EMERGING TRENDSAT

THE BOTTOM END OFPYRAMID

Dr. H.S. Cheema

Prof. Kashinath Jadhav

MUMBAI DELHI NAGPUR BENGALURU HYDERABAD BHUBANESWAR CHENNAI PUNE INDORE AHMEDABAD

LUCKNOW ERNAKULAM KOLKATA GUWAHATI

FIRST EDITION : 2013

Published by : Mrs. Meena Pandey for Himalaya Publishing House Pvt. Ltd.,“Ramdoot”, Dr. Bhalerao Marg, Girgaon, Mumbai - 400 004.Phone: 022-23860170/23863863, Fax: 022-23877178E-mail: himpub@vsnl.com; Website: www.himpub.com

Branch Offices :

New Delhi : “Pooja Apartments”, 4-B, Murari Lal Street, Ansari Road, Darya Ganj,New Delhi - 110 002. Phone: 011-23270392, 23278631; Fax: 011-23256286

Nagpur : Kundanlal Chandak Industrial Estate, Ghat Road, Nagpur - 440 018.Phone: 0712-2738731, 3296733; Telefax: 0712-2721215

Bengaluru : No. 16/1 (Old 12/1), 1st Floor, Next to Hotel Highlands, Madhava Nagar,Race Course Road, Bengaluru - 560 001.Phone: 080-32919385; Telefax: 080-22286611

Hyderabad : No. 3-4-184, Lingampally, Besides Raghavendra Swamy Matham, Kachiguda,Hyderabad - 500 027. Phone: 040-27560041, 27550139; Mobile: 09390905282

Chennai : No. 8/2, Madley 2nd Street, Ground Floor, T. Nagar, Chennai - 600 017.Mobile: 09345345055

Pune : First Floor, "Laksha" Apartment, No. 527, Mehunpura, Shaniwarpeth(Near Prabhat Theatre), Pune - 411 030. Phone: 020-24496323/24496333;Mobile: 09370579333

Lucknow : House No 731, Shekhupura Colony, Near B.D. Convent School, Aliganj,Lucknow - 226 022. Mobile: 09307501549

Ahmedabad : 114, “SHAIL”, 1st Floor, Opp. Madhu Sudan House, C.G. Road, Navrang Pura,Ahmedabad - 380 009. Phone: 079-26560126; Mobile: 09377088847

Ernakulam : 39/176 (New No: 60/251) 1st Floor, Karikkamuri Road, Ernakulam,Kochi - 682011, Phone: 0484-2378012, 2378016; Mobile: 09344199799

Bhubaneswar : 5 Station Square, Bhubaneswar - 751 001 (Odisha).Phone: 0674-2532129, Mobile: 09338746007

Indore : Kesardeep Avenue Extension, 73, Narayan Bagh, Flat No. 302, IIIrd Floor,Near Humpty Dumpty School, Indore - 452 007 (M.P.). Mobile: 09301386468

Kolkata : 108/4, Beliaghata Main Road, Near ID Hospital, Opp. SBI Bank,

Kolkata - 700 010, Phone: 033-32449649, Mobile: 09883055590, 07439040301

Guwahati : House No. 15, Behind Pragjyotish College, Near Sharma Printing Press,P.O. Bharalumukh, Guwahati - 781009, (Assam).Mobile: 09883055590, 09883055536

DTP by : Sudhakar Shetty (HPH Pvt. Ltd., Mumbai)

Printed at : M/S Sri Sai Art Printer Hyderabad. On behalf of HPH

© AuthorsNo part of this publication may be reproduced, stored in a retrieval system, or transmittedin any form or by any means, electronic, mechanical, photocopying, recording and/or otherwisewithout the prior written permission of the publishers.

FOREWORD

Central Government budget for Rural Development has goneup by a hefty 460% over the last 5 years which has transformedthe rural landscape in many respects. 70% of the villages arenow connected by all-weather road, 60% households have electricityand the number of mobile phones has crossed 300 million connections.India’s rural market has become a US $ One Trillion economy,equal to the size of the current Canadian or South Korean economies!Rural markets have thus become attractive for Corporate India.

As the penetration and consumption for most categories –durables and FMCGs — are still lower in rural when comparedto urban, companies can look forward to this huge, untappedmarket as their next frontier. Rural market in India has reachedin flexion point with infrastructure falling in place and will continue to grow as ruralincomes rise in the next decade. The income pyramid will morph into a diamond asconsumers at the base of the pyramid earning less $ 1 per capita/per day shrink from 400million in 2010 to 250 million by 2020. Simultaneously the rich earning more than $ 5 willtreble, from 50 million to 150 million and the middle income will expand by 150 millionpeople. This dramatic growth in incomes will drive consumption like never before.

The challenges companies face in tapping the growing potential of rural India willbe reaching their products to 600,000 village locations and communicating brand messagesto millions of first time consumers as also in offering affordable products.

It is against this backdrop that I view the publication of the book, “Emerging Trendsat the Bottom End of Pyramid: The Challenges of Rural Marketing.” I find it highlyrewarding and relevant. The time is right to explore the various aspects of rural marketingto answer the challenges in the best way possible. The book carries a number of wellresearched papers which readers will find very enlightening as far as the current issuesof rural marketing are concerned. This wealth of research will go a long way in shapingright marketing strategies for rural India and will help us in the overall growth of thenation and its 1.3 billion people.

It is a well edited book and Dr. H. S. Cheema and his team deserve kudos for thepainstaking efforts in carefully arranging and editing the research papers. I also appreciatethe time invested by research scholars in authoring the research papers. When I overhearpeople talking of India taking center stage in the world economy, it reminds me of aninstitute such as iFEEL that has been continuously supporting quality research and thepresent book is an ample proof of their hard earned reputation of turning the instituteinto a research hub of future.

Pradeep Kashyap

Founder and CEO, MART and

President, Rural Marketing Association of India.

PREFACE

“The future lies with those companies who see the poor as their customers” says

C.K. Prahald, one of the prominent management gurus. The rural India is no more an isolated

phenomenon but a dream land of opportunities to the marketers all over world in a dismal

urban scenario where markets are saturated and margins are shrinking. In an area where

technology is bringing in new products every now then with strict adherence to quality, marketers

all over the world are bound to go for greener pastures. What else can be more promising

than rural India where 53% of FMCG and 59% of the durables are consumed by the 74.6 core

rural population with its per capita income doubling by 2012! KPMG ranks India second on

GRD index.

India is changing very fast. We see the marks of the great change that the forces of

globalization and liberation have imprinted on our cities, its people and the rural India. As the

economy was poised for this giant leap, the government, boosted by overall revenue generation,

growth of GDP, rapid industrialization, business expansion, the spread of education and technology

went ahead boldly with various schemes benefiting the rural populace. The gradual awakening

on the part of rural India and its changing face has attracted the attention of national and

international industries and business houses to tap this huge untapped potential. Another

reason for this important shift was the increase in the purchasing power of lower and middle

class segments of the society including the rural populace. Media revolution too played a key

role in synthesizing rural India with their urban counter parts. The rising aspirations, new

hopes and new found confidence urged rural populace to adapt to the new life styles of the

twenty first century.

There were times when a number of problems were plaguing India. A country with the

second largest population in the world and major chunk of the population depending on a

poorly equipped agriculture, India Imported grains from major economies in the world to feed

the huge population. India cut a poor figure on the world map. The same country, once

viewed as huge liability for the world, is poised to become the second fastest developing

economy. Experts at home and abroad are agog to see such an astounding metamorphosis.

Today they are unanimous in saying that the rising clout of rural India and its huge middle

class hold a great promise for Indian economy in particular and for the world economy in

general.

Viewed against this promising scenario of emerging rural India, the publication of “Emerging

Trends at the Bottom End of Pyramid” has a unique significance as it provides intellectual

capital in the form of a wide spectrum of research papers that present a treasure of data. As

the years pass, we are bound to face many challenges on the road to rural marketing. All

reputed industries and business houses are in the process of formulating their strategies to

cater to the rural market in the best way possible. This is going to be a different ball game

altogether as rural populace has a different mind set, their needs, expectations and life styles

are different. Here lies a great challenge for all those big brands to customize their products

to suit the rural tastes.

The four parts of the book deal with different facets of rural market. Part A: Rural Market-

Opportunities and Challenges has a rich range of research papers unfolding this enigma called

rural market. The very first paper ‘Changing Marketing Environment and Its Impact on Rural

Marketing in the 21st century’ shows how the general marketing scenario is changing very fast

and how it is playing a crucial role in shaping the policies designed to deal with the rural

markets. The variety of research papers in part A has all the relevant issues for research such

as rural environment, opportunities and challenges of rural marketing, rural markets and retail

in 2011, the changing paradigm in rural marketing, global HRM, rural logistics, causes of stress

among rural students etc.

Part-B of the book views rural economy, its structure, various under and cross currents

affecting the scope, growth and size of rural market. ‘Commercialization of Microfinance — An

Indian Scenario depicts the journey of how finance changed in order to accommodate the

emerging trends. Micro-finance is emerging as a powerful instrument of poverty alleviation in

the new economy. In India, micro-finance scene is dominated by self-help groups and bank

linkage programs which are aimed at providing a cost effective mechanism for providing

financial services to the ‘unreached poor. There are quite a good number of quality research

papers such as ‘Socio-Economic Impact Analysis of Micro Finance in India’, ‘Micro-finance:

The sole Tool for Rural Economic Independence’, Micro-finance in Rural India- Business Opportunities

and Challenges for Private Sector’, and ‘Critical Analysis of Micro finance in India with special

reference to Rural Markets.’

Part-C takes care of marketing strategies which form the most crucial part of rural marketing

as the future of a product depends on how well it is marketed. This process involves thorough

analysis of the rural market and various forces at work in shaping up appropriate strategies.

The spectrum of papers present a very varied view of strategies to be adopted while marketing

different products. ‘Facets of Marketing in Fertilizers: An Empirical Study.’ This kind of study

is of great value in Indian context as agrarian economy contributes the major share of revenue

to the GDP and fertilizers play a key role in overall per acre crop cultivation. Likewise the rest

of the papers in the section present a very holistic view of kind of strategies to be adopted for

successful marketing of products in rural markets through many papers such as, ‘Frugal Innovation:

A Success Mantra for the Rural Marketing’, ‘Value for Offering in Rural Markets’, ‘Brand Construct

Using Imagery to Create Brand Identity in Rural Markets’, and ‘Supply Chain Management

(SCM) Effect of Organized Vegetable Retailing on Farmers.’

Part-D has another important section of case studies. All the research needs to be supported

by appropriate case studies. There are eight case studies in this section. Just a simple reference

is enough to make you aware of the range these case studies cover. ‘Role of National Service

Scheme in Rural Management’, deals with how certain ambitious schemes started by the

government in colleges are serving an important purpose of building a healthy rural society.

‘Impact of National Rural Employment Guarantee Schemes (NERGS) on the Rural Poor Households

of Manipur’ and ‘Marketing Strategies for Untapped Rural Market with STP analysis: A Case

Study of Bharati Airtel Rural Strategy’ present a matter of fact analysis of some of the aspects

of rural markets. This happens to be the most practical and interesting part of this book.

In short, “Emerging Trends at the Bottom End of Pyramid” serves the most important

purpose of dissemination of knowledge and what else can be the better way than publishing

quality research in a book form. “Research begets more research” is literally true because

this motivates academic fraternity to go the research way and make a potential contribution

to the development of the society through providing intellectual capital to tackle the challenges

society, in general, is facing. This book makes a very interesting reading. Research is really a

stupendous task for the researchers to collect relevant data and put it in the research format.

All their attempts have been extremely fruitful as you acutely realize the hard efforts researchers

put into carrying forward the research. I am quite confident that the book will go a long way

in helping students, faculties, institutions, industries and business houses in carrying forward

this important legacy of research.

Wish you a joyful reading to you and to many those who will be a part of academia in

near future.

Dr. H. S. CHEEMA

CEO & Dean

Institute for Future Education Entrepreneurship and Leadership

ACKNOWLEDGEMENT

Expressing gratitude to those who lend us helping hand in successfully carrying out an

activity is our cherished tradition. It makes our hearts feel light and at the same time fills the

hearts of the people with satisfaction for having contributed to a worthwhile cause.

Editing a book and that too related to research is a stupendous task. It involves painful

labour of many as it demands pouring over the soft copies for correcting errors in order to

render research papers flawless in expressing their content. It’s just one type of job and there

many such works to be performed and so it aptly referred to as a team work.

First in the list of our benefactors is the Management of iFEEL who have been very

encouraging and always lend us unconditional support to engage ourselves in this research

related cause. We owe many thanks to them and we would prefer to be in their debt as this

sense of gratitude would enable us in future to deliver the best. Our heartfelt thanks to NABARD,

National Bank for Agriculture and Rural Development for supporting the conference proceedings.

Himalaya Publishing House has a great sense of commitment to the dissemination of

knowledge by bringing to light quality research work. It’s this inspirational attitude that boosted

our confidence in editing this valuable book. We gratefully acknowledge their help and million

thanks to them, especially to honourable Mr. K.N. Pandey for accepting our proposal and

bringing it out in a delightful, aesthetically designed format.

We were supported by an able team of our colleagues, Ms Sayali Vartak, Ms Shrutika

Dharap and Nikhil Rane from the administrative department in making the necessary corrections

in the soft copies, arranging and preserving the soft and hard copies, contacting the researchers

in case of doubts. We thank them for their patient hard work.

EDITORS

CONTENTS

PART A: RURAL MARKET — OPPORTUNITIES & CHALLENGES

1. Changing Marketing Environment and its Impact on Rural Marketingin 21st Century 3-9

Mrs. Anupama Nerurkar

2. Rural Retail Marketing Scenario in India 10-25Dr. Rashmi Sharma

3. Rural Marketing: Opportunities & Challenges 26-30Dr. Sanjit Kumar Dash

4. Scope and Challenges of Rural Marketing in India 31-39Mr. Arvind A. Dhond

5. Rural Marketing — The Way Ahead 40-56

6. Rural Markets and Retail 2011 57-65Dr. Binod Kumar Sinha

7. Rural Marketing: Opportunities and Challenges 66-73Asst. Prof. A. BalaSubramanian

8. Fortune in Rural India — A Changing Paradigm 74-82Prof. Vijaya JacquilineMs. Pradnya Mhamunkar

9. Rural Marketing: Opportunities and Challenges to Corporate Sector 83-87Dr. A.B. Adsule

10. Rural Retailing 88-91Dr. Elizabeth Mathews

11. Global HRM: The Challenges 92-97Prof. Dr. Arjita Jain

12. Big Opportunity of Logistic in Rural Area 98-102Prof. Deepal D. MukkawarProf. Ram Reddy

13. Rural Education — Causes of Stress Among Rural Students 103-110Ms. Eesha S. Barai

14. Retailing — The New Vistas in Rural India 111-119Mr. Ajit N. JadhavMs. Amita C. KoliMrs. Amrita A. Jadhav

PART - B: MICROFINANCE & ITS ROLE IN RURAL DEVELOPMENT

15. Commercialization of Microfinance — An Indian Scenario 123-134Mr. Sachin Chauhan

16. Socio-Economic Impact Analysis of Micro Finance in India 135-150Dr. Mahalaxmi KrishnanMrs. Darshana D. KadwadkarMrs. Usha Bhandare

17. Microfinance: The Sole Tool for Rural Economic Independence 151-158Mr. Sudeep SaxenaMrs. Neha Sudeep Saxena

18. Financial Inclusion through Rural Marketing 159-166Dr. Seethalekshmy N.Mr. Jitendra Aherkar

19. Microfinance in Rural India — Business Opportunities andChallenges for Private Sector 167-174

Mrs. Sonali Deogirikar

20. Critical Analysis of Microfinance in India with Special Reference toRural Markets 175-182

Dr. Kinnarry ThakkarMr. Amit K. Prajapati

21. Challenges of Microfinance in Rural Market 183-189Prof. VirendraProf. Santosh Vadhrya

22. Impact of Microfinance and Self Help Groups (SHG) onRural Market Development 190-199

Dr. Keshav Y. ShindeAsst. Prof. S.K. Khamkar

23. Evaluation of Microfinance in Rural Microenterprise Development 200-207Dr. Subhash Dattatray Pawar

24. Women Empowerment through Microfinance 208-216Prof. Madhavi Nighoskar

25. A Macro View of Microfinance Sector in India 217-223Mrs. Jenny Sabu

26. Impact of Microfinance on Rural Marketing 224-233Mr. Hinduja Srichand P.

27. Microfinance for Rural Market Development 234-237Dr. Sanjay Kaptan

28. Developing Suitable Financial Products for Rural India 238-242Dr. Vidya TikuteDr. Yashodhan Mithare

29. Marketing of Financial Services to the Rural Women: The Women’s Accessto Financial Services 243-252

Asst. Prof. Gajanan Mudholkar

30. Broad Sectors like Banking, Financial Services & Insurance (BFSI)Microfinance & its impact on the Rural Markets 253-257

Prof. Thomson VargheseProf. Santosh KulkarniProf. Clifford D’souza

31. Health Finance and Insurance for Rural Poor of India: A Review 258-271

PART C: DESIGNING MARKETING STRATEGIES FOR RURAL MARKET

32. Facets for Marketing the Fertilisers: An Empirical Study 275-283Dr. H.S. CheemaMr. Gowri Shankar

33. Frugal Innovation — A Success Mantra for the Rural Marketing 284-290Ritu Sinha

34. Value Offering in Rural Markets — New Strategies and Approaches 291-295Dr. Y.R. Waghmare

35. Adapting Marketing Mix for Rural India: An Insight into FMCG Sector 296-309Prof. Vikram ParekhDr. Pradip Manjrekar

36. Rural Communication 310-314Prof. Dr. Roundal Sitaram Rangnath

37. I.C.T. in Rural India and in Internet Security 315-319Mr. Vinod Moreshwar Vaze

38. An Evaluation of Impact of SHG on the Social Empowerment ofWomen in Maharashtra 320-327

Dr. Sapna ModiProf. Seema SharmaProf. Mudassar Khan

39. Brand Construct Using Imagery to Create Brand Identity in Rural Markets 328-349Dr. Ramkishen Y.Co-Authors: (1) Ms. Divya Singh,

(2) Ms. Meenal Dubey

40. Research on New Design of Instrument to Collect Primary Data fromRural Area for Marketing Research 354-354

Prof. Devika Shinde

41. Effect of Emotional Intelligence in Branding on Rural Customers 355-361Dr. Ashish SharmaDr. Hitendra Bargal

42. Reshaping the Support System for Marketing of Agricultural Produce 362-367Prof. Dr Shamim AhmadDr. Khan Ashfaq AhmadMr. Tufail Ahmad Khan

43. Supply Chain Management [SCM] Effect of Organised Vegetable Retailing onFarmers 368-381

Lion Dr. Nishikant Jha

44. Post-harvest Management for Export of Cut Roses from Pune Region 382-391Mr. A.A. Ajgaonkar and Dr. B.N. Pawar

45. Role of Self Help Groups in Rural Marketing 392-398Mr. Ankit SinghMr. Jitendra Aherkar

46. Role of Self Help Group (Bachat Gat) in Development of Rural Economy 399-405Prof. Sanjaykumar J. PatilMs. Yogita J. Patil

47. A Study of Existing Legal and Regulatory Framework for Self Help Groupsin Pune district 406-416

Asst. Prof. Wani Nalanda D.

48. Rural Marketing: An Introspection of the Strategies followed in Rural Indiaby the FMCG Giant — Hindustan Lever Ltd. 417-425

Dr. Bernadette D’SilvaDr. Stephen D’SilvaMrs. Sweta Menon

PART - D: CASE STUDIES

49. Microenterprise Development Interventions: Case Studies from Maharashtra 429-446Ms. Nisha Bharti

50. A Study of Challenges in Rural Market for Life Insurance Companies 447-451Mr. Kamalkar N. Munde

51. Impact of National Rural Employment Guarantee Schemes (NREGS)on the Rural Poor Households of Manipur 452-460

Dr. Thiyam Singh Bharat

52. Study on Current Environment Changes in Agricultural andRural Tourism in India 461-471

Dr. Anil MishraMr. Abhishek Saraf

53. Globally Competitive MSMEs: An Engine for Future Growth of India Inc. 472-487Prof. Sonal Dabke

54. Cronbach’s Alpha Reliability Co-efficient for Standard of Customer Servicesin MSC Bank 488-494

Mr. Anil Matkar

55. Role of National Service Scheme in Rural Management:A Case Study of Village Shivali, Tal. Maval, Dist. Pune 495-500

Dr. Nitin GhorpadeDr. Savita Kulkarni

56. The Marketing Strategies for Untapped Rural Market with STP Analysis:A Case Study of Bharati Airtel Rural Strategy 501-510

Gajanan Mudholkar

CHANGING MARKETING ENVIRONMENT AND ITS IMPACT ON RURAL MARKETING… 11

PART - A

RURAL MARKET —OPPORTUNITIES & CHALLENGES

1

2 EMERGING TRENDS AT THE BOTTOM END OF PYRAMID

CHANGING MARKETING ENVIRONMENT AND ITS IMPACT ON RURAL MARKETING… 33

3

CHANGING MARKETINGENVIRONMENT AND ITSIMPACT ON RURALMARKETING IN 21STCENTURY

1

Mrs. Anupama Nerurkar*

INTRODUCTION

South Asia is primarily rural in character and large population resides in rural area. TodayIndia has more than 70% of its population living in rural areas. Other neighbouring countrieslike Pakistan and Sri Lanka have more than 2/3rd population in rural area. Rural marketing hasemerged as the biggest opportunity in the 21st century. It is a challenge for multinationals inhighly competitive nature of urban markets. The changing consumer behavior is the result ofchanging marketing environment in rural areas.

The paper tends to bring about the phenomenal changes in the environmental factorsthat have forced the marketers to consider rural market as a profitable and growing market.Basically marketing is about identifying and meeting human and social needs. Marketingmanagement in 21st century is an art and science of choosing target markets and getting,keeping and growing customers through creating delivering and communicating superior customervalue.

Rural means places far away from towns and cities. (Collin & Cobuild Dictionary) Theterm Rural is defined by the Government of India as what is not urban. Rural marketing is theprocess of developing, pricing, promoting, distributing rural specific goods and services leadsto exchanges between urban and rural markets, which satisfies consumer demand and alsoachieves organizational objectives. Rural Marketing, in simple words is planning and implementationof marketing function for the rural area.

Objectives of the study

(a) To analyse the environmental factors that affect the success of rural marketing.(b) To identify the environmental changes which can be exploited as marketing opportunities.(c) To suggest promotional tools for effective marketing in rural areas.

* Associate Professor in Commerce faculty in L.S. Raheja College of Arts & Commerce, Santacruz(West) and a research scholar in PGSR, S.N.D.T. University, Mumbai.

4 EMERGING TRENDS AT THE BOTTOM END OF PYRAMID

Marketing Environment

Environment is the totality of all things/situations/influences that affect the business activitiesand surround it. Thus, marketing environment includes the marketing factors that directly orindirectly influence the market and thereby marketing decisions of the firm.

The general factors include —

1. Demographic environment

2. Economic environment

3. Socio-cultural environment

4. Natural environment

5. Technological environment

6. Political-legal environment

(1) Demographic EnvironmentSize of population is an important factor. India has about 6,39,000 villages where 743

million people accounting for about 72% of India’s population reside. About 62% of the villageshave less than 1,000 population and 3% of the villages have population more than 5,000. Mostvillages with less than 500 people do not have shops. This creates complexity in distributionof logistics management. Age ratio is another factor to be considered. It is observed that inIndia, young adults (20-35 yrs) account for only 25% of rural population. The young childrenagain constitute 25% of the rural population.

(2) Economic EnvironmentThe rural population has a higher level of disposal of income at the same income level

compared to urban market. This is an encouraging fact for marketers including multinationalcompanies, the income levels in rural areas have increased over the years. The consumptionpatterns of the rural consumers are also undergoing a shift, while income as well as expenditurehas increased in rural areas, spending on non-food items has also increased. The increasingdemand for many products in rural areas can be accounted for by this changing pattern.

(3) Social-cultural EnvironmentSocial hierarchy, traditions, social norms and customs play important role in determining

individual and collective behavior in rural market. It is also influenced by regional culture.Caste system is also a dominant factor. It determines the social status. Violations of norms canlead to social tensions.

(4) Natural EnvironmentThe natural environment of villages has been undergoing a rapid change. Pucca houses,

availability of electricity, two wheelers and four-wheelers are the common features. Farminghas also undergone a major change.

(5) Technological EnvironmentTechnology is changing the face of rural markets. Green revolution has increased the

productivity. New technology in animal husbandry, poultry; dairy has witnessed a significantincrease in production. Farmers and fishermen are getting information through internet.

CHANGING MARKETING ENVIRONMENT AND ITS IMPACT ON RURAL MARKETING… 55(6) Political-legal Environment

Earlier, rural market was only influenced by local politics. Today, they are amalgamatedwith national mainstreams. They are benefitting from SEZ. A number of NGOs are educatingand organizing the villagers and playing a major role in creating political and legal awareness.Thus, rural markets are monolithic and diverse in nature. The important influences include —

l Population

l Limited purchasing power

l It is necessary to understand that the regional disparities heavily influence economicdevelopment, social interaction, politics and awareness level. This in turn influencesthe purchasing power.

Today rising disposable income rural market due to

(a) New tax structure

(b) A good monsoon

(c) Fruits of green revolution

(d) Administered Pricing Mechanism (APM) has created disposable income.

The rural buyer provides range of contradictions and paradoxes, which are baffling tomost urban born marketing people. It is ironic that rural people amidst deficiency spends solavishly on wedding ceremonies and festivals. Today rural consumer shops for value. It is thisincome that companies are going to tap in the near future.

Rising literacy levelsIn the midst of change awareness farmers are remarkably well-informed concerning the

world around them. Simultaneously, the increased environment in school has gathered awave of rural demand for several life style and aspiration products. Hence, one can’t take ageneric view of Indian rural markets.

Spread of cable televisionMedia impact on rural customers is high because of satellite environment channels. This

is resulting in a change in their lifestyle, thereby increasing their consumption of food items.The accessibility of television is high and compared to other mediums, its interest arousalcapacity is high. Attitudes have changed. The aspirations of the consumers have hence grownpurchasing commodities to buying brands.

Changing pattern of rural demand(a) Increased crop yields mean enhanced rural purchasing power.

(b) Increase in export of agricultural products due to OGL, WTO policy.

(c) Better banking facilities.

(d) With co-op bank taking the lead in rural area, every village has access to short,medium and long term loans from these banks. The credit facilities are lent bypublic sector banks through Kisan Credit cards; help the farmers to buy seeds,fertilizers and even consumer goods on installments.

6 EMERGING TRENDS AT THE BOTTOM END OF PYRAMID

FMCG majors like HLL, Marico Industries, Colgate Palmolive, and Britannia are going forrural marketing. MNCs in consumer durables, LG, Samsung targeted rural markets. Thesecompanies s are changing the life style of rural Indian. Mass media has created increaseddemand for goods and services in rural areas.

Government policies like following has increased income level and purchasing power.

(a) Self sufficiency like operation flood (White revolution).

(b) Employment schemes like – IRDA.

(c) REP (Rural Electrification programme).

(d) Credit cards for farmers.

(e) Co-operatives and corporate support.

(f) Micro Finance and emergence of SHG.

However the problems remain more or less same in recent years,

1. Deprived people.

2. Dispensed markets — Believe in old customs, traditions, habits, taboos and practices,gender inequality and regional or communal differences as well as significant deprivationof basic human needs.

3. Lack of proper physical communication facilities, access to telephones.

4. Transportation problem like — Many are not connected by rail transport.

5. Many languages and dialects.

6. It is difficult for marketers to design promotional strategies due to varied culture.

7. Lack of use of telephones, fax, telegrams.

8. Depressed markets.

9. District fairs are periodic and occasional in nature. Manufacturers and retailers canuse them for promotion as they allow greater visibility and capture the attention oftarget audience for larger span.

10. Dispersed market — Rural population is scattered over a large area and it is almostimpossible to ensure the availability of a brand all over the country.

11. Advertising in such a highly heterogeneous market, which is widely spread and isvery expensive.

12. Low per capita income is another feature of rural marketing. Dependence upon theagriculture situation as agriculture is the main source of income and it dependslargely on monsoon, there is no stable and regular demand.

13. Also there is problem of communication.

14. Prevalence of spurious brands and seasonal demand is also a regular feature. Ruralconsumers are cautious in buying and decisions are slow. They like to give a producta trail and only after getting personal satisfaction, do they buy again.

15. They have different ways of thinking. Vast difference in the lifestyle and limitedbrands. Life in rural areas is still governed by customs and traditions and people donot easily adopt new practices.

CHANGING MARKETING ENVIRONMENT AND ITS IMPACT ON RURAL MARKETING… 77

16. Effective distribution in rural area requires rural level shopkeeper or stockist atdistrict level and co-owned depot or consignment distribution at state level. Somany tiers increase the cost of distribution .Thus, rural market typically signify complexlogistics challenges. The consumers at rural level has narrow consumption basket.

Marketers should do effective environment scanning. The major areas are —

l The consumers can be classified as the affluent group which includes cash rich wheatfarmers in Punjab and chilly merchants in Andhra Pradesh fall in this group. Themiddle class is emerging as the largest segment like farmers in sugarcane cultivationin U.P. and jute farmers in West Bengal. The poor sector stands out striking contrastto the first group. The size is very large and their purchasing power is very low. Thisgroup is receiving the benefits of several social, educational and economic schemesand over a period of time. A good part of this group may advance economically andmerge into middle class.

l Occupation pattern includes farming (agriculture farming, animal husbandry), tradingcrafts, poultry farming and odd jobs like plumbing, electric works, health workers andteachers.

Though change is common, some changes seem peculiar and paradoxical. Today wewitness in Indian economy one such a bia-faceted change. Change from national to global onone side and urban to rural on the other. Today, many Indian corporate and MNC look at thesemarkets by compulsion as well as by choice. Compulsion because market is saturated andthere is nowhere to go. Choice because they are attractive and viable. A silent revolution issweeping the Indian rural countryside. The marketing battlefield has shifted from the cities tothe villages. “Go rural” seems to be the latest slogan. Adi Godrej of Godrej soaps says “Therural consumer is discerned and the rural market is vibrant. At the current of the growth, it willsoon outstrip the urban market the rural market is not sleeping any longer, we are “Everybody,academicians, market researchers and market managers agree that the real India lives invillages. Among various factors that have made rural markets attractive are large population,raising prosperity, growth in consumption, life style changes, product life cycle advantage,relatively high market growth rates, cost-effectiveness of rural marketing and convenience inreaching rural areas.

Formulating rural marketing strategy:

It requires an understanding of the rural markets and the significant rural-urban differencesand similarities. Socio-cultural factors are the most important determinants in purchase decisions,Basic cultural values have not faded in rural India. Many rural purchases require collectivesocial sanction, unheard of in urban areas. Buying decisions are highly influenced by socialcustoms, traditions and beliefs. Cast influences are direct and strong. However rural youthsare more open to new ideas and concepts.

1. Understanding social classes is equally important. However it is difficult to definedue to two reasons.

(a) Occupations are not same throughout the year.

(b) Incomes are understated as many farmers and artisans receive cash and kindas their remuneration. But upper middle-upper class is targeted and attractedtowards premium products.

8 EMERGING TRENDS AT THE BOTTOM END OF PYRAMID

2. Group psychology, information of primary group, opinions of secondary opinionleaders like Sarpanch is most influential. It is observed that family purchase ofdurables has nothing to do with income, but has more to do with size of family.Existence of joint family system is attractive proposition. Still male head makes thedecisions in most of the cases.

3. New technology has boosted the incomes of the rural folks. Four fold increase inthe outlay for rural development from the seventh to Ninth Five-year Plan. Governmenthas introduced programmes for self employment. IT policy is also bringing connectivityto the villages through the internet.

4. Rural bazaar is also displaying the market trend towards consumerism. Rural incomeshave changed drastically over the last five years, influencing market behavior. Ruralincomes have changed drastically because it is relatively free from direct taxes.

5. Rural markets are also witnessing value growth. Estimates are that rural market isgrowing twice as fast as urban market for durable products as well as non-durables.Indian market is constantly changing and it is now fiercely competitive today. Anotherinteresting observation is that FMCG counterfeit products only come in the smallestsize of packaging. In the rural market, low purchasing powers makes sachets of25 gms and 30 gms packs popular. And it is in the case of these small packs thatconsumers are duped more easily as the quantity is not large enough for the buyerto discern its quality e.g., shampoo, hair oil, detergents, etc.

6. Competition from unorganized sector is heavy. The unorganized segment plays spoilsportand benefits mainly due to strategy of low price. Rural marketing is at once a challengeand an opportunity as it calls for substantial allocation for distribution. In rural market,the battle is between fewer brands because retailers feel shy of stocking too manybrands of a product category. Obviously, one brand tends to dominate. So the firstentrant will have the obvious advantage.

CONCLUSION

Rural markets have changed. They are comparable to urban counterparts. Good qualityproducts offer best price and inspirational values to the rural consumers who have a particulartendency to mimic his urban counterparts. The basic facilities such as housing, health, educationwater supply, roads, communication and poor in most of the rural areas. Rural marketing isthe flow of goods and services from urban to rural and vice versa. The flow of goods withinthe rural areas is also called rural marketing. Therefore rural marketing is two way marketingprocess

1. Urban to rural

2. Rural to urban

3. Rural to rural.

Rural environment is characterized by low investment, low literacy and low density ofpopulation, low infrastructural facilities, low income and low savings. Thus, marketing is theprocess of delivering better standard of living and quality of life to the rural population. It isa fact that rural markets are growing fast, nearly five times than the rate of growth in urbanmarkets. There is a need to understand the rural markets in terms of buyers’ behavior, attitudes,

CHANGING MARKETING ENVIRONMENT AND ITS IMPACT ON RURAL MARKETING… 99beliefs and aspirations of the people. However it is not easy to enter the rural market. Thecompanies entering the rural markets have a major role to play by carrying developmentalmessage to the less informed rural population. Further the companies with long-term plansand high-level of commitment to rural marketing will only be successful. The rural market istransforming year after year and it would be quite inappropriate to approach it with a mindsetabout its past image.

But rural market is not homogeneous across the country. The region has resulted intremendous heterogeneity. The consumer willingness to accept innovation varies significantlyfrom one rural market segment to another. The rural population is normally perceived as amultiple of poor population with limited purchasing power. The rural populations hardly changetheir house or go for vacations. Thus, when there is a growth in their income, the extra moneygoes straight into consumption. So Rural Marketing offers excellent opportunities if properlyexploited.

REFERENCES

1. Rural Marketing, Concepts and Practices, Balram Dogra and Karminder Ghuman, TataMcGraw-Hill Publishing Company Limited, New Delhi, 2008.

2. Rural Marketing, Minouti Kamat, R. Krishnamoorthy, Himalaya Publishing House Pvt. Ltd.,2007.

3. Cases in Rural Marketing, An Integrated Approach, C.S.G. Krishnamacharyulu, LalithaRamakrishnan, Pearson Education, 2003.

4. Rural Marketing: Text and Cases, C.S.G. Krishnamacharyulu, Lalitha Ramakrishnan, PearsonEducation, 2008.

5. New Perspectives on Rural Marketing, Ramkishen Y., Jaico Publishing House, 2002.

6. Marketing Management, A South Asian Perspective, Philip Kotler and others.

* * *