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)


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

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

Sahara

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
Marketing

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

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 Rural Marketing Participants Dimensions of the transaction

Products/ services

Modalities

Norms

Outcomes

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 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

Construction

Manufacturing

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

524.0

628.8

741.6

76.7

74.3

72.2

19.8 Source: Census 2001

16.7

15.2

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

70,001

1,05,000

Middle Upper Middle

7.1 1.2

10.4 3.9

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

High

0.5

3.0

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

Sewa

Agri Marketing

Ozhwar Sandhiyes

Agri extension

Universities

EID Parry

Close of Session

Thank You