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
 Strategic Issues & Directions in rural marketing
 Defining Rural India
Organisation Definition Limitations
NSSO  rural not defined
( Census)  Population density < 400 / Sq Km
 75 percent of the male working
population is engaged in agriculture
No Municipal corporation / board

Planning  Towns upto 15,000 population are Town characteristics

Commission considered rural not defined
 Cont’d
LG Electronics All places other than the Only clarifies what are
7 metros the cities

NABARD All locations with a Village & town

population upto 10, 000 characteristics not
considered “ rural” defined

Sahara Commercial Population

establishments located characteristics unknown
in areas servicing less
than 1000 population

Source: The Rural Marketing Book- Text & Practice, Kashyap. P and Raut. S
( 2007)
 Defining Rural Marketing
National Commission on NGOs Corporate Rural
Agriculture Marketing Definition
Decisions to produce Marketing products Function that manages
saleable farm produced in rural areas all activities involved in
commodities involving to urban areas assessing, stimulating
all the aspects of the and converting the
market system or purchasing power of
Marketing products
structure, both rural consumers into
produced in rural areas
functional and effective demand for
in rural markets
institutional, based on specific products and
technical & economic services to create
considerations and satisfaction & a better
includes the pre & post standard of living for
harvest operations. achieving organisational
goals.
 Phases in Rural Marketing
Sr. No Time Frame Key Events & Trends
1 Phase One( Pre 1960’s) 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
 Cont’d
2 Phase Two ( 1960s to 1990s)
Green Revolution
Companies like
Mahindra and Mahindra,
Sri Ram Fertilisers and
IFFCO emerge
Rural products were
also marketed through
agencies like KVIC

3 Phase Three( 1990s to Present) 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 Urban

Rural
From

Urban

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

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

Participants Products/ Modalities Norms Outcomes

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
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
•Livestock & fisheries
• On land activities
•Manufacturing &
• Farm Activities services
 Rural Employment Patterns( Male)
Sector Year – 1987 ( % share in Year -2004 ( % share in
employment) employment)

Agriculture 75 67

Transport & 2 8
Communication
Trade & Hotels 5 7

Construction 4 7

Manufacturing 7 8

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

 Rural India – Population Trends

1971 1981 1991 2001

Total 548.2 683.3 848.3 1026.9

Population (in
million)
Rural 524.0 628.8 741.6
Population (in
million)
As a proportion 76.7 74.3 72.2
of total
population

Decadal 19.8 16.7 15.2

Variation
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 Income Class 1989-90( % 1998-99 ( %
( at 1998-99 Households) Households)
prices)
<= 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

1,05,001- Upper Middle 1.2 3.9

1,40,000

> 1,40,000 High 0.5 3.0

Source: National Council for Applied Economic Research, 2000

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 Government Private NGO/ PPP

Infrastructure NIC N- Logue Simputer

Provision

Rural Services Bhoomi( Karnatak Sewa

a)

Agri Marketing Agmarknet E- Choupal Ozhwar

Sandhiyes

Agri extension Universities EID Parry

Close of Session

Thank You