The Call of Rural India

The Rural Marketing Environment1Evolution of Rural MarketingPhase I (Before 60s)Traditional farming methodsFocus on marketing of rural products in urban markets and agricultural inputs in ruralPhase II (1960s to Early 90s)The Green and the White RevolutionDemand for agricultural inputsDomain of marketing of agricultural inputs addedPhase III(Mid 90s to present)Higher development in rural sectorMarketers realised the potential of the vast rural marketRMB 0222Rural Market StructureDemographic EnvironmentShare of rural population down from 80.1% in 1971 census to 72.2% in 2001 census. The number at 741.6 million indicates an increase of over 15%Youth (20 to 34) 23.1% of rural populationRural literacy up from 36% in 1981 to 59% in 2001 censusRural households up by 26 million in last decadeFamily size has gone down marginally due to migration Joint families now breaking apart with over 77% going nuclear in ruralConcept of individualised joint families staying in the same house but having separate kitchens

RMB 0233Some ComparisonsRMB 024Education in India (2001)Education LevelRuralUrbanBelow Primary31.718.0Primary but below Middle29.522.9Middle but below Matric16.916.3Matric but below Graduate18.429.6Graduate and above3.513.2Distribution of Population by age groups (2001)Age GroupsRuralUrban0 411.58.95 1425.721.815 199.510.620 3423.126.835 5419.722.555+10.59.4Source : 2001 CensusLower due to lack of facilitiesLower due to migration factor4Some ComparisonsRMB 025Family StructureType of HouseholdRuralUrbanJoint19.5%15.2%Nuclear without elders60.2%65.5%Nuclear with elders17.1%15.4%Others3.2%3.9%Total (million)13854Household SizeSize of HouseholdRuralUrban1 2 members11.1%10.7%3 4 members30.4%38.8%5 6 members34.0%32.8%7 members and above24.5%17.7%Average Family Size5.365.31Source : IRS 2005Joint Family System Breakdown 5Occupational PatternOver 40% of rural population is in cultivation followed by 35% wage earners11% of the rural population are salary earners and nearly 5% petty shopkeepers3.4% are artisansThe cultivators disposable income is highly seasonal being available at the time of harvestingRMB 0266Population Distribution - Rural

PopulationNumber of VillagesLess than 20092,541200-500127,054501-1,000144,8171,001-2,000129,6622,001-5,00080,313More than 5,00018,758Total number of villages593,145RMB 027Source : MARTDo not include uninhabited. Total villages including these are 638,365Hardly any shops in these villages account for 50% of rural population & 60% rural wealth7Distribution of Towns in India Town ClassPopulation CategoryNumber of TownsLiteracy(%)LPG penetration(% of HHs)Working population(% of pop)Class I1 lakh & above423824732Class II50,000 99,999498794431Class III20,000 49,9991,386773632Class IV10,000 19,9991,560762934Class V5,000 9,9991,057762735Class VILess than 5,000237803734All India5,1618048328Source: Census 2001*10 lakh+ : 27, 5-10 lakh: 42, 1-5 lakh: 35490 % of durables purchased by rural people from these towns8Economic Environment

AnnualIncome1995-962006-07Above Rs 215,0000.30.9Rs 45,001- 215,00013.525.0Rs 22,001- 45,00031.649.0Rs 16,001 - 22,00031.214.0Rs 16,000 & Below23.411.1100.0100.0RMB 029All figures in %Projections Based on 7.2% GDP GrowthThe 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 patterns9Changing Rural Consumers Expenditure PatternPer Capita Consumption Expenditure(Rs. Per month)YEARRURALURBAN198311216619912814582001486855Source: NSSOConsumption Expenditure RuralPercentageYEARFOODNON-FOOD198366341991633720015941Source: NSSORMB 0210Per 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 in urban10Social and Cultural EnvironmentVariations between regions and sub-regionsIn villages inward migration is insignificant while outward migration to urban and foreign is reasonably highThe settlement pattern is in clusters largely around caste linesHouses are largely semi-pucca and kachaLand is the primary source of livelihoodActivities limited to smaller geographic areas resulting in higher adherence to customs and traditions

RMB 021111Village CommunityVillages are self-sufficient and autonomousEach village has a council of elders (panchayat)Panchayats have the constitutional authority for exercising self-governanceThe panchayat structure has undergone change with elections and reservation for underprivileged familiesShift from subsistence farming to commercial and mixed farming has made the village dependent on external factors

RMB 021212Caste SystemThe rural society has a strong caste system:BrahminsKshatriyas (Warriors)Vaishyas (Business Class and traders)Shudras (involved in odd jobs) UntouchablesThe settlements of the lower castes are normally on the outskirts of the villageMarketers have to be sensitive to the caste system especially in the area of communicationRMB 021313Political EnvironmentThe panchayats were dominated by upper castesThe panchayati raj system has introduced an integrated and inclusive approach to governance in the rural sectorVillages with 5000 population or a cluster of villages with a combined population of 5000 form a panchayatGram Sabhas are to be organised once a quarter to bring in transperancy, accountability and achievementThe sarpanch represents the village at the tehsil/taluka/ block level

RMB 021414Tecnological EnvironmentTriggered by three major revolutions:Green Revolution (1967 to 1978) to bring about food self-sufficiency. Resulted in adoption of high yield seeds, fertilisers, pesticides, and farm mechanisationsWhite Revolution Milk production through producer cooperatives and moving processed milk to urban-demand centres. Milk production has gone up from 17 million tonnes in 1950-51 to over 100 million tonnes in 2007-08The NGO movement has created grassroot level assimilation of technological extensions in rural areasNGOs have also been instrumental in providing health, homes, hygiene, child care, education and other social development programmes

RMB 021515Constitution of Rural MarketsConsumers MarketConstituents: Individuals and HouseholdsProducts:Consumables: Food Products, Cosmetics Durables: Watches, bicycles, radios.Institutional Market Constituents: Food processing, poultry, fishery, animal husbandry, cottage industries, health centers, schoolsConsumables : Agri inputs (seeds and fertilizers) animal feed, fuelDurables: Tractors, Pumpsets and threshers.Services Market Banking, insurance credit cards, communication

RMB 021616Size of Rural MarketParticularsRural MarketCroresFMCG products65,000Consumer Durables5,000Agri-inputs incl. tractors45,0002/4 wheelers8,000TOTAL1,23,000Source Francis Kanoi 2002In the FMCG market the size of the pie is larger than the urban pie. Problems of logistics, supply and storageRural markets accounted for 54% of the durables sold in the countryThe decadal growth rate for consumer durables is 100% in rural against 40% in urbanRMB 021717Nature of Rural MarketThe big question transactional or developmental approach to the rural marketsAgri-input companies follow an extension services approach to increase productivityHPCL is promoting concept of community kitchens to popularise cooking gasHULs Project Shakti improves the income of rural women The rural marketing process needs to be evolutionary and not revolutionaryRMB 021818Marketing Management in Non-Profit SectorsNGOs have started partnering with corporatesCorporates are facing saturation in the urban segment and do not understand the rural environmentThe potential for a marriage between the two to fulfill each others needs existsRMB 021919In 20 years the rural Indian market will be larger than the total consumer markets in such countries such as South Korea or Canada today, and almost four times the size of todays urban market. The estimated size of rural market will be USD 577 billion- McKinsey Global Institute, May 200720Successful Mantra in Rural

Business Mind, Social Heart21Chart123.431.231.613.50.311.11449250.9

DestitutesAspirersClimbersConsuming classVery Rich

Sheet11995-962006-07Destitutes23.411.1Aspirers31.214Climbers31.649Consuming class13.525Very Rich0.30.9