Rural marketing: Where to focus values of consumer or price of product

I'd suggest the following:

1. Consider the values, cultures, traditions and other needs of the target segment customers to identify the need

2. Study and analyse demographics to arrive at the best possible selling price

3. Work backwards and develop a scaleable prototype to fit the above 2

4. Pilot and replicate

As Piyush has already mentioned, it isnt always the price that matters for rural markets. They too are looking for products that could help them ease/ upgrade their current conditions. The thing to be kept in mind is that the product should be appealing in price and utility and as is for all markets: value for money

Rural incomes are on the rise driven largely due to continuous growth in agriculture for four consecutive years, with the rural population accounting to 70% of the total Indian population. Moreover the main factor to be considered at this point of time is the effect of recession on the rural economy. The rural market is completly insulated from the recession.

The major factor to be considered while launching a product in the rural market is it's quality, durability, availability. Educating the rural consumers about the importance of the product becomes very imoirtant to sell the product effectively to the rural consumers. Look at how Lifeboy had entered the rural market, i.e. by educating the rural consumers in the shandies and local markets by using Ultra Violet rays. They used these rays to the show the rural consumers that they had carried germs with them and the germs won't be destroyed untill they used their soap to clean their hands.

Price is a secondary factor,but becomes an important factor when,competitiors are already present in the rural market.

This debate has to be set in context of a particular country. I am assuming it to be India. Indian consumers are price conscious. I remember my sales management teacher pointing it that the 4 P's of an Indian market are Price, Price, Price and Price. 

But at the same time there is a huge difference between the consumers in the urban setting from those in rural market. Rural market of India is a "sleeping giant". What do we need to do to realize its potential.  Considering my experience of the urban markets, I am forced (in fact biased) to consider "lowering price" as the key factor to awaken the sleeping giant. But when I research a bit, into some real life case studies I think something is amiss.

Take for instance, the "Chota Coke" campaign of coca cola, wherein Aamir Khan was seen endorsing coke with just 5 Rupees. But what happened, after some time, the whole campaign was hurriedly withdrawn and sent to trash. Why? Because the company did not understand there is a disconnect between the rural consumers needs and the offer (5 Rs Coke) in the first place. 

On the success side, take the successful rural banking model taken up by FINO, or for instance the even more successful case of the voltage stabilizer sold by HMT for the rural market, or the classic B School case study of Ghari detergent powder which captured a huge market share in the rural India. 

What is common about these success stories? They all have product innovation and customization according to the values and needs of the rural customers. It has nothing to do with price.

I agree that Indian consumers compared to the rest of the world are more price conscious, but it is a huge mistake to consider price as the key driver in the rural market.  Its like stretching one idea too long and applying one easy answer to every problem if we consider price as the key driver.

As a matter of fact, the rural consumers often have a higher disposable income than their urban counterparts, yet, if he owns just three durables in comparison to the eight owned by an urban consumer, it’s not because of price, but simply because the rest of the 5 doesn't serve a purpose to him.

I support you view ma'am , but just one quick point , ,after tapping into the cultural and emotional issues ,Pricing will stay for long , this has to be equally competitive as well.

If End User Will Finish What Will be the Value of Product.