RURAL MARKETING

ENVIRONMENT
CONCEPT OF ENVIRONMENT
 Environment literally means the surroundings, external objects,
influences or circumstances under which someone or
something exists.
 The environment of any organization is “the aggregate of all
conditions, events and influences that surround and effect
it”.
EXTERNAL ENVIRONMENT

 Socio-Cultural
 Economic

 Technological

 Political & Legal

SOME IMPORTANT VARIABLE IN MEGA ENVIRONMENT

Economic Technological Political & Legal Socio-Cultural

GDP trends Spending by govt Type
of Govt. Life-Style

Interest rates on R&D Tax Laws Religion

Inflation Industry spending 

Foreign trade Language

Type of on R&D regulations Customs

Focus of
economy Constitutional Age distribution
Income technology framework Languages
Patent protection Anti trust litigation
Disposable Growth rate of
Productivity
income Labor laws
population
Wage-price Communication & 
Attitude toward
control Infrastructural foreign co.
Money New products Stability of govt

supply Commercialization

of technology
RURAL ECONOMIC ENVIRONMENT
 Rural Economy

Farm Sector Non-farm Sector

Agriculture Rural Industries Rural Services

Animal Husbandry Agro Processing Retailing & Trading

Manufacturing
Horticulture Community & Social
Service
Mining &
Quarrying Transport & Storage
Forestry

Construction
Fishery Communication
JAJMANI SYSTEM
 A self-sufficient economy system
 Revolved around the farmers who owned land
 ‘Specialist castes’ who provided services to the farmers and to
each other
 System under threat due to urbanization that provided relief
from exploitation
SOURCES AND PATTERNS OF INCOME
 Primary source is agriculture
 No regular income throughout the year (Seasonality)
 Cash only at the time of harvest
 Marketers should notice of time of year when incomes are due
 Crop patterns vary, and time of cash surpluses from harvests
vary geographically
 Cash crops and services leading to stable cash flows throughout
the year.
 Remittances from outside.
 RURAL INCOME
DISTRIBUTION

Rural Income
Rs. 7,006 billion
(100%)

Agricultural Non-agricultural
(53%) (47%)

Self-employed Wage-earners Formal Informal

(43%) (10%) (31%) (16%)
 PER CAPITA RURAL INCOME

Rural Per Capita Income

Rs. 9,481

Agricultural Non-agricultural
Rs. 6,855 Rs. 16,464

Self-employed Wage-earners Formal Informal

Rs. 10,150 Rs. 2,860 Rs. 19,514 Rs. 12,595
DISTRIBUTION OF RURAL HOUSEHOLD BY
INCOME

Annual Income (Rs.) Income class 1989-90 1998-99

at 1998-99 prices   (%HHs) (%HHs)
<=35000 Low 63.7 47.9
35001-70000 Low Middle 23.9 34.8
70001-105000 Middle 7.1 10.4
105001-140000 Upper Middle 1.2 3.9
>140000 High 0.5 3
Total   100 100
DISTRIBUTION OF HOUSEHOLDS BY
INCOME FROM 1989-90 TO 2009-10

1989-90 2001-02 2009-10

Urban Rural AI Urban Rural AI Urban Rural AI

Middle High 11270 9095 20365 28884 23978 52862 51140 56363 107503

Low Middle 13957 24458 38415 16956 53208 70164 14809 64916 9725

Low 14879 68870 83749 7648 57518 65166 3253 31465 34718

Total 40106 102334 142440 53488 134704 188192 69202 152744 221946

Middle High = above Rs 90,000 p.a. AI = All India

Low Middle = Rs 45,000-90,000 p.a. (in, 000 families)
Low = below Rs 45,000 p.a.
 SAVING PATTERN

Households Availing Banking facilities (figures in million)

Rural % of Total % of
  Total % of HHs HHs HHs Urban HHs

Households (HHs) 192 100  138 72 54 26

No of HHs Availing
banking services 68 35.5 42 30.1 27 49.5
RURAL SOCIO-CULTURAL ENVIRONMENT
RURAL SOCIO-CULTURAL SCENARIO
 Religious bent of mind.
 Social customs.

 Caste system.

 Gender Discrimination.

 Literacy.

 Cultural diversity.

 Group influence on behavior.

CASTE SYSTEM
 BRAHMINS at top, then kshatriyas, vaishyas, and the
shudras at bottom.
 Each have their sub castes.
 Shudras suffered from entering places visited by top.
 Change in zamindari system helps in abolition.
 Marketers have to be sensitive on this issue.
DEMOGRAPHIC ENVIRONMENT

1981 1991 2001

Total population (million) 683.3 848.3 1026.9

Rural population (million) 524.0 628.8 741.6

Rural proportion to urban pop (%) 76.7 74.3 72.2

DISTRIBUTION OF POPULATION BY AGE
GROUPS (1991)

Age groups Rural Urban

0-4 13 11
05-14 26 23
15-19 9 10
20-34 23 28
35-54 19 20
55+ 10 8
Total 100 100
EDUCATION AND THE LEVEL OF
DEMAND

Rural literacy 1981 1991 2001

% of Literates 36 45 59

Education level Rural Urban

Below primary 29.2 18.4
Primary but below middle 31.6 23.9
Middle but below matriculation 21.0 20.8
Matriculation but below graduate 15.5 26.1
Graduate and above 2.7 10.8
HOUSEHOLD PATTERN

    1991     2001  

Particulars Rural Urban Total Rural Urban Total

Households
(million) 112 40 152 138 54 192
Family size
(number) 5.55 5.32 - 5.36 5.31 -
 HOUSEHOLD TYPE IN INDIA
Type of household Definition
Rural urban

Single member Single member

5.15 7.91

Nuclear pair Head and spouse

4.91 5.20

Nuclear Head and spouse with unmarried children

37.88 41.57

Broken nuclear Head and spouse with or without unmarried

children but with other relations who are not 4.58 4.24
currently having spouse
Supplemented nuclear Head and spouse with or without unmarried
children but with other unmarried or separated or 16.81 15.44
divorced or widowed relations
Supplemented broken Head without spouse with or without unmarried
nuclear children but with other unmarried or separated or
5.76 5.13
divorced or widowed relations
 CONTD…

Broken extended Head without spouse but with other relations of 3.62 3.07
nuclear whom only one is having spouse

Lineally extended Head and spouse with married son/daughter and 17.6 13.2
spouses and/or parents with or without other not 5 3
currently relations/ head without spouse but with at
least 2 married /daughter and their spouses and/or
parents with or without other not currently married
relations
Collaterally extended Head and spouse with married brother /sister and 3.53 3.85
their spouses with or without other relations
(including married relations)/ head without spouse
but with at least 2 married brother/sister and their
spouses with or without other relations
Others Other households not covered elsewhere 0.11 0.36

TOTAL 100 100

RURAL HOUSING PATTERN

House type 1981 1991 2001

Pucca 22 31 41

Semi-Pucca 37 36 36

Kuccha 41 33 23

Total 100 100 100

 RURAL OCCUPATION
PATTERN

Rural Population = 742 million

Rural Employed = 312 million
(100%)

Agricultural Non-agricultural
(73%) (27%)

Self-employed Wage-earners Formal Informal

(40%) (33%) (15%) (12%)
 OCCUPATIONAL PATTERN

Distribution of households by occupation of the head, 1999-2000

Head's occupation Distribution of households (%)
    Urban Rural All
Housewife   0.84 1.01 0.96
Cultivator   3.45 40.86 29.99
Wage earner 20.93 35.28 31.12
salary earner 40.72 11.28 19.84
professional 3.59 0.73 1.56
Artisan   6.9 3.41 4.42
Petty Shopkeeper 16.05 4.97 8.19
Businessman 3.68 0.46 1.4
others   3.85 1.98 2.52
Total   100 100 100
RURAL POLITICAL ENVIRONMENT
 POLITICAL ENVIRONMENT

 Historically controlled by upper castes (panchayat & village

pardhan)
 Then Panchayati raj system came into effect in which all
government departments, such as; education, health, agriculture,
development etc. form an integrated approach for the
development of rural areas.
PANCHAYATI RAJ INSTITUTIONS
 Provide 3 tire system to panchayati raj for all the states
population exceeding 2 mn.
 To hold panchayat elections regularly every 5 years.
 To provide reservations for SC/ST/Women at least 33%
 To appoint a state finance commission.
 Preparation for economic development & social justice
 To collect taxes, duties, tolls & fees.
RURAL TECHNOLOGICAL ENVIRONMENT
TECHNOLOGICAL ENVIRONMENT
It is triggered by three main revolutions :
 Green revolution

 White revolution

 Introduction of non-govt. agencies in the development

sector.
GREEN REVOLUTION
 Period under 1967-1978 aimed to improve in food self
sufficiency.
 Introduction of mechanization first time.

 Increase in farm production also introduced mechanized

processing spurring growth of manufacturing sector.
 Boosted farm productivity, employment creation,
standard of living changes.
WHITE REVOLUTION
 Aims for achieving self sufficiency in milk products by
the govt.
 Develops linkage between rural producers & urban
consumers.
 Formation of producers cooperatives which
institutionalizing & producing processing milk.
 Milk production increases almost 5 folds(from 1950 to
2001)
 Areas effected Gujarat, Punjab, Haryana, U.P.
NGO MOVEMENT
 Provide numerous services for up gradation of rural
sector
 Helps in providing assistance of technological extensions
in rural areas.
 Also providing basic health and child care services
education training opportunities which helps in
development.
RURAL PHYSICAL ENVIRONMENT
PHYSICAL ENVIRONMENT
RURAL AND URBAN LIFE: DISTINGUISHING FEATURES

Population Density (Urban & Rural) (per sq. km.)  

  1971 1981 1991 2001

Pop. Density (total) 177 216 267 312

Rural   171 214 253

Distribution of Towns and Villages  

  1991 2001
No. of towns 3697 5161
No. of inhabited 580779 593154
Total no. of Villages 634321 638588

Total no. of Villages also include non-inhabited villages

 CONT…….

Inhabited Villages Classified by Population Size, 1991 and 2001

Villages in size group Villages in size group
  (1991) (2001)
  Number % Number %
Less than 200 102952 17.9 92541 15.6
201-500 141143 24.3 127054 21.4
501-1000 144998 25 144817 24.4
1001-2000 114395 19.7 129662 21.9
2001-5000 62915 10.8 80313 13.5
5000+ 13376 2.3 18758 3.2
Total 580779 100 593154 100
 INFRASTRUCTURE
 Physical Infrastructure
-Roads
-Electricity
-Telecommunication
 Marketing
-Mandis, Melas, Haats
-Small Kirana shops
-PDS shops
-Post-offices, PHCs, Petrol Pumps
 Commercial
-Credit Availability
-Banking facility
-Political Policy
RURAL MARKET STRUCTURE
PRODUCTS AND SERVICES IN RURAL
MARKETS
(A) Products
 For personal consumption
-FMCGs
-Durables
 Agricultural Inputs
-Perishable
-Durable
(B) Services
 Personal
 Agricultural
 Financial
-Personal
-Agricultural
CONSTITUTION OF RURAL MARKETS
 CONSUMER MARKET
 INSTITUTIONAL MARKET

 SERVICES MARKET

 FMCG MARKET

 DURABLES MARKET
CONSUMER MARKET
 Constituents: Individuals & Households
 Products
 Consumables: food products, toiletries, cosmetics, textiles.
 Durables: watches, bicycles, radios, TV, home appliances.
 INSTITUTIONAL MARKETS
 Constituents: agriculture & allied activities, food processing,
poultry, fishery, animal husbandry, NGO, etc.
 Products
 Consumables: agri-inputs animal feed, fishnets, fuel etc.
 Durables: agri-implements (tractors, pump sets)
SERVICE MARKET
 Constitution: individuals, households, production firms.
 Services: banking, insurance, credit, tuition,
communication power etc.
SIZE OF RURAL MARKET
 FMCG- Rs.65000cr
 DURABLES-Rs.5000cr

 AGRI INPUTS- Rs.45000cr

 2-4 WHEELER- Rs.8000cr

 TOTAL Rs.1,23,000cr
FMCG: RURAL SHARE

1998-99
Washing Cake 67%
Tea 60%
Toilet Soap 58%
Tooth Paste 47%
Tooth Powder 78%
Electric Bulb 42%
Shampoo 33%
MOST POPULAR ITEMS

Rural Ranking Urban Ranking

Toilet Soap 1 Toilet Soap
Washing Powder 2 Biscuits
Packaged Tea 3 Washing Powder
Biscuits 4 Packaged Tea
Detergent Cakes 5 Detergent cakes
RURAL CONSUMERS EXPENDITURE
PATTERN
Per capita consumption Expenditure (Rs. Per month)
  Rural Urban
1983 112 166
1991 281 458
2001 486 855

Consumption of Rural per capita consumption

expenditure
  Food Non-Food
1983 66 34
1991 63 37
2001 59 41
COMPARISON OF RURAL AND
URBAN ENVIRONMENT
 Urban Rural
Size and Characteristics
• Large population size • Villages is the human
growing at a fast growth settlement with a small
rate administrative unit.
• Incoming immigration • Comprises few hundred
from the rural area for households and the
education and population growth due to
employment. immigration is insignificant.
• The population density is • Migration from village to
high. city/Towns is to get better
• Towns are smaller urban education and employment.
units.
 Settlement Pattern
City settlement is compact though
spread over a larger area. Land used is
residential, commercial, industrial and
community facilities, etc.
Structure of houses is permanent and
often rises to more than one storey.
Housing on rental is highly prevalent.
Clustering pattern based on class. e.g.
neighbourhoods and streets indicate
some caste/sub-caste and extended
family influences.
Primary resource base is production
and distribution of industrial goods and
services.
Village have land for human settlement
and for cultivation. The settlement are
clustered but in some areas
households settle on cultivable land
holdings. 
Houses are largely semi-pucca or
kuchha. They are owner occupied.
Clustered according to kinship, caste or
religious groups. Some villages are
locally referred to as ‘thakur gaon’ or
’harijan basti’ depending on the
majority caste residing in the village.  
Land is the primary resources for
livelihoods. Other forms of resources
are water bodies, forest and mountains.
Cows, buffaloes and poultry are kept
for households need for milk, eggs, and
meat. 
 Occupation
• Occupations are diverse, ranging • Predominant occupations are
from professionals, skilled, semi- cultivation and agricultural labour.
skilled to unskilled workers. • People continue to practice
• Occupational specialization is traditional occupations.
achieved with higher education • Skill upgradation with technology
and training to build skills.   has been limited. 
Realms of activities
• Interaction and mobility is spread • Restricted to smaller
over large geographical, social and geographical, social, and
economic area. economic areas.
• Relationship is more complex with • Individuals are recognized or
differentiation in personal and referred to on the basis of family,
professional life. There is erosion caste and village. Individual
of custom, tradition, and religion. behavior is governed by custom,
• Women have freedom in choice of tradition and religion.
activity and interest. • Women have limited freedom in
choice of activity and interest.