Rural Marketing - Influencing Factors


India in last twenty years showed a remarkable shift in its economic, social and technological environment. By the liberalization and privatization policies and the subsequent phenomenon of globalization have led to huge inflow of foreign investments and entry of large MNCs in India.

Many domestic Indian organizations of the field those in ICT, automobile, textile and engineering products have expanded their operations into overseas markets. As products and markets are turning global, organizations are facing competition both in the domestic as well as in the international markets.

Task of marketers has become more challenging due to shift in the demographic profile and demands of consumers. Organizations of industries such as FMCG, telecom, insurance, financial services, consumer durable and automobiles are nowadays employing innovative marketing practices for their survival and also to increase their market share.

These organizations are now shifting their focus from the saturated metros and tier-I cities to the rural and semi urban towns, to increase their revenues and market. But rural areas have their own limitations in terms of number of villages with low population density, accessibility, infrastructure, telecommunication network, illiteracy, social and cultural backwardness and low income.

Besides this almost seventy percent of Indian population stays in the rural areas and the revenue generated by the agricultural sector in the total GDP is less than seventeen percent. The maximum of rural population has comparatively low income as well as consumption rate compared to their urban areas. Still yet they have aspirations and wants for most of the urban products.

The factors that have created rising demands among rural buyers are increase in literacy levels, migration to urban sectors, growth in media and telecommunication, availability of bank credit schemes, globalization of market, low price technology products (such as television, mobile, fridge, camera, etc.), government sponsored employment generation, and tax concessions and loan waivers.

Rural people nowadays are no longer ignorant and resigned to their fate. Today a rural buyer not only has purchasing power but he is also better informed about the price and demand of the products for which the money is being spent. They are looking for better quality, durability and multi utility of the products and services offered in the market to them.

Socio-cultural Factors

Socio-cultural environment is an important part of environment — culture, traditions, beliefs, values and lifestyle of the people within a limitation of society constitute the socio-cultural environment.

The following elements play a big role in the decision making stage to a large extent as to what the people will buy and how they will consume.

Culture

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

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

Social Class

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

Social and Cultural Environment

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

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

Caste System

Indian Society had a scheme of social gradation, with the Brahmins at the head of the hierarchy, followed by the Kshatriyas, the Vaishya’s and the Shudras at the bottom. The castes in themselves have sub-castes which are claiming social supremacy over the other.

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

Population

India is the largest democracy in the world occupying 2.4 percent of the world’s geographical area and supports 16 percent of whole world population. More than 72 per cent of the total population of our country resides in rural areas.

The estimated size of India’s rural consumers can be estimated from the following table. This table highlights the rural and urban population of India between 1981 and 2001 −

1981 1991 2001 Increase over Previous decade
1991 2001
Rural Population (in crore) 50.20 60.21 66.0 +10.01 +5.79
Urban Population (in crore) 15.62 24.18 32.6 +8.56 +8.42
Total 65.28 84.39 98.6 18.57 14.21

According to this table, around 72 percent of the total population of our country lives in rural areas. This provides the marketers a larger market as compared to the urban market. So, growth in population is the main contributing factor that leads the marketers to have an eye on this particular segment.

In terms of the number of the people, the Indian rural market is almost twice of the entire market of the USA and the USSR. But we have to consider other factors while studying rural marketing environment like occupation pattern, spending pattern, economic reforms, source of income generation and infrastructure facilities etc.

Census year All India
Population(in lakhs) Decadal Growth Rate
Rural Urban Total
1901 2125.4 258.5 2383.9 -
1911 2261.5 259.4 2520.9 2.3
1921 2232.3 280.9 2513.2 -0.31
1931 2455.2 334.6 2729.8 11.00
1941 2745.1 441.5 3186.6 14.22
1951 2986.5 624.4 3610.9 13.31
1961 3602.9 798.4 4392.3 21.64
1971 4390.5 1091.1 5481.6 24.80
1981 5238.7 1594.6 6833.3 24.66
1991 6286.9 2176.1 8463.0 23.86
2001 7416.6 2853.6 10270.2 21.34

The above table shows you the population and its growth between 1901 and 2001 and also how it is now growing rapidly.

Though the proportion of rural population to total population of country is showing a slight decrease over the years, but in absolute numbers rural population is increasing at a higher rate than the urban population. The increasing rate of population in rural areas provides scope for marketing of consumer durables goods and services.

Occupation

Occupational pattern of rural people also has an impact on the nature of income generation, which will in turn affect the expenditure pattern. Purchase behavior of the rural consumers depends upon the nature of occupation and the consistency in the generation of income.

Occupation Proportion Of Rural Population
Agriculture 50
Agriculture Labour 27
Business 10
Non-Agricultural Labour 9
Salary Earners 2
Not gainfully employed 2
Total 100

A major section of the rural population relies on agriculture and allied activities for occupation. So, the income in the hands of rural people is very much conditioned by the status of agriculture and other allied activities.

Literacy Level

The literacy level of rural people has a considerable impact on the marketing strategies to be adopted by the marketing team especially in communication with the rural people. Higher the level of literacy, the easier it becomes for companies to penetrate into rural areas.

Sex 1971 1981 1991 2001
Rural Urban Rural Urban Rural Urban Rural Urban
Male 34 61 41 66 58 81 57.9 81.1
Female 13 42 18 48 31 64 30.6 64
Total 24 52 30 57 45 73 44.7 73

From the table, we can make out that there has been a rise in the literacy rate during the last two decades, changes in the literacy rate from 1991 was only marginal. It can be further noticed that only 45 percent of rural people are literate in our country even today.

Land Distribution & Use

One of the main obstacles for marketers to exploit the rural market potential has been the largeness of rural markets in terms of the areas it covered. It is much easier to divide it according to the needs of the urban population because of concentration, but it is very difficult in the case of rural market because of their widespread nature.

The following table shows the distribution of villages in India −

Population No.of Villages Percentage to total
Less than 200 114207 17.29
200-499 155123 24.3
500-999 159400 25.0
1000-1999 125758 19.7
2000-4999 69135 108
5000-9999 11618 1.80
10000 and above 3061 0.5
Total 638.356 1000

This clearly shows that rural population is distributed in almost about 638365 villages. It is also noted that villages are not uniform in size. About 42 percent of the villages in India has population of less than 500 people in it.

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