RURAL MARKETING PPT

Rural MarketingRural MarketingASHA PRIYA GOUDASHA PRIYA GOUD

GITAM INSTITUTE OF MANAGEMENTGITAM INSTITUTE OF MANAGEMENTGITAM UNIVERSITYGITAM UNIVERSITY

Why Rural Marketing Why Rural Marketing is hot?is hot?

Rural Push Policy of UPA GovernmentRural Push Policy of UPA Government Four Consecutive years of positive growth Four Consecutive years of positive growth

in rural GDPin rural GDP 40% hike in MSP of Crops over last two 40% hike in MSP of Crops over last two

yearsyears Farm Loan Waiver & NREGSFarm Loan Waiver & NREGS Growing Industry Demand for land Growing Industry Demand for land

(Overnight Wealth)(Overnight Wealth) Big rise in remittances from CitiesBig rise in remittances from Cities Slowing urban demand forcing corporates Slowing urban demand forcing corporates

to rural marketsto rural markets

% Annual Change in % Annual Change in Rural GDPRural GDP

Year Change

2003-04 10%

2004-05 -6.7%

2005-06 5.8%

2006-07 4%

2007-08 4.9%

2008-09(Estimates)

2.6%

51%

Rs. 13,65,000

Crore

49%

Rs 13,17,018

Crore

Why Rural Marketing Why Rural Marketing is a New Discipline?is a New Discipline?

Rural Marketing is a new discipline because:-Rural Marketing is a new discipline because:-

India is a predominantly agrarian society.India is a predominantly agrarian society. Western Marketing has no experience to Western Marketing has no experience to

manage it. manage it. Urban markets are saturating in India. Urban markets are saturating in India. There are immense opportunities at the There are immense opportunities at the

bottom of the pyramid.bottom of the pyramid. R. M. can change rural business. R. M. can change rural business. Retail boom will also expedite the growth Retail boom will also expedite the growth

of rural marketing.of rural marketing.

What is Rural?What is Rural? Definitions of Rural

Census Village: Basic Unit for rural areas is the revenue village, might

comprise several hamlets demarcated by physical boundaries.

Town: Towns are actually rural areas but satisfy the following criteria.

Minimum Population >=5,000 Population density>= 400/ sq. km. 75% of the male population engaged in non-agri activity.

RBI Locations with population up to 10,000 will be considered as rural

and 10,000 to 100,000 as semi-urban.

Nabard All locations irrespective of villages or town, up to a population of

10,000 will be considered as ‘rural’.

Planning Commission

Towns with population up to 15,000 are considered as rural.

Sahara Locations having shops/ commercials establishments’ up to 10,000

are treated as rural.

LG Electronics

The rural and semi urban area is defined as all other than the seven

metros.

What is Rural What is Rural Marketing?Marketing?

According to the National Commission on Agriculture: ‘Rural Marketing is a process which starts with a decision to produce a saleable farm commodity and it involves all the aspects of market structure or system, both functional and institutional, abase on technical and economic considerations and includes pre and post harvest operations, assembling, grading, storage, transportation and distributions’.

“Rural Marketing can be defined as a function that manages all activities involved in assessing, stimulating, and converting the purchasing power of rural consumers into an effective demand for specific products and services and moving these products and services to the people in rural areas to create satisfaction and a better standard of living and thereby achieving organizational goals.”

-Pradeep Kashyap

Scope of Scope of Rural MarketingRural Marketing

The Rural Marketing MatrixThe Rural Marketing Matrix(M

arke

t)

Handicrafts, Handloom Textiles, Leather products (Semi-

organised)

Farm & Non-Farm and services (Unorganised

Sector)

Rural

Brand Consumables

and durables (Organised)

Urban

Rural Urban

(Production)

Evolution of Rural Evolution of Rural MarketingMarketing

Phase Origin Function Major Products

Source Market

Destination

Market

I Since independenc

e

Agriculturalmarketing

Agricultural produce

Rural Urban

II Mid-Sixties Marketing ofagricultural inputs

Agricultural inputs

Urban Rural

III Mid-Nineties Rural marketing

Consumables and durables forconsumption and

production

Urban/ Rural

Rural

IV 21st Century

Nature of Rural Marketing Nature of Rural Marketing

(Transactional Vs Development Marketing)(Transactional Vs Development Marketing)

S. No.

Aspect Transactional Development

1 Concept Consumer orientation, Marketing concept

Society orientation, societal concept

2 Role Stimulating and conversional

marketing

Catalytic and transformation agent

3 Focus Product-market fit Social change

4 Key task Product innovations and communications

Social Innovations and communications.

5 Nature of activity Commercial Socio-cultural, economic

6 Participants Corporate enterprises, Sellers

Government, voluntary agencies, corporate enterprises, benefactors

7 Offer Products and services Development Projects/Schemes/Programmes

8 Target group Buyers Beneficiaries and buyers

9 Communication Functional Development

10 Goal Profits Customer satisfaction

Brand image

Market Development Corporate Image

11 Time-Frame Short-Medium Medium-Long

12 Motivation Profit-motive Business policy

Service-motive Ideological or Public policy

Taxonomy of Rural Taxonomy of Rural MarketsMarkets

(Classification of Rural Markets)(Classification of Rural Markets)

Constituents Products Durables Services

Consumer Market

Individuals and households

Consumables: Foods products, Toiletries, Cosmetics, Textiles and Garments, Foot Wear etc.

Watches, Bicycles, Radio, T.V., Kitchen appliances, Furniture, Sewing machines, Two Wheelers etc.

-------

Industrial Market

Agricultural and allied activities, Poultry farming, Fishing, Animal, Husbandry cottage industries, Health Centre, School, Cooperatives, Panchayat office etc.

Consumables: Seeds, Fertilizers, Pesticides, Animal feed, Fishnets, Medicines, Petrol/Diesel etc.

Tillers, Tractors, Pump sets, Generators, Harvesters, Boats etc.

-------

Services Market

Individuals, House holds, Officers, and Production firms

------- ------- Repairs, Transport, Banking, Credit, Insurance Health care, Education, Communication, Power etc.

Whether Rural Markets Whether Rural Markets are Attractive?are Attractive?

Large population Rising prosperity Growth in consumption Life-style changes Life-cycle advantages Market growth rates higher than Urban Rural marketing is not expensive Remoteness is no longer a problem.

Rural Vs Urban Rural Vs Urban MarketingMarketing

S. No.

Aspect Urban Rural

1 Philosophy Marketing and societal concepts, Green marketing and relationship marketing

Marketing and societal concepts, development marketing, and relationship marketing.

2 Market(a) Demand(b) Competition

(c) Consumerso Location o Literacyo Incomeo Expenditureo Needso Innovation

adoption

HighAmong units in

organized sector

ConcentratedHighHighPlanned, EvenHigh levelFaster

Low Mostly from unorganized units

Widely spreadLowLowSeasonal variationsLow levelSlow

3 Productso Awareness o Conceptso Positioning o Usage methodo Quality preferenceo Features

High KnownEasyEasily graspedGoodImportant

Low Less knownDifficultDifficult to grasp ModerateLess Important Contd.

Rural Vs Urban Marketing – Contd.Rural Vs Urban Marketing – Contd.

S. No.

Aspect Urban Rural

4 Priceo Sensitiveo Level desired

YesMedium-High

Very muchLow-Medium

5 Distributiono Channels

o Transport facilitieso Product availability

Wholesalers, Stockists Retailers,

Supermarkets, Specialty stores and authorized show rooms

GoodHigh

Village shops Shandies Haats and Jatras

AverageLimited

6 Promotiono Advertising

o Personal Selling

o Sales promotion

o Publicity

Print audio-visual media,

out doors, exhibitions etc.

Few languages

Door-to-door frequently

Contests, Gifts, Price DiscountsGood opportunities

TV, Radio, Print Media to

some extent. More languages

Occasionally

Gifts, Price discounts

Less

Value Added Rural Value Added Rural MarketingMarketing

Ensure increase in customer

value

Communicate unique

proposition

Build special brands for

rural customers

Provide functional benefits

Segment rural

customers

Study demographic

patterns

Study product

ownership patterns

Identify unique characteristics

of rural customer

HOW TO ADD VALUE THROUGH RURAL MARKETING

Are relevant needs being

met?

Are the clusters

large enough?

No YesNo No

SESSION IISESSION II

Rural Marketing Environment Rural Marketing Environment

& Rural Economy& Rural Economy

Structure of Rural Structure of Rural MarketsMarkets

Demographic Environment

1971

1981

1991

2001

Total population (million) 548.2

683.3

848.3

1026.9

Rural population (million) 524.0

628.8

741.6

Rural Proportion to total population (%)

80.1 76.7 74.3 72.2

Decadal Variation - 19.8 16.7 15.2

Source: Census of India 2001

Education and the Education and the Level of DemandLevel of Demand

Rural Literacy 1981 1991 2001

% of literates 36 45 59


Household PatternHousehold PatternFamily StructureFamily Structure

Particulars 1991 2001

Rural Urban

Total Rural Urban

Total

Households (Million) 112 40 152 138 54 192

Family Size (Number)

5.55 5.32 5.36 5.31


Rural Housing PatternRural Housing Pattern

House Type 1981 1991 2001

Pucca (%) 22 31 41

Semi-Pucca (%) 37 36 36

Kuccha (%) 41 33 23

Total 100 100 100


Occupational PatternOccupational Pattern

Distribution of Households by Occupation of the Head, 1999-2000

Head’s Occupation

Distribution of households (%)

Urban Rural All

Housewife 0.84 1.01 0.96

Cultivator 3.45 40.86 29.99

Wage earner 20.93 35.28 31.12

Salary earner 40.72 11.28 19.84

Professional 3.59 0.73 1.56

Artisan 6.90 3.41 4.42

Petty Shopkeeper 16.05 4.97 8.19

Businessman 3.68 0.46 1.40

Other 3.85 1.98 2.52

Total 100.00

100.00

100.00

Source: NCAER 2002

Physical EnvironmentPhysical Environment

Rural and Urban Life: Rural and Urban Life: Distinguishing FeaturesDistinguishing Features

Population Density (Urban + Rural) (Per Sq. Km.)

1971 1981 1991 2001

Popu. Density (Total)

177 216 267 312

Rural 171 214 253

Distribution of Towns and Villages

1991 2001

No. of Towns 3,697 5,161

No. of inhabited Villages

580,779 593,154

Total no. of Villages 634,321* 638,588*

* The total number of Villages also includes non-inhabited Villages.


Settlements Settlements (Scattered and Clustered)(Scattered and Clustered)

Town class

Population No. ofTowns

% of total

Towns

% ofPopulatio

n

Decadal Growth(1991-

2001)

Class-I 1 Lakh and above

423 8.2 61.5 24

Class-II 50,000 – 99,999

498 9.6 12.3 15

Class-III

20,000 – 49,999

1,386 26.9 15.0 16

Class-IV

10,000 – 19,999

1,560 30.2 8.1 7

Class-V 05,000 – 09,999

1,057 20.5 2.8 8

Class-VI

Less than 5,000 237 4.6 0.3 -22

Total 5,161 100.0 100.0

* 10 Lakh + : 27; 5-10 Lakh: 42; 1-5 Lakh:354

Source: Census 2001

Economic EnvironmentEconomic Environment

% H

ou

seh

old

s

80 --

70 --

60 --

50 --

40 --

30--

20--

10--

0--

23.9

8.8

39.5

42.7 42.5

67.3

17.8

36.9

20.6

1989-90 2001-02 2009-10

Source: Market Information Survey of Households, NCAER

_________ Low (<Rs.45K p.a) ________ Middle (Rs.45K-90K p.a) _________ High (>Rs.90k p.a)

Changing Rural Changing Rural Consumers Expenditure Consumers Expenditure

PatternPattern

Per capita consumption expenditure (Rs. Per

month)

Rural Urban

1983 112 166

1991 281 458

2001 486 855

Source: NSSO

Composition of rural per capita consumption

expenditure

Food Non-Food

1983 66 34

1991 63 37

2001 59 41

Source: NSSO

Technological Environment

Size of Rural MarketSize of Rural Market

Estimated Annual Size : Rural Market

FMCG Rs. 65000 Crore

Durables Rs. 5000 Crore

Agri-inputs (incl. tractors)

Rs. 45000 Crore

2/4 Wheelers Rs. 8000 Crore

Total Rs. 1,23,000 Crore

Source: Francis Kanoi 2002

II-The Rural Economy:II-The Rural Economy:

The Economic Scenario The Economic Scenario in Rural Indiain Rural India

Human Development Index (HDI)

Year

Rural

Urban

Total

1981

0.26 0.44 0.30

1991

0.34 0.51 0.38

2001

------ ------ 0.47

Source: Human Development Report, 2001

The HDI is a composite of variables capturing attainments in three dimensions of human development, viz., economic, educational and health.

The Changing Face of The Changing Face of Rural DevelopmentRural Development

Population below the poverty line (Rural)

Period No. of Persons

(Million)

% of Person

s

Poverty line (Rs.)

1983 252 46 89.5

1993-94 244 37 206

1999-2000

193 27 328

Source: Human Development Report, 2001

The Development Exercise: The Development Exercise: The Five-Year PlansThe Five-Year Plans

Sectoral allocations during the five-year plans (Rs. Billion)

Head of Development

Seventh Plan

Eighth Plan

Ninth Plan Tenth Plan

(1985-90)

(1992-97) (1997-2002)

(2002-07)

1.Agriculture 105 225 372 589

2.Rural

Development89 344 890 1,219

Source: Planning Commission 2002Percentage share of the different sectors in GDP (at 1993-

94 prices)

Year Primary (Agri and

Allied)

Secondary(Manufacturi

ng)

Tertiary(Service

s)

Total

1950-51

57.2 14.8 28.0 100.0

1980-81

39.7 23.7 36.6 100.0

2001-02

23.9 26.6 49.5 100.0

Source: National Account Statistics, 1951-2001

Transition of the Transition of the Rural EconomyRural Economy

1. Food grain crops

2. On-land activities

3. Farm activities

1. Non-food grain crops, cash crops

2. Off-land allied activities like livestock and fisheries

3. Non-farm activities, including manufacturing and services.

The Rural Economic The Rural Economic StructureStructure

Farm Sector(Agri & Allied)

Agriculture

Animal Husbandry (Dairy, Goat, Poultry)

Horticulture

Forestry

Fishing

Rural Economy

Non-Farm Sector(Formal & Informal Sector)

Rural Industries Rural Services

Agro Processing(Sugarcane, Oilseed etc)

Retailing & Trading

Manufacturing(Handloom, Handicrafts etc)

Community & Social Service

Mining & Quarrying Transport & Storage

Construction Communication

Income DisparityIncome Disparity

Rural-Urban Income Comparison

Sector Bottom (30%)

Middle (40%)

Top (30%) All Classes

Rural

Urban

Rural

Urban

Rural

Urban

Rural Urban

Average Consumpti

on Expenditur

e (Rs./

Annum)

3,270

4,580 5,110

8,150

9,400

18,720

5,830 10,260

Population (Million)

223 86 297 114 223 86 742 285

Source: NSS 55th Round (1999-2000), Census 2001

The Rural InfrastructureThe Rural InfrastructureRoad ConnectivityRoad Connectivity

Road Connectivity at the Village level (%)

Population

less than 1,000

Population

between 1,000

and 1,500

Population more than

1991-92

36.52 72.32 89.82

1994-95

37.45 76.54 91.72

1996-97

49.18 74.58 78.04

Source: National Human Development Report 2001

Telephone ServicesTelephone Services

Telecom Density (Phone per 100)

2000 2005 Increase

Urban 8.2 26.2 220%

Rural 0.7 1.74 148%

All 2.9 9.08 213%

Source : Telecom Regulatory Authority

of India Report, 2005

Why Agriculture Growth Why Agriculture Growth has been slow & tardy?has been slow & tardy?

1.1. Low priority to AgricultureLow priority to Agriculture2.2. Subsistence Orientation of AgricultureSubsistence Orientation of Agriculture3.3. Failure of Land ReformsFailure of Land Reforms4.4. Low size of operational LandholdingsLow size of operational Landholdings5.5. Inadequate Food SuppliesInadequate Food Supplies6.6. Sluggish Infrastructural GrowthSluggish Infrastructural Growth7.7. Disconnect between Research & Disconnect between Research &

FarmersFarmers8.8. Insufficient Availability of CreditInsufficient Availability of Credit9.9. Inadequate InputsInadequate Inputs10.10. Slowdown of Rural IndustrializationSlowdown of Rural Industrialization

Policy Interventions Policy Interventions RequiredRequired

1.1. Thrust on Land ReformsThrust on Land Reforms

2.2. Strengthening the Panchayati Raj InstitutionsStrengthening the Panchayati Raj Institutions

3.3. Financial Inclusion (Innovative Credit Delivery)Financial Inclusion (Innovative Credit Delivery)

4.4. Development of Rural InfrastructureDevelopment of Rural Infrastructure

5.5. Expansion of Kisan Credit Card SchemeExpansion of Kisan Credit Card Scheme

6.6. Protection of Farmers from natural calamitiesProtection of Farmers from natural calamities

7.7. Extensive use of ICTExtensive use of ICT

8.8. Higher Investment in Agriculture & Rural Higher Investment in Agriculture & Rural Development.Development.

9.9. Focus on High Value Crops & Non-farm Incomes.Focus on High Value Crops & Non-farm Incomes.

10.10. Bridging the Gap Between Agri-Research & Bridging the Gap Between Agri-Research &

FarmingFarming..

T

HANK YOU

THANK YOU

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