Introduction to Rural Marketing

Session I

Xavier Institute of Management, Bhubaneswar

Why should we do this course? 

Agriculture s share in GDP is going down, but, India still lives in her villages 

Urban markets are crowded and saturated The understanding of rural is diffused and sometimes confusing 

Is rural marketing different from urban marketing ?

Session Coverage 

Rural India

Some definitional issues

Phases/ stages in rural marketing Scope of rural marketing How is rural India changing? Schools of thought- Approaches to Rural Markets thoughtStrategic Issues & Directions in rural marketing

Defining Rural India
Organisation NSSO ( Census) 


Limitations rural not defined

Population density < 400 / Sq Km  75 percent of the male working population is engaged in agriculture No Municipal corporation / board

Planning Commission

Towns upto 15,000 population are considered rural 

Town characteristics not defined

Cont d
LG Electronics NABARD All places other than the 7 metros All locations with a population upto 10, 000 considered rural Commercial establishments located in areas servicing less than 1000 population Only clarifies what are the cities Village & town characteristics not defined Population characteristics unknown


Source: The Rural Marketing Book- Text & Practice, Kashyap. P and Raut. S ( 2007)

Defining Rural Marketing
National Commission on Agriculture Decisions to produce saleable farm commodities involving all the aspects of the market system or structure, both functional and institutional, based on technical & economic considerations and includes the pre & post harvest operations. NGOs Marketing products produced in rural areas to urban areas Marketing products produced in rural areas in rural markets Corporate Rural Marketing Definition Function that manages all activities involved in assessing, stimulating and converting the purchasing power of rural consumers into effective demand for specific products and services to create satisfaction & a better standard of living for achieving organisational goals.

Phases in Rural Marketing
Sr. No 1 Time Frame Phase One( Pre 1960 s) Key Events & Trends rural products in rural and urban areas Agricultural inputs in rural areas  Agricultural marketing Farming methods were primitive and mechanisation was low Markets unorganised 

Cont d
2 Phase Two ( 1960s to 1990s) Revolution Companies like Mahindra and Mahindra, Sri Ram Fertilisers and IFFCO emerge Rural products were also marketed through agencies like KVIC for consumables and durables rise Companies find growth in urban markets stagnating or falling 
Demand Green


Phase Three( 1990s to Present)

Scope of Rural Marketing 

Keenly debated topic Definitions based on organisational/ institutional vision, mission & goals 


Need for a comprehensive and modular understanding Rural Marketing is a Multi work in progress

disciplinary approach is necessary for sharper


Domain of Rural Marketing



Rural From


Source: M. Jha, Rural Marketing- Some Conceptual Issues, EPW, 1988

Scope of Rural Marketing
Domain of Rural Marketing Participants Dimensions of the transaction

Products/ services




Rural to Rural Rural to Urban Urban to Rural

Changes in Rural India 

Diverse change levers in rural India The pull of the cities & towns migration and its side


Effect of government programmes Civil society interventions Natural & manmade disasters Slow but sure change

Transitions In Rural India

Non food, cash crops Food Grain Crops On land activities Farm Activities Livestock & fisheries Manufacturing & services

Rural Employment Patterns( Male)
Sector Year 1987 ( % share in employment) 75 2 5 Year -2004 ( % share in employment) 67 8 7

Agriculture Transport & Communication Trade & Hotels







Source: NSSO data, Mckinsey Global Institute Study, 2004-05

Rural India
1971 Total Population (in million) Rural Population (in million) As a proportion of total population Decadal Variation 548.2

Population Trends
1981 683.3 1991 848.3 2001 1026.9







19.8 Source: Census 2001



Cont d 

The joint family system is being replaced by the nuclear family system 

The occupational pattern shows a predominance of cultivators and wage earners 

Cultivators( 40.86 %) and Wage Earners( 35.28 %) according to NCAER studies (2002)

Rural Settlement & Habitation Trends 

Key findings from 2001 census Population density 253/ sq kilometer and total number of villages is 638, 588 


Villages having less than 500 population are falling Villages having 2000 + population most prosperous What are the implications of these trends?

Cont d 

Size of villages/ habitations are changing Role & influence of towns is changing Social interaction is a mix of rural and urban Let s look at some key trends in detail

Rural Income Trends
Annual Income ( at 1998-99 1998prices) <= 35,000 35,00135,001- 70,000 Income Class 1989-90( % 1989Households) 67.3 23.9 19981998-99 ( % Households) 47.9 34.8

Low Low Middle



Middle Upper Middle

7.1 1.2

10.4 3.9

1,05,0011,05,0011,40,000 > 1,40,000




Source: National Council for Applied Economic Research, 2000

Rural Marketing- Schools of Thought Marketing   

Determinist School Activist School What is the right approach? Dependent on level of market development, stage in the PLC and access to resources 

Amul & ITC prominent examples No water-tight compartmentalisation water-

Strategic Issues & Directions in Rural Marketing 

Evolutionary Vs revolutionary changes in rural markets Role of state & market forces ICT based interventions Partnership innovations Developmental role of rural marketing Scalability & replication of rural marketing programmes

ICT in Rural Markets
Category Infrastructure Provision Rural Services Government NIC Private N- Logue NGO/ PPP Simputer

Bhoomi( Karnataka) Agmarknet E- Choupal


Agri Marketing

Ozhwar Sandhiyes

Agri extension


EID Parry

Close of Session

Thank You

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