2014

Q. Name two institutes engaged in marketing of agricultural products under contract farming
in India? (2 marks).
Ans:
 Karnataka State Agricultural Marketing Board
 Krishi Maratavahini
 Madhya Pradesh State Agricultural Marketing Board
 Maharashtra State Agricultural Marketing Board, Pune
 Meghalaya State Agricultural Marketing Board
 Orissa State Agricultural Marketing Board, Bhubaneswar
 Punjab State Marketing Board
 Rajasthan State Marketing Board
 AP Agricultural Marketing Board
 Domestic & Export Market Intelligence Cell
 Tamil Nadu Agricultural University and Agri Marketing Board
 HP State Agricultural Marketing Board

Q. What are the four A’s of Rural Marketing Mix? (2 marks).

Ans: For rural market 4Ps alone are not sufficient. The 4As also has to be considered and keep
in mind while formulating the plan to enter the rural market because these are also critically
important.

1. Availability

The first challenge in rural marketing is to ensure availability of the product or service. India’s

2. Affordability

The second major challenge is to ensure affordability of the product or service. With low
disposable incomes, products need to be affordable to the rural consumer, most of who are on
daily wages.

3. Acceptability

The next challenge is to gain acceptability for the product or service. Therefore, there is a need
to offer products that suit the rural market.

4. Awareness

Building awareness is another challenge in rural marketing. A large part of rural India is
inaccessible to conventional advertising media. The media penetration in rural areas
is only about 57%.It has been seen that, two out of five Indians are unreached by any media - TV,
Press, Radio and Cinema put together. Haats, mandis and melas are opportunities.
Q. Name two folk media used in Rural India. (2marks)
Ans: folk dance: Colorful, vibrant, melancholic, elegant, graceful — all these attributes form the
core of folk dances. They attract audience since the tunes are generally feet tapping and very
well liked by the local crowd. The folk dances vary in range from the mountains to the plains to
the desert to the coastal areas. Every geographical area differs in the type of dances that it
offers.

Folk music : is yet another popular form of folk media. Music is governed by the language,
colloquial accent, and instruments used by the local people. Thus, each territorial area has a
distinct folk music of its own. Folk music is especially admired since it does not require
elaborate set ups or any preparation. Wherever a crowd gathers, people begin to sing and
others gradually join. Lyrics of folk music are pretty striking since they echo the problems of the
people with a satirical taunt to the government and the officials.
Street theatre : is one more form of folk media that is being used widely to propagate socio
political messages and to create awareness for social issues. A group of people perform on
streets, and gather crowds. The objective here is to make people a part of the play and thus
convey the social message.
Puppetry : is another form of folk media that is equally entertaining and informative. Puppets
come in four basic types- glove puppets, string puppets, rod puppets and shadow puppets.
Each type is found in a particular state.
Q. State two important reasons which can be attributes to the sudden growing importance of
rural markets?

Ans: Population Growth: Increased in population and, hence, increase in demand. At present
rural population is account for nearly 72 crores of total Indian population, three times more
than urban population. More population means more demand.

Rural Development Priority:

Liberal assistance from national and international financial institutions and agencies for rural
development has changed rural lifestyle. World Bank has granted billions of rupee for rural
infrastructure.

Growth of Agro-processing Industry:

Establishment and growth of agro-processing industries, and active involvement of the giant
business units For example, Reliance Fresh in distribution of agro-products like fruits,
vegetables, serials, etc., have changed income and life style of rural people.

Improved Literacy Rate:

Increased literacy rate and education level among rural folks, and growth of academic and
training institutes in rural places have accelerated growth of rural market. Literacy level 25%
before independence – is now more than 67%.

Q. State two characteristics of Co-operative societies. (2MARks) Ans:

Free membership: An individual of the age of majority of the same locality, or class may be
member of a cooperative society on the basis of consent of the members.

Number of members: For formation of a primary cooperative society, fifteen persons

of majority age are necessary. Maximum number is not mentioned in the act.

Objective: The objective of cooperative society is not earning profit, but to achieve
economic welfare through mutual cooperation.

Entity: A cooperative society has a society, independent form its members.

Formation: A group of persons can from a cooperative society. It must be registered and
formed according to Cooperative Act. 1940. For registration, cooperation must be under
observation for six month.

Q. Differentiate between rural marketing and urban marketing? (5marks)

Ans: The fundamental differences between urban and rural are discussed in the following
points:

1. A settlement where the population is very high and has the features of a built
environment (an environment that provides basic facilities for human activity), is known
as urban. Rural is the geographical region located in the outer parts of the cities or
towns.
2. The life in urban areas is fast and complicated, whereas rural life is simple and relaxed.
3. The Urban settlement includes cities and towns. On the other hand, the rural
settlement includes villages and hamlets.
4. There is greater isolation from nature in urban areas, due to the existence of the built
environment. Conversely, rural areas are in direct contact with nature, as natural
elements influence them.
5. Urban people are engaged in non-agricultural work, i.e. trade, commerce or service
industry. In contrast, the primary occupation of rural people is agriculture and animal
husbandry.
6. Population wise, urban areas are densely populated, which is based on the
urbanisation, i.e. the higher the urbanisation, the higher is the population. On the
contrary, the rural population is sparse, which has an inverse relationship with
agriculturism.
7. Urban areas are developed in a planned and systematic way, according to the process
of urbanisation and industrialisation. Development in rural areas is seldom, based on
the availability of natural vegetation and fauna in the region.
8. When it comes to social mobilisation, urban people are highly intensive as they change
their occupation or residence frequently in search of better opportunities. However, in
rural areas occupational or territorial mobility of the people is relatively less intensive.
9. Division of labour and specialisation is always present in the urban settlement at the
time of job allotment. As opposed to rural areas, there is no division of labour.

Q. Explain the nature and characteristics of the rural markets in India? (5marks)
Ans: 1. More Prospective:
With the initiation of various rural development programmes, there has been an upsurge of
employment opportunities for the rural poor.
One of the biggest cause behind the steady growth of rural market is that it is not exploited and also
yet to be explored.

2. Size:
The rural market in India is vast and scattered, and offers a plethora of opportunities in
comparison to the urban sector. It covers the maximum population and regions, and thereby,
the maximum number of consumers. Rural market is account for about 74% of total Indian
population.

3. Nature:
The social status of the rural regions is precarious (uncertain) as the income level and literacy is
extremely low along with the range of traditional values and superstitious beliefs that have
always been a major impediment (obstacle) in the progression of this sector.

4. Response to Products:
Product-related features of rural segment are:
i. Rural markets (buyers) believe in product utility rather than status and prestige. However, they like
novel products with distinctive features.
ii. Most village customers consider tastes rather than usefulness in long run.

iii. They like simple and long-life products. They are interested in immediate results. Products must
offer immediate benefits.
iv. They respond to those products that suit their religious faith, and social norms and customs.
v. They ask for such products which can assists in their traditional occupations and life style.
vi. They have minimum urge for individuality. They prefer family-used products than personal- used
products.
vii. They strongly prefer such products that can change and improve their life-style.
viii. They are less concerned with product services associated with products like after-sales
services, guarantee and warrantee, home delivery, and other similar services. Branding, packaging,
and labeling have less influence compared to urban segments.
5. Response to Price:
Price-related features of rural segments include:
i. Rural customers are price-sensitive and highly influenced by level of pricing. Price is the strongest
factor that affects their buying decision.
ii. They buy those products which are low in price and medium in quality.
iii. They are easily attracted by price discounts and rebates.

iv. They prefer credit facility. They normally have strong desire to postpone payment for certain
period.
v. Some middle-class rural customers are attracted by installment and loan facility.

6. Response to Promotion:
Promotion-related features of rural segment include:
i. Rural customers are highly attracted by local and regional promotional efforts.
ii. Their reference groups consist of educated and non-educated family members and relatives living
in urban areas and foreign countries as well.
iii. Personal selling seems more influential to convince rural mass.

iv. They are attracted by such sales promotional tools or articles which are useful in their routine life
such as knife, gas lighter, rings, key- chains, caps, photos of local actors, calendars and cards with
religious impression, etc.
v. They have a strong faith on local religious and spiritual leaders. Such leaders are among the most
influential reference groups.
vi. Publicity efforts related to local vocational and agricultural activities can impress them.

vii. They can be appealed by visual or pictorial advertisements published in local and regional
languages.

7. Response to Distribution:
Distribution-related features of rural segment include:
i. Normally, they buy from familiar retailers and salesmen. They are hesitant to buy from big
shopping malls or departmental stores. However, situation is changing gradually.
ii. Rural customers strongly favour relations. They continue buying from known and established
retailers who maintain close family relations with them.
iii. Mostly they buy from retail outlets situated in rural or sub-urban areas. However, some rural
customers like to buy products from nearby cities also.
iv. Normally they place frequent orders of small in size. They lack storage facilities.
v. They are not interested in home-delivery. They want immediate possession. They lack patience.
They are found eager to possess and use the products immediately.
vi. Caste, religion, political party, relations, etc., play important role in selecting the retailers.

vii. Online and direct marketing are not much popular in rural areas. Sometimes, a few of them
are interested in network marketing.
8. Predictability:
Unlike urban markets, the rural markets are difficult to predict, and possess special
characteristics. The featured population is predominantly illiterate, have low and irregular
income, lack of monthly income, and flow of income fluctuating with the monsoon winds.
They don’t have a stable pattern of reacting due to income factors.
9. Role of Government:
Demand of products depends on availability of basic facilities like electricity, transportation,
schools, hospitals, etc. The steps taken by the Government of India to initiate proper irrigation,
infrastructural developments, prevention of flood, grants for fertilizers, and various schemes to
cut down the poverty line have improved the condition of the rural masses. Rural market
depends on government’s contribution to the rural sector.

10. Rigidity:
Most rural customers are illiterate, backward, and orthodox. It is very difficult to convince
them to buy the products. They believe in the present and lack ambitions.

11. High Level of Heterogeneity:

We find different types of buyers in rural areas. Some are simple, while some are sophisticated;
some are extreme rich, while some are extreme poor; some are highly educated, while some are
complete illiterate; some are dynamic and modern, while some are very rigid and orthodox;
some believe in quality and status, while some believe in availability and price.

Q. Write a note on Agri Export Zones. (5 marks)

Ans: With the primary objective of boosting agricultural exports from India, in March 2001,
Government

of India announced a policy of setting up of Agri Export Zones (AEZs) across the country. The Central

Government has sanctioned 60 AEZs comprising about 40 agricultural commodities .AEZs is

spread across 20 states in the country.. The concept of agri export zone takes a comprehensive

look at a particular produce/product located in a contiguous area for the purpose of developing

and sourcing the raw materials, their processing/packaging, leading to final exports. The entire

effort is centred around the cluster approach of identifying the potential products, the

geographical

region in which these products are grown and adopting an end-to-end approach of integrating

the entire process right from the stage of production till it reaches the market.

Benefits

i) Strengthening of backward linkages with a market oriented approach.

ii) Product acceptability and its competitiveness abroad as well as in the

domestic market.

iii) Value addition to basic agricultural produce.

iv) Bring down cost of production through economy of scale.

 v) Better price for agricultural produce.

vi) Improvement in product quality and packaging.

vii) Promote trade related research and development.

viii) Increase employment opportunities.

Q. Explain the various functions of NABARD. (5 marks)

Ans: 1. To serve as an apex financing agency for the institutions providing investment and production
credit for promoting various developmental activities in rural areas;

2. To take measures towards institution building for improving absorptive capacity of the credit
delivery system, including monitoring, formulation of rehabilitation schemes, restructuring of
credit institutions and training of personnel;

3. To coordinate the rural financing activities of all institutions engaged in developmental work
at the field level and liaison with the Government of India, the State Governments, the Reserve
Bank and other national level institutions concerned with policy formulation; and

4. To undertake monitoring and evaluation of projects refinanced by it.

5. NABARD gives high priority to projects formed under Integrated Rural Development
Programme (IRDP).

6. It arranges refinance for IRDP accounts in order to give highest share for the support for
poverty alleviation programs run by Integrated Rural Development Programme.

7. NABARD also gives guidelines for promotion of group activities under its programs and
provides 100% refinance support for them.
8. It is setting linkages between Self-help Group (SHG) which are organized by voluntary
agencies for poor and needy in rural areas.

9. It refinances to the complete extent for those projects which are operated under the
‘National Watershed Development Programme‘and the ‘National Mission of Wasteland
Development‘.

10. It also has a system of District Oriented Monitoring Studies, under which, study is
conducted for a cross section of schemes that are sanctioned in a district to various banks, to
ascertain their performance and to identify the constraints in their implemen- tation, it also
initiates appropriate action to correct them.

11. It also supports “Vikas Vahini” volunteer programs which offer credit and development
activities to poor farmers.

12. It also inspects and supervises the cooperative banks and RRBs to periodically ensure the
development of the rural financing and farmers’ welfare.

13. NABARAD also recommends about licensing for RRBs and Cooperative banks to RBI.

14. NABARD gives assistance for the training and development of the staff of various other
credit insti¬tutions which are engaged in credit distributions.

15. It also runs programs for agriculture and rural development in the whole country.

16. It is engaged in regulations of the cooperative banks and the RRB’s, and manages their
talent acquisition through IBPS CWE conducted across the country.

Q. Discuss the major characteristics of the Indian FMCG sector?

(5marks) Ans:
Q. Discuss some major marketing strategies required to meet the challenges and generate
growth for agrochemical market in India.(5marks)
Ans:
Q. Explain the various causes of rural indebtedness.

Ans: Cause # 1. Better Position to Borrow:

The rights of the land holders have been really ascertained as a result of land settlement policy
of the Government and consequent upon the various improvements, the value of land
increased as a form of security. The farmer’s credit was more definite and of greater value.
He was in a better position to borrow and because of ignorance and extravagance he did
borrow the maximum that he could.

Cause # 2. Farmer’s Increased Credit:

The farmer’s credit increased due to rise in agricultural prices, rents and land values. This, in
turn was the result of stable rule, the new transport and the growth of towns. British law also
gave the peasant the rights of absolute ownership and free transfer of land.

Cause # 3. Un-Remunerative Farming:

The excessive pressure of population on the land and the consequent sub-division and
fragmentation of land; the decay of cottage industries and the lack of subsidiary occupations to
supplement farm income; the ill-health and inefficiency of the farmers; the insecurity of the
crops and the loss of cattle through famine and disease- all these made farming un-
remunerative. The peasant, therefore, was forced to borrow.

Cause # 4. Heaviness of Land Revenue:

According to R.C. Dutt the heaviness of land revenue with the rigidity of its collection was one
of the causes of rural indebtedness. Even in periods of famines and depression there was little
or no remission of land revenue.

Cause # 5. Increased Standard of Living:

There has been a change the standard of living of the peasant. There was a general rise in the
standard of living of the farmer without
corresponding increase in their purchasing power. Hence they resorted to
borrowing.

Cause # 6. Conditions Necessary to Induce the Money Lenders to Lend:

The establishment of a strong and centralised rule and new judicial system by the British
created the condition necessary to induce the money-lenders to give, loans against proper
security and get high rates of inter est.

Moneylenders could get the debtors arrested or get their properties attached. Earlier it was not
customary for the creditor to seize the land of his debtor. But with the steady rise in land
values and with the facilities available for the transfer of land, it became profitable and easy for
the moneylender to lend and realise.

Cause # 7. Improvident Expenditure:

Another cause of rural indebtedness was traditional social expenses on wedding, deaths,
dinners, etc. The peasants had also to borrow for cultivation expenses and even for domestic
expenses, which went up during temporary prosperity and remained high even bad times.

Cause # 8. Ancestral Debts:

It may also be pointed out that the debt is ancestral. As it is said the Indian farmer is born
in debt, lives in debt and dies in debt leaving behind debt.

Cause # 9. Questionable Practices of Money-Lenders:

To these may be added the questionable practices of the money- lenders. The money lenders
followed many questionable practices like deducing advance interest, getting gifts for doing
business, liking of thumb impression on blank paper, manipulating accounts, executing
documents for larger sums than those actually given, taking of conditional sale deed, etc. The
rates obtained by the moneylender were high.

Q. Discuss the major challenges in Rural Marketing in India?(8marks)

Ans: 1. Deprived people and deprived markets:
The number of people below the poverty line has not decreased in any appreciable manner.
Thus, poor people and consequently underdevel- oped markets characterize rural markets. A
vast majority of rural people is tradition bound, and they also face problems such as
inconsistent electrical power, scarce infrastructure and unreliable telephone system, and
politico-business associations that hinder development efforts.

2. Lack of communication facilities:

Even today, most villages in the country are inaccessible during the monsoons. A large number
of villages in the country have no access to telephones. Other communication infrastructure is
also highly underdeveloped.

3. Transport:
Many rural areas are not connected by rail transport. Many roads have been poorly surfaced
and got severely damaged during monsoons. The use of bullock carts is inevitable even today.
Camel carts are used in Rajasthan and Gujarat in both rural and urban sectors.

4. Many languages and dialects:

The languages and dialects vary from state to state, region to region and probably from district
to district. Since messages have to be delivered in the local language, it is difficult for the
marketers to design promotional strategies for each of these areas. Facilities such as phone,
telegram and fax are less developed in villages adding to the communication problems faced by
the marketers.
5. Dispersed markets:
Rural population is scattered over a large land area. And it is almost impossible to ensure the
availability of a brand all over the country. District fairs are periodic and occasional in nature.
Manufacturers and retailers prefer such occasions, as they allow greater visibility and capture
the attention of the target audience for larger spans of time.
Advertising in such a highly heterogeneous market is also very expensive.

6. Low per capita Income:

The per capita income of rural people is low as compared to the urban people. Moreover,
demand in rural markets depends on the agricultural situation, which in turn depends on the
monsoons.
Therefore, the demand is not stable or regular. Hence, the per-capita income is low in
villages compared with urban areas.

7. Low levels of literacy:

The level of literacy is lower compared with urban areas. This again leads to a problem of
communication in these rural areas. Print medium becomes ineffective and to an extent
irrelevant, since its reach is poor.

8. Prevalence of spurious brands and seasonal demand: For any branded product, there
are a multitude of local variants, which are cheaper and hence more desirable. Also, due to
illiteracy, the consumer can hardly make out a spurious brand from an original one. Rural
consumers are cautious in buying and their decisions are slow, they generally give a product
a trial and only after complete satisfaction they buy it again.
9. Different way of thinking:
There is a vast difference in the lifestyles of the people. The choice of brands that an urban
customer enjoys is not available to the rural customer, who usually has two to three choices.
As such, the rural customer has a fairly simple thinking and their decisions are still governed by
customs and traditions. It is difficult to make them adopt new practices.

10. Warehousing problem:

Warehousing facilities in the form of godowns are not available in rural India. The available
godowns are not properly maintained to keep goods in proper conditions. This is a major
problem because of which the warehousing cost increases in rural India.

11. Problems in sales force management:

Sales force is generally reluctant to work in rural areas. The languages and dialects vary from
state to state, region to region, and probably from district to district. Since messages have to
be delivered in the local language, it is difficult for sales force to communicate with the rural
consumers. Sales force finds it difficult to adjust to the rural environment and inadequate
facilities available in rural areas.

12. Distribution problem:

Effective distribution requires village-level shopkeeper, toluka-level wholesaler/dealer,
district-level stockiest/distributor, and company- owned depot at state level. These many
tiers increase the cost of distribution.
Q. Explain any four challenges for Cooperative sector in India. Write four strategies for
strengthening the primary agricultural credit societies. (8marks)

Ans: Several reasons are adduced to the painfully failure of the cooperative movement in the
Indian context. They are as follows:
1. Lack of spontaneity:
Co-operative movement in India lacks spontaneity in the sense that it has not been emanated
from the people themselves. They usually do not come forward to organise co-operatives on
their own accord.

On the other hand, the ruralites perceive the cooperative societies and banks as government
lending agencies. They are interested only in deriving benefits from them instead of
contributing anything in return.

2. Lack of funds:
The cooperatives have resource constraints as their owned funds hardly make a sizeable
portfolio of the working capital. With weak owned fund base, the borrowings of the
cooperatives from the central financing agency are considerably conditioned. This has stood in
the way of adequately meeting the credit requirements of the existing as well as new members.

3. Neglecting the demand aspect:

Historically, the cooperatives have been viewing the problem of agricultural credit from the
view point of “supply”. The “demand” aspect is neglected.

4. Loans for productive purposes only:

ADVERTISEMENTS:

The Cooperative Credit Societies do not cater to all the credit requirements of the farmers.
They grant loans only for agricultural operations. Farmers approach the money-lenders to
meet their other requirements. This divided allegiance to the co-operative society and the
money-lender stands in the way of the growth of the cooperative movement.

5. Negligence of non-credit aspects:

By and large the Primary Agricultural Cooperative Societies are disbursing credit only and have
not yet emerged as true multipurpose institutions, undertaking diversified functions besides
credit.

6. Regional disparities:

ADVERTISEMENTS:

There have been good deals of regional disparities pertaining to credit availability. The picture
of credit availability in the Eastern states, tribal and hilly regions is simply dismal. Consequently,
the farmers in these regions farm technology.

7. Lack of co-operation on the part of the people:

In the Indian context, most of the people are in the grip of illiteracy, ignorance and
conservatism. They do not understand the significance of cooperation in their lives. Absence
of willing cooperation on their part hinders the growth of cooperative movement.

8. Horizontal and vertical linkages, though, structurally established, have not yet
operationally become effective.

ADVERTISEMENTS:

9. Exploitation:
In the absence of proper marketing arrangements and functions at the level of Primary
Agricultural Cooperative Societies, the rural poor falls prey to the mercy of middlemen who
exploit the situation.

10. Defective management:

The cooperative credit structure is criticised on the ground that it is mostly managed by
landlords and large farmers. Hence small and medium farmers do not get their fair share. They
are often deprived of the assistance from the co-operative society.

Large farmers and landlords, with their superior economic and social power, manage to have a
greater hold on these societies. A lion’s share of benefits goes to them. In this way, the
cooperatives suffer from nepotism, favouritism and partiality. The growth of the cooperative
movement, thus, is severely affected.

Q. Write four challenges for Indian tractor industry. Explain some marketing strategies for
Agrochemicals in India. 4+4
Ans:
 2015

Q. Define rural marketing? (2 marks)

Ans: Rural marketing is a process of developing, pricing, promoting, and distributing rural
specific goods and services leading to desired exchange with rural customers to satisfy their
needs and wants, and also to achieve organizational objectives.
The concept of Rural Marketing in India Economy has always played
an influential role in the lives of people. In India, leaving out a few metropolitan cities, all the
districts and industrial townships are connected with rural markets. The rural market in India
generates bigger revenues in the country as the rural regions comprise of the maximum
consumers in this country. The rural market in Indian economy generates almost more than
half of the country’s income. Rural marketing in Indian economy can be classified under two
broad categories.
Q. State two basic functions of regulated markets. (2 marks)

Ans: (i) Ensure remunerative price of the agricultural produce to the farmers,

(ii) Narrow down the price differentials between the producer and the consumer,
and

(iii) To control the non-functional margins of the traders and commission agents.
Q. State two conditions necessary for effective market segmentation. 2
Ans: The requirements for effective market segmentation are as follows:
a) Measurable: The size, needs, purchasing power, and characteristics of the customers in the
segment should be measurable. Quantification should be possible.
b) Divisible: The segments should be differentiable. There must be clear-cut basis for dividing
customers into meaningful homogeneous groups. They should respond differently to different
marketing mixes. There should

be differences in buyer's needs, characteristics and behaviour for dividing in groups.

c) Accessible: The segment should be reachable and serviceable. It should be accessible through
existing marketing institutions, such as distribution channels, advertising media and sales force.
There should be middlemen to distribute the products.

d) Substantial: The segment should be substantial. It should be large enough in terms of

customers and profit potential. IT should justify the costs of developing a separate marketing
mix.

e) Actionable: It should be actionable for marketing purposes. Organizations should be able to

design and implement the marketing mix to serve the chosen segment.
Q. State two principles of cooperative society.
Ans:

1. Voluntary and Open Membership

Cooperatives are voluntary organisations, open to all persons able to use their services and
willing to accept the responsibilities of membership, without gender, social, racial, political or
religious discrimination.

2. Democratic Member Control

Cooperatives are democratic organisations controlled by their members, who actively

participate in setting their policies and making decisions. Men and women serving as elected
representatives are accountable to the membership. In primary cooperatives members have
equal voting rights (one member, one vote) and cooperatives at other levels are also organised
in a democratic manner.

3. Member Economic Participation

Members contribute equitably to, and democratically control, the capital of their cooperative.
At least part of that capital is usually the common property of the cooperative. Members
usually receive limited compensation, if any, on capital subscribed as a condition of
membership. Members allocate surpluses for any or all of the following purposes: developing
their cooperative, possibly by setting up reserves, part of which at least would be indivisible;
benefiting members in proportion to their transactions with the cooperative; and supporting
other activities approved by the membership.

4. Autonomy and Independence

Cooperatives are autonomous, self-help organisations controlled by their members. If they

enter into agreements with other organisations, including governments, or raise capital from
external sources, they do so on terms that ensure democratic control by their members and
maintain their cooperative autonomy.
 5. Education, Training, and Information

Cooperatives provide education and training for their members, elected representatives,
managers, and employees so they can contribute effectively to the development of their co-
operatives. They inform the general public - particularly young people and opinion leaders -
about the nature and benefits of co-operation.

6. Cooperation among Cooperatives

Cooperatives serve their members most effectively and strengthen the cooperative movement
by working together through local, national, regional and international structures.

Q. Explain the phased evolution of rural

marketing. 5 Ans:

Q.State and explain five points of difference between behavior in rural and urban markets. 5
Ans: Rural Consumer:

i. Bound by tradition, social norms and religion; consumers tend to be close minded.

ii. Many consumers in high and middle income groups buy in bulk are brand conscious and look for
convenience. Buying is mostly done from nearby towns.

iii. Marked preference for fresh food items; food-grains purchased in bulk.

iv. Mostly cash economy; local traders provide credit.

v. Erratic supply of electricity makes stocking of ice creams and chocolates difficult.

vi. Trips to nearby towns are a source of enjoyment, where several products are bought together.

vii. Largely a value buyer, is turned off by gimmicks.

viii. Likes direct communication in local language, rejects the modern idiom and unable to respond to
bizarre humour appeals.

ix. Male-oriented products likely to do well as females are not given importance.

x. Buys products that are easily available. Exhibits brand loyal behaviour; easy bait for imitation products.

xi. Purchases are highly influenced by families or opinion leaders like elders or local shopkeepers.

xii. Buying power depends on good monsoons and harvests.

Urban Consumer:

i. Modernity pulling at tradition; consumers appear outwardly modern but are traditional at heart.

ii. Though families buy on a monthly basis, trips to nearby stores and supermarkets are more common.
Impulse buying and consumption of fast foods is high.

iii. Preference for fresh vegetables, but processed foods also bought. Only large families buy in bulk.
iv. Credit and debit cards becoming popular.

v. Larger per capita consumption of ice creams and chocolates.

vi. Shopping for daily items is seen as a chore.

vii. Willing to try premium products; gets influenced by advertising.

viii. Communication in a mix of languages, likes quirky communications and influenced by hype.

ix. Working women and higher education for girls make female-oriented products successful.

x. Mostly brand loyal but willing to experiment, discerning about brands; lower income segments buy
imitation products.

xi. Highly influenced by families, but individual preferences on the rise; dependent on online advice and
peers.

xii. Buying power is stable due to a social class dependent on fixed salaries.

Q.‘’The rural markets are changing’’ Elaborate and justify your

answer. 5 Ans:

Q. Explain the various factors which influence rural consumers during purchase of a product. 5
Ans: 1.Social Activities: Rural consumer always believe that whatever he buys it should be
good, by which he will have a name in the society. They should have a standard than their
neighbors. They are conservative and take long time to buy something. It is not easy to
influence them. They always believe that it is better to discuss with others before purchase
2. Cultural Background: They are very conservative; believe in Traditions, customs, and old
rules. Because of all these it is really tough to understand them. They are superstition and
before buying any product they check with their elders. If it is in their culture and Traditions
then they go for the product.
3. Family Size: The families in rural are market are joint ones. Till now they live in joint families.
They check with the family members and discuss everything before buying any product. It is
important to check the size of the family, depending upon this they can go for the product. The
family member's discussion influences the purchasing decision. Here the money does not play
any role; they go with their decision only.
4. Influence of opinion leaders: Rural consumers believe to take advice from the opinion
leaders before buying any product. Opinion leaders are those people who are well educated,
go to towns frequently to buy products, School teachers, Head masters, President of the
village, youth leader etc. They feel that their opinion leaders will have more idea about the
product then others. They influence more on the decision of opinion leaders only. Whatever
be the decision of the leader they try to realize on it then they move on to that.
5. Status in the area: Most of the people in rural market buy products according to their status
in that area. For Ex: People in the villages of Andhra Pradesh buy products by looking at their
status, If he is the president of the village then he buys all the branded and costlier products.
Hence depending upon the role and status in the society they like to buy the product.
Sometimes to make a show off they buy highly priced and branded products even if it is not in
need.
6. Purchasing Power: To buy any product the main factor we look at is the economy nature of
the consumer. In rural India most of them are depended upon the agriculture, which is a
seasonal demand business. Depending upon the yield only they go for any product. They look
at all the factors before buying any product. They look the product features and believe that
for low price it should come for long term usage. Hence it is one of the important factors that
companies should take into account before going in the market. .
7. Advice of Retailer: Depending upon the relationship with the retailer most of the consumers
take their advice and follow it. They believe he is offering them the right choice. They believe
he is in the market and knows well, that is the reason they go for the advice of the retailer. If at
all he is the new customer also he buys the product depending upon his experience at the retail
shop.
Q. Write a note on NABARD. 5

Ans: National Bank for Agriculture and Rural Development (NABARD) was established on
July 12, 1982 with the paid up capital of Rs. 100 cr. by 50: 50 contribution of government of
India and Reserve bank of India.
It is the apex banking institution to provide finance for Agriculture and rural development.
National Bank for Agriculture and Rural Development (NABARD) was established on July 12,
1982 with the paid up capital of Rs. 100 cr. by 50: 50 contribution of government of India and
Reserve bank of India. It is an apex institution in rural credit structure for providing credit for
promotion of agriculture, small scale industries, cottage and village industries, handicrafts etc.

Functions of NABARD:

NABARD was established as a development bank to perform the following functions:

1. To serve as an apex financing agency for the institutions providing investment and
production credit for promoting various developmental activities in rural areas;

2. To take measures towards institution building for improving absorptive capacity of the credit
delivery system, including monitoring, formulation of rehabilitation schemes, restructuring of
credit institutions and training of personnel;

3. To coordinate the rural financing activities of all institutions engaged in developmental work
at the field level and liaison with the Government of India, the State Governments, the Reserve
Bank and other national level institutions concerned with policy formulation; and

4. To undertake monitoring and evaluation of projects refinanced by it.

5. NABARD gives high priority to projects formed under Integrated Rural Development
Programme (IRDP).

Q. Explain the lifestyle of a rural

consumer. 5 Ans:

Q. Explain the rural marketing model with a suitable diagram. 8

Ans:
Q. Write short notes on the following. 4+4
A) Unconventional Media
B) Folk media
Ans: Unconventional Media, often referred to as guerrilla marketing, often consists of creative,
low- cost marketing methods used by small businesses to temporarily promote a product or
service.

Folk media is an effective means of communication in today’s world since it not only helps
connect people with their cultures but also revives the lost culture of the society. Folk media
forms the language of expression for the local populace and gives them a chance to voice out
their opinions on various issues. It depicts the constantly changing face of any society along
with its virtues and vices. It is a method to underline certain dominant ideologies of the society
through its own people. If observed closely, traditional folk media is an excellent tool to
enhance communication and promote dialogue at the grass root level of any society.
The most popular form of traditional folk media is the folk dance. Colorful, vibrant, melancholic,
elegant, graceful — all these attributes form the core of folk dances. They attract audience since
the tunes are generally feet tapping and very well-liked by the local crowd. The folk dances vary
in range from the mountains to the plains to the desert to the coastal areas. Every geographical
area differs in the type of dances that it offers.
Folk music is yet another popular form of folk media. Music is governed by the language,
colloquial accent, and instruments used by the local people. Thus, each territorial area has a
distinct folk music of its own. Folk music is especially admired since it does not require
elaborate set ups or any preparation. Wherever a crowd gathers, people begin to sing and
others gradually join. Lyrics of folk music are pretty striking since they echo the problems of the
people with a satirical taunt to the government and the officials.
Street theatre is one more form of folk media that is being used widely to propagate socio
political messages and to create awareness for social issues. A group of people perform on
streets, and gather crowds. The objective here is to make people a part of the play and thus
convey the social message. Thus, even a common man identifies with the issue and becomes a
part of the act. Street plays are short, direct, loud, and over expressive since they are
performed in places where there are huge crowds.
Puppetry is another form of folk media that is equally entertaining and informative. Puppets
come in four basic types- glove puppets, string puppets, rod puppets and shadow puppets.
Each type is found in a particular state like glove puppets are found in Kerala, Odissa, and
Tamilnadu. Puppet shows follow a story, a popular legend or a folk tale and end in a moral or
social message. Children, adults, aged — all enjoy puppet shows. Paintings and sculptures also
form an integral part of traditional folk media. The paintings depict life and socio-cultural
environment of local people. This is a form of expression without words or music. They are not
just images but give us a clear idea of what the people face in a societal setup, their problems,
their struggles etc.
Q. What are consumer durables? What are the major issues that create problems in marketing of
durables in rural market in India. 2+6
Ans: Consumer durables are a category of consumer products that do not have to be
purchased frequently because they are made to last for an extended period of time. They are
also called durable goods or durables

Consumer goods are often divided into two categories: durables and non- durables.
Durables have an extended product life and are not worn out or consumed quickly when
you use them. Since they're made to last, durable goods are typically more expensive
than non-durable goods that have to be purchased over and over again.

A washing machine is an example of a durable good -- it takes many years and multiple
uses to wear it out. The laundry detergent used in the washing machine is a non-durable
good -- when the bottle is empty, the product is depleted and must be repurchased.

Other examples of durable goods are automobiles, appliances, furniture, jewelry, consumer
electronics and sporting goods.

1. Deprived people and deprived markets:

The number of people below the poverty line has not decreased in any appreciable manner.
Thus, poor people and consequently underdevel- oped markets characterize rural markets. A
vast majority of rural people is tradition bound, and they also face problems such as
inconsistent electrical power, scarce infrastructure and unreliable telephone system, and
politico-business associations that hinder development efforts.

2. Lack of communication facilities:

Even today, most villages in the country are inaccessible during the monsoons. A large number
of villages in the country have no access to telephones. Other communication infrastructure is
also highly underdeveloped.
3. Transport:
Many rural areas are not connected by rail transport. Many roads have been poorly surfaced
and got severely damaged during monsoons. The use of bullock carts is inevitable even today.
Camel carts are used in Rajasthan and Gujarat in both rural and urban sectors.

4. Many languages and dialects:

The languages and dialects vary from state to state, region to region and probably from district
to district. Since messages have to be delivered in the local language, it is difficult for the
marketers to design promotional strategies for each of these areas. Facilities such as phone,
telegram and fax are less developed in villages adding to the communication problems faced by
the marketers.

5. Dispersed markets:
Rural population is scattered over a large land area. And it is almost impossible to ensure the
availability of a brand all over the country. District fairs are periodic and occasional in nature.
Manufacturers and retailers prefer such occasions, as they allow greater visibility and capture
the attention of the target audience for larger spans of time.
Advertising in such a highly heterogeneous market is also very expensive.

6. Low per capita Income:

The per capita income of rural people is low as compared to the urban people. Moreover,
demand in rural markets depends on the agricultural situation, which in turn depends on the
monsoons.
Therefore, the demand is not stable or regular. Hence, the per-capita income is low in
villages compared with urban areas.
7. Low levels of literacy:
The level of literacy is lower compared with urban areas. This again leads to a problem of
communication in these rural areas. Print medium becomes ineffective and to an extent
irrelevant, since its reach is poor.

8. Prevalence of spurious brands and seasonal demand: For any branded product, there
are a multitude of local variants, which are cheaper and hence more desirable. Also, due to
illiteracy, the consumer can hardly make out a spurious brand from an original one. Rural
consumers are cautious in buying and their decisions are slow, they generally give a product
a trial and only after complete satisfaction they buy it again.

9. Different way of thinking:

There is a vast difference in the lifestyles of the people. The choice of brands that an urban
customer enjoys is not available to the rural customer, who usually has two to three choices.
As such, the rural customer has a fairly simple thinking and their decisions are still governed by
customs and traditions. It is difficult to make them adopt new practices.

10. Warehousing problem:

Warehousing facilities in the form of godowns are not available in rural India. The available
godowns are not properly maintained to keep goods in proper conditions. This is a major
problem because of which the warehousing cost increases in rural India.

11. Problems in sales force management:

ADVERTISEMENTS:

Sales force is generally reluctant to work in rural areas. The languages and dialects vary from
state to state, region to region, and probably from district to district. Since messages have to
be delivered in the local language, it is difficult for sales force to communicate with the rural
consumers. Sales force finds it difficult to adjust to the rural environment and inadequate
facilities available in rural areas.

12. Distribution problem:

Effective distribution requires village-level shopkeeper, toluka-level wholesaler/dealer,
district-level stockist/distributor, and company- owned depot at state level. These many
tiers increase the cost of distribution.

Rural markets typically signify complex logistical challenges that directly translate into high
distribution costs. Bad roads, inadequate warehousing and lack of good distributors pose as
major problems to the marketers.

Q. Discuss four advantages and four disadvantages of cooperative societies.

Ans: Advantages:
1. Easy Formation:
Compared to the formation of a company, formation of a cooperative society is easy. Any ten
adult persons can voluntarily form themselves into an association and get it registered with the
Registrar of Co-
operatives. Formation of a cooperative society also does not involve long and complicated
legal formalities.

2. Limited Liability:
Like company form of ownership, the liability of members is limited to the extent of their
capital in the cooperative societies.

3. Perpetual Existence:
A cooperative society has a separate legal entity. Hence, the death, insolvency, retirement,
lunacy, etc., of the members do not affect the perpetual existence of a cooperative society.

4. Social Service:
The basic philosophy of cooperatives is self-help and mutual help. Thus, cooperatives
foster fellow feeling among their members and inculcate moral values in them for a
better living.

5. Open Membership:
The membership of cooperative societies is open to all irrespective of caste, colour, creed and
economic status. There is no limit on maximum members.

6. Tax Advantage:
Unlike other three forms of business ownership, a cooperative society is exempted from
income-tax and surcharge on its earnings up to a certain limit. Besides, it is also exempted
from stamp duty and registration fee.

7. State Assistance:
Government has adopted cooperatives as an effective instrument of socio-economic change.
Hence, the Government offers a number of grants, loans and financial assistance to the
cooperative societies – to make their working more effective.

8. Democratic Management:
The management of cooperative society is entrusted to the managing committee duly elected
by the members on the basis of ‘one-member one -vote’ irrespective of the number of shares
held by them. The proxy is not allowed in cooperative societies. Thus, the management in
cooperatives is democratic.

Disadvantages:
In spite of its numerous advantages, the cooperative also has some disadvantages which must
be seriously considered before opting for this form of business ownership.

The important among the disadvantages are:

1. Lack of Secrecy:
A cooperative society has to submit its annual reports and accounts with the Registrar of
Cooperative Societies. Hence, it becomes quite difficult for it to maintain secrecy of its
business affairs.

2. Lack of Business Acumen:

The member of cooperative societies generally lack business acumen. When such members
become the members of the Board of Directors, the affairs of the society are expectedly not
conducted efficiently.
These also cannot employ the professional managers because it is
neither compatible with their avowed ends nor the limited resources allow for the same.

3. Lack of Interest:
The paid office-bearers of cooperative societies do not take interest in the functioning of
societies due to the absence of profit motive.
Business success requires sustained efforts over a period of time which, however, does not
exist in many cooperatives. As a result, the cooperatives become inactive and come to a
grinding halt.

4. Corruption:
In a way, lack of profit motive breeds fraud and corruption in management. This is
reflected in misappropriations of funds by the officials for their personal gains.

5. Lack of Mutual Interest:

The success of a cooperative society depends upon its members’ utmost trust to each other.
However, all members are not found imbued with a spirit of co-operation. Absence of such
spirit breeds mutual rivalries among the members. Influential members tend to dominate in
the society’s affairs.

Q. Explain the major problems of marketing of Agricultural Produce in India. 8

Ans: 1. Lack of Storage Facility:

There is no proper storage or warehousing facilities for farmers in the villages where they can
store their agriculture produce. Every year 15 to 30 per cent of the agricultural produce are
damaged either by rats or rains due to the absence of proper storage facilities. Thus, the
farmers are forced to sell their surplus produce just after harvests at a very low and un-
remunerative price.

2. Distress Sale:
Most of the Indian farmers are very poor and thus have no capacity to wait for better price of
his produce in the absence of proper credit facilities. Farmers often have to go for even
distress sale of their output to the village moneylenders-cum-traders at a very poor price.

3. Lack of Transportation:

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In the absence of proper road transportation facilities in the rural areas, Indian farmers
cannot reach nearby mandis to sell their produce at a fair price. Thus, they prefer to sell
their produce at the village markets itself.

4. Unfavourable Mandis:
The condition of the mandis are also not at all favourable to the farmers. In the mandis, the
farmers have to wait for disposing their produce for which there is no storage facilities. Thus,
the farmers will have to lake help of the middleman or dalal who lake away a major share of the
profit, and finalizes the deal either in his favour or in favour of arhatiya or wholesalers. A study
made by D.S. Sidhu revealed that the share of middlemen in case of rice was 31 per cent, in
case of vegetable was 29.5 per cent and in case of fruits was 46.5 per cent.

5. Intermediaries:
A large number of intermediaries exist between the cultivator and the consumer. All these
middlemen and dalals claim a good amount of margin and thus reduce the returns of the
cultivators.

6. Unregulated Market’s:
There are huge number of unregulated markets which adopt various malpractices. Prevalence
of false weights and measures and lack of grading and standardization of products in village
markets in India are always going against the interest of ignorant, small and poor farmers.

7. Lack of Market Intelligence:

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There is absence of market intelligence or information system in India. Indian farmers are not
aware of the ruling prices of their produce prevailing in big markets. Thus, they have to accept
any un- remunerative price for their produce as offered by traders or middlemen.

8. Lack of Organisation:
There is lack of collective organisation on the part of Indian farmers. A very small amount of
marketable surplus is being brought to the markets by a huge number of small farmers leading
to a high transportation cost. Accordingly, the Royal Commission on Agriculture has rightly
observed, “So long as the farmer does not learn the system of marketing himself or in
cooperation with others, he can never bargain better with the buyers of his produce who are
very shrewd and well informed.”

9. Lack of Grading:
Indian farmers do not give importance to grading of their produce. They hesitate to separate
the qualitatively good crops from bad crops. Therefore, they fail to fetch a good price of their
quality product.

10. Lack of Institutional Finance:

In the absence of adequate institutional finance, Indian farmers have to come under the
clutches of traders and moneylenders for taking loan. After harvest they have to sell their
produce to those moneylenders at unfavourable terms.

11. Unfavourable Conditions:

Farmers are marketing their product under advice circumstances. A huge number of small and
marginal farmers are forced by the rich farmers, traders and moneylenders to fall into their
trap to go for distress sale of their produce by involving them into a vicious circle of
indebtedness. All these worsen the income distribution pattern of the village economy of the
country.

Q. What are the characteristics of Indian Handicraft Industry? State some of the challenges
of the Indian Handicraft industry. 4+4=8
Ans: Characteristics:
 They are quota free and neutral to fiber content or composition, barring 100% silk.
 They include Garments, Made-up and clothing accessories.
 Are produced in cottage industries.
 Should not have zippers.
 Must be ornamented using any one or more of the following Indian folk styles.
 Hand painting, Hand printing, Batik, Tie and Dye, Kalamkari.
 Hand embroidery, Crocheting.
 Appliqué work of sequins, wooden or glass beads, shells, mirror, ornamental motifs of textiles
materials.
 Extra wrap of welt ornamentation of silk, art silk or zari threads.
 Should conform to shape and styles of each item as defined in the agreed list of different countries.
 Should satisfy the dimensional aspects.

Challenges:

 Processing and procuring raw materials: Earlier, raw materials used by artisans were largely
accessible due to the close links between the evolution of crafts and locally available materials.
Further, the Jajmani system, which mainly comprises artisanal caste and the village community to
supply goods and services; offered artisans with access to community resources. Over the time,
this traditional structure has been broken down along with competition from organized industry;
artisans find it difficult to buy quality raw materials at a price they can afford to pay. In the absence
of raw material banks, these local artisans are forced to rely on local traders who provide them raw
materials against orders, at high prices, or switch to non-traditional raw materials.

 Aggregation and mediator trade: The process of aggregation involves bringing products from
decentralized units with aim to enable economies of scale in transportation, storage, and retail. Due
 to the dull status of infrastructure and lack of communication in the country, aggregating the product
is a difficult job to do. This, as a result, leads to many of the troubles in the chain of crafts supply.
Buyers and retailers both lack incentives to rise above upstream, supply-side issues, which
resulting in loss of opportunities for artisans to access markets.

 Production: The techniques and the process of crafting vary from one craft to another; the
production takes place in households, with all the family members get engaged in various aspects
of the process. Even though there are organized artisans structures exist, those craftsmen typically
produce within community settings. The production of handcrafted products is mostly seasonal, with
crafts activity being balanced for the period of the harvest season, as most of the artisans is also
engaged in agriculture to for their livelihood.

 Markets: The market for hand crafted products can be understood as local, retail shops – high-end
as well as mainstream, exhibitions and exports. Out of all these, local markets are still the most
common market for many artisans. The new age markets, national as well as international, have
grown with an expanding demand for products that have a story linked to them. However, such
products are low in supply due to inefficiencies in the supply chain.

 Demand: With the beginning of globalization and the availability of more affordable and varied
products, the market is facing severe competition in the global market. These products are typically
perceived as traditional, old-fashioned and antithetical to modern tastes. There have been lesser
efforts made in order to reposition the image of handicrafts in India and build customer appreciation
of the history and cultural identity associated with these products. Apart from that, there have been
a few instances of traditional crafts being contemporized to fit with changing market patterns.
Q. Write short notes on 4+4=8

1. Regulated market

2. Regional Rural Banks (RRBs) Ans:

Regulated market:
A regulated market is a market over which government bodies or, less commonly,
industry or labor groups, exert a level of oversight and
control. Regulation curtails the freedom of market participants or grants them special
privileges. Regulations include rules regarding how goods and services can be marketed; what
rights consumers have to demand refunds or replacements; safety standards for products,
workplaces, food and drugs; mitigation of environmental and social impacts; and the level of
control a given participant is allowed to assume over a market.

A regulated market can be started under the provision of law for any specific commodity or for
a group of commodities. This type of market is managed and administered by a market
committee. This market committee is composed of representatives of the State Government,
the legal bodies (district board), the traders, the commission agents and the farmers
themselves.

The Government appoints this committee for a definite period and this committee is
empowered with the total management of the market. These market committees usually fix
the market charges like commission, rates etc. It eliminates all dalals or brokers representing
either the buyer or the seller. The committee ensures remunerative prices to the farmers as
well as prevalence of the system of appropriate weights and measures.

The committee makes necessary provisions for hearing all complaints and settles those
complaints accordingly. For any dispute, the committee arranges for arbitration. The
committee is given responsibility to license brokers and weigh-men and is also vested with
powers to award punishment to those people found guilty of dishonest and fraudulent
practices.

Regional Rural Banks(RRBs) are Indian Scheduled Commercial Banks (Government Banks)
operating at regional level in different States of India. They have been created with a view of
serving primarily the rural areas of India with basic banking and financial services. However,
RRBs may have branches set up for urban operations and their area of operation may include
urban areas too.
The area of operation of RRBs is limited to the area as notified by Government of India covering
one or more districts in the State. RRBs also perform a variety of different functions. RRBs
perform various functions in following heads:

 RRBs grant loans and advances to small farmers and agricultural laborers so that they
can start their own farming activities including purchase of land, seeds and manure.
 RRBs provides banking services at the doorsteps of the rural people ,particularly in those
area which are not served by any commercial Bank
 The RRBs charges a lower rate of Interest and thus they reduce the cost of credit in the
rural areas.
 RRBs provide loan and other financial assistance to entrepreneurs in villages, sub-urban
areas and small towns .So that they become able to enlarge their business.
 Loans to artisans to encourage them for the production of artistic and related goods.
 Encourage the saving habit among the rural and semi-urban population.

2016

Q. State two pricing objectives in rural marketing. 2

Ans: i. Maximum Current Profit:

One of the objectives of pricing is to maximize current profits. This objective is aimed at making
as much money as possible. Company tries to set its price in a way that more current profits
can be earned. However, company cannot set its price beyond the limit. But, it concentrates on
maximum profits.

ii. Target Return on Investment:

Most companies want to earn reasonable rate of return on investment.

Target return may be:

(1) fixed percentage of sales,
(2) return on investment, or

(3) a fixed rupee amount.

Company sets its pricing policies and strategies in a way that sales revenue ultimately yields
average return on total investment. For example, company decides to earn 20% return on total
investment of 3 crore rupees. It must set price of product in a way that it can earn 60 lakh
rupees.

Q. What are the two additional P’s of rural

marketing? 2

Ans: Product, Place, Price, Promotion, People,

Physical Distribution

Q. Write two characteristics of FMCG Industry during the pre-

liberalization era. 2 Ans:

Q. Write two marketing strategies of tractor

Industry. 2

Ans: Ultra Low Cost Rural Tractors (Product,

Services & Fuel Cost)

Ease of availability of services

Q. State two points of distinction between consumer durables and

FMCGs. 2 Ans:

Q. Explain the nature and characteristics of rural markets in

India. 5 Ans: already done

Q. how will you segment the rural market based on sociological characteristics.

Explain. 5 Ans:

Q. Write five points of distinction between consumer behavior in Rural and Urban

markets. 5 Ans: already done

Q. Explain the major opportunities in the rural markets in india. 5

Ans: Untapped potential: it offers a great chance for different branded goods as well as
services for large number of customers.

It is estimated by HLL that out of 5 lakh villages in India , only lakh has been taped so far ,
which goes on to indicate the market potentials of the rural market .

Market size and potential

The size of India s rural market is stated as 12.2 % of the percentage of the old population this
means 12.2% of the worlds consumers leave in rural India.

In India, rural household farm about 72% of total household constitutes a huge market by any
standard.

Increasing income

Different programs undertaken have helped to improve the economic the economic situation of
the rural areas. The increase in income is seen in both absolute values as well as in the increase
in average number of days of occupation in a year.

Accessibility markets

Though the road network has not developed to the best possible extent but a fire amount of
development has been made in many regions, making these regions accessible from the urban
region and making in easier for supplying products to these regions

Competition in urban areas

The urban market is getting saturated and thus is enable to provide the much needed market to
many companies and in search of greener pastures many of these companies are now targeting
the rural market.

Q. Explain any five major challenges the indian tractor

industry. 5 Ans:
Q. Write about the various agencies players involved in the marketing of agricultural produce in India.
5

 Ans: Producers

Most farmers or producers, perform one or more marketing functions. They sell the surplus
either in the village or in the market. Some farmers, especially the large ones, assemble the
produce of small farmers, transport it to the nearby market, sell it here and make a profit.

 Middlemen
Middlemen are those individuals or business concerns which specialize in performing the
various marketing functions and rendering such services as are involved in the marketing of
goods.

Wholesalers
Wholeselling is the one ion of goods is the wholesale dealers. Wholeselling is the one that
covers activities of all individuals or businessmen, which sell to or negotiate sales with
customers, who buy for resale or industrial use. His position is that of an intermediary between
manufacturer and retailer.
Wholesalers are classified as
 I. Local wholesalers, who deliver their purchases to local retailer.
II. Provincial wholesalers some time called as distributor selling to the retailers of a
particular district or a state and
III. National wholesalers located at a strategic place and distribute goods all over the country.

Retailers
He is the last link in chain of middleman, who sells directly to consumer. He takes title to
goods, sells and sets up business usually amidst the consumer's groups. He buys his
requirement usually from the wholesalers. Retailers in producing areas may have direct
contact with producers and buys goods from them for resale.

Co-operative Marketing Societies

Main function is that of commission agency i.e.

 Selling the produce of member's.

 They also undertake outright purchases.
 Provide storage facilities for storage and grading and
 Save cultivators from exploitation by traders and help farmers in getting fair price for their
produce.
 Performing functions of processing of raw produce.

Pucca Arhatias
He is the real purchase in the wholesale market on his own behalf of acting for some
businessmen, firms in consuming markets. Big mills (rice, oils, cotton etc.) play as their agent
and order him to purchase certain quantity within a given range of price. When pucca arhatia
trades on his own, he dispose of his produce brought by him through dealers in different parts
of country.

Katcha Arhatia
He also advances money to the cultivators and village banias on the condition that the produce
will be disposed off through him alone and hence charges a very nominal rate of interest on
the money advanced. Katcha arhatia charges commission for services rendered by him.
Important link between the village cultivator or traders on the one hand.

Village Merchants
He is an important agency in the collection of produce and more so when the mando is
situated at a considerable distance from the village. He advances from his shop either on
credit or for exchange of foodgrain or so price given for cultivator's produce. The quantities of
agril. Produce so collected are either disposed off in the mandi or retained for resale in the
village in the processed forms, such as rice, flour, oil etc.

Intinerant Traders
They are small merchants, who move from village to village and buy the produce from
cultivator's house. They give a lower price than selling in the nearby market and in setting
transportation take into consideration, the factors such as cost of transportation, market
charges and profit margin.

Transport Agency
This agency assists in the movement of the produce from one market to another e.g. railways,
trucks, bullock carts, camel carts, tractor trolleys.

Communication Agency
It gives information about the prices prevailing, and quantity available and transactions e.g.
post, telephone, telegraph, newspapers, radio.

Advertising Agency
It enables prospective buyers to know the quality of the product and decide about the purchase
of commodities e.g. newspapers, radio, television, cinema slides.

Auctioners
They put produce for auction and bidding by the buyers.
Government Agencies / Institutions
In addition to individuals, corporate, co-operative and government institutions are operating
in the field of agricultural marketing. Some important institutions are :-

The State Trading Corporation (STC)

I. To make available supplies of essential commodities to consumers at reasonable prices on a

regular basis;
II. To ensure a fair prices of the produce to the farmers so that there may be an adequate
incentive to increase production;
III. To minimize violent price fluctuations occurring as a result of seasonal variations in supply and
demand;
IV. To arrange for the supply of such inputs as fertilizers and insecticides so that the
tempo of increased production is maintained;
V. To undertake the procurement and maintenance of buffer stock, and their
distribution, whenever and wherever necessary;
VI. To arrange for storage, transportation, packaging and processing;
VII. To check hoarding, black-marketing and profiteering.

The Food Corporation of India (FCI)

I. To procure a sizable portion of marketable surplus of foodgrains and other

agricultural commodities at incentive prices from the farmers on behalf of the
Central and State Governments;
II. To make timely releases of the stocks through the public distribution system (fair price
shops and controlled items shops)
III. To minimize seasonal price fluctuations and inter-regional price variations in agricultural
commodities
IV. To build up a sizable buffer stock of foodgrains.

Q. Define Cooperative Society. Explain the various types of Cooperative Societies. 2+6= 8

Ans: Cooperative Society is an autonomous association which any person can join. Members of the
cooperative society are united and have a common goal and purpose which can be social, economic
and cultural needs and interest. For cooperative societies it is mandatory to register themselves
under Bihar Cooperative Societies act, 1935. The purpose of cooperative societies is to support the
economically backward section of society, which is done through mutual help. Joint ownership and
democratic leadership are some of the features of cooperative societies. By definition, the word
‘co-operation’ means working together.
Therefore, people who want to work together with a common economic
goal can form co-operative societies. People join such societies voluntarily and work on the principle
of self-help and mutual help.
The main types of cooperative societies are given below:

1. Consumers cooperative societies:

Consumers’ cooperatives are formed by the consumers to obtain their daily requirements at
reasonable prices. Such a society buys goods directly from manufacturers and wholesalers
to eliminate the profits of middlemen.

These societies protect lower and middle class people from the exploitation of profit hungry
businessmen. The profits of the society are distributed among members in the ratio of
purchases made by them during the year.

Consumer’s cooperatives or cooperative stores are working mainly in urban areas in India.
Super Bazar working under the control of Government is an example of consumers’
cooperative society.

2. Producers cooperatives:
Producers or industrial cooperatives are voluntary associations of small producers and
artisans who join hands to face competition and increase production. These societies
are of two types.

(a) Industrial service cooperatives:

In this type, the producers work independently and sell their industrial output to the
cooperative society. The society undertakes to supply raw materials, tools and machinery to the
members. The output of members is marketed by the society.

(b) Manufacturing cooperatives:

In this type, producer members are treated as employees of the society and are paid wages
for their work. The society provides raw material and equipment to every member.

The members produce goods at a common place or in their houses. The society sells the
output in the market and its profits are distributed among the members.

3. Marketing Cooperatives:
These are voluntary associations of independent producers who want to sell their output at
remunerative prices. The output of different members is pooled and sold through a centralised
agency to eliminate middlemen. The sale proceeds are distributed among the members in the
ratio of their outputs.

As a central sales agency, the society may also perform important marketing functions such as
processing, grading and packaging the output, advertising and exporting products,
warehousing and transportation, etc.

Marketing societies are set up generally by farmers, artisans and small producers who find it
difficult to face competition in the market and to perform necessary marketing functions
individually. The National Agricul- tural Cooperative Marketing Federation (NAFED) is an
example of marketing cooperative in India.

4. Cooperative Farming Societies:

These are voluntary associations of small farmers who join together to obtain the economies of
large scale farming. In India farmers are economically weak and their land-holdings are small.
In their individual capacity, they are unable to use modern tools, seeds, fertilizers, etc. They
pool their lands and do farming collectively with the help of modern technology to maximum
agricultural output.

5. Housing Cooperatives:
These societies are formed by low and middle income group people in urban areas to have a
house of their own. Housing cooperatives are of different types. Some societies acquire land
and give the plots to the members for constructing their own houses.

They also arrange loans from financial institutions and Government agencies. Other societies
themselves construct houses and allot them to the members who make payment in
instalments.

6. Credit Cooperatives:
These societies are formed by poor people to provide financial help and to develop the habit of
savings among members. They help to protect members from exploitation of money lenders
who charge exorbitant interest from borrowers.

Credit cooperatives are found in both urban and rural areas. In rural areas, agricultural credit
societies provide loans to members mainly for agricultural activities. In urban areas, non-
agricultural societies or urban banks offer credit facilities to the members for household needs.

Q. Differentiate between consumer durables and FMCGs. Discuss the major challenges of FMCG
industry in India. 4+4=8
Ans:
 1. FMCG stands for Fast Moving Consumer Goods and FMCD stands for Fast
Moving Consumer Durable.
2.As the terms suggest, one sector deals with consumer goods that have a smaller shelf
life and are perishable in nature. Eg: Food items like Milk, bread, etc. On the other hand,
durable are more durable of course and do not wear out too soon. They have a utility
value over a period of time. Eg: Consumer electronics like microwave, washing machine,
etc.
3.FMCG products are consumed almost immediately by the consumer and need to be
replenished from time to time. FMCD products do not exhaust in one use and can be
used for a considerably longer period of time, with repeated usage.

Some of the major challenges are the following:

Managing availability in the complex distribution Set Up

The Indian FMCG sector has to work with very complex distribution system comprising multiple
layers of numerous small retailers between company and end customer. For example a company
like, Marico has to ensure reach to 1.6 million retailers spread throughout the country. As the
number of SKUs (Stock keeping Units) have been increasing exponentially, just ensuring availability
at the last stage of distribution has become a nightmare for companies. Standard solutions
applicable in developed countries are not suitable for a country like India.

Dealing with Counterfeit Goods

According to recent study conducted, counterfeits accounted for loss of sale worth more than
Rs 300 billion for the FMCG sector every year. P&G found that various counterfeit products of
Vicks Vaporub raked in sales equivalent to 54 percent of the original. To prevent such losses,
FMCG companies in India have to ensure that they exercise greater control over their
distribution channel and not just leave it to the market forces.

Opportunistic Games played by the Distribution Channel

It is a common notion in distribution that only 50 percent of the promotion actually reaches the
final customer. This is due to the fact that many distributors work unscrupulously. Rather than
playing the role of the facilitator, they try to grab a significant part of the promotion budget for
themselves. Due to which companies lose control of the sales of their products. Thus, FMCG
companies end up wasting a significant part of their resources on these issues, which do not
really add any value to their customers.
Infrastructure

Poor roads and unreliable transport systems have an adverse impact on costs and
uncertainties. Non-availability of infrastructure, like cold chains affects certain product
categories significantly
.even if the cold chain is available, power problems add to the uncertainty. Most Indian cities
face power problems in summer and ice-cream manufacturers have to live with these
problems in their distribution network. In general FMCG companies have to take these issues
into account while planning their supply chains.

Q. Enumerate four factors suggesting better future prospects for tractor industry in India.
Explain four marketing strategies for tractor industry. 4+4=8
Ans:
Q. State two important characteristics of Indian Handicraft Industry. Discuss the major
challenges for the Rural Artisan sector in India. 4+4=8
Ans:
Q. State two challenges in marketing of Agricultural Produce. State and explain the role of
different players involved in marketing of agricultural produce in India. 2+6=8
Ans: alrdy done
Q. Write short note on: any two 4+4=8
1. Agri Export Zones(AEZ)
2. Regulated Markets
3. Contract Farming
4. 4As of Rural Marketing

Mix Ans: 1 & 2 already

done

3. Contract farming: Contract farming can be defined as agricultural production carried out
according to an agreement between a buyer and farmers, which establishes conditions for the
production and marketing of a farm product or products. Typically, the farmer agrees to
provide agreed quantities of a specific agricultural product. These should meet the quality
standards of the purchaser and be supplied at the time determined by the purchaser. In turn,
the buyer commits to purchase the product and, in some cases, to support production through,
for example, the supply of farm inputs, land preparation and the provision of technical advice.
 Advantages

Contract farming is looking towards the benefits both for the farm-producers as well as
to the agro- processing firms. Producer/farmer
 Makes small scale farming competitive - small farmers can access technology, credit, marketing
channels and information while lowering transaction costs
 Assured market for their produce at their doorsteps, reducing marketing and transaction costs
 It reduces the risk of production, price and marketing costs.
 Contract farming can open up new markets which would otherwise be unavailable to small farmers.
 It also ensures higher production of better quality, financial support in cash and /or kind
and technical guidance to the farmers.
 In case of agri-processing level, it ensures consistent supply of agricultural produce with quality, at
right
time and lesser cost.
Agri-based firms
 Optimally utilize their installed capacity, infrastructure and manpower, and respond to food
safety and quality concerns of the consumers.
 Make direct private investment in agricultural activities.
 The price fixation is done by the negotiation between the producers and firms.
 The farmers enter into contract production with an assured price under term and conditions.

Challenges

 Contract farming arrangements are often criticized for being biased in favor of firms or
large farmers, while exploiting the poor bargaining power of small farmers.
 Problems faced by growers like undue quality cut on produce by firms, delayed deliveries at
the factory, delayed payments, low price and pest attack on the contract crop which raised
the cost of production.
 Contracting agreements are often verbal or informal in nature, and even written contracts
often do not provide the legal protection in India that may be observed in other countries .
Lack of enforceability of contractual provisions can result in breach of contracts by either
party.
 Single Buyer – Multiple Sellers (Monopsony) .
 Adverse gender effects - Women have less access to contract farming than men
 NABARD’s Initiatives in contact farming
NABARD developed a special refinance package for contract farming arrangements (within and
outside AEZs) aimed at promoting increased production of commercial crops and creation of
marketing avenues for the farmers. The various initiatives undertaken by NABARD in this
direction are:
 Financial Interventions
 Special Refinance package for financing farmers for contract farming in AEZs
 100% refinance to disbursements made by CBs, SCBs, RRBs and select SCARDBs (having net NPA
less than 5%)
 Term facility for repayments (3 years)
 Fixation of higher scale of finance for crops under contract farming.
 Extension of refinance scheme for financing farmers for contract farming in AEZs to
contract farming outside AEZs besides coverage of medicinal and aromatic plants.
 Extension of Refinance scheme for contract farming under Automatic Refinance Facility.

4. 4As of Rural Marketing Mix:

 2017

Q. State the four A’s of Rural Marketing

Mix. 2 Ans: Already Done

Q. State two basic functions of Regulated

Markets. 2 Ans: Already Done

Q. State two features/ characteristics of cooperative

societies. 2 Ans:

 As it is a voluntary association, the membership is also voluntary. A

person is free to join a cooperative society, and can also leave anytime as per his
desire. Irrespective of their religion, gender & caste, membership is open to all.

 It is compulsory for the co-operative society to get registration. The co-operative

society is a separate legal identity to the society.

 It does not get affected by the entry or exit of its members.

 There is limited liability of the members of co-operative society. Liability is limited

to the extent of the amount contributed by members as capital.
 An elected managing committee has the powers to take decisions. Members have the
right to vote, by which they elect the members who will constitute the managing
committee.

 The cooperative society works on the principle of mutual help & welfare. Hence, the
principal of service dominates it’s working. If any surplus is generated, it is distributed
amongst the members as a dividend in conformity with the bye-laws of the society.

Q. Name two Folk Media used in Rural

India. 2 Ans: Already done

Q. Write two functions of Regional Rural Banks

(RRB). 2 Ans: Already done

Q. Write a note on NABARD. 5

Ans: National Bank for Agriculture and Rural Development (NABARD) was established on July
12, 1982 with the paid up capital of Rs. 100 cr. by 50: 50 contribution of government of India
and Reserve bank of India.
By HEMANT
SINGH NOV 24,
2015 12:23 IST
It is the apex banking institution to provide finance for Agriculture and rural development.
National Bank for Agriculture and Rural Development (NABARD) was established on July 12,
1982 with the paid up capital of Rs. 100 cr. by 50: 50 contribution of government of India and
Reserve bank of India. It is an apex institution in rural credit structure for providing credit for
promotion of agriculture, small scale industries, cottage and village industries, handicrafts etc.

Functions of NABARD:

NABARD was established as a development bank to perform the following functions:

1. To serve as an apex financing agency for the institutions providing investment and
production credit for promoting various developmental activities in rural areas;
2. To take measures towards institution building for improving absorptive capacity of the credit
delivery system, including monitoring, formulation of rehabilitation schemes, restructuring of
credit institutions and training of personnel;

3. To coordinate the rural financing activities of all institutions engaged in developmental work
at the field level and liaison with the Government of India, the State Governments, the Reserve
Bank and other national level institutions concerned with policy formulation; and

4. To undertake monitoring and evaluation of projects refinanced by it.

5. NABARD gives high priority to projects formed under Integrated Rural Development
Programme (IRDP).

6. It arranges refinance for IRDP accounts in order to give highest share for the support for
poverty alleviation programs run by Integrated Rural Development Programme.

7. NABARD also gives guidelines for promotion of group activities under its programs and
provides 100% refinance support for them.

8. It is setting linkages between Self-help Group (SHG) which are organized by voluntary
agencies for poor and needy in rural areas.

9. It refinances to the complete extent for those projects which are operated under the
‘National Watershed Development Programme‘and the ‘National Mission of Wasteland
Development‘.

10. It also has a system of District Oriented Monitoring Studies, under which, study is
conducted for a cross section of schemes that are sanctioned in a district to various banks, to
ascertain their performance and to identify the constraints in their implemen- tation, it also
initiates appropriate action to correct them.
11. It also supports “Vikas Vahini” volunteer programs which offer credit and development
activities to poor farmers.

12. It also inspects and supervises the cooperative banks and RRBs to periodically ensure the
development of the rural financing and farmers’ welfare.

13. NABARAD also recommends about licensing for RRBs and Cooperative banks to RBI.

14. NABARD gives assistance for the training and development of the staff of various other
credit insti¬tutions which are engaged in credit distributions.

15. It also runs programs for agriculture and rural development in the whole country.

16. It is engaged in regulations of the cooperative banks and the RRB’s, and manages their
talent acquisition through IBPS CWE conducted across the country.

Role of NABARD:

1. It is an apex institution which has power to deal with all matters concerning policy, planning
as well as operations in giving credit for agriculture and other economic activities in the rural
areas.

2. It is a refinancing agency for those institutions that provide investment and production credit
for promoting the several developmental programs for rural development.

3. It is improving the absorptive capacity of the credit delivery system in India, including
monitoring, formulation of rehabilitation schemes, restructuring of credit institutions, and
training of personnel.
4. It co-ordinates the rural credit financing activities of all sorts of institutions engaged in
developmental work at the field level while maintaining liaison with Government of India, and
State Governments, and also RBI and other national level institutions that are concerned with
policy formulation.

5. It prepares rural credit plans, annually, for all districts in the country.

6. It also promotes research in rural banking, and the field of agriculture and rural
development.

Q. Explain five challenges for the Rural Artisan Sector. 5

Ans: 1. Low productivity –The sector’s informal nature and the low education of most artisans
create issues such as:

Unorganized production – As a largely unorganized sector, handicrafts faces problems such

as a paucity of professional infrastructure such as work sheds, storage space, shipping and
packing facilities.

Low education – Many crafts require the entire household to participate in production in some
capacity. In many cases, crafts also serve as a seasonal source of income for agricultural
households. This means that children miss school, resulting in low education levels for the
family overall. The lack of education makes it difficult to manage inventory, access government
schemes and market information and bargain with traders and middlemen. It is estimated that
in 2003 around 50% of heads of households of crafts producing families had no education
whatsoever, and more shockingly, around 90% of the women in these households were
completely uneducated, according to a report published in Economic and Political Weekly 2003,
by World Bank titled Handmade in India: Preliminary Analysis of Crafts Producers and Crafts
Production.

Outdated production methods – Artisans may also lack the financial capability to upgrade
technology in production, or undergo necessary training on a regular basis, as would be
available to them in a formal
work setting. This compromises the quality of their products and raises the cost of
production.

2. Inadequate inputs – There are three main issues:

Lack of quality raw materials – Rural artisans often lack access to quality raw materials. Due to
the low volumes required, they have low bargaining power and are forced to buy sub-standard
materials at a higher price. In crafts such as weaving, handloom weavers have to compete with
the power loom industry for high quality raw materials, which are more easily accessible the to
the power loom industry as a result of government subsidies.

Lack of funding – Craft producers suffer greatly from lack of working capital and access to
credit and loan facilities. Banks cite poor recovery rates, wrong utilization of funds, lack of
marketing facilities for finished products and lack of education on part of the borrowers as
reasons for the low proportion of loans made to artisans. In general, this forces artisans to
borrow from their local moneylender or trader at high interest rates. The All India Debt and
Investment Survey (2002) showed that the proportion of money borrowed by rural
households from money lenders rose by over 10% from 17.5% in 1991 to 29.6% in 2002.

Design inputs – In most traditional societies, design evolved in the interaction between the
artisan and the consumer. Further, the artisan was aware of the sociocultural context of the
consumer, and could thus design products that suited their needs and tastes. Due to the
breakdown of the historic artisan-consumer relationship, and the increasing urbanization and
globalization of markets for crafts, artisans have difficulty understanding how to tailor their
products to changing demands. The artisan may not speak the same language as the
consumer, both literally as well as metaphorically. An example of this includes women in
SEWA’s craft cooperatives who design block printed table napkins and mats, but may have
never used these products themselves.

3. Information asymmetry : Due to their low education, artisans often cannot identify
potential new markets for their products, nor do they understand the requirements for
interacting with these markets. This
reduces their understanding of the market potential of their goods, the prices of their
products in different markets, government schemes instituted for their welfare and
diversification opportunities.

4. Fragmented value chain

Lack of market linkages – While consumers of crafts products are increasingly becoming
urbanized, crafts continue to be sold through local markets; artisans have few opportunities to
reach new consumers through relevant retail platforms such as department stores and
shopping malls. Further, due to their rural orientation, artisans are often unable to access
training and technology to supply their products to online markets.

Dominance of middlemen – Although middlemen are necessary to enable effective market

linkages, they often, if not always, exploit artisans by paying them a fraction of their fair wages.
This may be due to lack of information on the part of middlemen about true manufacturing
costs, or merely due to their ability to coerce artisans, who often lack bargaining power.

Lack of aggregation – Crafts production typically takes places in scattered clusters in rural
areas, while markets are usually in urban centers. Currently, there is a lack of organized
systems to efficiently aggregate goods from small producers, carry out quality checks, store
approved goods in warehouses, and supply them to wholesalers and retailers in urban areas.
In lieu of this, retailers have to directly source from select producers, which is often not viable
in the long run, resulting in the loss of a large percentage of the market for artisans.

5. Lack of an enabling environment

Neglect by central and state governments – The Government views the sector as a sunset
industry, no longer relevant in India’s technology- driven economic growth. Thus, schemes
designed for artisans tend to have low priority in terms of execution and assessment. Within
crafts,
the Government’s priorities are skewed towards the export market, with 70% of its crafts
budget going towards development of environments to enable export. Further, the fact that
the crafts sector falls under the
purview of 17 different Government ministries, ranging from the Ministry of Textiles to
Ministry of Women and Children, results in confusion and inaction.

Lack of interest by second generation – Rural youth are increasingly disinterested in continuing
their family craft traditions, for three main reasons. First, having seen their parents struggle to
find markets and fair prices for their products, they are inclined to pursue other trades.
Second, the school system today does not integrate lessons regarding the importance of crafts
into the school curriculum, and instead students are pushed towards white collar office jobs,
even if they are lower paying. Finally, crafts are strongly associated with a family’s caste. In
many cases, such as leatherwork, artisans are ostracized for being from the lowest caste,
which further dissuades rural youth from joining the family trade.

Q. Write short notes on : 5

1. Farmer’s Service Societies
2. Contract Farming. ( already done)

Ans: Farmer’s Service Societies : The National Commission on Agriculture gave the idea of the
formation of Farmers’ Service Societies in 1970.
These societies have been constituted in a few states. The idea ultimately was to
convert the service societies into large-sized multipurpose credit societies.

The agricultural credit or multi-purpose credit societies supply short and medium credit to
members in rural areas. These societies get amount mostly from the Central Cooperative
Banks and State Cooperative Banks. The long-term loans are supplied by the State Land
Development Banks through the Primary Land Development
Banks in the different areas of the states. Recently, the short-term, medium-term and
long-term loans are advanced by a single agency only.

Q. Write briefly about the evolution of Rural Marketing? 5

Ans: Kashyap and Raut (2006), identified three phases in the evolution of rural marketing in
India.
Phase I (Before the 1960s):
Rural marketing referred to marketing of rural products in rural and urban areas and agricultural
inputs in rural markets. It was considered synonymous with ‘agricultural marketing’. Agricultural
produces like food grains and industrial inputs like cotton, sugarcane etc. were the primary
products marketed during this period.

The scope of farm mechanization equipment’s (tractors, pump-sets, threshers) and agriculture
inputs like fertilizers, seeds and pesticides was very limited, as the rural economy was in a
primitive stage, with traditional farming methods. The market was totally unorganized.

Phase II (1960s to 1990s):

The ‘green revolution’, during this phase, changed the face of rural India ushering in scientific
farming practices. Better irrigation facilities, use of fertilizers, pesticides, high- yield variety
seeds, coupled with application of implements like tractors, power tillers, harvesters, pump
sets and sprinklers resulted in growth of agricultural production, changing the very content of
rural markets. During this phase, apart from conventional ‘agricultural marketing’, a new area –
‘marketing of agricultural inputs’ emerged.
Phase III (1990s Onwards):
During this phase, India’s industrial sector gained in strength and maturity. A new service sector
emerged, signifying the transition of an agricultural society into an industrial one.

Meanwhile, the increased plan outlay of Central and State governments for rural
development and strengthening of local governance (through Panchayati raj institutions)
witnessed socio- economic progress. In addition, the economic reforms further accelerated
the process by introducing competition into the markets. All these factors resulted in the
growth of rural markets.

Some critical factors in successful rural marketing are:

(1) Understanding rural buyers and sellers and their situations;

(2) Reaching remote rural locations for products and services; and

(3) Communicating with vastly heterogeneous rural audiences spread over the country.

Q. What do you mean by Handicraft? State the characteristics of the Indian Handicraft

Industry. 5 Ans:

Q. Explain two approaches for segmenting the rural market in

India. 5 Ans:

Demographic Segmentation
Age and life cycle : Children, teenagers, young adults, elders, seniors (Confectionary and toys
are more desirable in childhood, whereas young adults seek motorcycles, soft drinks, trendy
clothes and music systems)
 Family structure : Nuclear, joint (Family pack or economy refill packs work very well

with joint families, Joint family translates to greater consumption of products) Gender :
Male, female

Income : Due to irregular income patterns and multiple sources of income, assessment
of rural income is difficult.

Landownership : Land owners, rich farmers, small or marginal farmers, agricultural

labourers. Segmentation on the basis of : size of landholding, area of land under
cultivation, irrigation method, crop mix and rate of money realisation. Education &
House type
Occupation : Cultivators, shopkeepers, poultry, artisans
Religion & Caste : Settlement of villages on the basis of religion and caste. Eg. Rajput
village.

Psychographic Segmentation

Social class –Social class is determined by a combination of factors like education,

occupation, income, wealth and others. Classified rural consumers into five classes:

Affluent, The Well off, The Climbers, The Aspirants and the Destitutes on the basis of
three variables : Education of the chief wage earner, Ownership of durables, and Type of
house.

Lifestyle –Overall manner in which a person lives and spends time and money.
Personality

Behaviour Segmentation

Occasions : Festival, mela, jatra, weekly haat. In rural areas, most durables are
purchased during or after the harvest season because this is when farmers have cash in
hand after selling their agricultural produce. Melas offer products at attractive prices
and weekly haat days are the time to purchase daily-use products, vegetables and
spices.
 Benefits sought : Quality, convenience, value for money, service. Rural consumers are
more concerned with the utility of the product than its appearance and sophistication.

User status –Rural consumers fall into the category of first-time users for most product
categories. Therefore, the focus on product trials and demonstrations is very crucial in
rural market. Tag line for Ghariwas Detergentkarein‘ induce customers to try out the
product.

Usage rate –Usage for most FMCG products is relatively low among rural consumers due
to poor affordability. Marketers have launched sachet packs for rural consumers and
family packs for joint families.

Loyalty status –Rural buyers take a long time to decide on a particular brand, but once
they are convinced, they are more brand loyal than their urban counterparts.

Place of purchase –Village shops (Tea, kerosene), Haats (Food grain, pulses, vegetables),
Nearest town (Fertilisers, seeds), Melas (Clothes, cheap jewelry)

Q. Differentiate between Consumer Durables and FMCG’s . Discuss the major challenges
of FMCG industry in India. 4+4=8
Ans: Already Done
Q. State four marketing strategies for Indian Tractor Industry. Explain some factors
suggesting better future prospects for the industry. 4+4=8
Ans:
Q. What do you mean by Rural Indebtedness? Discuss the various causes of Rural Indebtedness.
3+5=8
Ans: Indebtedness means an obligation to pay money to another party. In rural India the poor
farmers and wage labours etc. when are unable to repay a loan and accumulate it, gives rise to
the problem of rural indebtedness. Rural indebtedness is an indicator of the weak financial
infrastructure of our country,which includes inability of our economic system to reach to the
needy farmers, landless people in the villages and the agricultural wage labourers.
The farmers borrow loan for either agricultural operations or some other uses like supporting
the family in the lean season or to buy equipments. Due to lower income or wasteful
expenditures when the farmers are unable to pay the loans they are unable to pay off their
debts and thus accumulate the debt as well as pending interest on the amount. The weaker
‘financial inclusion’ in India has given the local money lenders an opportunity to exploit such
farmers from generations to generations.
Causes of rural indebtness:

Poverty:

Poverty is perhaps a major cause for rural indebtedness. The low level of rural incomes, the
uncertain and primitive farming of small landholdings makes it impossible to meet the needs
required for their living. Often, the rural people take debts to meet these needs.

Ancestral/Inherited Debt:

Most of the rural debts of the present day are inherited from the past and which increases
with the passage of time. An inheritor is liable to the repayment of the debt only to the
extent of the property inherited by him.

Despite this law, the rural people continue to repay the debts of their forefathers, as they are
not fully conversant with law as they are illiterate. As these people are bound by the traditions
and values they regard it as their sacred social duty to repay the debts of their forefathers.

Such increasing debt is passed on from one generation to another making its repayment
increasingly difficult, whenever it is passed on. Thus, the Royal Commission has rightly stated
that the Indian farmer ‘is born in debt, lives in debt and dies in debt’.

Social and Religious Needs:

Villagers are mostly bound by the social traditions and customs, which are considered to be
sacred and had to be performed. Some of these
ceremonies are marriage, births, deaths, religious occasions, etc. The expenditure is usually
very high for the performance of these ceremonies. In order to meet these needs, the
villagers take loans. As their incomes are not sufficient enough, they are not able to repay
these loans. Thus, they remain unpaid and increase with the passage of time.

Litigation:

Generally, the agriculturists in India are involved in various kinds of disputes related to land,
property, etc., which force them to go to a court of law. Often, they view it important to win
the case as it is related to the family prestige and honour. Such litigations involve heavy
expenditure and time. In order to meet these needs, the agriculturists take loans that they are
not able to repay and are caught into indebtedness.

Backwardness of Agriculture:

Indian agriculture is an uncertain business. It virtually depends on unreliable rains for the
supply of water. If there are no rains or untimely rains, the entire crop is lost and the credit
invested in the agriculture goes waste. As a result, the loan taken for the productive
purposes also becomes a burden, leading to indebtedness of the farmers.

Excessive Burden of Land Revenue and Rent:

Land revenue, where it is levied by the government in some states and the rent payable to the
landowners is becoming excessive burden on
small farmers. In order to pay these land revenue, mid-rent, the farmers take loan. Sometimes,
the farmers have to pay these rents and land revenues even during the floods and drought.
This make the farmers run into debts.

Defective Money Lending System:

The village money lending system is very much defective. The sole aim of the moneylenders is
to extract the maximum from the farmers. The moneylenders make wrong entries in their
account books, charge very high interest rates and extract high prices for the goods they sell to
the farmers but purchase the farmers produce at very low prices.

In course of time, as the amount debt increases, the moneylenders are much interested in
seizing the farmers lands, and other valuable assets than the debt being repaid by the farmers.
Thus, the farmers are trapped in the hands of the moneylenders.

Q. State two challenges in marketing of Agricultural Produce. State and Explain the role of
different players involved in marketing of agricultural produce in India. 2+6=8
Ans: Already done
Q. Discuss the various measures envisaged to promote exports from Agri Export Zones in

India. 8 Ans:

Q. State four factors affecting market growth of agro chemicals. State and explain four
structural changes faced by the Indian Agro Chemical Industry. 4+4=8
Ans:
Q. Explain the various unconventional platforms for promoting brands in

Rural India. Ans:

Q. Explain the rural marketing model with a suitable diagram. 8

Ans: page 07.

2018

Q. Write the differentiating points between Rural Marketing and Urban

Marketing. 2 Ans:

Urban marketing Rural marketing

Crate relationship by offering integrated Crate relationship by inclusive growth of

innovation in product or service. product or service.

Buyer looks for style, quality &novelty. Buyer looks for quality products that offer
value for money.

Internet, TV channels, mobile, are used for Interactive approaches, observation, rating
research. scale are used for research.

Psycho graphic, usage based segmentation Demographic & geographic segmentation

is the main base of divide the market. can be the base of divide the market.

Marketing goal is capture market share, Create a brand name then capture the
image, and profitability. market with enough profitability.

Sophisticated technology can be used to Primarily appropriate technologies can be

create product. used for rural innovation.

Consumers take purchasing decision Consumers are too much emotional to

emotionally &rationally take purchasing decision.
Q. Write two benefits of Rural Market Segmentation. 2

Ans: 1. Determining market opportunities:

Market segmentation enables to identify market opportunities. The marketer can study the
needs of each segment in the light of current offerings by the competitors. From such study,
the marketer can find out the current satisfaction of customers.

2. Adjustments in marketing appeals:

Sellers can make best possible adjustments of their product and marketing appeals.
Instead of one marketing programme aimed to draw in all potential buyers, sellers can
create separate marketing programmes designed to satisfy the needs of different
customers. Proper advertising and sales promotional appeals can be made depending on
the target audience.

3. Developing marketing programmes:

Companies can develop marketing programmes and budgets based on a clearer idea of the
response characteristics of specific market segments. They can budget funds to different
segments depending on their buying response.

4. Designing a product:
Market segmentation helps in designing products that really match the demands of the
target audience. Products with high market potential can be designed and directed to meet
the satisfaction of the target market.

5. Media selection:
It helps in selection of advertising media more intelligently and in allocating funds to various
media. The funds are allocated to various media depending on the target audience, impact of
the media, competitor advertising, and so on.

Q. Write two opportunities in Rural

Market. 2 Ans: Already done

Q. Write two characteristics of rural shopping

habits. 2 Ans: Already done

Q. Explain any two C’s of pricing.
Ans: Competitors: A major factor that determines pricing of a product is the presence and
capabilities of competitors. Competition generally drives down prices, but the pricing of
product depends on the competitor-driven factors i.e Actual or potential competition,
Positioning, Strengths and weaknesses of competitors

Collaborators: The collaborators in the making and selling of a product, be it distributors,

suppliers or other alliance partners influence pricing.

Shut down of a supply source might lead to raw material scarcity and increase product price
whereas availability of multiple suppliers or new raw material source might lead to reduced
raw material prices, resulting in lesser product price.
Q. What are Agri Export Zones? Explain the various measures initiated for the development
of AEZs. 2+3=5
Ans: Measures to promote exports from Agri Export Zone
i. Financial Assistance
 Both Central as well as State Government and their agencies are providing a
variety of financial assistance to various agri export related activities.
 These extend from providing financial assistance for Training and Extension, R&D,
Quality Upgradation, Infrastructure and Marketing etc.
 Central government Agencies like APEDA, NHB, Deptt. of Food Processing Industries,
Ministry of Agriculture provide assistance, a number of State Governments have also
extended similar facilities.
 All these facilities are dovetailed and extended to promote agri exports from the
proposed Zones in a coordinated manner.
 Some additional features like providing grants from Market Access Initiative fund
could also be considered.
ii. Fiscal Incentives
 The benefits under Export Promotion Capital Goods Scheme, which were hitherto
available only to direct exporters, have now been extended to service exporters in the
Agri Export zones.
 Even service provided to ultimate exporters will be eligible for import of capital
goods at a concessional duty for setting up of common facilities.
 They shall fulfil their export obligation through receipt of foreign exchange from
ultimate exporters who shall make the payments from their EEFC account.
 Exporters of value added agri products will be eligible for sourcing duty free fuel for
generation of power, provided the cost component of power in the ultimate product
is 10% or more and the input-output norms are fixed by the advance licencing
committee of the DGFT.
 In view of the power intensive nature of most of the value addition, almost all the
exporters of value added agriculture produce will become eligible for such facility.
 Similarly, input-output norms can also be fixed for sourcing other inputs, like
fertilizer, pesticides etc. duty free for cultivation purpose.
Q. Write a note on Contracting

Farming. 5 Ans: Already done

Q. Explain the different place strategies foe ensuring effective distribution in rural

areas. 5 Ans:

 Focus on the local market is essential for a better grip on the situation. Since localized
distribution hubs are supposed to cater a limited geography, they can work in a better
way.
  Tweak the product promotion and marketing tactics to the local needs. Since there is
incredible diversity in cultures, traditions, and languages in rural India, the model has
to be flexible and adaptive.
 Company should make effective use of technology to reach the masses. There are
ways to unleash the immense potential by thinking out-of-the-box ways of reaching
people.
 Service delivery is equally important. Marketing strategy shouldnt be limited to
promotion and distribution only. Rather, it should be equally efficient when it comes to
delivering services.
 An emotional touch works excellently in the rural areas. Once the trust is developed
in the product, it is important that live up to it.

Q. Explain the 4 As of Rural Marketing

Mix. 5 Ans: Already done

Q. Write the characteristics of the Indian Handicraft

Industry.5 Ans:

Q. What are Regulated Markets? Write three features of Regulated Markets India. Write
any three advantages of Regulated Markets. 2+3+3=8
Ans: A regulated market is a market over which government bodies or, less commonly,
industry or labor groups, exert a level of oversight and
control. Regulation curtails the freedom of market participants or grants them special
privileges. Regulations include rules regarding how goods and services can be marketed;
what rights consumers have to demand refunds or replacements; safety standards for
products, workplaces, food and drugs; mitigation of environmental and social impacts; and
the level of control a given participant is allowed to assume over a market.

Features:

1.A regulated market can be started under the provision of law for any specific commodity or
for a group of commodities. This type of market is managed and administered by a market
committee. This market committee is composed of representatives of the State Government,
the legal bodies (district board), the traders, the commission agents and the farmers
themselves.

2. The Government appoints this committee for a definite period and this committee is
empowered with the total management of the market.
3. The Central Government has provided assistance for the creation of infrastructural facilities
in these markets and also for setting up of rural godowns. Grading standards have been
finalised for 150 agricultural and allied commodities under Agricultural Produce (Grading and
Marking) Act, 1937. In India, there are at present 3253 licensed cold storages with an installed
capacity of 8,733 million tonnes as on March 31, 1996.

4. These market committees usually fix the market charges like commission, rates etc. It
eliminates all dalals or brokers representing either the buyer or the seller. The committee
ensures remunerative prices to the farmers as well as prevalence of the system of appropriate
weights and measures.

5. The committee makes necessary provisions for hearing all complaints and settles those
complaints accordingly. For any dispute, the committee arranges for arbitration. The
committee is given responsibility to license brokers and weigh-men and is also vested with
powers to award punishment to those people found guilty of dishonest and fraudulent
practices.

6. These regulated markets are nowadays considered very useful for the elimination of
fraudulent practices adopted by different brokers, commission agents and also for
standardizing market prices of agricultural produce. These markets are ensuring fair prices
for the agricultural produce to the farmers and also for adopting standard weights and
measures.

Advantages:

 The economic and social advantages accruing to the cultivators, as a result of the
regulation of markets are:
1. As a result of the rationalization of market charges alone, the producer-seller is
benefitted to the tune of 3 to 5 rupees for every hundred rupees worth of
produce marketed by him in regulated markets.
2. There has been an increase in the number of sellers bringing their produce to
these markets.
3. A change has also been brought about in the socialistic behavior of the
influential, powerful and economically well off trading sections towards the
 ignorant, indebted and economically backward cultivators by constant diversion
of their attention to the canons of fair trading and responsibilities that devolve
on the licensed traders and commission agents of the market committees.
4. Market changes are clearly defined and specified. Excessive charges are reduced
and unwarranted ones are prohibited.
5. Market practices are regulated and; and the undesirable activities of the market
functionaries are brought under control so that a fair dealing is assured.
6. Correct weighment is ensured by periodical inspections and verifications of
scales and weights. Only correct and stamped beam scales and weights are
allowed to be used in the market. Weighment is done only by the licensed
weighman.
7. A machinery for the settlement of disputes between traders and sellers is set up.
This machinery provides suitable arrangements for the settlement of disputes
regarding quality, weighment and deductions prevent litigation, safeguard the
interests of the seller and smoothens business by creating good relation between
sellers and buyers.

Q. Write about the concept of Agri Export Zones. Explain three measures initiate to
promote exports from such zone. Write three benefits of AEZs. 2+3+3=8
Ans: already done.
Q. Write notes on the folloing: 4+4=8
1. Contract farming
2. Rural

Indebtedness Ans:

already done

Q. Explain the various Unconventional platforms for promoting brands in Rural

India. 8 Ans:

Q. Discuss the various marketing strategies for fertilizer

Industry. 8 Ans:

Q. Explain four challenges for Co-operative sector. Also write four strategies for
strengthening the co- operatives in Rural India. 8
Ans:
Q. Discuss the major challenges faced by the Rural Artisan Sector. Write two strengths of
the Indian Handicraft Industry. 6+2=8
Ans: