Page 248 - DMGT509_RURAL MARKETING

Unit 13: Rural and Urban Markets

consumers. Bargaining power of consumers has increased tremendously than ever before due to Notes
intense competition. The phenomenal growth of media, availability of loans and lowering of
interest rates have caused sudden rush for these products. Liberalization and opening up of the
economy has exposed the middle class of the country to the quality products at the competitive
prices. There is a huge flow of foreign brands into the Indian market. There have been major
structural changes in the economy as a result of globalization. The competition has been
intensified. The state like Punjab gets a favorable ranking in terms of ownership of assets,
consumer durables, two-wheelers, and cars in rural areas. In rural Punjab there are many families
whose one or more family members have gone abroad. Their standard of living is even far
better than many of the urban residents.

13.1 Rural and Urban Markets: A Comparative Analysis

13.1.1 Rural vs Urban Consumers – Challenges

The biggest mistake a FMCG company can make while entering the rural India is to treat it as an
extension to the existing urban market. But there is a vast difference in the lifestyles of the rural
and urban consumers. The rural Indian consumer is economically, socially, and psychographically
different from his urban counterpart. The kind of choices that an urban customer takes for
granted is different from the choices available to the rural counterparts.

The difference in consumer behavior in essence stems from the way of thinking with the fairly
simple thought process of the rural consumer in contrast to a much more complex urban
counterpart. On top of this there has hardly been any research into the consumer behavior of the
rural areas, whereas there is considerable amount of data on the urban consumers regarding
things like - who is the influencer, who is the buyer, how do they go and buy, how much money
do they spend on their purchases, etc. On the rural front the efforts have started only recently
and will take time to come out with substantial results. So the primary challenge is to understand
the buyer and his behavior.
Even greater challenge lies in terms of the vast differences in the rural areas which severely
limits the marketer’s ability to segment, target and position his offerings. The population is
dispersed to such an extent that 90% of the rural population is concentrated in villages with
population of less than 2000. So the geographical spread is not as homogeneous as it is with the
urban areas owing to vast differences culture and education levels. Also with agriculture being
the main business of rural sector the purchasing power of rural consumer is highly unpredictable
which can lead to high variations in demand patterns.

One more gray area that needs to be probed into is the importance of retailer in rural trade.
Rural consumer’s brand choices are greatly restricted and this is where the retailer comes into
the picture. The rural customer generally goes to the same retailer to buy goods. Naturally
there’s a very strong bonding in terms of trust between the two. Also with the low education
levels of rural sector the rural buying behavior is such that the consumer doesn’t ask for the
things explicitly by brand but like “laal wala sabun dena” or “paanch rupaye waali chai dena”.
Now in such a scenario the brand becomes subservient to the retailer and he pushes whatever
brand fetches him the greatest returns. Thus, as there is a need to understand the rural consumer,
similarly need is there to study the retailer as he is a chief influencer in the buying decision.

Did u know? ITC Limited and Hindustan Lever Limited (now Hindustan Unilever Limited)
have initiated rural approach through strategic initiatives such as e-choupals and Project
Shakti. In case of white goods and automobiles, the differences between prices of national
and foreign brands have been narrowed down.

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