The rural market in India is a huge unorganized market as well as much of it is still untapped in various domains. A huge scope for services exists in these markets where still major companies have directed their focus on. Since major of Indian population exists in rural segment, prospects of huge demand exists for the products offered by various companies or service providers.
But the demand and supply pattern in the rural segment is majorly different than those in the urban segment.
This difference is due to vast difference in:
• Income level
• Expenditure capacity
• Taste and preferences
• Educational level
• Social, Cultural and environmental
These differences results in Gaps between Service provider and the consumers/customers in both the market segments. Hence a service provider clearly needs to understand these gaps and the strategies to fill these gaps effectively. Therefore the mantra for successful strategy implementation in rural markets for service delivery is “Think Global Act Local”
Analysis of Services Requirements in Rural Markets:
Following Service areas have great potential in rural markets:
1. Agricultural consultancy:
Rural customers require proper consultancy services about the best methods, timings and seasons, technology, tools, prices and best markets for selling their farming products.
2. Banking, microfinance and loan facilities:
The rural market has huge potential for banking services for providing following facilities at affordable prices:
• Agricultural loans
• Educational loans
• Housing loans
• Savings accounts and safe deposits
• Automobile loans
• Personal loans
3. Healthcare:
There is a huge demand for medical and health facilities in rural markets as there is large population in India that resides in Rural areas and lack proper facilities for proper health care. The availability and location of these services is of great concern as most of the areas either do not have any or many rural and remote areas needs to be dependent on very few and distantly located Hospitals.
4. Telecomm services:
Due to increased awareness and improved telecomm infrastructure across India, the demand for telecomm (Fixed and wireless) and internet services have increased drastically. Even the government’s policies for reduced tariffs, call rates, lesser mobile handset prices and private participation involvement has helped in increasing the level of competition, continuous improvement in technology and thus has resulted in the growth of the rural telecomm market. Hence the rural market has now become attractive and lucrative for many National and Global telecomm companies, who now are focusing more on this huge untapped market.
5. Automobiles Services:
There has been a huge increase in the number of two wheeler, four wheeler and Agricultural tools and vehicles in past few decades because of reduction in prices and government support to the rural population. This has give rise to a new business for providing maintenance and repair services to these vehicles with more attractive service quality, location and availability. This segment has huge potential in the upcoming trends of services to the rural markets.
6. T.V. Channels Services:
Due to the increased awareness, arenas of interest, leisure requirements, and number of entertainment options like televisions and computers due to reduced & affordable prices, the demand for entertainment services like T.V. entertainment channels have increased. This provides a huge potential for cable and Direct to Home services providers to tap the rural markets to meet their demands. Many companies have already gained profits by targeting rural markets which include Airtel (DISH TV), Reliance (BIG TV), and Tata (SKY).
7. Travel and reservation Services:
The travel and reservation booking and organizing services for booking train, busses, taxies and tour consultancy has also been observed to create a huge demand in last few decades as more and more rural population need to mobilize for business and personal needs. Hence these services hold a huge potential for service providers.
8. Low Cost Hotels:
Due to increased mobilization because of business and personal needs, there is also increased demand for hotel and lodging services to the travellers but majorly driven by the pricing of such services and facilities. Hence provide a great platform for the service providers to focus on these demands to capture a big untapped market.
9. Event Managements:
The rural population are majorly involved in celebrating and organizing festivals, which require lightning arrangements, venue decoration, food, lodging, transportation, catering and event planning etc. for:
i. Family gatherings, Marriages, engagements, birthday parties,etc.
ii. Festivals like Diwali, Onam,Christmas, lorhi, Eid, Dushera, Kannada Rajamahotsava, Navratri, Garba and Dandia mahotsava etc.
iii. Religious/Caste based events like poojas, various ceremonies, etc.
Hence these services also have great potential to meet the rural customer’s demand for even management.
10. Beauty Parlours:
As there has been major improvement in the quality of life style and increased awareness among the rural customers (especially females), there has been great demand observed for beauty products and services. A huge increase in the demand for FMCG products like shampoos, beauty soaps, beauty creams, cosmetics, etc. has also been observed lately in rural India. This market is still dominated by unorganized and local players who lack adequate tools, methods, skills, process, technology and beauty products to meet the demand of rural population. Hence focusing on this segment would be a profitable business for any company.
11. Affordable Movie theatres:
Till now the entertainment service providers for movie theatres at affordable prices in rural markets are dominated by local and unorganized players who lack proper facilities and infrastructure as well as quality delivered. Focusing on this market is a good profitable business
12. Educational and Career consultancy:
The rural markets lack adequate and quality educational services which are majorly catered by government agencies and bodies. But due to lack of proper infrastructure, expertise, knowledge, talent, funds and participation of the service provider, this sector is unable to meet the desired level of service expectation of the rural customer for career building. Hence there a great business opportunity for any company if it is able to fill this gap effectively and would also be imparting its social responsibility to the growth of the society and country.
With all the above mentioned arenas for Services in rural markets, there is a huge demand and growth opportunities that exists to be exploited by the companies which can make best market expansion and profitability by investing in Rural India.
7 P’s analysis of Rural and Urban Marketing
The most potential among all the above described services is the Rural Banking Service. Lets us examine this sector on the basis of difference between Rural and Urban markets on the grounds of 7 P’s of Marketing.
1. Product:
The Products (Services) provided to Rural customers differ from that of urban customers as rural segment have more demand for agricultural loans, lower limits for savings accounts, microfinance, lower amount of loans for education, automobiles, small & medium scale industry and personal loans. The duration for these loans, schemes and capacity also differs from that of urban customers.
2. Price:
The price of these services as expected by the rural customer is lesser as compared to urban customer due to the fact that income level as well as savings pattern of the rural customer are lesser. The risk appetite and affordability is also a matter of concern for the rural markets as they are lesser as compared to urban markets.
3. Place:
The place of availability is of very intense concern in rural markets due to lack of adequate and proper transportation facilities in rural India. The rural customers face major problems with the availability of service location in vicinity and thus are reluctant to derive benefits due to lack of travel support.
4. Promotions:
The promotional strategies in rural marketing needs to be more personalized and simple as compared to the urban markets which needs to reach more remote areas as rural markets lack more in means of communications and technology. The promotional tools also need to be customized according to the regional languages so that it clearly states the service details and benefits.
5. Physical evidence:
The physical evidence provided to the rural segment differ from that of the urban markets as they need to be more simple, colourful, artistic and personalized as most of the rural customers lack adequate education or low educational background and thus need to be clearly explained about the features and benefits of the services thus provided.
6. People:
The people and staff appointed for the service delivery for rural banking services needs to be properly selected, recruited and trained to properly understand the rural customer’s needs and requirements. They need to be made well aware of the regional, cultural, social, economic and technological needs of the customers. The employee involvement in the service delivery to the service (banking) sector is more in rural markets than urban markets as the employees need to constantly educate and assist the customers about the service process, price, product and simultaneously communicate the benefits as well as the precautions and risks involved with the services being offered.
7. Process:
The process of rural banking differs from that of urban banking sector as it needs to be more simple and thus less documentation involved and more customized as per the economic capacity of the customers. The process of banking in rural markets is observed to be more affected by the Government policies and rural customer psychology driven. Hence the process needs to be more frequently reviewed and flexible to accommodate the changes due to these factors. The process also need to be timely revived and revised to remove any complexity arising due to inclusion of new economic policies and changing demand & supply patterns.
Strategic recommendations for Rural Banking services
To enter into the Rural Markets, A global company needs to keep in mind the following Do’s and Dont’s before making strategic decisions about the Service quality:
Do’s for Rural Banking:
• The focus of the service quality should be customer driven and hence need to be customized as per the rural requirements of customers having low income group as major target group. Hence more of benefits driven by the customer from savings schemes should be included in the Services provided through accounts maintenance with the banks.
• The service providers should be clearly aware of the local languages, culture and behaviour of the rural customers. Thus the inclusion of local employees would be beneficial for the banks to deal effectively with the customers.
• The banks should be able to provide these banking services such as loan and microfinance services at lowest and most profitable interest rates with flexible and customized repayment options to the customers. The Bank need to clearly understand the best possible location for its setup and operations as the location and facility layout of the service provider plays a very significant role in rural banking because the rural areas do not have sufficient transport facilities like urban markets.
• The customers should be made aware clearly about the services provided by the bank through effective physical evidence and promotions that should be made as simple as possible to the rural customers to understand properly. The assistance should be provided regularly to the customers to educate them about the current as well as prospective facilities and benefits derived from the banking services provided.
Don’t’s for the Rural Banking:
• Do not put much focus on providing any complex and unessential services like corporate loans and credit card facilities as still the market demand for such services are much lesser as compared to other banking services.
• Do not use any illegal or unethical means for repayment of loans and other services as this would result in more of customer dissatisfaction and grievance which would harm the brand equity and image of the banking company
• Do not provide services to the customer before properly educating the customer about the details product and process of the service so as to avoid confusion and discrepancy.
• Do not focus on the short term profitability but the bank needs to focus on the building long term relationship with the customer by putting more concentration on:
o Service quality
o Service recovery
o Reach to the customer and building prospective future customers
o Improving market share
o Building Brand loyalty
o Providing new facilities as per the customer needs and requirements
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