Academic journal article IUP Journal of Management Research

Rural Marketing Mix in Bhutan: An FMCG Perspective

Academic journal article IUP Journal of Management Research

Rural Marketing Mix in Bhutan: An FMCG Perspective

Article excerpt

Almost all large consumer goods companies operating in Bhutan actually operate through their Indian offices since India has a free trade agreement with Bhutan. Bhutan has a unique rural market structure, and the 4Ps (Product, Place, Price and Promotion) and 4As (Awareness, Availability, Affordability and Acceptability) of rural marketing are also governed by unique regulations formulated by the Government of Bhutan. Bhutan is 69.1% rural, and rural marketing becomes the most important subject for marketing in Bhutan-in fact, if Indian census benchmarks were applied to the Bhutan demographics, the percentage of rural population would be beyond 90%. This present study is the most comprehensive ex post facto qualitative and quantitative study of the 4Ps/4As of rural marketing in Bhutan. The research tool used is a qualitative survey of the national distributors operating in Bhutan and of some wholesalers in each district of Bhutan, followed by a quantitative analysis of the associations between the factors. Absolutely no literature is available on rural marketing in Bhutan, and this paper aims to advance that body of knowledge from a practitioner's point of view.


Bhutan has an indigenous population of 634,982 (of which rural population is 438,871) and is very sparsely populated with only 18 people per sq km (PHCB, 2005). The population, including the non-Bhutanese, is 672,425. In contrast to this, the Indian census defines any area with less than 400 people per sq km as rural (also 70% of adult male population should be engaged in agriculture and there should not be any municipal board). As per PHCB (2005), 69.1% of population of Bhutan reside in rural areas. Though the percentage of rural population in Bhutan seems almost same as that of India, the point to note is that Bhutan Census board has a less stringent criterion for classifying a place as Urban-the urban- rural classification used in the PHCB (2005) is according to the classification of the Department of Urban Development and Engineering Services (DUDES) and is not based on any standard criterion. If we use the Indian standard criterion, Bhutan is considerably more rural. Hence, Bhutan can be termed as a predominantly rural country and rural marketing is very important for the country. The rural marketing tools and challenges are presented in Table 1.

Rural marketing does not exist as a proper academic or research discipline in the western world. Though there are some Indian books and articles on rural marketing, there is almost nothing written on rural marketing in Bhutan, a seamless neighbor to India. Since there is no material on rural marketing mix of Bhutan, this paper aims to develop scholarly material on rural marketing mix.

The scope of Fast Moving Consumer Goods (FMCG) distribution in rural Bhutan is best represented by Figure 1 describing the domain of rural marketing in rural marketing theory presented by Jha (1988). Anything produced in rural and supplied to rural falls in the unorganized sector; anything produced in urban areas and supplied to rural areas falls under consumer goods distribution (which is the scope of this paper); anything produced in rural and supplied to urban areas falls under agricultural marketing, artisan products and cottage industry; and anything produced in urban areas and supplied to urban areas is outside the purview of rural marketing. FMCG marketing in the rural markets of Bhutan falls in the realm of urban to rural marketing quadrant as highlighted in Figure 1.

Geography and Demography of Bhutan

Bhutan's geographical area is comparable to Switzerland, Denmark, Netherland and Taiwan but it lags behind in terms of per capita income and Human Development Index (HDI) ranking. Bhutan, officially the Kingdom of Bhutan, is a landlocked state in South Asia, located at the eastern end of the Himalayas and bordered to the south, east and west by the Republic of India and to the north by the People's Republic of China. …

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