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