Page 184 - DMGT509_RURAL MARKETING

Unit 9: Pricing Strategies

Rural markets usually work on two different price levels for similar products. Notes
1. When the product is distributed from company sources at the rural retail markets,
the price structures include the cost of distributing right at the retail or distributor
level.
2. Alternatively, in other cases, the local retailer also visits the nearest distributor/dealer at
the nearest town or district to collect his stocks, and there the retailer adds his own cost of
distribution to the product.

Figure 9.1: Types of Traders in Periodic Markets

The above Figure 9.1 is a broad indication of the kind of retailers we are referring to in
point (2).
At both these levels the pricing structures are very different owing to the nature and amount of
logistics cost incurred being different. In some instances where marketers are not able to approach
certain markets for absence of proper infrastructure (primarily roads), the local retailers take
the onus of approaching the nearest distributor/dealer/stockiest. On the other hand, the local
haats and fairs also offer products at the best deal and so the third pricing structure though more
a part of promotional pricing strategy, also coexists along with the first two.

With different price structures, very often, for the same products rural marketers find it
difficult to ensure the sustainability. Sustainability also refers to maintaining similar price
levels. If the monsoon season leads to bad road conditions and the local retailer incurs a
higher cost of reaching the goods to his village, the final product price will also vary
substantially. However, as mentioned earlier, due to usage occasions and usage amount of
average FMCG products being less than urban markets, price differences in aggregate terms
are not usually varying. Sachets, one of the most successful forays in rural markets are usually
low in amount and cost. The price differentials are also at times affordable from the consumer's
perspective. The retailing comparison as shown in Table explains the differences between
urban, semi-urban and village markets with regard to pricing issues. Product and Pricing
Decisions for the Rural Markets.

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