In this article we will discuss about Rural Advertising in India.
Learn about:- 1. Introduction to Rural Advertising 2. Rural Advertising Mix 3. Problems of Marketing Products in Rural Areas 4. Ways of Advertising in Rural Areas;
5. Problems & Needs of a Rural Consumer 6. Rural Marketing Strategy in India 7. Size and Importance of Rural Markets and Other Details.
Everything you need to know about Rural Adverting in India
Rural Advertising in India – Introduction
In India, rural advertising is increasingly evident throughout the countryside. The majority of advertisements and hoardings are for fertilizers, hybrid seeds, diesel pumps and pesticides, not to mention the message of family planning.
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Therefore, advertising in the Indian rural context must be seen as consisting of techniques for improving economic mobility within the country. The emergence of an active cash economy is bound to create a strong rural demand and promote consumption.
The traditional growth and dominance of urban industrial centres is undergoing rapid changes. A more equitable distribution in rural areas would also help in slowing down the rapidly increasing influx of people from rural into urban centres.
Literacy and Media Habits:
Despite the low level of literacy in rural areas, the growth between 1971 and 1981 is significant. Five crore more people have become literate in the course of the last decade, a figure almost equal to the entire population of France. Growth in literacy levels is expected to continue, and this, in turn, will lead to greater awareness of products on the part of the rural people.
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Some market research studies on the media habits of farmers in Andhra, Haryana and Punjab are quite revealing they clearly show that, contrary to popular belief, organized media play a significant role in supplementing the efforts to reach rural consumers.
Other 70 per cent of the population listens to the radio; about 65 per cent in Andhra goes to the cinema. The corresponding figure for Punjab and Haryana is 26 per cent. In both these areas, over 30 per cent read newspapers regularly.
In rural India, the role that advertising plays is minor. It will enhance demand only when favourable environmental conditions have been created. Advertising does not create immediate demand. There is always an information gap.
Rural India is a set of regional markets where cultural factors play a very important role. The raw materials come from the soil; and the relatively low productivity of Indian forms is reflected in the low purchasing power of the rural buyer.
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The rural advertising problem in a country like India is related to political, social and economic problems. With low incomes from farms the question that arises is- Can we afford the infrastructure of the mass media for the rural markets? The Indian rural market is very heterogeneous.
Nevertheless, public advertising is an important pre-condition for the creation of demand. The problem of the rural consumer in our country is that he is traditional; to some extent, there is homogeneity, and there are high resistance and low resistance products amongst the rural buyers.
Rural buyers show a great many contradictions; and the advertising man has to understand them. For example, the poor spend lavishly on marriages; in certain parts, a rigid caste system still exists; the community is more contented with whatever little it has. Many preach non-violence and practice violence.
For mass media men to motivate rural buyers to change their life-style is not therefore that easy. The concept of sufficiency is a hurdle to development; and the problem of huge distances and inadequate outlets is quite considerable.
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Within a rural market, there are many mini-markets based on caste, religion,’ language or other differences. All the people living in and around these markets have distinctly different life-styles. The marketing men know that the cost of distribution increases as the town gets smaller; and it is not economical to serve very small villages.
In rural areas, the effective approach to be employed to reach the buyers is to establish contact with local educators who can influence them by word of mouth. Such local educators are government officials, Block Development & Extension Officers, Village Pardhans and school teachers.
Rural markets are no longer a seller’s market now. Many people have underrated the strength of the market on the assumption that India’s rural poverty restricts rural purchases only to those items which are basic necessities. This has turned out to be a myth now.
The social status, needs, expenditure on weddings, religious ceremonies and the farmers’ need for excitement, travelling and entertainment, have influenced the operations of the rural market. Many farmers travel to weekly markets to buy vegetables that they can themselves grow; but they go in order to have news, stimulation and for socialisation.
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The bumper crops and the upturn in agricultural production have resulted in a considerable increase in the incomes of farmers and in their purchasing power. The increase in purchasing power in rural areas has generated vast potential markets for manufactured goods because the people want to raise their standard of living.
New approaches must be evolved to awaken the rural population to the range of consumption possibilities open to them. Advertising and consumer research is essential for this purpose; for it must be determined not only what the villager wants but what would motivate him to buy.
Market research and consumer surveys are essential and should cover a fairly wide area of rural life, including the attitudes and aspirations of the rural buyer.
The different approaches to reach rural buyers which may be profitably utilised include mobile publicity-cum-sales stalls, sales and cinema vans, participation in rural fairs and festivals.
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The villagers are slightly hesitant about going to smart-looking shops. The relatively prosperous families generally become the pace setter group in the village; and these must initially receive the advertiser’s attention.
Advertising research may focus on the sources of awareness in the rural sector the media influencing the villages. It must concentrate on determining the different influences that the villager is being exposed to, either in the village or in his visits to the towns.
A villager normally makes his household purchases in a nearby small town or a fair, but visits either a district, town or a still larger market for his requirements of consumer durables. It would be useful to ascertain his motivation in selecting different markets for different purposes.
Seasonality figures prominently in rural buying habits on account of harvesting seasons, fairs, festivals and marriage, etc. These things should be plotted in advance for sales promotion; and advertising information on the styles of the rural buyer, his attitudes towards processes, durability, and the incidence of impulse buying these should be checked.
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The rural buyer in general is price conscious. Cheaper and sophisticated models of agricultural machinery, sewing machines, etc., should therefore be more acceptable to the village consumer.
The goods should be made available to the rural consumer at places which are most convenient to him. Ideally, it would be desirable to get right down to the villages, and combine the sales and advertising effort at that level. But, practically, this would be very difficult because the selling cost would be too high if we follow this approach.
To expand sales in rural markets, hire-purchase facilities should be extended. Effective after-sales service should be extended where a distributor/dealer has been appointed. Some incentive should be given to dealers to open bank accounts in nearby banking towns.
Eighty per cent of the total population is in villages and about 60 per cent of the national income comes from rural areas. There is an inequitable distribution of this rural income amongst the rural folk.
There are two sections of the rural population: a large portion have a low income and low consumption levels; the rest are the rural rich.
Rural Advertising Mix
In rural areas, advertising in the form of outdoor publicity will- prove more effective. The use of mobile vans and audiovisual methods would hold and attract the attention of the rural folk. The use of switch lights, wall writings, cars and other vehicles fitted with loudspeakers and musical instruments would boost sales in rural areas.
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Demonstrations and seminars may be profitably used. A few individuals are very prominent in rural areas and their word is honoured by the villagers.’ Convincing such individuals about the utility of the products will go a long way in stimulating their sales in the villages.
There is a considerable scope for outdoor publicity inside and outside the public carriers. On truck routes, hoardings may prove to be the most effective method of advertising. This type of advertising, moreover, has a definite reminder value.
What is required is the use of appropriate colours, signs and pictures which are liked by the rural folk. Outdoor advertising in rural areas, however, should not only introduce new commodities to the market but also explain their uses and extol their virtues.
The services of commercial broadcasting too, may be profitably utilized in view of the growing popularity of radios, transistors and TV sets. In a country like ours, where 75 per cent of the people are illiterate, the importance of radios and TV sales as a means of mass communication needs hardly to be over-emphasized.
The point of purchase for most of the items is usually the weekly “haat” or market outside the village. For certain products, the point-of-purchase display that relies heavily on pictorial representation would prove very effective.
As the retailer is the final- link in the chain of communication with the consumer, retail displays would be extremely effective if the material is well planned. What is imperative for the manufacturer is to design a display that will suit the small retail shop in rural areas.
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This is of crucial importance because the biggest problem of the retailer is to mar age the mass material in the limited space available. Whatever may be the medium of advertising, the largest audience in rural areas should be the growing number of literate youth.
The written word, whether it is used for advertising in the press or on a hoarding, on merchandising materials or on the container, would have to be addressed largely to the younger generation with their expectations and their aspirations.
With growing literacy in rural areas, another possible breakthrough in rural marketing may be achieved by the use of the mail? Order channel of communication. India’s postal network serves more than one and half lakh towns and villages.
Mail orders may be used as an ideal tool with a view to sending out goods to consumers but also as a means of promoting product messages. A recent study of advertising media, as used in the family planning campaign, has revealed that, by far, the most effective publicity medium for village audiences were the mailings to village panchayats.
The most serious difficulty in mail order business, however, is the high cost of postal parcels and the uncertainties regarding prompt and secure delivery.
Co-operatives have played a very important role in popularising the use of various agricultural inputs, such as fertilizers, improved seeds, new implements, pesticides etc. The public distribution system has rightly recognized the importance of the role of co-operatives in rural areas.
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For the sale of engineering goods and agricultural equipment, it is necessary to provide, for their service and repairs, facilities at a nearby place where the rural buyers are located. The demonstration and the use of the items should also be explained at this centre.
Rural Advertising – Problems of Marketing Products in Rural Areas
Problems of Marketing Agricultural Products:
There is a need for coordinating production and marketing:
(i) If production increases, the increased output must be marketed. The structural interdependence of the industrial and rural sectors and lack of co-ordination generate problems which depress prices and discourage production.
(ii) Difficulties of transport and communication limit the range of physical distribution; therefore, an efficient and coordinated transport system is needed.
(iii) By their very nature agricultural products are grown in a few places and certain seasons. For a continuous supply and fair prices, therefore, storage facilities are necessary.
(iv) Cereals, vegetables, etc., last longer if packed in polythene.
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(v) Market information is vital.
(vi) Poor farmers are fleeced by moneylenders. Extended credit facilities should therefore be created.
Problems of Marketing Consumer Goods in Rural Areas:
The creation of primary demand is essential. Advertising is mainly done to create awareness. That is why the radio and TV have become very popular in more than 500,000 villages. Providing goods at the retail outlets is a great challenge, therefore an intimate knowledge of the consumer wants is essential.
The pre-eminent position of the rural sector in our economy is nothing new. Four-fifths of our people live there, and half of our national income is generated in this sector. Anyone interested in marketing has for long been conscious of the vast potential in rural India. This potential is now beginning to be seen not as a remote promise, but perhaps an immediate opportunity.
There is little doubt that the record agricultural production of the last two years, in contrast with the sharp decline which occurred two years earlier, has changed attitudes a great deal. Optimism has been encouraged by the first signs of a genuine breakthrough in agriculture.
The intelligent use of fertilizers, pesticides and better seeds has had a dramatic impact on yields, wherever they have been applied. That the agricultural yield would rise sharply, given proper inputs, has been known for decades.
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What has come as surprise to the country as a whole is the enthusiasm and extent to which these new practices have been accepted. With the right products presented in the right way to the farmer an immense change can be brought about; and the image of the farmer as a tradition-bound, unenterprising individual reconciled to his poverty-stricken existence will begin to fade.
While it is wrong to overlook the fact that the change is most significant amongst the larger and more enlightened farmers in areas under irrigation or assured rainfall, it would seem reasonable to assume that it must, in the course of time, sweep over the bulk of the rural sector.
While it is important that agricultural productivity should continue to receive high priority in the Five-Year Plans, it is this demonstration of the farmers’ willingness to try out new products and new concepts that makes rural marketing a new and an exciting challenge. The goal is the village.
Of some 565,000 villages listed in the census, a vast majority are very small in size. Over 60 per cent have less than 500 people each, who account for about 20 per cent of the rural population. Nearly half the rural population lives in villages which have between 1,000 and 5,000 persons, each, and may be considered medium-sized.
About 4,000 larger villages, with over 5,000 people each, account for less than 10 per cent of the rural population. The practical problem of extending operations to 90,000 or so medium- sized villages is immediately obvious.
For the sales force, too, new means of travel may be introduced company owned sales vans, for example in areas where public transport is non-existent or irregular. As communications improve and these villages are served by conventional transport, the vans may go deeper to pioneer another set of marketers. One problem is the absence of any kind, of shop in some of these smaller villages.
Selling from the van itself, which may visit the village only five or six times a year, is clearly not a satisfactory solution; so dealers in the larger towns should be persuaded to open branches, particularly in those villages where they have relatives. The very high cost of distributing products to such a rural market cannot be ignored.
A sales van costs 2 ½ times as much as a “non-mechanized” salesman, and the outdoor selling cost per unit of sale is 17 times as great. Distribution costs are higher, too, not only because the distances travelled per unit of sale are greater, but because the heavy wear and tear on sales vans plying on rural roads and the absence of backloads escalate costs.
The existence of a disposable income, although an essential pre-requisite, is not by itself a sufficient way of motivating the villager has to be found. There are no newspapers or cinemas to advertise in; in some cases, the products themselves are unknown.
Cinema vans may be pressed into service to show popular films and advertised products with a view to stimulating their sale. To improve utilization, entirely new equipment may be designed which would allow cinema shows to be held in broad daylight and in the open air.
To introduce unfamiliar products to rural audiences, the demonstration van may be brought in. While there can be no doubt that such vans are highly effective motivators, like sales vans, they are also very expensive.
Rural Advertising – Ways of Advertising in Rural Areas
People in villages are scattered. The task of contacting them therefore is very demanding and challenging. Besides, the methods of communicating with villagers have to be of a different order in view of their lower levels of education and environmental differences.
In planning a promotional strategy, the variations in customs, habits, religion, attitudes and their interplay should not be overlooked.
In the early stages, it is better to concentrate on villages which have a population of 2,000 or more. In other words, the approach to rural marketing has to be selective. As far as possible, the product should be low-priced; and this may be partially achieved by cutting cost down on fancy packaging. Brand consciousness among the rural folk is quite significant.
In many instances, an entire village patronized a particular brand of sewing machine, bicycle or tractor; the entry of another brand in that village became extremely difficult. In the advertisements which are aimed at rural buyers, the advertiser should not make too many claims for his product, because they will not be remembered by the farmer, nor would he believe in them. It is better to release advertisements in the vernacular.
Advertising stimulates the demand for industrial goods among the farmers and in the villages; it would thus give them an added incentive to sell their produce, increase the total quantity of food- grains arriving in the market, and act as a curb on the inflationary tendencies created by the.
Large volume of developmental spending. The immense value of advertising in educating and informing the rural public must be appreciated, for it plays a role in changing the attitudes of people a task which is difficult enough in a society like ours.
Rural Advertising – Problems & Needs of a Rural Consumer
Both the environment and the rural consumer present qualitative differences in their problems and needs. Apart from the fact that income and aspiration levels are low, marketing has to cope with a serious information gap as well as with governmental controls in planning for rural economic growth.
The world is accustomed to looking at rural India as poor and troubled. Yet rural India is the largest potential market outside China and Japan.
Admittedly, rural India is a model with its own peculiarities. It may, however, be treated as a “precursor society” for those who aspire to higher standards of living, starting from a low base with an incapacity to pay for consumer products which help to raise the standard of living.
(a) Low Incomes – Large Markets:
The rural economy is characterized by low incomes and low purchasing power; but the large number of potential buyers constitute a large enough market.
In rural areas, the “poor rich” are the big potential buyers of consumer durable goods transistors, bicycles, scooters, sewing machines, electric irons, refrigerators, fans etc. The aspirations of prosperous rural sections are rising rapidly. The road ‘to the big markets of the future will not be only in the town.
The data on education, sophistication and on the use of products are woefully inadequate. The rough macro figures of today seem sufficiently tempting.
The large number of rural consumers, because of their low income levels, will continue to be more price conscious than brand conscious. The large aggregates of potential markets are fragmented into a number of smaller markets, nationally and product-wise.
Neither the gross national product nor the per capita income will help rural marketers very much. Rural marketing practitioners may perhaps form better judgements on the basis of three indicators the production of power, and the number of radios and telephones in use.
These may be treated as indicators of the extent to which factories and homes would spring up to provide for a market for a much wider range of products in rural areas.
(b) Low Incomes- Low Advertising:
The correlation of low incomes and low advertising is almost axiomatic. Rural marketers begin with the handicap of inadequate resources for the basic marketing job of franchise building.
On the one hand, there is a disinclination to invest heavily in an unknown and often unknowable advertising gain; on the other, there is the danger of over-advertising in an area where the potential market is so much smaller than the total population, and is often very widely dispersed.
Then there is the possibility of the wastage of media, which may unduly raise advertising costs and prices and reduce the profitability of rural marketers. Massive advertising in all the media carries with it the danger of massive waste.
And, then, the direction of one’s message to select income groups involves other non-mass media approaches which raise the cost per contact. The most discreet use of media at the minimum cost per contact and the minimum wastage is usually the path of wisdom in preference to the massive campaigns in all mass media.
When forming a total estimate of advertising expenditure in rural India, one should not lose sight of the incalculable impact of public advertising expenditures on such things as family planning, pesticides, irrigation, literacy and public health campaigns, the use of fertilizers, agricultural machinery, etc.
These are often ignored because the impact is often indirect in some cases direct and almost incalculable. This is a neglected area, but worthy of attention.
The rural marketer has the task of bringing about basic changes in consumer behaviour or of creating a new life style and a major agent of cultural change. The transition from the neem twig to tooth brush and toothpaste, from traditional medicines to modern antibiotics or sulpha drugs, from soap cake to detergent powders, ploughs to tractors is a telling example.
A majority of rural folk in India are culture-bound. Each section of rural society has its own cultural pattern of life; and the pre-industrial aspiration thresholds of each are low.
Rural marketing should therefore raise the aspiration levels and usher in a change by right motivations in each case, using existing cultural values to help it wherever possible. But the costs are higher in research and development, in packaging, and not the least in advertising, which seems to take on the characteristic of a long-term growth cost, and not just an annual expense to be recouped from annual profits.
It takes on the nature of a capital cost, lending itself to a discounted cash flow rate of return. More than money, such a basic problem of inducing a cultural change calls for advertising concepts which would enable the marketer to understand the nature of the problem and provide the right, cultural response to it.
In such situations, rural advertising campaigns may have limitations. They may reach the consumer’s eyes and ears but may not make a dent on his buying habits or induce a change.
In such cases, there is a great need for sociological insights in advertising techniques. In any case, rural marketers have to research to find the way in which buying decisions are made and identify those who are the decision-makers.
Lack of Adequate and Up-To-Date Data:
Perhaps the biggest single factor is the lack of adequate and up-to-date market data on rural buyers. What compounds the problem and makes it almost intractable, is the heterogeneous nature of rural society in India, with eight major languages, scores of dialects and cultural sub-groups.
But a beginning has been made by some private agencies, such as the Operations Research Group, Ahmedabad, and the Institute of Public Opinion, Delhi.
There is the problem, too, of suitable sampling within reasonable costs in multi-caste and multi-cultural groups, apart from the very significant spread of income distribution between the rural rich and the mass of poorer layers below.
The degree of risk and the chances of profit in marketing are of a very wide range. Rural marketers encounter a risk and uncertainty whose range, intensity and character cannot be easily gauged. Besides, because of the law and order problem, the extent of political risk in various parts of rural India is very great.
Rural India is characterized by the low productivity of the farm, the source of so many important raw materials e.g., vegetable oils, milk, cotton, sugar and cereals. The availability and prices of raw materials are subject to major fluctuations within a year and from year to year. This leads to many marketing problems.
It makes a stable pricing and margins policy very difficult in many cases. In an inflationary period, it leads to price control. The more rigid the price control, the greater the squeeze on profits, and the smaller the resources for marketing expenditure. Rural marketers, therefore, have to keep an eye on the movement of the prices of raw materials.
The elite and the Indian Government are more production-oriented than marketing-oriented. Advertising is equated with the bazzar type of selling, and is often considered to be a secondary economic activity.
It is suspected, and, in our price-conscious community, it is often considered as an unnecessary luxury which inflates prices and profits, and helps only the business firms who can afford it. It hurts the consumer’s pocket.
This is more so in the sheltered markets. In our country; the low priority of advertising as an economic activity creates environmental conditions which are unfavourable to the growth of advertising in rural societies.
Efficient Distribution System in Rural Markets:
The real challenge is to establish an efficient distribution system down to the village retailer. This is as important as building consumer franchise, but is often extremely difficult to achieve by reason of periodic shortages and old-fashioned retailing.
Yet this is the most critical point in marketing, the point where the consumer buys and public opinion judges Hence the intervention of the government, when the private distribution system fails.
Rural Advertising – Rural Marketing Strategy in India
With the rural selling experience as a guide the strategy that would make the best use of the new opportunities that the rural marketer would offer in the future has to be selected : whether, for instance, to be selective in the choice of regions and districts, or repeat, the pattern of the past and extend distribution on an all-India basis.
The regions which depend on the vagaries of the monsoon may be identified. Wide variations exist in land holdings and in the size of families. All these factors point to a “selection” approach.
While the districts which were likely to have a steady or rising disposable income may be spotted in this way, little is known about the size of the surplus income or how it would be spent. Is the surplus likely to grow or shrink?
How would it be divided between investment, savings and consumption? Before the considerable investment required to reach and develop the smaller rural markets is undertaken, all these and other questions have to be answered.
A Socio-Economic Survey:
To provide these answers, it is necessary to carry out a socioeconomic survey in areas where agricultural prosperity has augmented disposable incomes. A team of economists and market research staff may visit hundreds of villages and question a wide cross-section of the village community.
They may speak with local authorities and panchayat officials. They may have discussions in groups and meet leaders of the rural community, and assemble facts instead of opinions, based on the data which must be crosschecked.
Even amongst the so-called prosperous agricultural districts, emphasis should be placed on those which have relatively high per capita incomes today. The areas where the benefits of increasing productivity in the future would not be offset by other factors may also be identified.
Having provided for his family and his farm, the farmer becomes anxious to raise his status in the community in which he lives. The expenditure on weddings absorbs a big chunk of the farmer’s income.
Next in priority come consumer durables bicycles, transistors, furniture and watches which not merely add to comfort and convenience, but can be seen to be doing so by one’s neighbours.
Products like soap, vanaspati and other packaged goods also find a place on the shopping list. In some cases, this is so because the shortage of more popular brands has made the continuity of supplies to villages somewhat difficult.
Nevertheless, it is clear that unless we find new ways of regularly communicating with the farmers the occasional visit of a sales or cinema van is not enough and change his attitudes and priorities, a dramatic rise in the rural demand for products cannot be expected. Distribution, however good, is only a part of the job.
Communicating with the Villager:
What are these new ways? Although newspapers are still rare and adult illiteracy is widespread, there is growing up an increasingly literate population. The written word, whether it is used for advertising in the press or on hoardings, on merchandising materials or on the container, would have to be addressed largely to the younger generation in the light of its expectations and its aspiration. In short, the success in influencing the buying habits of the older villagers may lie in the ability to communicate with their children.
The only practicable means today of reaching a significant proportion of the village population is through radio and TV. With 30 to 50 per cent of the rural population in these well-to-do rural communities owning radio sets, the problem is to achieve a high level of listenership, and viewing.
The rural programmes put out by All India Radio are couched in the style and idiom of the neighbouring village community, and have shown how successfully this problem can be solved. What is now required is an increase in the range of the existing broadcasting stations and the setting up of new ones, particularly in the more progressive farming communities.
The demand on commercial broadcasting time already far exceeds its availability, and the cost of strengthening and widening the network may be met from the revenues. This also holds true for Doordarshan.
Potentially, the most powerful means of communication, particularly in the context of our literacy levels, is television. Experience in many countries abroad, many of which are in comparable stages of development, has shown the vital role of this medium as an instrument of social and economic development.
The potential of television, not only as an aid in the classroom but also in teaching improved farm practices, hygiene, first aid, etc., is too great to be ignored. The vast sums of money spent on television advertising by many companies in the developed world is an indication of the immense impact this medium has on consumer habits.
It may become by far the most effective single means of promoting the family planning campaign. Although the initial outlays involved in television are large; these costs, by making television commercial, may be recovered rapidly. The Indian electronic industry has made rapid strides and can now cope with the expansion of television network without excessive requirements of foreign exchange.
The whole area of motivation, however, is a fascinating one, for the techniques which are dramatically effective in one country may not be so in another.
Rural consumers tend to be much more subject to local religious, cultural and social pressures, and vary greatly from region to region. Hitherto, with the preponderantly urban character of our present market, our marketing strategy have paid little attention to regional variations in tastes and habits.
It may well be that one of the keys to success in the rural-market would be to take an increasing account of these regional preferences in the designing, formulating, packaging and advertising of our products.
Such rural roads as there are have been poorly surfaced, and many are totally destroyed or severely damaged by the monsoon.
Price Controls and Incentives:
Developing rural markets involves substantial investment in distribution, advertising and market research; the rewards, if any, come many years later. Some Indian companies have made these investments in the past and will continue to do so in the future.
However, under the tight price controls which apply to some of the common consumer products, this investment becomes increasingly uneconomic. If the rural market for these products is to develop the necessary tempo, these controls will have to be relaxed or removed.
Likewise, as has been done recently for research and development, tax reliefs on the expenditure incurred in the development of rural markets, such as van selling, commercial radio broadcasts to rural audiences, market research surveys, etc., would give the rural marketer much psychological and financial stimulus.
Rural Advertising – Size and Importance of Rural Markets
The rural market is made up of two broad compartments:
(a) The market for consumption goods, including both fast moving consumer goods and durables; and
(b) The market for agricultural inputs and other investment goods.
Not surprisingly, a survey recently carried out indicates that the entire demand potential for manufactured goods that exists in this country has been largely untapped. The truth, however, is that not even a fraction of the rural market has been serviced by the industries in the organized sector. There are certain important factors which affect its growth. This has been’ dealt within the following paragraphs.
Market for Consumer Goods:
An analysis of the National Sample Survey (NSS) data shows that, of the total expenditure on manufactured consumer goods, 75 per cent is spent in rural India. This percentage has remained almost unchanged since 1960-61.
Though the per capita consumption and expenditure on manufactured consumer items is low in rural areas, the market is approximately three times larger than that in urban areas.
On the assumption that all persons or families above the poverty line form the market for some branded consumer goods, this market has a size of 42 million households. If we only take Punjab, Haryana, Rajasthan, Gujarat and Andhra, the target market of 72 million people is larger numerically than that in France, UK or West Germany.
I, however, hasten to add that this is no way related as to how the market should develop, because rural economy in India must take into account the realities of the environment.
Rural Market Size in Value Terms:
For non-food consumption items, the size of the market (estimated by applying NSS proportions to Central Statistical Organisation data) in current prices was Rs. 5,500 crores in 1970-71, Rs. 9,500 crores in 1974-75, and Rs. 13,500 crores in 1979-80.
Assuming that these items were mainly consumed by the rural population above the poverty line, the amounts represent an annual expenditure of Rs. 516 per head per annum.
In real terms, however, the growth has been very modest at 2.5 per cent per annum because:
(a) Of lack of concerted effort by the organised sector to penetrate the rural market;
(b) Averages are misleading in this type of analysis for peak opportunities which occur in certain pockets may not be fully realised;
(c) If the market for consumer products is considered as a whole, it overshadows the opportunities that exist selected products, which may be growing at a much faster rate.
Wealth distribution in rural India is uneven; the top 13 per cent of the farmers’ land holdings account for 57 per cent of the cultivated area. Further, the NSS data show that the top 10 per cent of the rural population accounts for about 37 per cent of the expenditure on consumer goods.
Not surprisingly, the potential market is at the top end of the spectrum. However, with the increasing spread of rural income, consumer goods are expected to make a substantial penetration into the lower income strata by the normal “percolation effect”.
Then there is the increasing cross flow of population between urban and project town centres which act as conduits for the cross- flow of products and ideas, thus supplementing the demand for such products.
Market for Agricultural Inputs:
The increasing demand for manufactured consumer goods in rural areas is complemented by the burgeoning demand for agricultural inputs. This fact is borne out by the compound rate of growth in the offtake of agricultural inputs and equipment between 1970-71 and 1980-81 (fertilizers, 10 per cent; pesticides, 12 percent, the area under high-yielding varieties, 11 per cent: tractors, 15 percent; pumps and tube wells, 11 per cent).
However, these percentages by themselves do not explain the emerging progressive change in attitudes. Recently, the Marketing Research Department carried a survey of farm practices in Andhra, Punjab and Haryana.
Over 90 per cent of the farmers interviewed felt that “they should adopt more and more new farm practices.” Between 65 and 70 per cent agreed that “they should take greater risks in adopting new practices.”
The study, in summary, has established that, in these areas, the farmers are eager to use newer agricultural technology for improved profits, and are prepared to take calculated risks.
Sources of Rural Purchasing Capacity:
The factors that contribute to purchasing capacity in rural areas are:
(a) Marketable Agricultural Surplus and Rural/Urban Terms of Trade:
So far as manufactured consumer goods are concerned, the regression analysis indicates that there is a 0.7 per cent rise in consumption for every one per cent increase in the marketable surplus of food grains.
The consumption of agricultural inputs, like fertilizers, is governed mainly by two variables:
(i) The ratio of the food grains price of the previous period to the fertilizer price of the current period; and
(ii) The irrigated area as a percentage of gross sown area.
To prevent stagnation in agricultural output, we should have a consistent policy so that we may be able to maintain a favourable balance between agricultural input prices and food grains output prices.
As the irrigated area goes up, the cropping pattern/intensity changes, thus changing the consumption pattern of fertilizers per hectare. There is a strong correlation between the consumption of fertilizers per hectare and the value of output. This increase in per hectare value (income) ultimately reflects itself in a demand for consumer goods.
(b) Remittances:
District-wise data on remittances from outside are not available. It is, however, well known that a large number of families in some pockets in Kerala, Punjab, Saurashtra and Kutch receive remittances from relatives abroad.
In 1978, the total inward remittances in the State of Kerala alone were estimated at Rs. 400 crores. Therefore, traditional remittances from within the country are being supplemented in several States by remittances from overseas, thus creating new consumption and purchasing patterns.
(c) Government Expenditure:
The Sixth Plan outlay on agriculture and allied programmes is about Rs. 5,700 crores. Investment in flood control and irrigation facilities will be around Rs. 12,000 crores in 1983-85, and the Central Sector outlay on rural development and associated programmes will be Rs. 2,300 crores during the same period.
These will generate new income, and the increased purchasing power in rural areas may be expected to support the consumption. Of manufactured items. Further, these investments are expected to augment the income generation process from land in future years, which, in turn, will accelerate the growth of rural markets.
The investment proposed during the Sixth Plan for developing village & khadi industries is of the order of Rs. 1,780 crores. This, too, will encourage the income generation process.
(d) Dispersal of Industry:
Lastly, the policies governing industrial licensing have made it almost imperative for the private sector to seek investment opportunities in backward areas. If this is not impeded by regulatory agencies, it will greatly speed up the spread effect.
There are wide regional variations in the prosperity levels of the districts and in their market potential. These need to be analysed and understood sectorial in order to determine the methods of approaching them.
A socio-economic survey undertaken in four progressive districts, one from each part of the country Tanjore, Ludhiana, Burdwan and Kolhapur has revealed a healthy per capita income growth of five per cent per annum among big and small farmers against a national average of 1.5 percent. This has come about through improved use of land, coupled with a reduction in the family size.
There can be a number of attributes on the basis of which a prosperity index may be constructed. However, a very reliable indicator of the growth of the market potential and the development of a cash economy is the growth in bank deposits.
This growth in bank deposits in a district not only reflects the growth in income or inward remittances; it also shows the kind of expenditure or investment activity that is taking place, both in the private and public sectors.
An analysis of the growth in bank deposits was carried out recently in a number of progressive districts. The growth rate ranged from 113 per cent per annum in Ludhiana to 145 per cent per annum in Trichur.
The growth was mainly in:
(a) Areas which were agriculturally prosperous; and
(b) Areas like Trichur and Kutch, which receive large amount of remittances.
While it should not be the aim to preferentially cater to the needs of the more progressive districts, analyses confirm the danger of applying a uniform approach to the rural market.
Constraints on Developing Rural Market
The marketing effort for manufactured consumer goods as well as agricultural inputs in rural areas is constrained by:
(i) High distribution costs;
(ii) High initial market development expenditure;
(iii) The inability of the small retailer to carry stocks without an adequate credit facility;
(iv) Inadequate infrastructural facilities such as connecting roads, media availability, etc.
The development of the rural market will involve additional cost, both in terms of promotion and distribution. This cost of market development will have to be built into the pricing policy for specific brands.
It would be a welcome step if the additional distribution cost which is incurred in the development of the rural market is recognised by the government in the interest of a uniform pricing policy for both rural and urban consumers.
On the contrary, legitimate marketing activities, such as advertising and promotion, are now being penalised. This can be the single greatest impediment to the future rate of growth.
In rural marketing, it is often not the promotion of a brand that is crucial but the creation of an awareness of a particular product field, for instance, fertilizers. In such a situation, syndicate advertising may bring down the market development expenditure. Other less traditional forms of communications might also be considered.
A recent study by ICICI shows that the stocks that are serviced are often constrained by inadequate credit facilities. Banks may play a very constructive role in this context by increasing the volume of credit to the village agro town stockists, so that they are able to service a higher volume of trade at lower margins.
Rural markets may come into existence only after persistent and’ sustained efforts are made by pioneers in industry. The upturn in agriculture, providing additional purchasing power in the rural sector, is a challenge to create and develop a vast market for products, and calls for the exercise of all the skills of advertising and promotion.
The farmer must be exposed to a variety of influences to persuade him to change his traditional ways in favour of better methods of working and better conditions of living. By changing over to hybrid varieties of seeds and chemical fertilizers for higher yields, he has already shown his proneness to change, and it should not be difficult to carry the process further and divert his expenditure into fruitful channels.
Since the conventional media do not reach the village and since the literacy levels are quite low, it is a difficult task to find ways and. means of reaching this new potential consumer.
In the marketing of textiles, highly personalized selling by vans and participation in rural fairs and festivals and mobile units/stalls may play a useful role.
Similarly, for cycles and sewing machines, sales vans and participation in fairs may be supplemented by billboard’s, hoardings and point of-sale materials. Sewing machines and cycles may be advertised on the radio and TV. Sewing schools and the organization for training would promote the sales of sewing machines.
In Mandi towns and rural markets, cinema slides, wall posters, paintings on walls, coupled with a mobile sales stall at rural fairs and festivals would go a long way in promoting footwear sales.
It is necessary to establish individual brands to win rural consumer loyalty.
Rural Advertising – Rural Budget Surveys
Family budget surveys would give us the distribution of expenditure in households, commodity-wise. The study would highlight the changing trends in expenditure patterns and give us some indication of the priorities that a cultivator has in mind.
It has been considered necessary to study the attitudes to, and aspirations for, new styles of living. This would throw up helpful pointers to the future growth of a large number of consumer and consumer durable products.
Market research would cover sources of awareness in the rural sector. What is the media reading in the villages, and what are the different influences that a villager is exposed to, either in the village or in his visits to nearby towns?
Some villagers make their household purchases in a nearby small town or at a fair; but visits to either a district town or a still larger market for his requirements of consumer durables are less frequent.
It is useful, therefore, to ascertain the motivation of rural buyers in selecting different markets for different purposes. In would also be useful to determine rural buyer habits during the harvesting seasons, at fairs and festivals, and in the marriage seasons.
It is considered necessary to plot these in advance with a view to planning advertising and sales promotions.
Rural Advertising – Changing Scenario
With the breakthrough in the agricultural sector and the rise in rural incomes as a result of the outlay of crores of rupees on irrigation, fertilizers and other agricultural inputs, the face of the countryside has changed considerably.
Though the mechanised farming influence, resulting from the green revolution, has not weakened their religious beliefs, people generally are more interested in improving their standard of living by economic means rather than by leaving things to fate or depending on religious rituals.
In the villages, people now want a variety of goods which were beyond their means only about a decade ago. Bicycles, transistors, fountain-pens, soaps and detergents, watches, furniture, better clothes and many other new products are now in demand in rural areas. As electrification programmes are completed, there would be a demand for electric fans, radios, electric irons and refrigerators.
The challenging task of the marketing men is to divert the farmer’s acquisitive instinct from the traditional hankering after gold to these durable and other consumer goods. The urge for a better life should be stimulated in the countryside so that it may spur the villagers to greater efforts at improving their productivity and incomes.
Already, the demand for many commodities has gone up in rural areas. It is believed that the share of the rural sector in the purchase of domestic utensils and cotton textiles is about SO per cent; for woolen clothing, it is over 54 per cent; for washing soap and toilet soap, over 50 per cent; and for bicycles nearly 80 per cent.
Though no reliable estimates are available, it is generally believed that, in the rural sector, the sale of cheaper brands of cosmetics, man-made fibres, ‘batteries, transistors and radios already outstrips that in the unban sector.
It is highly desirable to foster the growth of national markets in India because this is central to a company’s economic development. Generally, markets for goods are urban and limited.
With the agricultural development which has taken place, rural markets offer a great potential, and our industries should focus on them. Manufacturers must take rural marketing and agricultural development seriously.
It is one thing for Indian industries to manufacture TV sets, transistors and other consumer durable goods for a small rich, isolated middle class. It is quite a different matter for them to place their skills of manufacturing and marketing at the service of the urban and rural population as a whole. Our industries should break down the barriers between the city and the countryside and foster a national market.
Cataloguing on a modest scale in places where the green revolution has taken its roots may be taken up to stimulate new demands for new goods for the farmer and his family.
The major need in the making of a national market is the organization of efficient distribution systems and the widening and deepening of the traditional channels of trade. For a long time, a small trickle of goods has overflowed from the towns into the small rural shops.
Rural marketers often find that their products have preceded them; but the products flow erratically, without proper stock control, merchandising; and they are priced high.
The villager buys very little from the meagerly stocked village shop. He does most his buying in the nearest mandi or market town, which is more adequately stocked with goods. One of the cheapest distribution systems for the opening up of large rural markets is perhaps the satellite marketing system.
This system assists in the deepest penetration of consumer products with no additional costs to the manufacturers. Some markets are so small that truck dispatches for many branded goods become difficult. There is already a coverage of wholesalers and retailers in district towns.
These wholesalers may be encouraged to send smaller consignments to large dealers in the satellite markets around them, consignments which would last for two weeks or a month. Large dealers, in any case, go to the nearest mandis once a fortnight or a month for other purchases; and they may pack a few more products of the company in trucks or bullock carts without additional freight charges.
The large dealers in such markets are semi-wholesalers, with whom the wholesalers share their commission for the quantity of the goods bought. The semi-wholesalers perform the same function in the small market as the wholesalers perform in the large market, i.e., financing of goods, warehousing and their distribution to retailers. The semi-wholesale markets, in turn, send out goods to still smaller satellites around them.
The rural market in India are neither a desert nor a gold mine. It is composed of a patchwork of potential rich districts. For example, in the rich districts of Punjab and Haryana, the farmers are poised for a change- they have more money in their pockets, and are eager to buy new products.
By reason of their prosperity, the demand for chemical fertilizers, high-yielding varieties of seeds, tractors, farm implements and a host of consumer durable goods- TV sets, fans, refrigerators, coolers, sewing machines, scooters, etc.- is almost insatiable.
In India, very few big companies have a national marketing system. The private distribution system has therefore to cover much new ground; the shortcomings of the private distribution system are taken care of by the public distribution system, by co-operatives and fair price shops.
However, whether it is private or public distribution, uneconomic overheads have to be avoided. It is necessary to train and modernize the traditional wholesaler and retailer in modern marketing techniques, and emphasize the importance of their local market knowledge.
Rural Advertising – Problems in Reaching the Rural Consumer
There are about 576,000 villages in India, 79 per cent of them with a population of less than 1,000. Almost 80 per cent of the villages do not have all-weather roads. Rural consumers, too, are far less homogeneous than their urban counterparts and differ from Tegion to region. It is not possible, therefore, to merely extend urban products to rural markets.
The low density of population and inaccessibility make the problem of serving these villages individually difficult and often uneconomical. Direct delivery of goods to even the top 1 per cent of the village’s costs twice as much as it does when servicing the urban markets.
In the initial stage, therefore, it may be better to concentrate only on the larger villages, the mandi towns, and towns with large agricultural hinterlands which act as centres of distribution. The semi-wholesalers and retailers servicing smaller villages may obtain stocks from these places, or the villagers themselves may buy the necessary items.
Studies conducted by the Marketing Research Department of Hindustan Lever have shown that about 90 per cent of the farmers visit the nearest town at least once a month to sell their produce and purchase their requirements. In other words, the towns with large agricultural hinterlands can become the gateways for entry into the rural market.
Under the rural road construction programme, the government plans to link villages with a population of 1,500 or above with all- weather roads. Progress in this direction has, however, been somewhat tardy. By the end of 1985, at least 20,000 such villages should be linked. If this project succeeds, the entire complexion of the rural market would change.
Rural Advertising – Role in India
The biggest single advertising problem is the shortness of the reach of mass media. As our country is large, the problem is complex, for there is a huge potential rural market. There are not very many dailies in circulation; nor do many own a radio or transistor or a TV set. The mass media gap in India is as conspicuous as the income gap.
Therefore, there is a need for extending basic infrastructure with a view to enlarging the reach of mass media in rural India. Hopefully, the electronic revolution will follow the green revolution in rural India.
Apart from the press and the cinema, the mobile cinema, demonstration vans, puppet shows, and theatres may convey the product message and sell the product directly to thousands of peasant customers. The value of this direct personal propaganda and selling cannot be overestimated, especially in the rural markets.
These are often a potent means of changing habits by means of real life demonstrations of the goodness of the product and its utility, and by the invaluable personal link established between the seller and buyer.
In rural markets, persuasion by the opinion-makers, by the “voice of authority,” counts; product messages may be conveyed in print, by the cinema, or in person by teacher, doctor, and shopkeeper or village headman. “Word of mouth” advertising is a powerful medium, especially with the pace-setters of change.
To the extent that traditional social institutions like the panchayats still influence social habits, particularly in spending at the time of marriages and festivals, they can be useful instruments for mass changes in consumer habits.
They are usually strongholds of tradition- but when the strongholds themselves change, the surrounding societies are quick to follow suit. This is particularly so when change comes to the culture centre of a community, the centre from which new ideas radiate.
According to one study, though most people consider the tradition-directed leaders to be an in pediment in the communication process to induce changes, this is not necessarily true. The change via such leaders may be slow; but they (the leaders) reduce the risks and uncertainties of its consequences.
They also help to generate confidence in the slower and later adapters. Both styles, the progressive and the traditional, may play their roles; and it is for rural marketers to realise their possibilities.
The study also indicates that the influence of opinion leaders in such non-mass media societies is largely confined to small social segments and the immediate neighbourhood structures. A rapid development, therefore, calls for the earliest possible extension of the mass media, especially the radio and TV.
In India, the advertising is mostly in English or Hindi. As rural markets widen beyond the English-and Hindi-knowing people, there are problems of translation into the vernaculars. Good translations are seldom easy; and there is often the need for thinking out the advertising concepts and the brand image in the local language itself.
This is a problem for local copywriters to conceptualise in the vernacular, where necessary. Advertising in the local language in the absence of shortage of professionals, makes success of rural advertising campaigns difficult.
It is a general assumption of advertising theory that advertising helps to create demand. It may be worth asking to what extent advertising creates demand, particularly in our rural society, which is in transition from tradition to modernity; and to what extent it helps only to accelerate demand after the social and environmental changes have taken place.
The basic trends of demand for products are determined primarily by prevailing social and environmental conditions.
Advertising itself serves not so much to increase the demand for a product as to speed up the expansion of demand that may come from favourable conditions, and to retard advances due to unfavourable conditions.
Most rural marketers treat this as an almost insoluble problem, because other factors also stimulate demand; for example, price cuts, quality changes and rising real incomes.
We divert some resources from advertising to market research even at the risk of under-advertising in rural areas. This is essential because the basic marketing problem is the absence of elementary market research data in rural areas.
In fact, we do not know where we are going. In our country, we have either over-or under-planned for growth. Over planning leads to over-capitalization, from which it is very hard to retreat.
The Five-Year Plans have been a classic exercise in bad demand forecasting with sophisticated methods and poor data; and it has been compounded by business managements accepting national planning targets as gospel, without undertaking the responsibility of doing a measure of their own market research, which is an essential for rural markets in India.
The rural market information gap is wide enough to justify major collaboration between governments, universities, independent research organisations and business. There is very little appreciation of it as a primary investment need, its very precondition; and very little money is spent by too few on it.
Advertising catering to rural society with divergent life-styles and value systems presented an unusual challenge between the strategy of homogenisation (overcoming the barriers between segments), and one of heterogenisation (capitalising the very existence of many small riches).
This sort of advertising involves constraints in the form of cost duplication, of facilities, and fragmentation. In such areas, the basic objective of advertising and market research may be to find and develop products which may cut across heterogeneous preferences with common brands and similar or common advertising.
Our rural marketers should keep an eye on import substitution and upgrade raw materials on the basis of research and development before they can ensure that adequate raw materials reach the manufacturing areas for products which would then reach rural markets in a steady flow and at relatively stable prices.
Tourist advertising and motivation pose a most fascinating challenge to our country with its very old culture. Foreign tourist can be attracted to rural areas where historical monuments, game sanctuaries, and mountain and sea resorts exist.