1. rural marketing

8/9/2019 1. Rural Marketing

1/33

Sanjay JainAssociate Professor

IMS, Ghaziabad


2/33

Definitions of Rural Limitation

Census

Village: Basic unit for rural areas isthe revenue village, might comprise

several hamlets demarcated by

physical boundaries.

Town: Towns are actually rural areasbut satisfy the following criteria:

Minimum population>=5000

Population Density>=400/sq. km.

75% of the male pop. engaged in

non-agri activity

Term rural is not defined. The

definition does not define the

population strata.

Term rural is not defined. Thedefinition does not rule out 5000+

population villages.

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

to 1,00,000 as semi-urban

It does not include 10,000+ pop.

Villages in rural definition.

In contrary, the definition

includes 5,000-10,000 pop.

towns in rural.


3/33

PLANNING

COMMISSI

ON

Towns with population up to 15,000

are considered as rural.

Towns characteristics are not

defined

NABARD

All location irrespective of villages or

town, upto a pop. Of 10,000 will be

considered as rural

Villages and town

characteristics are not defined.

LG

The rural and semi-urban area is

defined as all other cities other than

the seven metros.


4/33

The Census defined urban India as - "All the places thatfall within the administrative limits of a municipalcorporation, municipality, cantonment board etc or havea population of at least 5,000 and have at least 75 per

cent male working population in outside the primarysector and have a population density of at least 400 persquare kilometer. Rural India, on the other hand,comprises all places that are not urban"

(of nearly 6.4 lakh villages, only 20K have population

more than 5K)


5/33

` FMCG companies (Ex HUL & ITC) define rural as

any place with population less than 20K

` Agri-input companies & consumer durable

companies consider places with population lessthan 50K


6/33

InhabitedVillage Classification

Villages in Size group

Number Percentage %age of population

Less than 200 96,855 15.7 1.2

201-500 1,36,454 21.4 5.9

501-1000 1,56,737 24.6 14.5

1001-2000 1,40,751 22.0 25.9

2001-5000 87,206 13.7 37.5

5000+ 20,363 3.2 15.0

Source: Census of India, 2001


7/33

Town l ifi tion

Town Class Population No. of towns % of total towns % of population

Class-I 1 lakh and

above

423 8.2 61.5

Class-II 50,000-99,999 498 9.6 12.3

Class-III 20,000-49,999 1,386 26.9 15.0

Class-IV 10,000-19,999 1,560 30.2 8.1

Class-V 5,000-09,999 1,057 20.5 2.8

Class-VI < 5,000 237 04.6 0.3

TOTAL 5,161 100.0 100.0

Source: Census 2001


8/33

Category Dev. Rural Developing Rural

Size (Mn HH) 43 90

% of Pop. 32 68

2 wheeler 10 5

Refrigerator 8 2

Colour TV 12 3Tooth Paste 45 27

Branded Tea 11 1

Oil 13 7


9/33

PHASE - I (Before the 1960) Rural marketing referred to marketing of rural products in rural and

urban areas and agricultural inputs in rural markets. It was considered

synonymous with agricultural marketing.

Agricultural produces like food grains and industrial inputs like cotton,

sugarcane, etc. were the primary products marketed during this period.

The scope of farm mechanism equipment and agriculture inputs are

very limited.

The rural market was in a primitive stage, with traditional farming

method being used in agriculture.


10/33

Phase - II (1960-1990)` The Green revolution changed the phase of rural

India.

` New companies emerged such as Mahindra &Mahindra, Escorts, Eicher, Sriram Fertilizers andIFFCO.

` The marketing of rural products receivedconsiderable attention through agencies like KVIC

(Khadi & Village Industries Commission), Bunkarsocieties and Handicraft emporiums.


11/33

Phase III (1990 to the Present)` During the first two phases, the marketing of

consumable and durables to the rural markets was not

considered seriously. The primary reasons for thiswere:- The potential of rural market was not visible.

Rural markets were not very accessible.

The growth in urban markets during this period kept marketersbusy.


12/33

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 andmoving these products and services to the people in rural

areas to create satisfaction and a better standard of living

and thereby achieving organizational goals.


13/33

Rural marketing is the process of developing,

pricing, promoting and distributing rural-specific

goods and services, leading to exchanges

between urban and rural markets, which satisfiesconsumer demand and also achieves

organizational objectives


14/33

Rural marketing is a two way process. It contents

inflow of products into rural areas for production or

consumption purposes, and also outflow ofproducts to urban areas.


15/33

To Rural To Urban

From

Urban

FromRural


16/33


17/33

` Underdeveloped people and underdeveloped

market

` Lack of proper physical communication facilities

` Media for rural consumer` Many languages and dialects

` Vastness and uneven spread

` Low per capita income price sensitivity, small

quantity

` Logistics, storage, handling and transport


18/33

` Low levels of literacy` Seasonal demand` Hierarchy of markets` Product positioning heterogeneous customers` Understanding rural consumers` Rural specific and region specific strategies are

required.


19/33

` Vast size and demand base offers a huge

opportunity With 150 million households, the rural population is

nearly three times the urban Large consuming class - 41 % of India's middle class and

58 % of the total disposable income

` Growing affluence

Good monsoons Increase in agricultural output to 200m tons from 176 m

tons in 1991


20/33

` Rural market accounts for close to 70 % of toilet-soap users and 38

% of all two-wheeler purchased.

` Half the total market for TV sets, fans, pressure cookers, bicycles,

washing soap, blades, tea, salt and toothpowder.

` Rural market forFMCG products is growing much faster than theurban counterpart. (market size is Rs. 63,500 crores in rural India

as against Rs. 49,500 crores in urban India)

` In urban area most consumer markets were getting cluttered.

there are too many players eating into each other's market share.

The companies, therefore, reduce prices in urban areas and invest heavily in

sales promotion, intensifying the battle for market share.

Operating margins come under pressure and new growth markets have to be

explored.

This is where the rural markets play an important role.


21/33


22/33

The NCAER study on ownership of goods indicates thesame trend. It segments durables under three groups

1) Necessary products - Transistors, wristwatch andbicycle,

2) Emerging products - B&W TV and cassette recorder,3) Lifestyle products - CTV and refrigerators.

Marketers have to depend on rural India for the firsttwo categories for growth and size. Even in lifestyleproducts, rural India will be significant over next five

years.


23/33

According to Anugraha Madison (one of the first marketingfirms to realise the potential of rural India and decided tofocus on rural marketing)

` Today rural India is not 100 per cent dependent on an

agrarian economy.` Increasing percent of the rural population is involved in

other businesses. Some second generation people are getting white-collar jobs in

nearby towns.

Growing middle class with a monthly income in rural India --drastic change from the past where their income was totallydependent on the monsoon, cropping season, etc.


24/33


25/33

Anugraha Madison.

` The total expenditure of urban India is almost equal to

what has been spent by rural India. i.e. about 25 % of the urban India is spending as much as 75 % of

what rural India is spending. This shows the potential exists inrural India. There is a huge market waiting to be tapped in rural

India.


26/33

` Between June 2002 and December 2003, rural

per capita consumption expenditure grew by 11.5

% while the urban expenditure grew by 9.6 % .

` After the basic needs of food, cloth and shelter,they are looking at how to live better


27/33

Now for some facts and figures. The Indian rural

market today accounts for only about Rs 8

billion (53 per cent - FMCG sector, 59 per cent

durables sale, 100 per cent agriculturalproducts) of the total ad pie of Rs 120 billion,

thus claiming 6.6 per cent of the total share. So

clearly there seems to be a long way ahead.

The rural market is growing at a far greaterspeed than its urban counterpart


28/33

` Thirteen consecutive good monsoons since

1990 (ex 2002, 03)

` 600% increase in five year plan outlay for rural

development from 8th to 10th FYP.` 230% increase in the flow of institutional credit

from agriculture (1997-98 to 2004-05)

` 41mn KCC issued amounting to Rs. 97,700

crores since 1998 (40mn Credit plus Debit cardsin Urban India)


29/33

` Consuming class household in rural are equal tourban, hence disposal surplus in rural is muchhigher.

` There are 42,000 rural haats (supermarkets) in

India that exceed the total number of retail chainstores in US (35,000)` Nearly 85% of villages have Public Telephone.` Billing per cell phone in rural AP is more than in

Hyderabad.` 60% of 2 crores who signed up for rediffmail &

50% of online shopping are from small towns.


30/33

` Market size = 742 million` Considerable consumption:

FMCG = 53%

Durables = 59%

`

Respectable Market Size:FMCG =Rs. 65,000 Cr

Durables =Rs. 5,000 Cr

Agri-inputs =Rs. 45,000 Cr

2/4Wheelers =Rs. 8,000 Cr

TOTAL =Rs. 1,23,000 Cr


31/33

`

There are 42,000 rural super markets (haats) in Indiathat exceeds the total number of retail chain stores in theUS (35,000).

` In 2001-02, LIC sold 55% of its policies in rural India` Of the 20 lakh BSNL mobile phone connections, 50%

are in small towns and villages.` The 41 million Kisan Credit Cards issued in rural India

exceed the 40 million credit-plus-debit cards issued inurban India.

` Of the 6 lakh odd villages in the entire country, 5.22 lakhhas a Village Public Telephone as of march 2004.


32/33

1. Radio

-All India=35.1

-Rural =31.5

-Urban =44.5

2. Television

-All India=31.6

-Rural =18.9

-Urban =64.3


33/33

3. Bicycle

-All India=43.7

-Rural =42.8

-Urban =46.04. 2Wheelers

- All India=11.7

-Rural = 6.7

-Urban =24.7

1. rural marketing

Documents