Introduction to Rural

Marketing
Session I
Xavier Institute of Management,
Bhubaneswar

Why should we do this

course?

Agricultures 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

Strategic Issues & Directions in rural marketing

Defining Rural India

Organisatio
n
NSSO
( Census)

Planning
Commissio
n

Definition

Limitations
rural not
defined

Population density < 400 / Sq Km

75 percent of the male working
population is engaged in agriculture
No Municipal corporation / board

Towns upto 15,000 population are

considered rural

Town
characteristics
not defined

Contd
LG Electronics

All places other than

the 7 metros

Only clarifies what

are the cities

NABARD

All locations with a

population upto 10,
000 considered
rural

Village & town

characteristics not
defined

Sahara

Commercial
establishments
located in areas
servicing less than
1000 population

Population
characteristics
unknown

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

Defining Rural Marketing

National Commission
on Agriculture

NGOs

Decisions to produce
Marketing products
saleable farm
produced in rural
commodities
areas to urban areas
involving all the
aspects of the market
Marketing products
system or structure,
produced in rural
both functional and
areas in rural markets
institutional, based
on technical &
economic
considerations and
includes the pre &
post harvest
operations.

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

Time Frame

Phase One( Pre 1960s)

Key Events & Trends

Marketing

rural
products in rural and
urban areas
Agricultural inputs
in rural areas
Agricultural
marketing
Farming methods
were primitive and
mechanisation was
low
Markets
unorganised

Contd
2

Phase Two ( 1960s to 1990s)

Phase Three( 1990s to Present)

Green

Revolution
Companies like
Mahindra and
Mahindra, Sri Ram
Fertilisers and IFFCO
emerge
Rural products were
also marketed
through agencies like
KVIC
Demand

for
consumables and
durables rise
Companies find
growth in urban
markets stagnating or
falling

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 work in progress

Multi disciplinary approach is necessary for

sharper understanding

Domain of Rural Marketing

To

Rural

Urba
n

Rural
From

Urba
n

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

EPW, 1988

Scope of Rural Marketing

Domain
of Rural
Marketin
g

Rural to
Rural
Rural to
Urban
Urban to
Rural

Dimensions of the transaction

Participants Products
/
services

Modalities

Norms

Outcomes

Changes in Rural India

Diverse change levers in rural India

The pull of the cities & towns migration and

its side effects

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)

Year -2004 ( % share

in employment)

Agriculture

75

67

Transport &
Communicatio
n

Trade &
Hotels

Construction

Manufacturin
g

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

Rural India Population Trends

1971

1981

1991

2001

548.2

683.3

848.3

1026.9

Rural
Population (in
million)

524.0

628.8

741.6

As a proportion
of total
population

76.7

74.3

72.2

Decadal
Variation

19.8

16.7

15.2

Total
Population (in
million)

Source: Census 2001

Contd

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?

Contd

Size of villages/ habitations are changing

Role & influence of towns is changing

Social interaction is a mix of rural and urban

Lets look at some key trends in detail

Rural Income Trends

Annual Income (
at 1998-99
prices)

Income Class

1989-90( %
Households)

1998-99 ( %
Households)

<= 35,000

Low

67.3

47.9

35,001- 70,000

Low Middle

23.9

34.8

70,001
1,05,000

Middle

7.1

10.4

1,05,0011,40,000

Upper Middle

1.2

3.9

> 1,40,000

High

0.5

3.0

Source: National Council for Applied Economic Research, 200

Rural Marketing- Schools of

Thought

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

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

Government
NIC

Private

NGO/ PPP

N- Logue

Simputer

Rural Services

Bhoomi( Karnat
aka)

Sewa

Agri Marketing

Agmarknet

E- Choupal

Agri extension

Universities

EID Parry

Ozhwar
Sandhiyes

Close of Session

Thank You