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 ³the 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 
GDP

Technological 
Spending

Political & Legal 
Type

Socio-Cultural

trends Interest rates Inflation Type of economy Income Disposable income Wage-price control Money supply

of Govt. Life-Style on R&D Tax Laws Religion Industry spending Foreign trade Language on R&D regulations Customs Focus of Constitutional Age distribution technology framework Languages Patent protection Anti trust litigation Growth rate of Productivity Labor laws population Communication & Attitude toward Infrastructural foreign co. New products Stability of govt Commercialization of technology

by govt

RURAL ECONOMIC ENVIRONMENT

Rural Economy
Farm Sector Non-farm Sector

Agriculture

Rural Industries

Rural Services

Animal Husbandry

Agro Processing

Retailing & Trading

Horticulture

Manufacturing

Community & Social Service Transport & Storage

Forestry

Mining & Quarrying

Fishery

Construction

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 (53%)

Non-agricultural (47%)

Self-employed (43%)

Wage-earners (10%)

Formal (31%)

Informal (16%)

PER CAPITA RURAL INCOME
Rural Per Capita Income Rs. 9,481

Agricultural Rs. 6,855

Non-agricultural Rs. 16,464

Self-employed Rs. 10,150

Wage-earners Rs. 2,860

Formal Rs. 19,514

Informal Rs. 12,595

DISTRIBUTION OF RURAL HOUSEHOLD BY INCOME
Annual Income (Rs.) at 1998-99 prices <=35000 35001-70000 70001-105000 105001-140000 >140000 Total Low Low Middle Middle Upper Middle High Income class 1989-90 (%HHs) 63.7 23.9 7.1 1.2 0.5 100 1998-99 (%HHs) 47.9 34.8 10.4 3.9 3 100

DISTRIBUTION OF HOUSEHOLDS BY INCOME FROM 1989-90 TO 2009-10
1989-90 Urban Rural Middle High Low Middle Low Total
11270 13957 14879 40106 9095 24458 68870 102334

2001-02 AI
20365 38415 83749 142440

2009-10 AI
52862 70164 65166 188192

Urban
28884 16956 7648 53488

Rural
23978 53208 57518 134704

Urban Rural
51140 14809 3253 69202 56363 64916 31465 152744

AI
107503 9725 34718 221946

Middle High = above Rs 90,000 p.a. Low Middle = Rs 45,000-90,000 p.a. Low = below Rs 45,000 p.a.

AI = All India (in, 000 families)

SAVING PATTERN

Households Availing Banking facilities
Total % of HHs Rural HHs
% of Total

(figures in million)
% of Urban
HHs

HHs

Households (HHs) No of HHs Availing
banking services

192 68

100 35.5

138 42

72 30.1

54 27

26 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 Total population (million) Rural population (million) Rural proportion to urban pop (%)

1991

2001 1026.9 741.6 72.2

683.3 848.3 524.0 628.8 76.7 74.3

DISTRIBUTION OF POPULATION BY AGE GROUPS (1991)
Age groups 0-4 05-14 15-19 20-34 35-54 55+ Total Rural 13 26 9 23 19 10 100 Urban 11 23 10 28 20 8 100

EDUCATION AND THE LEVEL OF DEMAND
Rural literacy
% of Literates

1981 1991
36 45

2001
59

Education level
Below primary Primary but below middle Middle but below matriculation Matriculation but below graduate Graduate and above

Rural 29.2 31.6 21.0 15.5 2.7

Urban 18.4 23.9 20.8 26.1 10.8

HOUSEHOLD PATTERN

1991

2001

Particulars
Households (million) Family size (number)

Rural 112 5.55

Urban 40 5.32

Total 152 -

Rural 138 5.36

Urban 54 5.31

Total 192 -

HOUSEHOLD TYPE IN INDIA
Type of household Single member Nuclear pair Nuclear Broken nuclear Definition Single member Head and spouse Head and spouse with unmarried children Head and spouse with or without unmarried children but with other relations who are not currently having spouse Rural 5.15 4.91 37.88 4.58 urban 7.91 5.20 41.57 4.24

Supplemented nuclear Head and spouse with or without unmarried children but with other unmarried or separated or divorced or widowed relations Supplemented broken nuclear Head without spouse with or without unmarried children but with other unmarried or separated or divorced or widowed relations

16.81

15.44

5.76

5.13

CONTD«
Broken extended nuclear Lineally extended Head without spouse but with other relations of whom only one is having spouse Head and spouse with married son/daughter and spouses and/or parents with or without other not 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 Head and spouse with married brother /sister and 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 Other households not covered elsewhere 3.62 17.6 5 3.07 13.2 3

Collaterally extended

3.53

3.85

Others TOTAL

0.11 100

0.36 100

RURAL HOUSING PATTERN

House type Pucca Semi-Pucca Kuccha Total

1981 22 37 41 100

1991 31 36 33 100

2001 41 36 23 100

RURAL OCCUPATION PATTERN

Rural Population = 742 million Rural Employed = 312 million (100%)

Agricultural (73%)

Non-agricultural (27%)

Self-employed (40%)

Wage-earners (33%)

Formal (15%)

Informal (12%)

OCCUPATIONAL PATTERN
Distribution of households by occupation of the head, 1999-2000 Head's occupation Housewife Cultivator Wage earner salary earner professional Artisan Petty Shopkeeper Businessman others Total Distribution of households (%) Urban 0.84 3.45 20.93 40.72 3.59 6.9 16.05 3.68 3.85 100 Rural 1.01 40.86 35.28 11.28 0.73 3.41 4.97 0.46 1.98 100 All 0.96 29.99 31.12 19.84 1.56 4.42 8.19 1.4 2.52 100

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 Pop. Density (total) Rural 177 1981 216 171 1991 267 214 2001 312 253

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

Total no. of Villages also include non-inhabited villages

CONT««.
Inhabited Villages Classified by Population Size, 1991 and 2001 Villages in size group (1991) Number Less than 200 201-500 501-1000 1001-2000 2001-5000 5000+ Total 102952 141143 144998 114395 62915 13376 580779 % 17.9 24.3 25 19.7 10.8 2.3 100 Villages in size group (2001) Number 92541 127054 144817 129662 80313 18758 593154 % 15.6 21.4 24.4 21.9 13.5 3.2 100

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 Personal Agricultural Financial -Personal -Agricultural

(B) Services

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. y Durables: watches, bicycles, radios, TV, home appliances.
y

INSTITUTIONAL MARKETS
Constituents: agriculture & allied activities, food processing, poultry, fishery, animal husbandry, NGO, etc. Products

Consumables: agri-inputs animal feed, fishnets, fuel etc. y Durables: agri-implements (tractors, pump sets)
y

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 67% 60% 58% 47% 78% 42% 33%

Washing Cake Tea Toilet Soap Tooth Paste Tooth Powder Electric Bulb Shampoo

MOST POPULAR ITEMS
Rural Ranking Toilet Soap Washing Powder Packaged Tea Biscuits Detergent Cakes 1 2 3 4 5 Urban Ranking Toilet Soap Biscuits Washing Powder Packaged Tea Detergent cakes

RURAL CONSUMERS EXPENDITURE PATTERN
Per capita consumption Expenditure (Rs. Per month) Rural 1983 1991 2001 112 281 486 Urban 166 458 855

Consumption of Rural per capita consumption expenditure Food 1983 1991 2001 66 63 59 Non-Food 34 37 41

COMPARISON OF RURAL AND
URBAN ENVIRONMENT

Urban Size and Characteristics

Rural

‡ Large population size growing at a fast growth rate ‡ Incoming immigration from the rural area for education and employment. ‡ The population density is high. ‡ Towns are smaller urban units.

‡ Villages is the human settlement with a small administrative unit. ‡ Comprises few hundred households and the population growth due to immigration is insignificant. ‡ Migration from village to city/Towns is to get better education and employment.

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 µthakur 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 from professionals, skilled, semiskilled to unskilled workers. ‡ Occupational specialization is achieved with higher education and training to build skills. ‡ Interaction and mobility is spread over large geographical, social and economic area. ‡ Relationship is more complex with differentiation in personal and professional life. There is erosion of custom, tradition, and religion. ‡ Women have freedom in choice of activity and interest. ‡ Predominant occupations are cultivation and agricultural labour. ‡ People continue to practice traditional occupations. ‡ Skill upgradation with technology has been limited. ‡ Restricted to smaller geographical, social, and economic areas. ‡ Individuals are recognized or referred to on the basis of family, caste and village. Individual behavior is governed by custom, tradition and religion. ‡ Women have limited freedom in choice of activity and interest.

Realms of activities

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