In this article we will discuss about how marketing can remove separations between exchange and consumptions in rural areas.
Rural marketing cannot be understood without understanding the theory of market separations. According to this theory, producers and consumers are separate and marketing tries to remove the separations to cause consumption to occur. Seen in this light, marketing acquires quite a different meaning from the ideas perpetrated in popular literature.
Bartels (1968) has given a definition of marketing based on separations as follows:
“Marketing is the process whereby society, to supply its consumption needs, evolves distributive systems composed of participants, who, interacting under constraints—technical (economic) and ethical (social)—creates the transactions or flows which resolve market separations and result in exchange and consumption.”
Market separations keep rural consumers separated from producers, inhibiting them as consumers. Four kinds of market separations distinguish rural markets. These separations reduce considerably the applicability of modern marketing methods in such areas.
1. Spatial Separation:
It refers to the physical distances between producers and consumers. Rural markets are scattered and suffer from spatial separation as distances are large; many villages remain cut off from the rest of the country.
2. Temporal Separation:
It refers to the time it takes to reach rural consumers, which is usually large. It is the difference between production and consumption, or the time taken to service distant markets.
3. Informational Separation:
Media channels have a limited penetration in rural areas. Thus, rural consumers suffer from lack of information both as producers and consumers. As producers, they lack information relating to efficient production methods as well as market conditions, such as supply and demand that affect prices. As consumers, they lack information relating to products and brands, their use and availability.
4. Financial Separation:
Many rural consumers are poor. The lack of purchasing power, combined with lack of financial institutions, access to formal financial markets, credit and insurance, contribute to financial separation.
Bartels argued that one of the primary roles of marketing is to reduce or remove these separations and facilitate the process of consumption. “Whatever is done in the marketing process must contribute to the removal of these and other separations,” he wrote. Rural marketing has to be understood in this article. Unless companies take into account the nature of these separations found in rural environments, their efforts at marketing are unlikely to bear fruit.
Seen in this light, the role of marketing becomes not merely to provide goods and services but to also invest in institutions that reduce market separations. This considerably enhances the role of marketing in rural areas. Companies that have been successful in rural areas understand this and involve people both as producers and consumers. How do they do this is shown in Table 1.3.
In trying to remove market separations, rural marketing has to take up roles that are not envisaged in traditional marketing. Apart from supplying of goods and services, as many believe to be the role or marketing, it also means establishing infrastructure so that rural people can participate as producers in formal markets, thereby leading to income generation. This, in turn, turns them into becoming consumers in those very markets. Initiatives that keep the developmental aspect into marketing are the way forward.
For instance, the e-choupal initiative of ITC tried to remove market separations by providing information to the rural customer. The initiative empowered farmers by providing them information as producers and at the same time with goods and services for consumption. The e-choupal information kiosk is linked to the Internet and provides information on weather, agro-inputs, cropping patterns and other farming information to farmers. The information also empowered rural people as producers by increasing farm productivity, while at the same time building a relationship with the company.
The farmer who sells produce at ITC’s Choupal Sagar fetches a better price compared to selling at mandi. At the same time, the Choupal Sagar retail stores provide products that they need for consumption: farmers can shop using the cash earned from selling their produce. This is an example of how companies can fill the market separations to develop markets and build consumers over the long term.
We have analyzed some well-known rural marketing initiatives on the basis of the market separations they removed (Table 1.4). It is seen from Table 1.4 that only when a company tries to remove all four separations, it becomes very successful in rural areas. Companies that remove one separation (such as competing on price) may succeed for a while, but will find its advantage erode away after some time.
A company that seeks to remove all four separations has many tasks ahead of it. It has to be a multi-pronged effort, right from removing problems in designing low-cost goods to communication and distribution.