1. Rural and Urban Markets: A Comparative Analysis
Chapter IV
Rural and Urban Markets: A Comparative Analysis

2. Learning objectives of this chapter:
Understand the factors that differentiate urban and rural markets and create rural-urban divide
Comprehend the consequent differences in urban and rural consumer behaviour

3. Factors Causing Urban-Rural Divide
Contributing Factor (in %age)
Infrastructure
42%
Income
31%
Lifestyle
19%
Interaction 8%
Source: Rajesh K. Shukla, “Rural Markets: The Next Frontier for Manufacturers”,
Rural Asia, BIMTECH, 2005

4. Parameters Differentiating Urban and Rural Markets
Infrastructure
Socio-cultural background
Accessibility
Media Reach & Habits
Rural Sales Promotion
Nature of Competition

5. Media Habits in Rural and Urban Areas
TV Viewing
Female viewing
39%
28%
Satellite channels
20%
Around 2%
Newspaper readership
40%
32%
Reading any magazine 8% 6%
Cinema habits
Going to cinema
54%
43%
At least once a month
12%
11%
Radio listening
Radio
25%
36%
AIR
18%
26%
Vividh Bharti
15%
23%
Source: “The Rural: At the Cusp of Change”, Rural Asia th May 2005

6. Reach of Media in Rural Areas
Urban : Rural Penetration
TV sets per 1000 individuals
146:61
Press
3:1
Television
2:1
Satellite Television
5:1
Cinema
Internet
27:1
Radio (VB + PC + FM)
1.3:1
Source: NRS-2003, in Phadnis A., “The two-in-one nation!”, The Hindu Business Line, 2005

7. Differences in Consumer Behaviour in Rural and Urban Markets
Need based Buyer Behaviour of Rural Consumers
b) Conscious Decision-making by Rural Consumers
c) More Value for Money Decision making
d) Consensus Decision Making by Rural Consumers
e) Innate Resistance to Change amongst Rural Consumers
f) Different Lifestyle and Product Usage Environment
g) Different Perception with regard to Marketing Stimuli

8. Summary: Points to Ponder
It is not only the income alone, but also host of other factors that distinguish rural markets from urban market.
Difference in the availability of the infrastructure is the major difference between the two markets.
Differences in socio-cultural background of consumers in two markets significantly differentiate the consumer’s behaviour in these two markets.
The challenges in distributing goods and services in the rural market justify the requirement of separate rural marketing effort and approach.

9. Summary: Points to Ponder
The media reach and media habits are very different in urban and rural markets; creating need for different promotion strategies for the two markets.
Nature of competition, response towards pricing and branding are also quite different in the two markets.
There are significant differences in the two markets regarding: lifestyle of the consumers and their desire to change, How they perceive the marketing stimuli? How they decide to buy? Why they buy? The environment in which product is used.
Overall consumer behaviour and consumer decision-making process are significantly different in the urban and rural market, which justify approaching the rural market and rural consumer in a manner different from the urban one.