In this article we will discuss about the problems faced by rural markets in India.
Problem # 1. Diverse Markets:
It is a mistake to assume that the rural market is one homogenous market. In fact, rural markets and rural consumers vary across regions and incomes. They consist of very affluent landlords and businessmen, traders (both big and small), people providing goods and services, marginal and contract farmers, labourers and daily wage workers. Education levels too vary, but are rising – youngsters from villages seek admission in colleges and universities in nearby towns. A host of private colleges and universities offer engineering and management courses to attract youngsters from villages and small towns.
There are also variations with regard to proximity to urban areas—villages close to towns and big cities have people who are aware of and consume modern goods. Such villages tend to be well connected by roads, enabling better distribution of goods. But villages farther away from cities often have bad roads and poor connectivity.
Consisting of small markets, they are difficult to be serviced by most companies. Remote villages, deep in the hinterland, tend to be isolated. Many are ‘media dark’, that is, they are beyond the reach of modern media. The composition and character of consumption also varies on the basis of geographical location; villages in different states have different spending and consumption patterns.
Because of differences in rural consumers and villages, it is impossible to treat rural consumers as one homogenous group (Table 3.1). That is why, companies face problems while marketing to rural consumers.
Clearly, the rural consumer cannot be typecast. There are differences based on geographic, demographic and psychographic variables. This implies that companies must market products creatively, targeted to serve deeply felt consumer needs. These needs can be understood by understanding the rural marketing environment.
The Rural Marketing Environment:
The rural marketing environment is marked, among other things, by lack of infrastructure, which has a profound impact on rural consumption patterns. Issues related to electrification, transport, availability of water and communications are discussed in this article with their marketing implications.
Problem # 2. Rural Electrification:
There is a great push for rural electrification by the government. It has created a company, the Rural Electrification Corporation (REC), with the mission to facilitate availability of electricity for rural and semi-urban population and to finance and promote power projects, according to its website. According to central government figures published in The Hindu (2017), 591,685 out of 597,464 census villages (or 99 percent) have been electrified. The definition of ‘electrification’ includes only the provision of the electricity line to that point, not actual continuous access.
So even if a few houses in a village receive only a couple hours of electricity a day for a few days in the year, the village is still deemed to be electrified. Such figures are therefore misleading. However, the situation on the ground is quite different – supply remains erratic in most of the small towns and villages.
The Census of India 2011 shows that close to 43.2 percent of India’s rural households continue to depend on kerosene for lighting, while even today 0.5 percent of its population or about 897,760 households do not have access to lighting at all. It further shows that villages continue to depend on kerosene and firewood for their cooking and heating – 62.5 percent of rural households depend on firewood for cooking.
As a consequence of this:
i. Demand for electrical goods and appliances is low in rural India.
ii. Demand for processed foods that require refrigeration, chocolates and ice creams will remain low as they cannot be stored by retailers.
iii. There is a need for innovative products that do not depend on regular supply of electricity.
iv. Demand for batteries and generators is high.
Problem # 3. Rural Transport:
It is estimated that about 46 percent of the villages are connected by all-weather roads, while 54 percent are inaccessible during rainy seasons. Public transport system is quite poor, with private operators providing whatever they can. According to the National Transport Policy Committee (NTPC), fair weather roads connected only 55 percent of villages.
Planning Commission estimates that the percentage of connected habitats varies from 30 percent in many states to above 90 percent in others. The report prepared by Working Group on Rural Roads (2011) notes that there is growing empirical evidence that links transport investment to the improved well-being of the poor and, therefore, the lack of roads hurts them directly. It is also a hindrance to rural marketing. Low transport connectivity leads to higher poverty levels.
This aspect of rural environment results in the following:
i. Bicycles are very popular because of short distances and bad roads.
ii. Where roads are better, the ownership of motor-vehicles increases.
iii. There will be a shift from non-motorized vehicles to motorized ones as road connectivity increases. Rugged cars are preferred that can survive on bad roads.
iv. Distribution of goods has to be done through innovative ways as formal transport does not exist.
v. As bad roads cause damages to vehicles, there is a need to provide repair and after-sales service to vehicle owners in rural areas.
Problem # 4. Rural Communications:
Villages in India have suffered from the lack of connectivity for decades. Newspapers reach certain rural areas one or two days after their publication. Though rural issues are generally ignored by newspapers, the increase in circulation of local language newspapers shows that there is a slight uptake in rural readership. TV penetration in rural areas is around 45 percent, but is rising.
The real communication revolution in villages is being brought about by mobile phones. Landline telephones, which were earlier the monopoly of the government, were a rarity in villages. With the privatization of the sector, rural telephony has increased, especially with mobile phones. Table 3.2 shows the Telecom Regulatory Authority of India (TRAI) figures up to 28th February 2015.
The table shows the stark differences in the levels of telecom penetration in urban and rural areas. The urban tele-density was 149.25 while rural tele-density was just 47.16, showing the unbalanced growth in telecoms in India since independence. But now things seem to be improving; the monthly rural growth rate of 1.11 percent is nearly double that of 0.69 percent in urban areas.
This shows a growth opportunity for companies in rural markets, such as:
i. Increased growth of phones in rural areas means that consumers can interact with companies.
ii. As smartphones become cheaper and easily available, rural consumers can be reached by companies and get an exposure to products and advertising messages.
iii. Apps for rural markets, such as for micro-payments, make it easier for people to transact.
iv. Apps help rural people in accessing markets, thereby leading to increase in incomes, which, in turn, will spur consumption demand.
The lack of infrastructure shows that rural markets remain deprived and isolated. This is one of the reasons why they remain bound together by tradition and culture. Even Internet accessibility is a problem in many areas. Data cards do not work well. In many areas, even to load Gmail basic HTML version, it takes more than two minutes. Many areas do not get a signal at all. It is no wonder that despite advances in education and communications, the society remains deeply traditional. An understanding of the rural consumer, thus, requires an understanding of the rural society.
Problem # 5. Water Availability:
Securing even the minimum amount of water for everyday needs is a daily struggle for many people in rural India. Public water supply is usually missing, so rural households depend on groundwater for 85 percent of their needs. Women spend hours, or even the entire day, just fetching water for their families, according to a report by the National Commission for Women (2005).
In other regions, water quality has deteriorated due to groundwater pollution, leading to rampant spread of water-borne diseases such as cholera, diarrhoea and typhoid. In some parts of the country, fluoride and arsenic are the other major pollutants. According to the Central Groundwater Board, the two pollutants together affect nearly 80 million people.
It is estimated that India loses 2-4 percent of its GDP every year because of unclean water.