final rural project

8/7/2019 final rural project

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Rural India: Challenges and Opportunities

Marketing today has completely transformed the nature and dynamics of business. One

today needs to be adaptive to survive. Marketing of products has taken precedence over

the process of production itself. This can be attributed to the fact that the new-ageconsumer equipped with the potent tool of information seeks more knowledge about the

product, its features and its uses. Customer today indeed is the "King". He can make or

break the company. And when this information is presented in a creative and effectivemanner, it creates an everlasting impression on the consumer's mind and may even alter

his perception of what he needs.

Marketers are forever seeking fresh challenges and scouting for more and more clientele

to be drawn into their sphere of influence. The urban consumer has always beenpampered with the most dazzling array of goods and services from every industry. But

the urban market is fast shrinking due to saturation caused by the competition, and the

growth rate over the past few years has consistently shown a declining trend. In the hunt

for fresh pastures, the vast and hitherto vastly unexplored terrains of rural Indiaconsistently beckon the moolah-seeking marketer.

Why Rural India?

There are various reasons why every industry is taking a very serious look at rural

markets: -

About 285 million live in urban India whereas 742 million reside in rural areas,

constituting 72% of India's population resides in its 6, 00,000 villages.

The number of middle income and high income households in rural India is

expected to grow from 80 million to 111 million by 2007 while urban India isexpected to grow from 46 million to 59 million. Infact according to a recentsurvey, there are morecrorepatis in rural Punjab than in a few big urban cities.

Size of rural market is estimated to be 42 million households and rural market has

been growing at five times the pace of the urban market.

More rural development initiatives by the government.

Increasing agricultural productivity leading to growth of rural disposable income.

Lowering of difference between taste of urban and rural customers.


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Good Monsoons in the last couple of years.

Growing rural infrastructure - thanks to Government initiatives.

Setting up of channels like e-choupals by companies like ITC.

Many companies like Colgate-Palmolive, HLL, Godrej, etc., have already made

forays into rural households but still capturing the markets is a distant dream.Most marketers still lack in-depth knowledge to analyze the complex ruralmarket.

In the Indian context, rural marketing is a complex subject. For a business

organization, rural marketing is beset with a number of problems. The prices of

rural marketing pose many problems due to the vastness of the country and a highpotentiality for providing an effective marketing system.

The traditional marketing activities of promotion, distribution, sales and servicing,

undertaken so far in the urban and semi-urban contexts, are to be extended to cover a

much wider area in a rural environment by introducing appropriate innovation, selectionand adoption.

There are about 5,76,000 villages in India, 79 percent of them with a population of less

then 1,000 each. The major hurdles in tapping the rural markets can be summarized as: -

1. High distribution costs2. High initial market development expenditure

3. Inability of the small retailer to carry stock without adequate credit facility

4. Generating effective demand for manufactured foods5. Wholesale and dealer network problems

6. Mass communication and promotion problems

7. Banking and credit problems

8. Management and sales managing problems9. Market research problems

10. Inadequate infrastructure facilities (lack of physical distribution, roads

warehouses and media availability)11. Highly dispersed and thinly populated markets

12. Low per capita and poor standards of living, social, economic and cultural

backwardness of the rural masses


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13. Low level of exposure to different product categories and product brands

14. Cultural gap between urban-based marketers and rural consumers

The development of the rural market will involve additional cost both in terms ofpromotion and distribution. In rural marketing, often it is not promotion of a brand that is

crucial, but creating an awareness concerning a particular product field, for instance,fertilizers and pesticides.

Urban and semi-urban based salesmen are not able to tap the full potential in the villages.Here, it may be suggested that the marketers may select and employ the educated

unemployed from villages

Methods Followed Traditionally

Traditional methods of rural marketing make an interesting study and they ought to be

analyzed carefully to draw relevant conclusions. Conventionally, marketers have used the

following tools to make rural inroads: -

Use of few select rural distributors and retailers to stock their goods but no direct

interaction with prospective consumer.

Use of print media or radio but no alternate form of advertising for promotingtheir brands.

More focus on price of product but less attention devoted to quality or durability.

Same product features for urban and rural setting with no customization for rural

areas despite differences in the market environment.

Low frequency of marketing campaigns.

Little uses of village congregations like haats and melas to sell the products.

More focus on men as decision makers and buyers.


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Strategies for Rural Marketing

The past practices of treating rural markets as appendages of the urban market is notcorrect, since rural markets have their own independent existence, and if cultivated well

could turn into a generator of profit for the marketers. But the rural markets can be

exploited by realizing them, rather than treating them as convenient extensions of theurban market.

he focus should be on infecting marketing culture into the villages. The educated

unemployed youth in the villages could be trained to carry out this mission.

1. Decentralizing rural markets by detaching them from the urban bases. A give-and-

take two-way approach should replace the present one-way exploitation.2. The salesman in rural markets should be selected from the educated unemployed

villagers, trained well and appointed as salesmen. The town-to-villages shuttling

salesmen are to be replaced by stationary salesman in villages.3. Companies should also adequately concentrate on educating the villagers to save

them from spurious goods and services.

4. Rural markets are laggards in picking up new products. This will help thecompanies to phase their marketing efforts. This will also help to sell inventories

of products out dated in urban markets.


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Future Outlook

Considering the magnitude of the task at hand with the companies, it makes sense for

non-competitive companies like HLL and LG to make a joint effort to penetrate the

market. They can use each other's distribution channels to leverage their brands. Alsoconsidering the poor awareness levels of the people, competitors like HLL and P&G

should join hands to avoid the product proliferation, which results in confusing theconsumer. Rural consumers have a very high level of ethos so all the care should be taken

not to hurt them in any form of advertising. Moreover, every effort should be made by the

companies to promote the "my brand" feel in the minds of consumers. This can beachieved by connecting the local industries of that place and, if possible, use it in

packaging or graphics of the product.

So the need of the hour is the integration of all the above stated approaches and

constantly reinventing the products and bringing new innovations. Companies will need

to think beyond the short-term gains and resort to experimentation so as to develop adedicated model for these areas.

In recent years, rural markets have acquired significance in countries

like China and India, as the overall growth of the economy has resulted into substantial

increase in the purchasing powerof the rural communities. On account of the green

revolution in India, the rural areas are consuming a large quantity of industrial and urban

manufactured products. In this context, a special marketing strategy, namely, rural

marketinghas taken shape. Sometimes, rural marketingis confused with agricultural

marketing the later denotes marketing of produce of the rural areas to the urban

consumers or industrial consumers, whereas rural marketing involves delivering

manufactured or processed inputs or services to rural producers or consumers. Also,

when we consider the scenario of India and China, there is a picture that comes out,huge

market for the developed products as well as the labor support. This has led to the change

in the mindset of the marketers to move to these parts of the world.
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Also rural market is getting an importance because of the saturation of the urban market.

As due to the competition in the urban market, the market is more or so saturated as most

of the capacity of the

categories to an unexplored market i.e. the rural market. This has also led to the CSR

activities being done by the corporate to help the poor people attain some wealth to spendon their product purchasers have been targeted by the marketers.So the marketers are

looking for extending their product categories. Here we can think of HLL (now, HUL)

initiatives in the rural India. One of such project is the Project Shakti, which is not only

helping their company attain some revenue but also helping the poor women of the

village to attain some money which is surely going to increase their purchasing power.

Also this will increase their brand loyalty as well as recognition in that area. Similarly we

can think of the ITC E-Chaupal, which is helping the poor farmers get all the information

about the weather as well as the market price of the food grains they are producing.In

other view these activities are also helping the companies increase their brand value. So

as it is given above the significance of the rural market has increased due to the saturation

of the urban market as well as in such conditions the company which will lead the way

will be benefited as shown by the success of HUL and ITC initiatives.

Strategies

Dynamics of rural markets differ from other market types, and similarly rural marketing

strategies are also significantly different from the marketing strategies aimed at

anurban orindustrial consumer. This, along with several other related issues, have been

subject matter of intense discussions and debate in countries like India and China and

focus of even international symposia organized in these countries[2].

Rural markets and rural marketing involve a number of strategies, which include:

Client and location specific promotion

Joint or cooperative promotion..

Bundling of inputs

Management of demand

Developmental marketing

Unique selling proposition (USP)
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Extension services

Business ethics

Partnership for sustainability

Client and Location specific promotion involves a strategy designed to be suitable to

the location and the client.

Joint or co-operative promotion strategy involves participation between the marketing

agencies and the client.

'Bundling of inputs' denote a marketing strategy, in which several related items are sold

to the target client, including arrangements of credit, after-sale service, and so on.

Management of demandinvolve continuous market research of buyers needs and

problems at various levels so that continuous improvements and innovations can be

undertaken for a sustainable market performance.

Developmental marketing refer to taking up marketing programmes keeping the

development objective in mind and using various managerial and other inputs of

marketing to achieve these objectives.

Media, both traditional as well as the modern media, is used as a marketing strategy.

Unique Selling Propositions (USP) involve presenting a theme with the product to

attract the client to buy that particular product. For examples, some of famous Indian

Farm equipment manufactures have coined catchy themes, which they display along with

the products, to attract the target client, that is the farmers. English version of some of

such themes would read like:

The heartbeats of rural India

With new technique for a life time of company

For the sake of progress and prosperity

Extension Services denote, in short, a system of attending to the missing links and

providing the required know-how.

Ethics in Business. form, as usual, an important plank for rural markets and rural

marketing.

Partnership for sustainability involve laying and building a foundation for continuous

and long lasting relationship.


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'''Building sustainable market linkages for rural products: Industrys role, scope,

opportunities and challenges'''

Introduction:

Rural products of India are unique, innovative and have good utility and values. Large

number of these rural products (like handicraft items, food products, embroidery, clothes

& other products) sustains a significant segment of the population in the rural areas.

Several attributes of rural products can be identified, for which, it has a demand in the

market. Out of the lots, ethnic origin and indigenous design & appearance are two

traits of rural products, attracting a premium in the market. But, contrary to this, the non-

uniformity of rural products (from one another) and lack of its quality control measures

has been creating a negative demand. Besides, the small sized and dispersed production

units of these rural products hinder realization of the economies of scale in marketing and

result in high transaction costs per unit of output. Niche-based products have no local

market. Products in local use are also not marketed horizontally; they often first traveldown to market through a long chain of intermediaries and then up to more difficult

locations in the rural areas. In the process, the people in rural areas suffer from both low

prices as producers and high prices as consumers. In this conflict, rural products loss its

equilibrium and the supply side becomes exponentially high. Because of this hazard, rural

entrepreneurs face acute economic loss and rural markets become stagnant. Therefore,


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there is an emergent need for Building sustainable market linkages for rural products, so

that, it can be connected to larger markets and farmers can get a sustainable livelihood.

Market linkages for rural products:

There are, broadly speaking, three ways in which they can be connected to the markets.

They can do it on their own through cooperatives. Or, the state can do it for them

through its procurement engines. Stages one and two, in a manner of speaking. Today,

developmental thinking on market linkages has reached stage three linkages throughcompanies or industries. Rural markets are regarded as organizations formarketing of

non-farm products in a traditional setting. Developing rural markets is one of the major

concerns of government and Non-governmental organization in India. This subject has

attracted large number of research studies over past. Among which noted contributions

are made by Rajagopal, PhD, FRSA; faculty members ofInstitute of Rural Management

Anand, IIMA and others.

Across India, previous attempts to create such linkages have floundered. Take Assam and

other eastern states itself. Around the Eighties, the state government here decided that

cooperatives were a great way to consolidate its political base. Loans went to the

undeserving. Debts were written off. The institutions slowly got corrupted. As for the

linkages provided by the state, these offer uncertain sustainability. Given this context,

one can conclude that profit-oriented industry linkages are a more sustainable, more

scalable alternative. In this scenario, companies can use the social infrastructure (the self

help group et al.) as an alternative procurement and distribution chain and vise versa.

Industrys role in building market linkages:

To make an effective market linkage, industries have to play as an engine of market,which can generate a brand image of the rural products. This initiative of industries will

also strengthen the backward and forward linkages of the rural market, besides,

accelerating the innovations of the rural products. Definitely, this strategy will also give a

remarkable dividend to the industries & profit making companies. In micro level, it is

observed that to create a sustainable market linkage for rural products, industries can
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develop an ecosystem of Self Help Groups (SHGs) by involving the local communities

through village level empowerment. It is nothing less than the next phase in the

democratization of commerce. Under this paradigm, industries can create a network with

viable marketing channels covering all the linkages from villages to the global level. This

architecture provides the right value of procurement through the village procurement

centres and rural entrepreneurs can sell their products faster with better price realization.

This model is also capable of generating a consumer business and an output business in a

win-win scenario, where rural producers can get a wide marketing horizon and the

industries shall get a new, lower cost salesforce. Another role of industries in building

market linkages for agro-based rural products can be the dynamic contract farming. If a

conventional industry can kick off a contract farming business, and export niche

horticulture crops like cucumbers, the small and marginal farmers who could grow these

small cucumbers would make Rs 30,000 in profits in a year. KRBL, one of Indias largestbasmati exporters, has contract farming agreements with 24,000 farmers; Global Green

buys from about 12,000 farmers. Moreover, in the current era of information technology,

industry and private companies can also creatively use ICT for building sustainable

marketing linkages. This approach creatively leverages information technology (IT) to set

up a meta-market in favour of small and poor producers/rural entrepreneurs, who would

otherwise continue to operate and transact in 'unevolved' markets where the rent-seeking

vested interests exploit their disadvantaged position. ITC e Choupal is the best example

in this context. Through creative use of Information Technology, ITC eChoupal has been

creating sustainable stakeholder value by reorganizing the agri-commodity supply chains

simultaneously improving the competitiveness of small farmer agriculture and enhancing

rural prosperity. eChoupal also sidesteps the value-sapping problems caused by

fragmentation, dispersion, heterogeneity and weak infrastructure. ITC takes on the role of

a Network Orchestrator in this meta-market by stitching together an end-to-end solution.

It eliminated the traditional 'mandi' system which involved lot of middlemen as a result of

which farmers failed to get the right value for their produce. The solution simultaneously

addresses the viability concerns of the participating companies by virtually aggregating

the demand from thousands of small farmers, and the value-for-money concerns of thefarmers by creating competition among the companies in each leg of the value chain.
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Scope & opportunities:

The basic scope of this novel initiative will be the mutual benefits of the rural

entrepreneurs and industries. The entrepreneurs primary beneficiaries, SHGs bridge

with the community, participating companies/industries and rural consumers havebefitted through a robust commercial relationship. These models of marketing linkages

demonstrate a large corporation which can play a major role in reorganizing markets and

increasing the efficiency of a rural product generation system. While doing so it will

benefit farmers and rural communities as well as shareholders. Moreover, the key role of

information technologyprovided and maintained by the industry/company for building

linkages, and used by local farmersbrings about transparency, increased access to

information, and rural transformation. Besides, this strategy of market linkage, addresses

the challenges faced by rural entrepreneurs due to institution voids, numerous

intermediaries and infrastructure bottlenecks. Moreover, the prime scope of this model is

the creation of opportunities for the rural entrepreneurs for product differentiation and

innovation by offering them choices. Because of this sustainable market linkages, rural

producers can participate in the benefits of globalization and will also develop their

capacity to maintain global quality standard. Nonetheless, it creates new stakeholders for

the industry sector. And subsequently, they become part of the firms core businesses.

The involvement of the private /industry sector at the rural product and market

development can also provide opportunities for the development of new services and

values to the customers, which will find application in the developed markets. It will beworth mentioning that building a sustainable market linkage through industrys

intervention will also empower the rural mass (producers, farmers & entrepreneurs) to

cope with socio-economic problems in the rural society and will ensure economic self

reliance.


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Challenges:

There are significant challenges to the entire process the most important being the

capacity building of the rural entrepreneurs. For decades, the entrepreneurs associated

with very conventional/traditional knowledge of business, humiliation with government,

so they are likely to look at these initiatives with skepticism. Only consistent performance

can convince the skeptics. Therefore, the industries must play a catalytic role to cope with

this challenge and should also train the entrepreneurs to develop their managerial and IT

skills. On the other hand, the products of the existing and popular brand also stand as

threat to the rural products. These global giants (brand) may try to suppress the rural

products in the markets with its communication hype. Therefore, developing alternative

and additional market linkages for these products is an absolute necessity. Moreover, the

low volumes of rural products, high operating costs, high attrition, and absence of local

know how and relationships may also create problem in the process. Henceforth, it isessential to make a way out to cope with these odds.

Conclusion:

These issues gain added complexity under globalization, where markets are characterized

by extreme competition and volatility. While rural products has been perceived

traditionally as catering to the local market, or at best, to a wider national market through

limited formal channels, the reality of globalization since the 1990s introduced a new

dimension to the market for such products. The issue of rural product generation through

industrialization, therefore, needs to be viewed from a new angle and on far more

scientific lines. The core of a scientific approach is to understand the market

opportunities for rural products along with the country's development priorities and to

chalk out a strategy where rural industries have an important role to play. While rural


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products are forced to increasingly become part of global supply chains, these products

need to adapt themselves, not only according to the changing tastes of the national

market, but also according to changes in tastes in the international market. Therefore, a

process is essential to explore the market linkages and capacity building for SHGs

through a bottom up approach and continuous dialogue with stakeholders of rural

enterprise. This process should ensure the participation of rural people as consumers and

producers in the globalization mechanism, with better livelihoods and global access to

markets. The real challenge of building a sustainable market linkage starts here.

Present position

Rural markets, as part of any economy, have untapped potential. There are several

difficulties confronting the effort to fully explore rural markets. The concept of rural

markets in India, as also in several other countries, like China[3], is still in evolving

shape, and the sector poses a variety of challenges, including understanding the dynamics

of the rural markets and strategies to supply and satisfy the rural consumers.

SARASThe promotion of Swarozgaris under the banner ofSARAS was one of the major steps

taken by the Ministry of Rural Development during the year 1999-2000 for theimprovement of rural business. The main aim of the Ministry of Rural Development in

subscribing most of the rural products under the banner of SARAS was that, it wanted to

give the rural products a globally recognized brand name which would be an added valueto the trading of these products. This task taken up by the Ministry of Rural Development

has opened up a galore of opportunities for the rural artisans or entrepreneurs or officials

who are deeply involved in the program of Swarnjayanti Gram Swarozgar Yojana
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(SGSY). The business people got a vast exposure in the international market with the

help of this program.

This can be claimed to be one of the beneficiary activities performed by the RuralMinistry for the welfare of the state's economy especially the rural sector. SARAS was

recognized to be an umbrella brand under which a variety of products were marketed not

only in the domestic market but in the international markets as well. SARAS has been aregular annual event every since 1999 when it hit the market at one go with its innovative

approach to the consumers. The SARAS exhibition is also a portrayal of the skills of

people residing in different corners of the rural sector. The products are directly displayedin the exhibitions executed by SARAS for rural products, and the visitors enjoy the

privilege to make their choices directly from the exhibition. The products are highly

adored by every section of society and people from all across the country participate in

the SARAS exhibition. The sales graph of the rural products are growing higher andhigher and every year there is a phenomenal rise in the selling of products. Some

participants even order these products in a bulk apart from buying single pieces. The

products range includes handicrafts, textiles, artwork, furniture, draperies, household

artifacts, items of daily use, and many more.The exhibition of rural products under the banner of SARAS has also been a participant

in the India International Trade Fair (IITF). Such enhancements in the program havefueled the confidence and enthusiasm within the craftsmen and they are giving their best

of production every year for it. SARAS has not only recognized the in-built skills of the

artisans that were subdued but also provided them with a plethora of opportunities to

make the best use of it. The goods manufactured by these rural poor are made popular toadorn the domestic markets and has also paved its way through the urban, metropolitan,

and global markets.

SARAS exhibitions have also won the confidence of the stakeholders in the developmentof rural products or craftsmen. Apart from opening up of new roads for these hidden

talents, SARAS has been also playing a key role in connecting these talents with various

markets. SARAS 2003 will be strictly focusing on improving the skills of the artisans andincreasing the richness of products by developing more awareness programs among the

rural poor.

ORMAS (Orissa Rural Development and Marketing Society)

ORMAS (Orissa Rural Development and Marketing Society) is a self-governing apex

body, which is run by the Panchayati Raj Department under the Government of Orissa.

The main aim of ORMAS is to facilitate a better livelihood to the rural poor of Orissa by

implementing advanced technologies.

The main objective with which the state government has set up the Orissa Rural


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Development and Marketing Society under the supervision of Panchayati Raj

Department, are-

To incorporate better technology

To provide new marketing strategies for better networking To undertake development measures to sharpen the skills of the rural producers to

generate better products

This is one of the major steps taken by the state government for the amelioration of the

rural business in Orissa. This also ensures a sustainable living for the rural section of

society who are involved in the manufacturing of rural products that are sold in themarkets across the country and also in the international market.

The chief activities of the industrial sectors of ORMAS include Handloom, Handicraft

and other Utility items. Apart from these three items, Orissa Rural Development andMarketing Society is also involved in manufacturing minor forest and agri-based

products which possess a great foundation of raw materials and skills. The activities

carried out by ORMAS (Orissa Rural Development and Marketing Society) involveproducing siali and sal leaf plate and cups, hill broom, Rock Bee honey processing, dal

processing, kewda leaf products, and many more. ORMAS also does a countrywide

networking for marketing purposes for products such as Tamarind, Amla, Harida,

Kalmegh and few other MFPs and medicinal plants. In the recent period, ORMASpromoted few more agricultural rural products for a better trading such as Onion,

Turmeric and Ginger.

ORMAS also facilitates proper input connections for the promotion of these rural

products. ORMAS works at macro-level that ensures smooth implementation of the

programs involved in the welfare activities. The other activities of the ORMAS includehelping in the formation and promotion of Self Help Groups, to facilitate the banking

operations of the SHGs, and to offer marketing linkages with lucrative prices to the

producers. The ORMAS also facilitates capacity building of the self-help groups byoffering them basic orientation and training to develop their skill further. Moreover

linkages are created by the ORMAS for meeting the infrastructure requirements of these

groups and to provide them the appropriate technology required for further development.

The ORMAS (Orissa Rural Development and Marketing Society) have taken up productpromotion programs as well in order to supply more standardized products.

final rural project

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