65 per cent of the population needs to be covered in any state, it will be possible to do so by reaching out to a quarter or one-third of the villages.
Problem # 5. Different Religions, Languages, Cultures, Social Customs and Traditions:
The numerous religious, languages and cultures of the tradition bound rural folk in different regions of the country present a colourful mosaic of their varied tastes, likings, preferences and buying behaviour.
Culture, of course, has a great impact on spending by people and even the poorest think it culturally obligatory to be lavish spenders on socio-cultural occasions. This may be exploited by a progressive and dynamic marketer.
Problem # 6. Lower per Capita Income:
Most of the consumers in the villages are very poor and their standard of living is very low. They are more price conscious than quality conscious, and measure quality in terms of price.
The poor consumers buy very small quantities of goods, and that too not very frequently, rendering the distribution of many goods in rural areas uneconomical. Under these circumstances, no businessman can thinks of hiring or owing a retail store in many of the villages.
Problem # 7. Seasonal Demand:
The demand for goods and services in rural India depends heavily on agriculture, which accounts for more than 60’per cent of the rural income. Agriculture being seasonal, demand for various goods and services is also seasonal, peaking at the end of the two main harvests, vis. Kharif (October-November) and Rabi (March-April) and falling to low levels during the remaining month of the year.
The peaks and the valleys in the demand-sender demand supply synchronisation by marketer pose a difficult and uphill tasks.
The examination of the problems and difficulties and threats and opportunities posed and offered by the rural markets makes it clear that entering final markets for different products and services and by grabbing a sizeable share thereof is a challenging task.
Indeed, it is hard work, identifying cultivating and harvesting these markets, which calls for constant monitoring of the ever- changing rural environments. In order to be successful in rural marketing.
A marketer has to clearly understand the needs, wants, desires, aspirations and dreams of the village as well as their linking’s and preferences with regard to different products and services, with the help of appropriate marketing research techniques.
Problems in Rural Marketing in India– 15 Major Problems:Transportation in Rural Areas, Proper Communication, Availability of Appropriate Media and a Few Others
Agriculture is the life blood of the Indian economy. The most striking feature of the country’s economic life is the preponderance of agriculture over other occupations. This is supported by the fact that 30% of the GDP is from agricultural sector and two third of the population depends upon this sector.
To increase GDP a long term trend growth rate of 3% in Indian agriculture has been considered desirable, but to achieve the target a number of key problems in agricultural sector will need to be resolved. Of these various problems, the problem of proper marketing of agricultural produce is the most glaring one.
Rural Marketing is a time consuming affair and requires considerable investments in terms of evolving appropriate strategies with a view to solve these problems.
The major problems faced by manufacturing and marketing men in rural areas are described below:
Problem # 1. Transportation in Rural Areas:
Transportation is an important means in the process of movement of products from urban production centres to remote villages. The Transportation infrastructure is extremely poor in rural India. Due to this reason, most of the villages are not accessible to the marketing men.
In our country, there are six lakh villages. Nearly 50 per cent of them are not connected by road at all. Many parts in rural India have only kachha roads. During the monsoons, even these roads become unserviceable. Regarding rail transport, though India has the second largest railway system in the world, many parts of rural India remain outside the rail network.
Problem # 2. Proper Communication:
Marketing communication in rural markets suffers from a variety of constraints. The literacy rate among the rural consumers is very low. Printed media have limited scope in the rural context.
Apart from low levels of literacy, the tradition-bound nature of rural people, their cultural barriers and their overall economic backwardness add to the difficulties of the communication task, post, telegraph, and telephones are the main components of the communication infrastructure.
These facilities are extremely inadequate in the rural parts or our country. In rural areas, the literacy percentage is still low, compared to urban areas. In India, there are 18 recognised languages. All these languages and many dialects are spoken in rural, areas. English and Hindi are not understood by many people.
Due to these problems, rule consumers, unlike urban consumers, do not have exposure to new products. Upto 50’s or early 60’s Radio was considered to be a potential medium of communication to rural people.
Problem # 3. Warehousing:
A storage function is necessary because production and consumption cycles rarely match. Many agricultural commodities are produced seasonally. Whereas demand for them is continuous. The storage function overcomes discrepancies in desired quantities and timing. In warehousing too. There are special problems in the rural context.
The Central Warehousing Corporation and state warehousing, which constitute the top tier in public warehousing in our country, have not extended their network of warehouses to the rural parts. It is almost impossible to distribute effectively in the interior outlets in the absence of adequate storage facilities. Due to lack of adequate and scientific storage facilities in rural areas, stocks are being maintained in towns only.
Problem # 4. Availability of Appropriate Media:
It has been estimated that all organised media in the country put together can reach’ only 30 per cent of the rural population of India. The print media covers only 18 per cent of the rural population. The radio network, in theory, covers 90 per cent. But actual listenership is much less.
TV is popular, and is an ideal medium for communicating with the rural masses. But, it is not available in all interior parts of the country. It is estimated that TV covers 20 per cent of the rural population. But, the actual viewership is meagre. The cinema, relatively, is available more as a medium of rural communication. But, these opportunities are very low in rural areas.
Problem # 5. Village Structure:
The village structure itself causes many problems. Most of the villages are small and scattered. It is estimated that 60 per cent of the villages are in the population group of below 1,000. The scattered nature of the villages increases distribution costs, and their small size affects economic viability of establishing distribution points.
Problem # 6. Finance (Credit/Finance):
In rural markets, distribution is also handicapped due to lack of adequate banking and credit/facilities. The rural outlets require banking support to enable remittances, to get replenishment of stocks, to facilitate credit transactions in general, and to obtain credit support from the bank.
Retailers are unable to carry optimum stocks in the absence of adequate credit facilities. Because of this problem they are not able to offer credit to the consumers. All these problems lead to low marketing activities in rural areas. It is estimated that there is one bank for every 50 villages, showing the poor banking facilities in rural areas.
Problem # 7. Underdeveloped People and Underdeveloped Market:
The agricultural technology has tried to develop the people and market in rural areas. Unfortunately, the impact of the technology is not felt uniformly throughout the country while that are pockets— some districts in Punjab, Haryana or Western Uttar Pradesh—where a rural consumer is somewhat comparable to his urban counterpart, there are large areas and groups of people who have remained beyond the technological breakthrough.
Even today about 75 districts in the country are drought prone and no new technology worth the name has percolated to increase the standard of living of these people. In addition, the farmer with small agriculture land holdings have also been unable to take advantage of the new technology.
The member of people below poverty line has not decreased in any appreciable manner. Thus, the rural markets by and large, are characterised by underdeveloped people and consequently underdeveloped market. A vast majority of the rural people are tradition bound, fatalistic and believe in age old customs, traditions, habits, taboos and practices.
Problem # 8. Many Languages and Dialects:
The available media for communication is not of practical utility due to different languages and dialects vary widely from state to state, region to region and probably from district to district. The message have to be delivered in local languages and dialects. Even though the number of recognised languages are only 16, the number of dialects is estimated to be abound 850.
Problem # 9. Low per Capita Incomes:
Even though about 33 to 35 per cent of Gross Domestic Product is generated in rural areas, it is shared by 74 percent of the population. Hence, the per capita income is low, compared to urban areas. This apart, the distribution of income is highly skewed, since the land holding pattern, presents a lightly heterogeneous scene.
Given the low per capita income and population spread in villages, what will be the off-take of any product by rural consumers, say from a village shop? What should be the inventory levels to be maintained by a rural shopkeeper and how long will it take for a rural shopkeeper to liquidate his stocks?
If a company opts to distribute the product upto village shop level what should be the frequency of distribution? These aspects require very careful consideration while evolving distribution strategies for rural markets.
Problem # 10. Market Organisation and Staff:
The size of the market organization and staff is very important to have an effective control. Comparatively, catering to rural market will involve large marketing organization and staff. How many manufacturers and marketing men can afford such huge investments in terms of personnel and also keep an effective control on it, needs examination.
Problem # 11. Logistics, Storage, Handling and Transport:
The widespread nature and varying size of villages, organizing a distribution set-up poses a number of questions. Are there good storage facilities available in rural areas? Already it has been seen that the transport facility in general is poor in rural areas. A lending company, which distributes its consumable products in rural areas has used bullock carts and camel backs for physical transportation of goods to inaccessible areas.
How to motivate a rural person to open a shop in the village? Whether he will have the requisite capital for the same? What will be the off-take from the shop in a day or in a week? How many times will one be able to turn over the capital invested?
Thus willingness to enter the rural market alone is not sufficient, but identification of potential shopkeepers, offering them credit, assuring periodic surplus and motivating them also become very essential. This will obviously have an adverse impact on the distribution costs and whether a company can afford much costs should be examined.
Problem # 12. Product Portioning:
In a highly heterogeneous market, product positioning becomes very difficult. Otherwise the product range should be very wide. A typical example is that of cigarette companies which have numerous branch to suit the different income segments of both rural and urban population. A large product range will give rise to distribution problems.
For a product, like tractors the positioning becomes fairly easy since it is meant for progressive farmers with good irrigation facilities and having at least 20-25 acres of land. Here again the example of a consumable product like tea is interesting. Even the very large tea companies like Brooke Bond or Lipton have tea packets priced from 25 paise onwards so that all segments of population are taken care of.
So this might warrant designing new products or redesigning the existing ones to suit the rural wants, habits and needs, based on purchasing power.
Problem # 13. Hierarchy of Markets:
The rural consumers have identified market places for different items of their requirements so there cannot be a uniform distribution pattern for all products. It has been seen that 90 per cent of the farmers visited the nearest town, where an agriculture produce assembling market is situated at least once a quarter for either selling the produce or for purchase of their requirement.
Thus depending upon the purchase habits of rural people, the distribution network for different commodities has to be different.
Problem # 14. Seasonal Demand:
The distribution of any product in the rural areas, either agriculture inputs, consumables or durables should necessarily follow a seasonal pattern. Since 75 percent of rural income is generated through agriculture operation; which is seasonal, the demand pattern is also seasonal.
A typical example of this is fertilizers. The demand for fertilizer is always high during the start of Kharif and Rabi seasons. This is the time at which the rural people have substantial cash inflows. Hence, the distribution should be fairly intensive during peak crop harvesting and marketing seasons.
This arrangement would result in adequate sales realisations. Thus the distribution system has to gear itself to the seasonal pattern of demand. In addition, festival seasons like Sankaranti or Pongal in southern regions as opposed to Baisakhi or Deepawali in north are also demand seasons.
So the distribution for rural areas should be more and frequent during harvest and festival seasons, as opposed to a fairly uniform demand pattern in urban areas. It should be recognised that rural market is a highway heterogeneous market, widely spread with seasonal demand and poor transportation and communication facilities, both in terms of physical movement of products and also in communicating with the target audience.
Problem # 15. Low Level of Literacy:
The literacy rate is low in rural areas as compared to urban areas. This again leads to the problem of communication or promotion expenses. The dependence should be more on electronic media, cinema, radio and television while the access to cinema and radio appears to be fairly easy and common, it is not so in the case of television. In addition, television advertising is very expensive.
Today, there are professional rural promotion organisations like, ‘video express’ and ‘video on wheels’ who specialise in mobile rural advertising companies like HMT, Karnataka/soaps and Detergents Ltd., have already taken to such rural promotion vans.
Recently Colgate-Palmolive have also commissioned their vans in collaboration with their distributors. The promotion of the product along with distribution is also being resorted to by many.
The problems referred above can be classified under the following heads for easy understanding:
(a) Consumer motivation and buying habits;
(b) Location and degree of concentration of demand;
(c) Dealer availability, attitude and motivation;
(d) Mass communication media;
(e) Logistics, storage, transport arid handling; and
(f) Marketing organisation and staff.
Any strategy for rural marketing should take the above problems into account, so that the investments made are easily recovered.
Problems in Rural Marketing in India– 7 Popular Problems: Widely Scattered Villages, Distribution, Lack of Transportation Facilities, Lack of Bank and Credit Facilities and a Few Others
Rural retail markets as an integral part of the Indian consumer market, suffer from the similar problems of national market.
However, certain problems which are typical to rural markets are described below:
While the large/vast untapped rural market looks extremely attractive, superficially, the marketing organisations must take into account the problems and constraints that exist in serving them.
1. Widely Scattered Villages:
Geographically, distribution of Indian consumer market comprising 84.5 crores population is very peculiar. Against population living in 2,921 urban locations, the rural sector with 75% of the population is widely spread in more than five lakh villages. Further, low density of population and inaccessibility makes the problem not only difficult, but also uneconomical.
2. Distribution:
It is often difficult to start distribution in the rural areas as it is done in urban areas by appointing stockists and leaving it to them to the redistribution of retailers. In the first place, locating a stockist is difficult.
Secondly, there are few regular transport services. For these reasons, distribution has to be begun by physically carrying the stocks from village to village and selling them to retailers. However, this involves high distribution costs.
3. Lack of Transportation Facilities:
Inadequate transport facilities are one of the prime obstacles in the improvement of rural markets. By the end of 1984 only 30% of the total number of villages were connected by roads, while 70% (4.16 lakhs) of villages were not connected by any road. About 1.69 lakhs of villages were connected by all-weather roads and 92,800 had fair weather roads.
The share of villages not connected by all-weather roads was highest 97% in Orissa followed by Uttar Pradesh (91%) and Rajasthan (82%). Due to this, the retailers are put to so many difficulties in procuring goods from neighbouring towns.
4. Lack of Bank and Credit Facilities:
Hardly any bank is found operating its activities in villages with population less than 2,000. There are about 5 lakh villages of this category in the country. Due to lack of credit and banking facilities, the rural retailers are experiencing 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 of credit different commodities.
5. Regional Differences:
Demand for products varies for people living in different areas with different climatic conditions, occupations, level of literacy, outlook towards life and exposure to modern sophisticated things. The income differences between the wealthy few and common masses also create differences in the demand.
The degree and effect of the Green Revolution on generating additional incomes varies widely in different states and different regions in the same state.
6. Inadequate Communication Facilities:
On communication front, there are two problems. On one hand, modern communication facilities like post office, telegraph office, telephone, etc., are not only inadequate, but non-existing in majority villages. On the other hand, the low levels of literacy in rural areas (29.6%) posing practically an unsurmountable problem of communication.
On account of this, many mass-media which is utilised and successful in urban areas for creating a primary demand cannot be effectively used in rural areas. Because of low reading habits of newspapers or magazines, advertisements in newspapers are not a reliable means.
Modern communication media like radios and TVs are not within the reach of most of the rural consumers. However a survey conducted by HLL revealed that over 70% of the population listens to the radio and about 65% go to movies in Andhra Pradesh. But this is true only in villages of developed regions like Coastal area and a few villages of higher population strata in other regions.
7. Negligence of Consumer Research:
Research of markets in general and consumers in particular and within that rural consumers is a neglected aspect of the economy. But, before attempts are made either to produce or to market goods in rural areas, it is to be remembered that, the purchasing habits and attitudes of the rural consumers should be studied carefully.
But, this has been completely neglected. Current research efforts in several areas suggest that in future years, the rural consumer will be the focal point of much of our marketing and distribution plans.
Problems in Rural Marketing in India – Top 10 Problems: Communication, Regarding Transportation, Rural Structure, Warehousing Problems, Appropriate Media and a Few Others
Rural market have attracted attention of corporate sector in recent years because of its promising growth in every area including per capita income and lifestyle.
Education in rural is growing rapidly and so is the thinking of rural person.
But rural market have some problems which are described in following part:
1. Communication:
Marketing communication in rural markets suffers from a variety of problems. The literacy rate among the rural consumer is very low. Print media, therefore, have limited scope in the rural market. Apart from low levels of literacy, the tradition-bound nature of rural people, their cultural barriers and their overall economic backwardness add to the difficulties of the communication task.
Post, telegraph, and telephones are the main components of the communication infrastructure. These facilities are extremely inadequate in the rural parts of our country. In rural areas, the literacy percentage is still low, compared to urban areas. Urban and Rural differentiation is sometimes made on the basis of difference of culture and language fluency which result in communication gap between corporate and rural people.
In India, there are 18 recognized languages. All these languages and many sub languages are spoken in rural areas. English and Hindi are not understood by many people. Due to these problems, rural consumers, unlike urban consumers do not have exposure to new products.
2. Problem Regarding Transportation:
Transportation is an important part in the process of transfer of products from urban production units to remote villages.
The transportation infrastructure is extremely poor in rural India. Many villages are not connected to national highways and are still remote for easy access.
Due to this reason, most of the villages are not accessible to the marketing personnel. In India, there are six lakhs villages. Nearly 50 per cent of them are not connected by road at all. Many parts in rural India have only kaccha roads. Regarding rail transport, though India has the second largest railway system in the world, many parts of rural India however, remain unconnected to the rail network.
3. Rural Structure:
In our country, the village structure itself causes many problems. Most of the villages are small and scattered.
It is estimated that 60 per cent of the villages are in the population group of below 1,000. The scattered nature of the villages increases distribution costs, and their small size affects economic viability of establishing distribution points.
4. Warehousing Problems:
A storage function is necessary because production and consumption cycles rarely match.
Many agricultural commodities are produced seasonally, whereas demand for them is continuous.
The storage function overcomes discrepancies in desired quantities and timing. In warehousing too, there are special problems in the rural context. The central warehousing corporation and state warehousing, which constitute the top tier in public warehousing in our country, have not extended their network of warehouses to the rural parts. It is almost impossible to distribute effectively in the interior outlets in the absence of adequate storage facilities. Due to lack of adequate and scientific storage facilities in rural areas, stocks are being maintained in towns only.
5. Appropriate Media:
It has been estimated that all organized media in the country put together can reach only 30 per cent of the rural population of India. The print media covers only 18 per cent of the rural population. The radio network, in theory, covers 90 per cent.
But, actual listenership is much less. TV is popular, and is an ideal medium for communicating with the rural masses. But, it is not available in all interior parts of the country. It is estimated that TV covers 20 percent of the rural population. But, the actual viewership is much lesser. The cinema, however, is a good medium for rural communication. But, these opportunities are very low in rural areas.
6. Rural Markets and Problems of Sales Management:
Rural marketing involves a greater amount of personal selling effort compared to urban marketing.
The rural salesman must also be able to guide the rural customers in the choice of the products. It has been observed that rural salesmen do not properly motivate rural consumers. 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 consumer visits to gain a favourable response from him. Channel management is also a difficult task in rural marketing. The distribution channels in villages are lengthy involving more intermediaries and consequently higher consumer prices. In many cases, dealers with required qualities are not available.
7. Brand of Product:
The brand is the surest 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 consumers. It has been observed that there is greater dissatisfaction among the rural consumers with regard to selling of low quality duplicate brands, particularly soaps, creams, clothes, etc. whose prices are often half of those of national brands, but sold at prices on par or slightly less than the prices of national brands. Local brands are becoming popular in rural markets in spite of their lower quality.
8. Insufficient Banking and Credit Facilities:
In rural markets, distribution is also handicapped due to lack of adequate banking and credit facilities. The rural outlets require banking support to enable remittances, to get replenishment of stocks, to facilitate credit transactions in general, and to obtain credit support from the bank.
Retailers are unable to carry optimum stocks in the absence of adequate credit facilities. Because of this problem, they are not able to offer credit to the consumers. All these problems lead to low marketing activities in rural areas. It is estimated that there is one bank for every 50 villages, showing the poor banking facilities in rural areas.
9. Problems of Market Segmentation in Rural Markets:
Market segmentation is the process of dividing the total market into a number of sub-markets.
The heterogeneous market is broken up into a number of relatively homogeneous units. Market segmentation is as important in rural marketing as it is in urban marketing. Most firms assume that rural markets are homogeneous. It is unwise on the part of these firms to assume that the rural market can be served with the same product, price and promotion combination.
10. Problems of Packaging in Rural Market:
As far as packaging is concerned, as a general rule, smaller packages are more popular in the rural areas. At present, all essential products are not available in villages in smaller packaging. The lower income group consumers are not able to purchase large and medium size packaged goods. It is also found that the labeling on the package is not in the local language. This is a major constraint to rural consumers understanding the product characteristics.
Corporate sector must study and analyze these problems and try to overcome those in upcoming years. Success of India lies in village and therefore Organization must show some respect towards rural market for its own growth.
Adi Godrej, chairman of Godrej group once stated that- “the rural consumer is discerning and the rural market is vibrant. At the current rate of growth, it will soon outstrip the urban market. The rural market is no longer sleeping but we are.”
Problems in Rural Marketing in India– 6 Key Problems: Multiple Tiers, Higher Costs and Administrative Problems, Inadequate Bank Facilities and a Few Others
The problems related to rural marketing are as follows:
1. Multiple Tiers, Higher Costs and Administrative Problems:
In the first place, the distribution chain in the rural context requires a larger number of tiers, compared with the urban context. The long distances to be covered from the product points and the scattered locations of the consuming households cause this situation.
At the minimum, the distribution chain in the rural context needs the village level shopkeeper, the mundi level distribution and the wholesaler/stockist in the town. And on top of them, it involves the manufacturers’ own warehouses/branch office operations at selected centres in the marketing territory. Such multiple tiers and scattered outfits push up costs and make channel management a major problem area.
2. Inadequate Bank Facilities:
Distribution in rural markets is also handicapped due to lack of adequate banking and credit facilities.
Rural outlets need banking support for three important purposes:
(a) To facilitate remittances to principals and to get fast replenishment of stocks.
(b) To receive supplies ‘through bank’ (retiring documents with the bank).
(c) To facilities are inadequate in the rural areas, the rural dealers and handicapped in all these aspects. It is estimated that there is only one bank branch for every fifty villages.
3. Inadequate Credit Facilities from Banks:
Inadequate of institutional/bank credit is another constraint. The rural outlets are unable to carry adequate stocks due to lack of credit facilities. They are unable to extend credit to their customers. And the vicious circle of lack of credit facilities leading to inadequate stocking and loss of business, finally resulting in poor viability of outlets, gets perpetuated.
4. Poor Viability of the Retail Outlets:
Moreover, sales outlets in the rural market at the retail level suffer from poor viability. A familiar paradox in rural distribution is that the manufacturer incurs additional expenses on distribution and still the retail outlets find that the business is unremunerative to them.
The scattered nature of the market and the multiplicity of tiers in the chain use up the additional funds the manufacturer is prepared to part with. And no additional remuneration accrues to any of the groups. Moreover, the business volume is not adequate enough to sustain the profitability of all the groups and the retail tier is the worst sufferer.
5. Non Availability of Dealers:
In addition, there is the problem of availability of dealers. Many firms find that availability of suitable dealers is limited. Even if the firm is willing to start from scratch and try out rank newcomers, the choice of candidates is really limited.
6. Scope for Manufacturer’s Own Outlets Limited; Greater Dependence on Dealers Inescapable:
The scope for manufacturers’ direct outlets such as – showrooms or depots is quite limited in the rural market unlike in the urban context. It becomes expensive as well as unmanageable. Dependence of the firm on intermediaries is very much enhanced in the rural context as direct outlets are often ruled out.
But controlling such a vast network of intermediaries is a difficult task. Control is mostly indirect. And because of these factors the firm has to be more careful while selecting the channel members in the rural context.