Rural Market Environment

It can be emphasized that understanding the marketing environment holds the key to effective marketing management. This is as truer of rural marketing as that of urban marketing. In this article we shall, therefore, initiate discussion on rural marketing and the rural market environment.

The rural market environment needs a separate examination as it varies significantly from that of the urban market. Until a few years ago urban market formed the main reference point in all the marketing discussions in marketing management. Here we shall deal with the subject ‘The rural consumer’.

Consumer and demand forms parts of a given marketing environment. It is to facilitate detailed discussions that we are dealing with the subject under the three headings shown above. We shall examine here the issues relating to rural consumer and rural demand.

The Rural Consumer: A Detailed Profile

Size of Rural Consumer Group: In numerical terms, India’s rural market is indeed a large one; it consists of more than 740 million consumers.

It can be seen that now 73 percent of India’s total population is rural. Though over the last three decades there has been a marginal reduction in the rural population expressed as a percentage of the total population, there has been a steady growth in rural population in terms of absolute numbers. And, it had reached 74 crore by 2001. In terms of households, the rural market consists of more than 12 crore households, forming over 70 percent of the total households in the country.

Characteristics of rural Consumer Group:

Location Pattern: Practically, the whole of India, barring the metros and towns, constitutes the Indian rural market. In other words, the market is spread through the length and breadth of the vast country.

A scattered market: It is evident that the rural market of India is a geographically scattered market. Whereas the urban population of India is concentrated in 3,200 cities and towns, the rural population is scattered across 570,000 villages. And, of them, only 6,300 villages, or less than 1.1 percent, have a population of more than 5,000 each. More than 3 lakh villages or more than 55 percent of the total number of villages, are in the category of 500 people or less and more than 1.5 lakh villages, or 25 percent, are in the category of 200 people or less. The inference is clear; unlike urban demand, which is highly concentrated rural demand is scattered over a large area.

Socio-economic position: By and large consumers continue to be marked by low per capita income. Similarly they continue to be tradition-bound community, with religion, culture and tradition strongly influencing their consumption habits. However, as we shall see in detail, a sizable segment of rural consumers defy this description. Nearly 60 percent of rural income comes from agriculture. Rural prosperity and discretionary income with rural consumers are thus linked to a sizeable extent with agricultural prosperity. More than half the households are in the income category of les than 25,000 per annum, but about 14 percent of the households have an annual income that exceeds Rs 50,000 per annum. Remittances from Indians working outside India have made a sizeable contribution to the growing rural income/purchasing power is some states.

Analysis reveals that, in recent years, rural consumers have been increasingly drawn into the savings habit. As much as 70 percent of the rural households now save a part of their income. The habit is relatively more wide spread among salary earners like government staff, teachers, and self-employed non-farmers, who include in the main, shopkeepers and service providers.