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African Journal of Agricultural Marketing ISSN: 2375-1061 Vol. 3 (1), pp. 188-192, January, 2015. Available online 
at www.internationalscholarsjournals.org © International Scholars Journals 

 

Author(s) retain the copyright of this article. 

 

 

 

Review 

 

The rural market and its untapped Potentials for 
marketers 

 

Ranvid Kumar, Amartya Chandra and Ajith Sanjay 
 

Department of Business Management, University of Delhi, New Delhi, India. 
 

Accepted 14 November, 2014 
 

Rural markets are gold mines paved with thrones. With mammoth size of 833 million populations residing in 
640867 villages, rural India offers huge untapped potentiality for any marketer. There is wide disparity in 
village population range from less than 200 to more than 10000. The main occupation of majority of rural 
population is agriculture and allied activities that signify main source of income. Rural consumers spend 
more on food items as against urban counterparts who spend more on non-food items. About 54 percent of 
rural households possess telephone, 46 percent possess bicycles and 33 percent possess television. 
Central and State governments invest massive amounts on rural development through several 
programmes. At this juncture, a modest attempt is made in this paper to comprehend rural market 
environment through rural population growth, villages by population range, occupation, income and 
expenditure pattern of rural population, rural households by possession of assets and rural development 
programmes. 
 
Key words: Expenditure, hinterland, income, mammoth, villages. 

 
 
INTRODUCTION 
 
India is a country of villages. Rural markets are charac-
terized by small population, distantly scattered, poor 
infrastructure, communication and transportation, low 
literacy, stumpy media reach, low standard of living, and 
especially low and irregular income levels. Many 
corporates have been trying to get a grip on rural market 
by facing the  challenges  like  how  to  make  the product  
 
 
 
 
 
*Corresponding Author. Email: prof.rankumar@du.ac.in 

 

 
 
 
 
affordable, how to penetrate villages with small 
populations, connectivity, language barriers and spurious 
brands (Ramkishen, 2005). Despite these challenges, 
factors such as increasing rural income, expenditure and 
life styles, declining urban demand and urban market 
saturation, and government concentration on rural 
development programmes compel marketers to find 
potential niches in the hinterland. It is inevitable to any 
marketer to access rural India as it comprises mammoth 
size of 833 million population living over 640867 villages. 
Under these circumstances comprehending rural market 
milieu is perceived appropriate. 

Favourable demographics   such  as  64  percent of the 
 



 
 
 
 
 
Table 1. Rural Urban Proportion-1901-2011.      

 

        
 

  
Yr 

Total population Rural population Proportion in total Urban population Proportion in total  
 

  (in million) (in million) (%) (in million) (%)   
 

     
 

1901 238.40 212.54 89.15 25.86 10.85   
 

1911 252.09 226.15 89.71 25.94 10.29   
 

1921 251.32 223.23 88.82 28.09 11.18   
 

1931 278.98 245.52 88.01 33.46 11.99   
 

1941 318.66 274.51 86.15 44.15 13.85   
 

1951 361.09 298.65 82.71 62.44 17.29   
 

1961 439.23 360.30 82.03 78.93 17.97   
 

1971 548.16 439.05 80.10 109.11 19.90   
 

1981 683.33 523.87 76.66 159.46 23.34   
 

1991 846.42 628.70 74.28 217.72 25.72   
 

2001 1028.61 742.49 72.18 286.12 27.82   
 

 2011 1210.57 833.46 68.85 377.11 31.15   
  

Source: Census of India. 
 

 
Table 2. Villages by population size class – India. 

 
 Population size Number of Proportion in total Total rural Proportion in total 
 class inhabited villages (%) population (%) 
 Less than 200 82151 13.75 8179551 0.98 
 200-499 114732 19.20 39685424 4.76 
 500-999 141800 23.73 103321330 12.39 
 1000-1999 139164 23.29 197536058 23.69 
 2000-4999 96428 16.13 288773884 34.64 
 5000-9999 18652 3.12 123877458 14.86 
 10000 and above 4681 0.78 72375147 8.68 
 Total 597608 100.00 833748852 100.00 

 
Source: Census of India, 2011. 

 

 
population in the working age category, increasing 

urbanization, rising number of nuclear families (which 

means multiple washing machines, air-conditioners and 

TVs), rising disposable incomes, falling prices, easier 

access to financing and growth of organized retail attract 

new players into the Indian rural market space. 
 
 
Rural Urban Proportion-1901-2011 
 
Since 1901, the growth and proportion of rural population 
are moving in opposite directions in India. The proportion 
of rural population in the total population is diminishing 
gradually in the pace of urbanization. However, the rural 
India is very big in size than any country’s total population 
in the world except China. It is significant to understand 
decadal changes in rural and urban proportions in the 
total population. 

Table 1 depicts that the absolute number of rural 

population has increased to 833 million in 2011 from 213 

million in 1901. But  the  poportion in the  total  population 

 

 
has decreased to 68.85 percent in 2011 from 89.15 

percent in 1901 that resembles the progress of 

urbanization. In case of urban population, both absolute 

and proportion are moving in the increasing direction. The 

percentage of urban population in the total population has 

reached 31.15 in 2011 from 10.85 in 1901. A three-fold 

raise in urban population proportion reflects the pace of 

development in the country (Table 1). 
 
 
Villages by population – India 
 
The populations in green patches vary in the hinterland. 
The size of the population is an important determinant to 
plump a marketer whether to tap it or not. So far, the 
hinterland is a neglected area by many marketers due to 
its low village populations and no parity concern but now 
it is inevitable market on account of several reasons.  

The number of inhabited villages shown in Table 2 

represents the unmerged portions of villages which are 

outside the urban areas. There are  as  many  as  597608 

Ranvid et al.       188 



 
 

 
 
Table 3. Occupational pattern of rural population. 

 

Occupation 
Proportion of total rural population 

 

(%)  

 
 

Agriculture 50 
 

Agricultural labour 27 
 

Business 10 
 

Non-agricultural labour 9 
 

Salary earners 2 
 

Not gainfully employed 2 
 

Total 100 
  

Source: Census of India, 2001. 
 
 

 
Table 4. Income generation in rural areas. 

 

Source of income 
Proportion of total rural income 

 

(%)  

 
 

Agriculture 59 
 

Agricultural wages 16 
 

Business and craft 9 
 

Non-agricultural wages 7 
 

Salaries 3 
 

Current transfers 2 
 

Others 4 
 

Total 100 
  

Source: Census of India, 2001. 
 
 
 
inhabited villages out of total 640867 villages in India. 

Among them 82151 villages have a population size less 

than 200. Very few people (0.98 percent) are living in this 

category of villages. The highest percentage of villages in 

this range are located in Arunachal Pradesh (29.40) 

followed by Himachal Pradesh (13.16) and Meghalaya 

(12.82). There are 114732 villages in the population 

range of 200-499 and holds 4.76 percent of the total rural 

population. The highest number of villages (141800) is 

reported in the population size 500-999 and claims 12.39 

percent of the total rural population. Nearly half of the 

rural population of India is residing in 115080 villages with 

population more than 2000 but less than 10000. The 

highest percentage of rural population (34.64) is noted in 

the range 2000-4999. But major portion of rural 

population is residing in village size groups of 1000-1999 

and 2000-4999. Villages having more than 10000 and 

above population represent 8.68 percent of the total 

population. With 92.21 percent Kerala represents highest 

population living in villages in this range. As compared to 

Census 2001 data, there is an increase in the number of 

villages in the population size groups 1000-1999, 2000-

4999, 5000-9999, and 10000 and above while decrease in 

number of  villages  in less than 500 and 500-999 ranges. 

189          Afr. J. Agric. Mark. 
 
 

 
Occupational pattern 
 
Predominance of agriculture is the prime characteristic of 
Indian rural economy. Now it is taking a new stride. The 
National Sample Survey Organisation (NSSO) data show 
that during 2004-05 to 2009 -10, rural construction jobs 
rose to 88 per cent, while the number of people employed 
in agriculture fell from 249 to 229 million (BL Bureau, 
2012).  

Table 3 discloses that the main occupation for majority 
of rural population is agriculture and allied activities. Half 
of the rural population own or lease land and cultivate it 
for their livelihood. Another 27 percent are dependent on 
these cultivators for jobs as agricultural labourers. Thus, 
a total of 77 percent of rural population solely depend 
upon only land for their living and land is the main source 
of their income. There are others who are engaged in 
businesses like petty shops or are itinerant merchants 
besides a small section of salary earners like teachers, 
health workers and village-level officials. 
 
 
Income generation 
 
The prosperity of rural areas, to a large extent, depends 
on the progress of agriculture and related activities. 
Nearly six lakh villages are busy rejoicing bountiful 
harvest after good monsoons, rapidly supporting 
minimum support price (MSP) for crops and steady cash-
flow from the government’s rural employment guarantee 
schemes (Rashmi, 2014). A robust increase in rural 
income is also due to rising non-farm employment 
opportunities and government’s rural focus through 
employment generation schemes.  

Table 4 divulges that 75 percent of rural income is 
generated from agriculture and agriculture-related activi-

ties. On average 9 percent a year increase in MSP since 
2007-08, rice-growing farmer’s income has increased 

nearly 50 percent in the last five years. The rural income 
is not only about farming but there are others supporting 
the economy – teachers, weavers, artisans and many 

others. A rationalization and expansion in income tax 
slabs in Union Budget 2014 puts significant money in the 

hands of salary earners. 
 
 
Expenditure Pattern 
 
There has been a notable shift in rural consumption; from 

necessities to discretionary goods. From buying tractors 

and bikes to fairness creams to noodles, rural India led 
consumption party – offering hope to corporates in the 

doldrums. Recent data from the NSSO show that rural 

consumption expanded at roughly 8.6 percent a year 

between 2004 and 2012 (Aarati, 2014). In addition, 

migrants from villages to urban areas, who benefitted 

from job opportunities  in  infrastructure  and  construction 



 Ranvid et al.       190      
 

Table 5. Absolute and Percentage break-up of average MPCEMMRP
*
 by Item Group, India.   

 

     
 

 
Item group 

Monthly per capita expenditure (Rs.) Percentage of total MPCE  
 

 
Rural Urban Rural Urban  

 

   
 

(1) (2) (3) (4) (5)  
 

 Cereal and cereal substitutes 154 175 10.8 6.7  
 

 Pulses and their products
**

 42 54 2.9 2.0  
 

 Milk and milk products 114 184 8.0 7.0  
 

 Edible oil 53 70 3.7 2.7  
 

 Egg, fish and meat 68 96 4.8 3.7  
 

 Vegetables 95 122 6.7 4.6  
 

 Fruits 41 90 2.8 3.4  
 

 Sugar, salt and spices 76 94 5.3 3.6  
 

 Beverages, refreshments, processed food
#
 113 236 7.9 9.0  

 

 Food: Total 756 1121 52.9 42.7  
 

 Pan, tobacco and intoxicants 46 42 3.2 1.6  
 

 Fuel and light 114 177 8.0 6.7  
 

 Clothing and footwear
$
 100 167 7.0 6.4  

 

 Education 50 182 3.5 6.9  
 

 Medical 95 146 6.7 5.5  
 

 Conveyance 60 171 4.2 6.5  
 

 Consumer services excl. conveyance 57 147 4.0 5.6  
 

 Misc. goods, entertainment 76 152 5.3 5.8  
 

 Rent 7 164 0.5 6.2  
 

 Taxes and cesses 4 22 0.2 0.8  
 

 Durable goods 65 139 4.5 5.3  
 

 Non-food: Total 674 1509 47.1 57.3  
 

 All Items 1430 2630 100.0 100.0  
  

 

*
MPCE MMRP = Modified Mixed Reference Period Monthly Per Capita Expenditure. 

**
includes gram; 

#
 includes purchased cooked meals;

$
 

excludes tailoring charges. Source: NSSO 68
th

 round: Key Indicators of Household Consumer Expenditure in India, 2011-12, 20 June 2013. 
 
 
 
projects, increased remittances to their families in rural 
India, which boosted consumption (BL Bureau, 2012). 

The 68
th

 round of NSSO on Household Consumer 

Expenditure is primary source of data on various 
indicators of level of living, pattern of consumption and 
well-being of households. As per the data in Table 5, for 
an average rural Indian, food items account for 52.9 
percent of the value of consumption during 2011-12. This 
includes 10.8 percent cereals and cereal substitutes, 8 
percent milk and milk products, 7.9 percent beverages, 
refreshments and processed food, and 6.7 percent 
vegetables. Among non-food item categories, fuel and 
light for household purposes (excluding transportation) 
account for 8 percent; clothing and footwear, 7 percent; 
medical expenses, 6.7 percent; education, 3.5 percent; 
conveyance, 4.2 percent; other consumer services 
(excluding conveyance), 4 percent, and consumer 
durables, 4.5 percent. Rural people spend fewer amounts 
than urban people on all food and non-food items except 
pan, tobacco and intoxicants item group.  

The Modi government’s recent decisions such as a 

meager 6.7 percent allotment for rural development and a 

 
 
 
low 3.8 percent increase in MSP in the Union Budget 

2014, reforms in urea prices and targeted subsidies, 

revamp NREGA to prevent misuse, and the looming 

possibility of drought adversely affecting rural spending 

power. 
 
 
Households by possession of assets 
 
About one in every two rural households now has a 
mobile phone. Even in India’s poorest states such as 
Bihar and Orissa, one in three rural households has a 
mobile phone.  

Table 6 portrays that 54.3 percent of rural households 

possess telephone followed by 46.2 percent households 
have bicycles and 33.4 percent households owned 

television. Similarly, 14.3 percent rural households have a 
two-wheeler. Communication, transportation and 
entertainment are priorities for rural people. A notable 

amount of radios, computers and cars are also owned by 
rural Indians. Bicycles and unspecified assets are more in 

rural areas than urban areas. 



191          Afr. J. Agric. Mark. 
 
 
 

Table 6. Households by possession of assets – India. 
 

Type of Asset 
Percentage of Households 

 

Total Rural Urban  

  
 

Total number of households 
(246,692,667) (167,826,730) (78,865,937) 

 

100.0 100.0 100.0  

  
 

Radio/Transistor 19.9 17.3 25.3 
 

Television 47.2 33.4 76.7 
 

Computer/Laptop – With Internet 3.1 0.7 8.3 
 

Computer/Laptop – Without Internet 6.3 4.4 10.4 
 

Telephone 63.2 54.3 82.0 
 

Telephone/Mobile Phone – Landline only 4.0 3.1 5.9 
 

Telephone/Mobile Phone – Mobile Phone only 53.2 47.9 64.3 
 

Telephone/Mobile Phone – Both 6.0 3.3 11.7 
 

Bicycle 44.8 46.2 41.9 
 

Scooter/Motorcycle/Moped 21.0 14.3 35.2 
 

Car/Jeep/Van 4.7 2.3 9.7 
 

None of the specified assets 17.8 22.9 7.0 
  

Figures in parentheses ( ) are absolute in number. Source: Census 2011 – Provisional Population Totals  
– India. 

 
 
 
Rural development programmes 
 
The Five Year Plans have witnessed massive 

investments by the Central and State governments in 

rural areas in a number of developmental programmes. 

Some of these programmes which contributed 

substantially to the incomes of rural people and created 

considerable impact are: 
 
1. National Rural Employment Guarantee Act (NREGA): 
With the objective of providing 100 days guaranteed work 
for rural households, NREGA is launched on February 2, 
2006. The ensured employment generated is from works 
that raise land productivity. The daily wages under the 
scheme vary from Rs 153 in Meghalaya to Rs 227 in 
Chandigarh (Rashmi, 2014). Nearly 27 percent of rural 
households availed themselves the employment under 
this scheme in 2009-10 (BL Buereau, 2012).   
2. Swarnjayanti Gram Swarozgar Yojana (SGSY): 
Through this scheme rural poor get self-employment. 
Poor families (swarozgaris) above the poverty line are 
provided with income generating assets through a mix of 
bank credit and government subsidy. The scheme 
involves organization of the poor into Self Help Groups 
(SHGs) build their capacities.  
3. Indira Awaas Yojana (IAY): Being an independent 
scheme since 1996, IAY provides assistance for 

construction / upgrading of dwelling units to the Below 

Poverty Line (BPL) rural households, with special 

emphasis on SCs, STs and freed bonded labour 

categories. A maximum assistance of Rs 35,000 per unit 
for construction in plain areas and Rs 38,500 per unit for 

hilly/difficult areas is provided. For upgrading a dwelling  

 
 

 
unit for all areas Rs 15,000 is provided. The funding of 
IAY is shared between the Centre and State in the ratio of 
75:25.  
4. National Social Assistance Programme (NSAP): The 
scheme provides social assistance benefit to poor 
households in the case of old age, death of primary 
breadwinner and maternity.  
5. Integrated Watershed Management programme 
(IWMP): The three area development programmes, 
namely, Integrated Wasteland Development Programme 
(IWDP), Drought Prone Area Programme (DPAP) and 
Desert Development Programme (DDP) are integrated 
and consolidated into a single programme known as 
IWMP during the Eleventh Plan for optimum utilization of 
resources and sustainable outcomes.   
6. National Land Records Modernization Programme 
(NLRMP): NLRMP is a major reform initiative that 
concerned with computerization, updating and 
maintenance of land records and validation of titles. This 
facilitates valuable and comprehensive database for 
planning developmental, regulatory and disaster 
management activities by providing location-specific 
information, while providing citizen services based on 
land records data.  
7. Intensive Agricultural District Programme (IADP – 
popularly known as Package Programme)   
8. Intensive Agricultural Area Programme (IAAP)  
9. High-Yielding Varieties Programme (HYVP – Green 
Revolution)   
10. Small Farmers Development Agency (SFDA)  
11. Marginal Farmers and Agricultural Labourers 
Development Programme (MFAL)   
12. Integrated  Tribal  Development   Programme   (ITDP)  



Ranvid et al.       192 
 
 

 
13. Hill Area Development Programme (HADP)   
14. Operation Flood I, II and III (White Revolution)  
15. Sericulture Development  
16. Fisheries Development (Blue Revolution)  
17. Integrated Rural Development Programme (IRDP)  
18. Sampoorna Grameena Rozgar Yojana (SGRY) and 

several others.  
 
While the above programmes focused mainly on agri-
culture and allied activities, there have been investments 
in other programmes devoted to the development of rural 
people. They include improvement in health, education, 
sanitation, adult education, recreation, women develop-
ment, and so on and have made considerable impact on 
the life styles of the masses by exposing them to 
modernization, reducing the drudgery of their work, and 
adding a modicum of dignity to their lives. Infrastructure 
facilities like road and communications network, rural 
electrification, public distribution system, cinema, 
television coverage, and the like have also received 
considerable attention in rural areas in the post-
independent era (Sarangapani, 2008).  

From FMCG companies to automobile makers, to those 

manufacturing small appliances, most consumer sectors 

have seen rural demand for their products move into 

higher gear due to rising support prices for crops, 

giveaways such as the NREGA and a significant 

expansion in agricultural credit routed through banks 

(Aarati, 2014). 
 
 
Initiatives to capture untapped rural potential 
 
Many FMCG and durables companies have initiated 
programmes to capture the untapped potential in rural 
India. For instance, FMCG major HUL has undertaken 
two projects – Bharat I and II – to take its products 
deeper into the rural areas. This is in spite of the fact that 
they are pioneers in rural marketing in India. Henkel Spic 
India has started a project called Hariyali Safar, or ‘green 
journey’, aimed at rural marketing. Maharaja Appliances 
Ltd. has launched a range of ‘no frills’ home appliances 
meant especially for the rural and semi-urban markets. 
Sony has entered the rural market without reducing its 
prices or even offering lower-end models for potential 
buyers. Mobile handset companies and mobile service 
providers have also started wooing rural consumers in a 
big way. After ‘Project Double’, which increased its rural 
penetration by 2.5 times over the past two years, Dabur 
India has launched a new initiative called ‘Project Core’ to 
expand its distribution footprint in the chemist channel. 
The FMCG company expects to increase its chemist 
coverage from 55,000 to 75,000 in the phase I, with an 
investment of Rs. 15 crore, and then to 125,000 chemists 
over the next few years. Rural marketing is inevitable for 
retailers. When retailers in urban areas are struggling to 
maintain their growth, rural areas offer huge potential for 

 

 
 
 
 
growth of organized retail sector. This is obvious from the 

fact that when giants like India bulls, Subhiksha and 

Spencer are forced to wind up their operations in some 

cities, companies such as Godrej and Kisan Sansar, 

which have focused on rural areas, are able to perform 

well. All FMCG and durables players are confident that 

these strategies may not bring quick results in the short-

run period but gain momentum in the long-run. 
 
 
Conclusion 
 
Factors such as increase in rural income, improved rural 
infrastructure and urban market saturation drive 
corporates to the green patches of hinterland. Rural 
population has increased in absolute number but 
decreased in proportion since 1901. Rural India lures 
marketers with mammoth population of 833 million. This 
massive population is living in villages range from less 
than 200 to more than 10000 that signifies the size of 
discrete market. Agriculture and allied activities are the 
main occupations which act as prominent source of 
income. Central and State governments have contributed 
several programmes for the development of rural income. 
Rural consumer spends more on food items that include 
cereal and cereal substitutes, milk and milk products, 
beverages, refreshments, processed food, and 
vegetables etc. More than half of the rural households 
possess telephone besides a significant number of 
bicycles and television sets. By comprehending all these 
facts and figures, stakeholders of rural marketing are 
needless to say that they have to take precise decisions 
to capture substantial untapped potential of the 
hinterland. 
 
 
Conflict of Interests 
 
The authors have not declared any conflict of interests. 
 
 
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BL Bureau (2012). Rural Indian outpace urbanites in 

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Agricultural Marketing. Mumbai: Jaico Publishing 
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Rashmi P (2014). Shopping drought ahead. The 
Business Line. Sarangapani A (2008). A Textbook on 
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India – A Study of FMCGs. New Delhi: University 
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