Rural Marketing_2007_09_001 (1).ppt
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Rural Marketing
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Why Rural Marketingis hot?
Rural Push Policy of UPA Government Four Consecutive years of positive growth
in rural GDP
40% hike in MSP of Crops over last twoyears Farm Loan Waiver & NREGS Growing Industry Demand for land
(Overnight Wealth)
Big rise in remittances from Cities Slowing urban demand forcing corporates
to rural markets
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% Annual Change inRural 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
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Why Rural Marketingis a New Discipline?
Rural Marketing is a new discipline because:-
India is a predominantly agrarian society. Western Marketing has no experience to
manage it. Urban markets are saturating in India. There are immense opportunities at the
bottom of the pyramid. R. M. can change rural business. Retail boom will also expedite the growth
of rural marketing.
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What is Rural?Definitions of Rural
Census Village: Basic Unit for rural areas is the revenue village, mightcomprise 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 of10,000 will be considered as rural.
PlanningCommission
Towns with population up to 15,000 are considered as rural.
Sahara Locations having shops/ commercials establishments up to 10,000are treated as rural.
LG Electronics The rural and semi urban area is defined as all other than the sevenmetros.
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What is RuralMarketing?
According to the National Commission on Agriculture:Rural Marketing is a process which starts with a decisionto produce a saleable farm commodity and it involves allthe aspects of market structure or system, both functionaland institutional, abase on technical and economic
considerations and includes pre and post harvestoperations, assembling, grading, storage, transportationand distributions.
Rural Marketing can be defined as a function thatmanages all activities involved in assessing, stimulating,and converting the purchasing power of rural consumers
into an effective demand for specific products andservices and moving these products and services to thepeople in rural areas to create satisfaction and a betterstandard of living and thereby achieving organizationalgoals.
-Pradeep Kashyap
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Scope ofRural Marketing
The Rural Marketing Matrix
(Market)
Handicrafts, Handloom
Textiles, Leather
products (Semi-
organised)
Farm & Non-Farm
and services
(Unorganised Sector)Rural
Brand Consumables
and durables
(Organised)Urban
Rural Urban
(Production)
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Evolution of RuralMarketing
Phase Origin Function MajorProducts
SourceMarket
DestinationMarket
I Sinceindependence
Agricultural
marketing
Agricultural
produce
Rural Urban
II Mid-Sixties Marketing
ofagricultural
inputs
Agricultural
inputs
Urban Rural
III Mid-Nineties Ruralmarketing
Consumables
and durables
forconsumption
and production
Urban/ Rural Rural
IV 21st Century
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Nature of Rural Marketing(Transactional Vs Development Marketing)
S. No. Aspect Transactional Development
1 Concept Consumer orientation,Marketing concept
Society orientation, societal concept
2 Role Stimulating and conversionalmarketing
Catalytic and transformation agent
3 Focus Product-market fit Social change
4 Key task Product innovations andcommunications
Social Innovations and communications.
5 Nature of activity Commercial Socio-cultural, economic
6 Participants Corporate enterprises, Sellers Government, voluntary agencies, corporateenterprises, 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 satisfactionBrand image
Market Development Corporate Image
11 Time-Frame Short-Medium Medium-Long
12 Motivation Profit-motive Business policy Service-motive Ideological or Public policy
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Taxonomy of RuralMarkets
(Classification of Rural Markets)
Constituents Products Durables Services
ConsumerMarket
Individuals and
householdsConsumables: Foods
products, Toiletries,
Cosmetics, Textiles
and Garments, Foot
Wear etc.
Watches, Bicycles,
Radio, T.V.,
Kitchen
appliances,
Furniture, Sewing
machines, Two
Wheelers etc.
-------
IndustrialMarket
Agricultural and
allied activities,
Poultry farming,
Fishing, Animal,
Husbandry cottage
industries, Health
Centre, School,
Cooperatives,
Panchayat officeetc.
Consumables: Seeds,
Fertilizers, Pesticides,
Animal feed, Fishnets,
Medicines,
Petrol/Diesel etc.
Tillers, Tractors,
Pump sets,
Generators,
Harvesters, Boats
etc.
-------
ServicesMarket
Individuals, House
holds, Officers,
and Production
firms
------- ------- Repairs,Transport,
Banking, Credit,
Insurance
Health care,
Education,
Communication, Power etc.
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Whether Rural Marketsare 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.
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Rural Vs UrbanMarketing
S. No. Aspect Urban Rural
1 Philosophy Marketing and societalconcepts, 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
Innovationadoption
HighAmong units in organized
sectorConcentratedHighHighPlanned, EvenHigh levelFaster
Low
Mostly from unorganized
unitsWidely 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.
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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 roomsGoodHigh
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 frequentlyContests, Gifts, Price
Discounts
Good opportunities
TV, Radio, Print Media to
some extent. More
languagesOccasionallyGifts, Price discountsLess
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Value Added RuralMarketing
Ensureincrease in
customer
value
Communicate unique
proposition
Build specialbrands for
rural customers
Providefunctional
benefits
Segmentrural
customers
Studydemographic
patterns
Studyproduct
ownership
patterns
Identify uniquecharacteristics
of rural
customer
HOW TO ADD VALUE THROUGH RURAL MARKETING
Are relevant
needs beingmet?
Are theclusters
large
enough?
No YesNo No
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SESSION II
Rural Marketing Environment
& Rural Economy
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Structure of RuralMarkets
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
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Education and the
Level of Demand
Rural Literacy 1981 1991 2001
% of literates 36 45 59
Source: Census of India 2001
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Household PatternFamily 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
Source: Census of India 2001
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Rural Housing Pattern
House Type 1981 1991 2001
Pucca (%) 22 31 41
Semi-Pucca (%) 37 36 36
Kuccha (%) 41 33 23
Total 100 100 100
Source: Census of India 2001
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Occupational Pattern
Distribution of Households by Occupation of theHead, 1999-2000
Heads 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
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Physical Environment
Rural and Urban Life:Distinguishing 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.
Source: Census of India 2001
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Settlements(Scattered and Clustered)
Townclass
Population No. ofTowns
% of totalTowns
% ofPopulation
DecadalGrowth
(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
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Economic Environment
%H
ouseho
lds
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.90k p.a)
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Changing RuralConsumers Expenditure
Pattern
Per capita consumptionexpenditure (Rs. Per month)
Rural Urban
1983 112 166
1991 281 458
2001 486 855
Source: NSSO
Composition of rural per capitaconsumption expenditure
Food Non-Food
1983 66 34
1991 63 37
2001 59 41
Source: NSSO
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TechnologicalEnvironment
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Size 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
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II-The Rural Economy:
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The Economic Scenarioin 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 ofvariables capturing attainmentsin three dimensions of human
development, viz., economic,educational and health.
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The Changing Face ofRural Development
Population below the poverty line (Rural)
Period No. of Persons
(Million)
% of Persons Poverty line
(Rs.)
1983 252 46 89.5
1993-94 244 37 206
1999-2000 193 27 328
Source: Human Development Report, 2001
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The Development Exercise:The Five-Year Plans
Sectoral allocations during the five-year plans (Rs. Billion)
Head ofDevelopment
SeventhPlan
Eighth Plan Ninth Plan Tenth Plan
(1985-90) (1992-97) (1997-2002) (2002-07)
1. Agriculture 105 225 372 589
2. Rural Development 89 344 890 1,219
Source: Planning Commission 2002
Percentage share of the different sectors in GDP (at 1993-94 prices)
Year Primary(Agri and Allied)
Secondary(Manufacturing)
Tertiary(Services)
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
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Transition of theRural 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.
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The Rural EconomicStructure
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 & SocialService
Mining & Quarrying Transport & Storage
Construction Communication
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Income Disparity
Rural-Urban Income Comparison
Sector Bottom (30%) Middle (40%) Top (30%) All Classes
Rural Urban Rural Urban Rural Urban Rural Urban
AverageConsumption
Expenditure
(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
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The Rural InfrastructureRoad Connectivity
Road Connectivity at the Village level (%)
Populationless than
1,000
Populationbetween
1,000 and1,500
Populationmore 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
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Telephone 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 Authorityof India Report, 2005
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Why Agriculture Growthhas been slow & tardy?
1. Low priority to Agriculture
2. Subsistence Orientation of Agriculture
3. Failure of Land Reforms
4. Low size of operational Landholdings
5. Inadequate Food Supplies
6. Sluggish Infrastructural Growth
7. Disconnect between Research &Farmers
8. Insufficient Availability of Credit
9. Inadequate Inputs
10. Slowdown of Rural Industrialization
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Policy InterventionsRequired
1. Thrust on Land Reforms
2. Strengthening the Panchayati Raj Institutions
3. Financial Inclusion (Innovative Credit Delivery)
4. Development of Rural Infrastructure
5. Expansion of Kisan Credit Card Scheme
6. Protection of Farmers from natural calamities
7. Extensive use of ICT
8. Higher Investment in Agriculture & Rural
Development.9. Focus on High Value Crops & Non-farm Incomes.
10. Bridging the Gap Between Agri-Research &
Farming.