RURAL MARKETING

Why should we do this

course?
 Agriculture’s share in GDP is going down, but, India
still lives in her villages
 Urban markets are crowded and saturated
 The understanding of “rural” is diffused and
sometimes confusing
 Is “rural marketing” different from “urban
marketing” ?
“The real voyage of discovery consists not in
seeking new landscapes, but in having new
eyes.”

Marcel Proust
EVOLUTION

 Gone are the days when rural consumers

went to a nearby city to buy branded stuff
 Today rural markets are critical for every
marketer-be it a branded shampoo or an
automobile
 Television has played an important role
 Rural is growing twice as fast as urban
markets
 India Diversity
 17 % of the world’s
population in 2% of its land
mass
 24 languages … 1642
Dialects
 All major religions … 20000
ethnic groups
 6, 38, 691 villages and
5,164 towns.
 70 % of population still
Rural and agrarian.

India - Not Just One Country

Rural India
 41 % are illiterate
 56 % have no access to electricity
 70 % have no bank account
 96 % have no telephones
 6.7 % have two wheelers
 1.3 % have 4 wheelers
Rural Market has arrived
 742 million people
 Rural is bigger than urban
 FMCG's 53%
 Durables 59%
sSource: NCAER,2002
 Estimated annual size of the rural market
 FMCG Rs 65,000 Crore
 Durables Rs 5,000 Crore
 Agri-inputs (incl. tractors) Rs 45,000 Crore
 2 / 4 wheelers Rs 8,000 Crore
 Total Rs 1,23,000 Crore

Source: Francis Kanoi, 2002

 Phases of Rural Marketing
Phase Time Period Nature Major Products Source Target
market market

I Independence to Agri Mktg. Agri. Produce Rural Urban

Green Revolution

II Green Revolution to Mktg. of agri Agri Inputs Urban Rural

Pre Liberalisation inputs

III Post Liberalisation in Rural Mktg. Consumable and Urban & Rural
20th Century durables for Rural
consumption and
production
IV 21st Century Development All Products and Urban & Urban &
Mktg. Services Rural Rural
Indian Rural Market
Some facts about Indian Rural Market

1. India has 72% of total population in the

rural areas.
2. The rural market is not fully developed & it
has very low literacy rate.
3. But it has very good potential keeping in
mind the number of people residing there.
Why Indian Rural Market is
Growing?
 The income level & the distribution of income is
becoming equal & balanced. So the people in the
rural areas have the same opportunity of growth as
the people of urban areas have.
 Good support from the private as well as the
government agencies is provided for the
development of the rural area people. Institutions
like ICICI, IFCI, SIDBI etc. have introduced many
schemes which are resulting into the development
of these people.
 Why Indian Rural Market is
Growing?
 The scope in the urban area is restricted due
to the dominance of the big and multinational
company. So, many small scale industries
came in the rural areas resulting into the
development of the rural area.
 Increasing exposures to the outer world
through the development of media result into
the change in the mindset.
The Rural Economy
The Rural Economic Structure
Rural Economy

Farm Sector Non-farm sector

(Agri & Allied) (formal and informal sector)

Agriculture Rural industries Rural Services

Animal Husbandry Agro Processing

Retailing & Trading
(dairy, goat, poultry) (Sugarcane,oilseed etc.)

Manufacturing
Horticulture Community & Social Service
(Handlooms, Handicrafts,etc.)

Forestry Mining & Quarrying Transport & Storage

Fishing Construction Communication

Rural Employment
Patterns( Male)
Sector Year – 1987 ( % share in Year -2004 ( % share
employment) in employment)

Agriculture 75 67

Transport & 2 8
Communicatio
n
Trade & Hotels 5 7

Construction 4 7

Manufacturing 7 8

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

Rural India – Population Trends

1971 1981 1991 2001

Total 548.2 683.3 848.3 1026.9

Population (in
million)
Rural 524.0 628.8 741.6
Population (in
million)
As a 76.7 74.3 72.2
proportion of
total
population
Decadal 19.8 16.7 15.2
Variation
Source: Census 2001
Cont’d
 The joint family system is being replaced by the
nuclear family system
 The occupational pattern shows a predominance of
cultivators and wage earners
 Cultivators( 40.86 %) and Wage Earners( 35.28 %)
according to NCAER studies (2002)
Rural Income Trends
Annual Income Income Class 1989-90( % 1998-99 ( %
( at 1998-99 Households) Households)
prices)
<= 35,000 Low 67.3 47.9

35,001- 70,000 Low Middle 23.9 34.8

70,001 – Middle 7.1 10.4

1,05,000

1,05,001- Upper Middle 1.2 3.9

1,40,000

> 1,40,000 High 0.5 3.0

Source: National Council for Applied Economic Research, 2000

Understand & Feel
 We believe, Farmer is the face
of Rural Markets
 As such to successfully explore
Rural Markets, we must
understand typical needs of the
Farmer
 Having done so, we must work-
out a solution which when
presented, makes the Farmer
feel empowered
 The Mantra is “Do it in field and
not in Boardrooms’
What is Rural
 What is not urban
 Urban is
 all locations within municipality corporation
 All other location satisfying all of the
following
 Minimum population 5000
 At least 75% of male force engaged in non-
agricultural activities
 Population density 400 persons per sq.km.
What is Rural Marketing
 Planning and implementation of
marketing function for the rural areas.
It is a two-way marketing process
which encompasses the discharge of
business activities that direct the flow of
goods from urban to rural and vice
verca
Characteristics of Rural Marketing
 Large & scattered market
 Heterogeneous market
 Income from agriculture
 Standard of living
 Infrastructure facilities
Challenges in Rural Marketing
 Distribution
 Understanding the psyche of the rural consumer
 Limited knowledge
 Communication
 Cost per contact
 State of fakes and spurious products
 Budget allocations
 Urban orientation and bias
 Lack of right competence &
Commitment at front line level
Opportunities in Rural Marketing
 Rising rural prosperity
 Lesser dependence on agriculture and
monsoon
 Increasing rural consumption
 Rural marketing efforts
 Increasing sale of branded products
 Large population
Rural Marketing- Schools of
Thought
 Determinist School
 Activist School
 What is the right approach?
 Dependent on level of market development, stage in
the PLC and access to resources
 Amul & ITC prominent examples
Strategic Issues & Directions in
Rural Marketing
 Evolutionary Vs revolutionary changes in rural markets
 Role of state & market forces
 ICT based interventions
 Partnership innovations
 Developmental role of rural marketing
 Scalability & replication of rural marketing programmes
ICT in Rural Markets
Category Government Private NGO/ PPP

Infrastructure NIC N- Logue Simputer

Provision

Rural Services Bhoomi( Karnata Sewa

ka)

Agri Marketing Agmarknet E- Choupal Ozhwar

Sandhiyes

Agri extension Universities EID Parry

Urban & Rural Markets
Comparative Analysis
Parameters differentiating Urban &
Rural Markets
 Infrastructure
 Socio-cultural Background
 Accessibility
 Media Reach & Habits
 Rural Sales Promotion
 Nature of Competition
What should be kept in mind to
get success in Rural Market?
 The 4A Approach :
 Availability
 Affordability
 Acceptability
 Awareness
 CONCLUSION

Looking at the challenges and the opportunities

which rural markets offer to the marketers ,it can be
said that the future is very promising for those who
can understand the dynamics of rural markets and
exploit them to their best advantage.
The future lies with those companies who see poor
as their customers

-C.K. Prahlad to Indian CEOs, Jan 2000

To get rich, sell to poor

- Pradeep Kashyap
Take Away from the Lecture
THANK YOU