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

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

Contd
LG Electronics NABARD All places other than the Only clarifies what are 7 metros the cities All locations with a population upto 10, 000 considered rural Village & town characteristics not defined

Sahara

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

Phases in Rural Marketing

Sr. No 1 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)
Green

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

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 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 Population Trends

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

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) <= 35,000 35,001- 70,000 70,001 1,05,000 1,05,001- 1,40,000 > 1,40,000 Income Class 1989-90( % Households) 67.3 23.9 7.1 1.2 0.5 1998-99 ( % Households) 47.9 34.8 10.4 3.9 3.0 Low Low Middle Middle Upper Middle High

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 Infrastructure Provision Rural Services Government NIC Private N- Logue NGO/ PPP Simputer

Bhoomi( Karnataka ) Agmarknet Universities E- Choupal EID Parry

Sewa

Agri Marketing Agri extension

Ozhwar Sandhiyes

Close of Session

Thank You