Ch 02 Rural Marketing Environment
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Transcript of Ch 02 Rural Marketing Environment
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Chapter 2
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Chapter Objectives The facts and figures of rural
Evolution of rural marketing in India
Holistic view of the marketing environment The household, institutional and service sectors in
rural
The need for business-social sector partnerships
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Evolution of Rural Marketing Phase I (Before 60s)
Traditional farming methods
Focus on marketing of rural products in urban markets and
agricultural inputs in rural
Phase II (1960s to Early 90s) The Green and the White Revolution
Demand for agricultural inputs
Domain of marketing of agricultural inputs added Phase III(Mid 90s to present)
Higher development in rural sector
Marketers realised the potential of the vast rural market
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Rural Market Structure Demographic Environment
Share of rural population down from 80.1% in 1971 census to72.2% in 2001 census. The number at 741.6 million indicates
an increase of over 15% Youth (20 to 34) 23.1% of rural population
Rural literacy up from 36% in 1981 to 59% in 2001 census
Rural households up by 26 million in last decade
Family size has gone down marginally due to migration
Joint families now breaking apart with over 77% going nuclearin rural
Concept of individualised joint families staying in the samehouse but having separate kitchens
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Some Comparisons
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Education in India (2001)
Education Level Rural Urban
Below Primary 31.7 18.0
Primary but below Middle 29.5 22.9
Middle but below Matric 16.9 16.3
Matric but below Graduate 18.4 29.6
Graduate and above 3.5 13.2
Distribution of Population by age groups (2001)
Age Groups Rural Urban
0 4 11.5 8.9
5 14 25.7 21.8
15 19 9.5 10.6
20 34 23.1 26.8
35
54 19.7 22.5
55+ 10.5 9.4
Source : 2001 Census
Lower due tolack of
facilities
Lower due tomigration
factor
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Some Comparisons
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Family Structure
Type of Household Rural Urban
Joint 19.5% 15.2%
Nuclear without elders 60.2% 65.5%
Nuclear with elders 17.1% 15.4%
Others 3.2% 3.9%
Total (million) 138 54
Household Size
Size of Household Rural Urban
1
2 members 11.1% 10.7%
3 4 members 30.4% 38.8%
5 6 members 34.0% 32.8%
7 members and above 24.5% 17.7%
Average Family Size 5.36 5.31
Source : IRS 2005
Joint FamilySystem
Breakdown
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Occupational Pattern
Over 40% of rural population is in cultivation followedby 35% wage earners
11% of the rural population are salary earners and
nearly 5% petty shopkeepers 3.4% are artisans
The cultivators disposable income is highly seasonalbeing available at the time of harvesting
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Population Distribution - Rural
16%
21%
24%
22%
14%3%
5000
PopulationNumber of
Villages
Less than 200 92,541
200-500 127,054501-1,000 144,817
1,001-2,000 129,662
2,001-5,000 80,313
More than 5,000 18,758
Total number ofvillages
593,145
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Source : MARTDo not include uninhabited. Total villages includingthese are 638,365
Hardly any shops in
these villages
account for 50%
of ruralpopulation &60% rural wealth
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Distribution of Towns in India
Town Class Population CategoryNumberof Towns
Literacy(%)
LPGpenetration(% of HHs)
Workingpopulation(% of pop)
Class I 1 lakh & above 423 82 47 32Class II 50,000 99,999 498 79 44 31
Class III 20,000 49,999 1,386 77 36 32
Class IV 10,000 19,999 1,560 76 29 34
Class V 5,000 9,999 1,057 76 27 35
Class VI Less than 5,000 237 80 37 34
All India 5,161 80 48 32
9
Source: Census 2001
*10 lakh+ : 27, 5-10 lakh: 42, 1-5 lakh: 354
90 % ofdurables
purchased byrural people
from thesetowns
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Economic Environment
AnnualIncome
1995-96 2006-07
Above Rs 215,000 0.3 0.9
Rs 45,001- 215,000 13.5 25.0
Rs 22,001- 45,000 31.6 49.0
Rs 16,001 - 22,000 31.2 14.0
Rs 16,000 & Below 23.4 11.1
100.0 100.0
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All figures in %
Projections Based on 7.2% GDP Growth
The rich and the very rich have doubled in the last ten yearsThe aspirers and the destitute have fallen by 50%Increasing incomes are also changing expenditure patterns
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Changing Rural Consumers Expenditure
PatternPer Capita Consumption
Expenditure(Rs. Per month)
YEAR RURAL URBAN
1983 112 166
1991 281 458
2001 486 855Source: NSSO
Consumption Expenditure RuralPercentage
YEAR FOODNON-
FOOD
1983 66 34
1991 63 37
2001 59 41Source: NSSO
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Per capita consumption expenditure has grown 4 times in the last two decadesExpenditure on non-food items is increasing42 million rural households avail banking services in rural against 27 million inurban
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Social and Cultural Environment Variations between regions and sub-regions
Distinct socio-cultural regions cutting across political/administrative boundaries exist
In villages inward migration is insignificant while outwardmigration to urban and foreign is reasonably high
The settlement pattern is in clusters largely around castelines
Houses are largely semi-pucca and kacha
Land is the primary source of livelihood
Activities limited to smaller geographic areas resulting inhigher adherence to customs and traditions
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Village Community Villages are self-sufficient and autonomous
Each village has a council of elders (panchayat)
Panchayats have the constitutional authority for exercisingself-governance
The panchayat structure has undergone change withelections and reservation for underprivileged families
Shift from subsistence farming to commercial and mixedfarming has made the village dependent on external factors
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Caste System The rural society has a strong caste system:
Brahmins
Kshatriyas (Warriors)
Vaishyas (Business Class and traders)
Shudras (involved in odd jobs) Untouchables
The settlements of the lower castes are normally on theoutskirts of the village
Marketers have to be sensitive to the caste system especiallyin the area of communication
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Political Environment The panchayats were dominated by upper castes
The panchayati raj system has introduced an integratedand inclusive approach to governance in the rural sector
Villages with 5000 population or a cluster of villages with acombined population of 5000 form a panchayat
Gram Sabhas are to be organised once a quarter to bring intransperancy, accountability and achievement
The sarpanch represents the village at the tehsil/taluka/block level
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Tecnological Environment Triggered by three major revolutions:
Green Revolution (1967 to 1978) to bring about food self-sufficiency.Resulted in adoption of high yield seeds, fertilisers, pesticides, andfarm mechanisations
White Revolution Milk production through producer cooperativesand moving processed milk to urban-demand centres. Milkproduction has gone up from 17 million tonnes in 1950-51 to over 100million tonnes in 2007-08
The NGO movement has created grassroot level assimilation oftechnological extensions in rural areas
NGOs have also been instrumental in providing health, homes,hygiene, child care, education and other social developmentprogrammes
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Constitution of Rural Markets Consumers Market
FMCG
Durables
Institutional Market Food processing, poultry, fishery, animalhusbandry, cottage industries, health centres, schools Consumables
Durables
Services Market Banking, insurance credit cards, communication
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Size of Rural Market
ParticularsRural Market
Crores
FMCG products 65,000
Consumer Durables 5,000
Agri-inputs incl.tractors
45,000
2/4 wheelers 8,000
TOTAL 1,23,000
Source Francis Kanoi 2002
In the FMCG market the size ofthe pie is larger than the urbanpie. Problems of logistics, supplyand storage
Rural markets accounted for54% of the durables sold in thecountry
The decadal growth rate forconsumer durables is 100% inrural against 40% in urban
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Nature of Rural Market The big question transactional or developmental
approach to the rural markets
Agri-input companies follow an extension servicesapproach to increase productivity
HPCL is promoting concept of community kitchens topopularise cooking gas
HULs Project Shakti improves the income of ruralwomen
The rural marketing process needs to be evolutionaryand not revolutionary
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Marketing Management in Non-ProfitSectors
NGOs have started partnering with corporates
Corporates are facing saturation in the urban segmentand do not understand the rural environment
The potential for a marriage between the two to fulfilleach others needs exists
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- McKinsey Global Institute, May 2007
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