Module-1

Introduction to
Rural
Marketing
 Introduction
• Predominantly rural character of India's
national economy is reflected in high
proportion of population in rural areas
• There are 700 million people living in rural
areas
• 6,30,000 villages
• Two third of the rural work force is
engaged in agriculture
• RM contributes 29% to India's GDP
• A location is defined as rural if 75% of
the population is engages in agricultural
related activity.

• In August 2013 around 650 million

people of Indian population was
engaged in agriculture.

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• Marketing of agricultural produce has
received adequate attention from the
policy makers & central & state govt.
• The result is in the establishment of
regulated markets with an aim to see
that agricultural producers get a better
share of the consumers rupee
• All the states have enacted Agricultural
Produce Markets Act
• As of today there are more than 5,000
agricultural commodity markets which
have been regulated under various 1–4
• The advent of commercial & market
oriented farming with the help of
modern technology necessitated the
use of manufacturing inputs like
fertilizers, pesticides, cattle & poultry
feeds & high yielding varieties of seeds.
• Mechanization of farming operations
also require manufactured inputs like
tractors, power tillers, combine
harvesters paving the way for industrial
manufacturing
• The advent of market oriented farming along
commercial lines with the help of improved &
advances technology & mechanization,
resulted in the increase in rural income.
• The high yielding varieties programme
launched in by the Govt has increased the rural
annual income by 2000 crore per annum.
• This also gives raise adequate disposal in
income the rural masses.
• Seeing this opportunity many organized
industries manufacturing consumable &
durable goods & services started exploring the
rural markets.
 Rural Marketing:
• Rural market refers to the demand originated from
the rural population.
• According to National Commission on Agriculture
“ Rural marketing is the process which starts with
a decision to produce a salable farm commodity &
it involves all the aspects of market structure or
system both functional & institutional , based on
technical & economic considerations,& includes
pre & post harvest operations ,assembling,
grading, storage, transportation & distribution.
 According to Thomsen RM comprises all
the operations & the agencies conducting
them , involved in the movement of farm
produced food, raw materials & their
derivatives such as textiles, from the farm
to the final consumers & the effect of such
operations on produces, middle men &
consumers
Rural marketing has two major areas:
• Marketing of agricultural produce from rural
to urban areas
• Marketing of manufactured goods &
services in rural areas
Thus RM is a two way process, which
includes the flow of goods from rural to
urban areas & the flow of goods & services
from urban to rural areas.
R-U; food grains, oilseeds, cotton,
U-R: Fertilizers, Pesticides, durables
 Components of Rural Markets

• Two parties are necessary

• Goods or commodity for
transaction
• Business relations &
communication
• Demarcation-area or place
perusing
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 Classification of Markets
I. Area of coverage
II. Location
III. Volumes of trade
IV. Time span
V. Number of commodities
VI. Type of transactions
VII. Degree of competition
VIII.Nature of commodities
IX. Government Intervention

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 Area of coverage
• Local Markets: buyers and sellers
belong to same village or nearby
village
• Tehsil level markets: at taluka level
• Regional level market: at district
level
• National level: Buyers & sellers
world over meet.

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 Location
• Village market: in a small village
• Primary market: villagers take their produce
to near by town & market
• Wholesale markets: Markets are located at
important commercial centers or dist HQ, they
arrive from villages in large quantity &
transaction takes place among village traders
& wholesalers. Commission agents ,brokers
packers, weightiest etc.
• Terminal markets: this market caters to the
final consumers .They are organized &
modern markets.

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 Volume of trade

• Retail Markets

• Wholesale markets

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 Time Span

• Long Period market- food grains,

oilseeds
• Short period market- vegetables, fruits,
fish, milk
• Permanent Markets- commodities can
be kept for a longer period of time

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 Nature of commodities

• General Markets

• Specialized Markets

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 Type of transaction

• Cash Market

• Forward Market

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 Government Intervention

• Regulated Markets

• Unregulated Markets

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 Distinctive features of rural &urban
markets:
Features Rural Urban
Demand pattern Seasonal Uniform

Spread Widely spread Concentrated

Literacy level Low High

Physical Communication Poor Very Good

facilities

Product Knowledge Not known Known

Source of information Word of mouth Any media

After sales service Inadequate Adequate

 Features Rural Urban

Per capita income Low High

Product as status Mostly no Mostly yes

symbol

Consumer protection Rarely available Easily available

Family Structure Joint Nuclear