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Rural Marketing 2007-09-001

Rural Marketing 2007-09-001

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Rural Marketing

Why Rural Marketing is hot?
 Rural Push Policy of UPA Government  Four Consecutive years of positive growth in rural GDP  40% hike in MSP of Crops over last two years  Farm Loan Waiver & NREGS  Growing Industry Demand for land (Overnight Wealth)  Big rise in remittances from Cities  Slowing urban demand forcing corporates to rural markets

% Annual Change in Rural GDP
Year Change

2003-04

10%

2004-05

-6.7%

51% Rs. 13,65,000

49% Rs 13,17,018 Crore

2005-06

5.8%

Crore

2006-07

4%

2007-08

4.9%

2008-09 (Estimates)

2.6%

can change rural business. There are immense opportunities at the bottom of the pyramid. R. Retail boom will also expedite the growth of rural marketing. M.   .Why Rural Marketing is a New Discipline? Rural Marketing is a new discipline because:    India is a predominantly agrarian society. Urban markets are saturating in India. Western Marketing has no experience to manage it.

 Minimum Population >=5. RBI Locations with population up to 10. up to a population of 10.000 as semi-urban.000  Population density>= 400/ sq.  75% of the male population engaged in non-agri activity.000 will be considered as rural and 10. Town: Towns are actually rural areas but satisfy the following criteria.000 are treated as rural.000 to 100.What is Rural? Definitions of Rural Census Village: Basic Unit for rural areas is the revenue village. Locations having shops/ commercials establishments’ up to 10.000 will be considered as ‘rural’. km.000 are considered as rural. Towns with population up to 15. All locations irrespective of villages or town. Nabard Planning Commission Sahara LG Electronics . might comprise several hamlets demarcated by physical boundaries. The rural and semi urban area is defined as all other than the seven metros.

stimulating.” -Pradeep Kashyap . abase on technical and economic considerations and includes pre and post harvest operations. both functional and institutional. transportation and distributions‟.  “Rural Marketing can be defined as a function that manages all activities involved in assessing. and converting the purchasing power of rural consumers into an effective demand for specific products and services and moving these products and services to the people in rural areas to create satisfaction and a better standard of living and thereby achieving organizational goals. storage. grading.What is Rural Marketing?  According to the National Commission on Agriculture: „Rural Marketing is a process which starts with a decision to produce a saleable farm commodity and it involves all the aspects of market structure or system. assembling.

Leather products (Semiorganised) Urban Rural Rural (Production) .Scope of Rural Marketing The Rural Marketing Matrix Urban (Market) Brand Consumables and durables (Organised) Farm & Non-Farm and services (Unorganised Sector) Handicrafts. Handloom Textiles.

Evolution of Rural Marketing Phase Origin Function Major Products Agricultural produce Agricultural inputs Source Market Rural Destination Market Urban I Since independence Mid-Sixties Agricultural marketing Marketing of agricultural inputs Rural marketing II Urban Rural III Mid-Nineties Consumables and durables for consumption and production Urban/ Rural Rural IV 21st Century .

No. benefactors Development Projects/Schemes/Programmes Beneficiaries and buyers Development Market Development Corporate Image Medium-Long Service-motive Ideological or Public policy 7 8 9 10 11 12 Offer Target group Communication Goal Time-Frame Motivation Products and services Buyers Functional Profits Customer satisfaction Brand image Short-Medium Profit-motive Business policy . Socio-cultural. Sellers Development Society orientation. corporate enterprises. voluntary agencies. economic Government. Marketing concept Stimulating and conversional marketing Product-market fit Product innovations and communications Commercial Corporate enterprises. 1 2 3 4 5 6 Aspect Concept Role Focus Key task Nature of activity Participants Transactional Consumer orientation. societal concept Catalytic and transformation agent Social change Social Innovations and communications.Nature of Rural Marketing (Transactional Vs Development Marketing) S.

Cosmetics. Fertilizers. Medicines.. Services ------- Industrial Market Agricultural and allied activities. Boats etc. Communication . Transport. Kitchen appliances. Toiletries. Foot Wear etc. Pesticides. Health Centre. Insurance Health care. Education. Petrol/Diesel etc.Taxonomy of Rural Markets (Classification of Rural Markets) Constituents Consumer Market Individuals and households Products Consumables: Foods products. and Production firms Consumables: Seeds. Sewing machines. Pump sets. Durables Watches. Two Wheelers etc. Tractors. Radio. School. Animal feed. Husbandry cottage industries. Furniture. Harvesters. Poultry farming. Individuals. Animal. Power etc. Generators. Textiles and Garments. Panchayat office etc.V. Fishnets. Cooperatives. T. ------- Services Market ------- ------- Repairs. Credit. . House holds. Banking. Bicycles. Tillers. Fishing. Officers.

Whether Rural Markets are Attractive?         Large population Rising prosperity Growth in consumption Life-style changes Life-cycle advantages Market growth rates higher than Urban Rural marketing is not expensive Remoteness is no longer a problem. .

development marketing. .Rural Vs Urban Marketing S. Even High level Faster Widely spread Low Low Seasonal variations Low level Slow 3 Products o Awareness o Concepts o Positioning o Usage method o Quality preference o Features High Known Easy Easily grasped Good Important Low Less known Difficult Difficult to grasp Moderate Less Important Contd. No. Low Mostly from unorganized units 2 Market (a) Demand (b) Competition (c) Consumers o Location o Literacy o Income o Expenditure o Needs o Innovation adoption Concentrated High High Planned. Green marketing and relationship marketing High Among units in organized sector Rural Marketing and societal concepts. and relationship marketing. 1 Aspect Philosophy Urban Marketing and societal concepts.

4 Aspect Price o Sensitive o Level desired Distribution o Channels Urban Yes Medium-High Rural Very much Low-Medium 5 Wholesalers. Gifts. Specialty stores and authorized show rooms Good High Village shops Shandies Haats and Jatras Average Limited o Transport facilities o Product availability 6 Promotion o Advertising Print audio-visual media. Supermarkets. Print Media to some extent. Few languages Door-to-door frequently Contests. Price Discounts Good opportunities TV. S. More languages Occasionally Gifts. No. Radio.Rural Vs Urban Marketing – Contd. Stockists Retailers. Price discounts Less o Personal Selling o Sales promotion o Publicity . exhibitions etc. out doors.

Value Added Rural Marketing HOW TO ADD VALUE THROUGH RURAL MARKETING Identify unique characteristics of rural customer Study demographic patterns Study product ownership patterns Segment rural customers Provide functional benefits Build special brands for rural customers Communicat e unique proposition Are the clusters large enough? Are relevant needs being met? Ensure increase in customer value No No No Yes .

SESSION II Rural Marketing Environment & Rural Economy .

2 .7 2001 1026.3 16.2 15.2 1981 683.9 741.3 628.6 72.8 74.3 524.7 19.1 548.Structure of Rural Markets Demographic Environment 1971 Total population (million) Rural population (million) Rural Proportion to total population (%) Decadal Variation Source: Census of India 2001 80.0 76.8 1991 848.

Education and the Level of Demand Rural Literacy % of literates 1981 36 1991 45 2001 59 Source: Census of India 2001 .

31 Total 192 Source: Census of India 2001 .32 Total 152 Rural 138 5.55 1991 Urban 40 5.36 2001 Urban 54 5.Household Pattern Family Structure Particulars Rural Households (Million) Family Size (Number) 112 5.

Rural Housing Pattern House Type Pucca (%) 1981 22 1991 31 2001 41 Semi-Pucca (%) Kuccha (%) Total Source: Census of India 2001 37 41 100 36 33 100 36 23 100 .

99 Wage earner Salary earner Professional Artisan Petty Shopkeeper Businessman Other Total Source: NCAER 2002 20.28 0.46 1.86 All 0.05 3.68 3.42 8.97 0.84 1.19 1.72 3.84 3. 1999-2000 Head’s Occupation Distribution of households (%) Urban Housewife Cultivator 0.56 4.45 Rural 1.40 2.90 16.00 35.01 40.00 .59 6.41 4.96 29.73 3.28 11.93 40.85 100.12 19.98 100.52 100.00 31.Occupational Pattern Distribution of Households by Occupation of the Head.

697 580.161 593.588* * The total number of Villages also includes non-inhabited Villages. .779 634.154 638. of inhabited Villages Total no. Density (Total) Rural 177 1981 216 171 1991 267 214 2001 312 253 Distribution of Towns and Villages 1991 No.Physical Environment Rural and Urban Life: Distinguishing Features Population Density (Urban + Rural) (Per Sq.321* 2001 5. Km. of Villages Source: Census of India 2001 3. of Towns No.) 1971 Popu.

000 – 09.999 10.2 9.999 20.Settlements (Scattered and Clustered) Town class Class-I Class-II Class-III Class-IV Class-V Class-VI Total Population No.5 12.000 * 10 Lakh + : 27.0 Decadal Growth (1991-2001) 24 15 16 7 8 -22 1 Lakh and above 50.0 % of Population 61.000 – 19.8 0.386 1.6 100. 1-5 Lakh:354 Source: Census 2001 .2 20.161 % of total Towns 8.0 8.6 26. of Towns 423 498 1. 5-10 Lakh: 42.3 100.999 05.3 15.057 237 5.560 1.000 – 49.1 2.000 – 99.9 30.999 Less than 5.5 4.

9 ________ Middle (Rs.5 42.a) 2001-02 2009-10 23.3 % Households 50 -42.9 17.8 20.5 36.7 40 -30-20-10-0-8.45K-90K p. NCAER .a) _________ High (>Rs.a) Source: Market Information Survey of Households.90k p.6 39.Economic Environment 80 -70 -60 -67.45K p.8 1989-90 _________ Low (<Rs.

Changing Rural Consumers Expenditure Pattern Per capita consumption expenditure (Rs. Per month) Rural Urban Composition of rural per capita consumption expenditure Food Non-Food 1983 112 166 1983 66 34 1991 281 458 1991 63 37 2001 486 855 2001 59 41 Source: NSSO Source: NSSO .

Technological Environment .

tractors) 2/4 Wheelers Total Source: Francis Kanoi 2002 Rs. 5000 Crore Rs. 65000 Crore Rs. 45000 Crore Rs. 8000 Crore Rs.23.000 Crore .Size of Rural Market Estimated Annual Size : Rural Market FMCG Durables Agri-inputs (incl. 1.

II-The Rural Economy: .

economic. educational and health.47 Source: Human Development Report.38 2001 ------ ------ 0.44 0.26 0..30 The HDI is a composite of variables capturing attainments in three dimensions of human development. 1991 0. 2001 .The Economic Scenario in Rural India Human Development Index (HDI) Year Rural Urban Total 1981 0.51 0. viz.34 0.

of Persons (Million) 252 244 % of Persons Poverty line (Rs.The Changing Face of Rural Development Population below the poverty line (Rural) Period No.) 89. 2001 .5 206 1983 1993-94 46 37 1999-2000 193 27 328 Source: Human Development Report.

2.The Development Exercise: The Five-Year Plans Sectoral allocations during the five-year plans (Rs.9 Secondary (Manufacturing) 14.0 Source: National Account Statistics.2 39.0 100.0 36.6 49.7 23.0 100.5 Total 100. 1951-2001 . Billion) Head of Development Seventh Plan (1985-90) 1.6 Tertiary (Services) 28. Agriculture Rural Development 105 89 Eighth Plan (1992-97) 225 344 Ninth Plan (1997-2002) 372 890 Tenth Plan (2002-07) 589 1.8 23.219 Source: Planning Commission 2002 Percentage share of the different sectors in GDP (at 1993-94 prices) Year 1950-51 1980-81 2001-02 Primary (Agri and Allied) 57.7 26.

Non-farm activities. Farm activities . Food grain crops 2. Non-food grain crops. On-land activities 3. including manufacturing and services. 1. cash crops 2.Transition of the Rural Economy 1. Off-land allied activities like livestock and fisheries 3.

Goat. Poultry) Agro Processing (Sugarcane. Oilseed etc) Retailing & Trading Horticulture Manufacturing (Handloom.The Rural Economic Structure Rural Economy Farm Sector (Agri & Allied) Non-Farm Sector (Formal & Informal Sector) Agriculture Rural Industries Rural Services Animal Husbandry (Dairy. Handicrafts etc) Community & Social Service Forestry Mining & Quarrying Transport & Storage Fishing Construction Communication .

Income Disparity Rural-Urban Income Comparison Sector Bottom (30%) Rural Average Consumption Expenditure (Rs. Census 2001 .830 Urban 10.580 Middle (40%) Rural 5./Annum) Population (Million) 3.270 Urban 4.110 Urban 8.260 223 86 297 114 223 86 742 285 Source: NSS 55th Round (1999-2000).720 All Classes Rural 5.400 Urban 18.150 Top (30%) Rural 9.

000 1991-92 1994-95 1996-97 36.32 76.18 Population between 1.The Rural Infrastructure Road Connectivity Road Connectivity at the Village level (%) Population less than 1.54 74.52 37.72 78.500 72.04 Source: National Human Development Report 2001 .000 and 1.45 49.82 91.58 Population more than 89.

74 9.Telephone Services Telecom Density (Phone per 100) 2000 Urban Rural All 8.2 1.08 Increase 220% 148% 213% Source : Telecom Regulatory Authority of India Report.9 2005 26. 2005 .2 0.7 2.

7. 6.Why Agriculture Growth has been slow & tardy? 1. 4. Insufficient Availability of Credit 9. Low priority to Agriculture Subsistence Orientation of Agriculture Failure of Land Reforms Low size of operational Landholdings Inadequate Food Supplies Sluggish Infrastructural Growth Disconnect between Research & Farmers 8. Slowdown of Rural Industrialization . 5. 2. Inadequate Inputs 10. 3.

6. 5. 3.Policy Interventions Required 1. 7. 4. 9. Focus on High Value Crops & Non-farm Incomes. Thrust on Land Reforms Strengthening the Panchayati Raj Institutions Financial Inclusion (Innovative Credit Delivery) Development of Rural Infrastructure Expansion of Kisan Credit Card Scheme Protection of Farmers from natural calamities Extensive use of ICT Higher Investment in Agriculture & Rural Development. 2. 10. . Bridging the Gap Between Agri-Research & Farming. 8.

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