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MBAIIIrd Semester

Marketing Specialization Major

Prof Shikhar

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Topics to be covered (index) Definition, Scope of Rural Marketing

Concepts, Components of Rural Markets

Classification of Rural Markets

Rural Vs Urban Markets

Rural Marketing Environment : Population, occupationPattern, income generation, location of rural population

Expenditure pattern, literacy level, land distribution, landuse pattern, irrigation

Development programs, infrastructure facilities, rural creditinstitutions, rural retail outlets, print media in rural areas

Rural areas requirement, problems in rural marketing, ruraldemand, rural market index.

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Definition According to the National Commission on Agriculture

Rural Marketing is a process which starts with a decision toproduce a saleable farm commodity and it involves all theaspects of market structure or system, both functional andinstitutional, based on technical and economicconsiderations, and includes pre and post harvest

operations , assembling, grading, storage, transportationand distribution.

According to Thomsen the study of Rural Marketingcomprises of all the operations, and the agenciesconducting them, involved in the movement of farm

produced food, raw materials and their derivatives, such astextiles, from the farms to the final consumers, and theeffects of such operations on producers, middlemen andconsumers.

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Rural marketing has also been defined as the processof developing, pricing, promoting, distributing rural-

specific goods and services leading to exchangebetween urban and rural markets, which satisfiesconsumer demand and also achieves organisationalobjectives.

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Rural

Urban

Urban Rural

1. Agricultural products(Food grains etc.)2. Oil seeds, Cotton,

Tobacco, Sugar, Caneetc.

3. Handicrafts and RuralIndustry Products

1. Small AgriculturalTools.2. Household earthen

items, wooden itemsetc.

Notconcerned

1. Consumables andconsumer durables.

2. Agricultural inputslike seeds, fertilizers,pesticides, tractors etc.

3. Services like Health,

education, Marketinformation etc.

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Census Record Rural Population in India : 64.8%

Rural nail polish market : Rs 270 million against Rs 81million.

Rural market for lipstick : Rs 250 million against Rs 131million.

Rural market for face cream : 1099 tonnes against 426tonnes.

Shampoo market ; 2257 tonnes against 718 tonnes. Mosquito Repellant Market : Rs 173 million against Rs

79 million.

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Scope of Rural Marketing The difference in rural and urban sector is due to vast difference in:

Income level

Expenditure capacity Taste and preferences Educational level Social, Cultural and environmental

Following Service areas have great potential in rural markets: 1. Agricultural consultancy:

Rural customers require proper consultancy services about the bestmethods, timings and seasons, technology, tools, prices and best marketsfor selling their farming products.

2. Banking, microfinance and loan facilities:The rural market has huge potential for banking services for providing

following facilities at affordable prices: Agricultural loans Educational loans Housing loans Savings accounts and safe deposits Automobile loans Personal loans

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3. Healthcare:The availability and location of these services is of great concern as most of the areas either do not have anyor many rural and remote areas needs to be dependent on very few and distantly located Hospitals

4. Telecomm services:The governments policies for reduced tariffs, call rates, lesser mobile handset prices and privateparticipation involvement has helped in increasing the level of competition, continuous improvement in

technology and thus has resulted in the growth of the rural telecomm market

5. Automobiles Services:There has been a huge increase in the number of two wheeler, four wheeler and Agricultural tools andvehicles in past few decades because of reduction in prices and government support to the rural population.This has given rise to a new business for providing maintenance and repair services to rural consumers.

6. T.V. Channels Services:Due to the increased awareness, arenas of interest, leisure requirements, and number of entertainmentoptions like televisions and computers due to reduced & affordable prices, the demand for entertainmentservices like T.V. entertainment channels have increased. Many companies have already gained profits bytargeting rural markets which include Airtel (DISH TV), Reliance (BIG TV), and Tata (SKY).

7. Travel and reservation Services:The travel and reservation booking and organizing services for booking train, busses, taxies and tourconsultancy has also been observed to create a huge demand in last few decades as more and more ruralpopulation need to mobilize for business and personal reasons.

8. Low Cost Hotels:Due to increased mobilization because of business and personal needs, there is also increased demand forhotel and lodging services to the travellers.

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9. Event Managements:The rural population are majorly involved in celebrating and organizing festivals, whichrequire lighting arrangements, venue decoration, food, lodging, transportation, cateringand event planning etc. for:i. Family gatherings, Marriages, engagements, birthday parties,etc.ii. Festivals like Diwali, Onam,Christmas, lohri, Eid, Dushera, Kannada Rajamahotsava,

Navratri, Garba and Dandia mahotsava etc.

10. Beauty Parlours:As there has been major improvement in the quality of life style and increased awarenessamong the rural customers (especially females), there has been great demand observed forbeauty products and services. This market is still dominated by unorganized and localplayers who lack adequate tools, methods, skills, process, technology and beauty productsto meet the demand of rural population.

11. Affordable Movie theatres:Till now the entertainment service providers for movie theatres at affordable prices inrural markets are dominated by local and unorganized players who lack proper facilitiesand infrastructure as well as quality delivered.

12. Educational and Career consultancy:

The rural markets lack adequate and quality educational services which are majorlycatered by government agencies and bodies. But due to lack of proper infrastructure,expertise, knowledge, talent, funds and participation of the service provider, this sector isunable to meet the desired level of service expectation of the rural customer for careerbuilding.

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Emerging Areas in Rural MarketingAgri-Business Management

NGO Management

Natural resource Management Rural Infrastructure Management

Micro-finance

Corporate Social Responsibility

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Urban Markets

Urban Market Rural Market

1. City has a large populationsize growing at a fast growthrate due to immigration fromrural areas for education and

employment. The populationdensity is high. Towns aresmaller urban units.

1. Village is a human settlement witha small administrative unit. Itcomprises few hundred householdsand the population growth due to

immigration is insignificant.Migration from village to city/townis to get better education andemployment.

2. The city settlement is

compact though spread overa larger area. Land use isresidential, commercial ,industrial roads and streets,institutional and communityfacilities etc.

2. Village has land for humansettlement and for cultivation.The settlements arepredominantly clustered but insome areas households settle onrespective cultivable landholdings.

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3. Structure of houses ispermanent and often rises tomore than one storey. Housing

on rental is highly prevalent.

3. Houses are largely semi-pucca orkachha. They are owner occupied.

4. Primary resource base isproduction and distribution ofindustrial goods and services.

4. Land is the primary resource forlivelihoods. Other forms of resourcesare water bodies, forests , andmountains. Cows, buffaloes andpoultry are kept for household needfor milk, eggs and meat.

5. Occupations are diverseranging from professionals,

skilled, semi-skilled to unskilledworkers. Higher education andtraining is required to buildskills.

5. Predominant occupations arecultivation and agricultural labour.

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6. Rigid, conservative in approach

and custom bound. Society isguided by age old customs. Noscientific outlook.

6. Free from traditionaloutlook. More scientific

approach to the issues.

7. Media reach is veryhigh. Marketers generally

prefer Televisions,internet and print mediato be reached to thetarget customers.

7. Media reach is very low.Marketers prefer Radio,

loudspeaker on rickshaws toreach to the target customers.

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Nature of the Rural Market Large and Scattered Market Consists of

approximately 75 crore rural consumers who live inapproximately 638365 villages spread over 32 lakhsquare km area. Covering such a large and widelyscattered geographical market, raises the inventory

and transportation costs. Heterogeneous Market As many as 20000 ethnic

groups are present in rural India. There are 24languages and 1624 dialects and the dialect varies every

100 km, making it extremely difficult to develop auniform promotional message. Divisions based oncaste, community and other factors also continue toexist.

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Income from Agriculture Nearly 55% of ruralincome comes from the agriculture sector, hence rural

prosperity is tied with agricultural prosperity to a greatextent.

Standard of Living Over 70% of the ruralpopulation is employed in small-scale agricultural and

related occupations. This dependence on agricultureand natural factors has led to an acute seasonality andhigh chance element in income receipts in rural areas.

Infrastructural Facilities Roads, warehouses,communication system and financial facilities areinadequate in rural areas. Roads do not connect nearly50% villages in the country. Over 50% ruralhouseholds have access to electricity as a main sourceof lighting but 46% still use kerosene for lighting.

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Classification of Rural MarketRural

Economy

Farm Sector(Agri & Allied)

Non-farm sector (Formal &Informal sector)

Agriculture

Animal Husbandry

Horticulture

Forestry, Fishing

Rural Industries Rural Services

Agro Processing(Sugarcane,Oilseed etc.)

Retailing &Trading

Manufacturing(Handloom,

Handicrafts etc.)

Community &Social Service

Mining,

ConstructionCommunication

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Classification of Economic Activity Primary Sector Agriculture and allied services such

as livestock, fishing and forestry.

Secondary sector Mining and manufacturingactivities.

Tertiary Sector Services such as transport,communication, trade, financial services andcommunity services.

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Transition

1. Food grain crops2. On-land activities

3. Farm activities

1. Non-food graincrops, cash crops

2. Off-land activities

like livestock andfisheries

3. Non-farmactivities, includesmanufacturing and

services.

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MandisAgricultural markets set up by state government to

procure agricultural products directly from farmers.Located in high production centres of different crops,these markets may be categorized as grain mandis,soya mandis, cotton mandis.

Most agricultural areas with a Population of more than10000 have mandis and caters to 136000 population.

Displays the latest commodity prices. The price quotefrom the seller may vary depending on factors such as

quantity, packaging, delivery terms, payment methodetc.

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Road Connectivity Pradhan Mantri Gram Sadak Yojana It was launched

in December 2000 with the objective of providingconnectivity through good all-weather roads to allunconnected habitations with a population of more

than 500 persons, with an anticipated investment ofRs 60000 crore.

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Mobile Postman Scheme

The scheme is designed to make a telephone availableat the doorstep of every rural household. Under thescheme, a mobile telephone will be provided to apostman. When the postman goes to a house to deliver

a letter, he will carry a telephone with him. Since apostman reaches practically every house, the schemewill enable the telephone services to be made availablepractically to all citizens in his area.

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Pradhan Mantri Gramodaya Yojana This Yojana for the primary health sector is an

initiative to strengthen and revitalize the primaryhealth infrastructure for the improved provisioning of

basic minimum services in rural areas so as to improvethe quality of life. The Planning Commission of Indiahas allocated additional Central Assistance of Rs 2800crore for six sectors, i.e. rural electrification, primaryhealth, primary education, shelter, drinking water andnutrition.

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Rural Electrification Indian planners visualized the necessity of Electrical

Energy and included it in the Five Year Plans.A rural electrification programme was devised for

increasing the infrastructural input for agriculturalproduction programs. To implement the program

effectively, the Rural Electric Corporation (REC) wasset up.

REC has been a catalyst for rural development. TheCorporation has sanctioned financial assistance of Rs.28,588 crore under 37335 rural electrification projects

so far. About 3.05 lakh villages have been electrifiedthrough REC funded schemes.

Over 78 lakh pumpsets stand energised with thecorporations assistance.

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Public Distribution System Distribution of essential commodities to a large

number of people through a network of FPS (Fair PriceShops) on a regular basis (often referred to as ration

shops). The commodities distributed are wheat, rice,sugar, edible oil and kerosene.

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Haats Haats (Periodic markets) play an important role in the

rural economy as well as in the social life of villagers. First point contact for villagers with the market.

Means of distributing local products and exchangingagricultural surplus.

Opportunity for buying daily necessities as well asfarm supplies and equipment.

A place for political, social and cultural contact.

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Melas Serve as the meeting ground for people from different

communities and religious groups, for livelihood andagricultural commodities, for crafts and craftsmen andfor displaying various skills.

Melas are gatherings of people away from their

residences for entertainment and for the sale andpurchase of goods and services at a particular time.

Melas may be classified on the following basis:

o Religious, cultural or commercial (commodity, cattle,

exhibition)o Local, regional and national

o One day, short duration or long duration.

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Regional Rural Banks Set up under an Act of Parliament in 1976 with the

objective of developing the rural economy through thepromotion of agriculture, trade and commerce andindustry and by extending credit to small andmarginal farmers.

Authorized capital of RRB is Rs. 5 crore.

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Cooperative BanksThere is a three-tier pyramidal cooperative credit

structure in the rural cooperative banking sector, withthe

State cooperative bank (SCB) at the state level

District Central Cooperative Bank at the district level

Primary Agricultural Cooperative Society at the villagelevel, essentially to ensure flows of short-term credit forproduction purposes.

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NABARD NABARD has been the primary government

institution dedicated to developing systems anddelivering institutional finance in rural for both thefarm sector and the non-farm sector. It refinancesassistance for financing farm mechanization, i.e.

purchase of tractors, power tillers and also theaccessories.

It also provides agricultural credit through the KisanCredit Card. This scheme aims at the provision of

adequate and timely support from the banking systemto the farmers for their cultivation needs, includingthe purchase of inputs in a flexible and cost-effectivemanner.

I i i h l di

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Innovations in the rural credit

domains by NABARD

Self-help groups and micro finance Farmers clubs

Rural Infrastructure Development Fund

Watershed Development

Tribal DevelopmentWomen and Development

District Rural Industries Project

Rural Entrepreneurship Development Programme

Rural marketing

Revival of the Short term Rural Co-operative Structure

Co-financing

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DRDA (District Rural Development Agency)

It has been the principal organ over the years at the

district level for overseeing the implementation ofvarious anti-poverty programs.

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Employment OpportunitiesWith the objective of promoting self-employment

among the educated unemployed rural youth,government programs such as the Pradhan MantriRojgar yojana and the Integrated Rural DevelopmentProject, were developed. These programs aim to

provide skill-based training and link access to bankcredit(subsidized).

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Sampoorna Grameen Rojgar Yojana The Employment Assurance Scheme and the Jawahar

Gram Samridhi Yojana are two schemes under theprogramme. The EAS is meant to create additionalemployment opportunities during periods of acuteshortage of wage employment through manual work for

the rural poor living below the poverty line. The JGSY aims at the creation of need-based rural

infrastructure at the village level.

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Rural Housing The Central government announced a National

Housing and Habitat Policy in 1998 aiming to provideHousing forAll by facilitating the construction of 20lakh additional housing units annually.

A C l

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A Caselet The life of a farmer, K.T. Srinivasa, has changed recently,

though the two dirt roads near his home about 40 miles from

Indias high-tech capital of Bengaluru, his house withouttoilet facility, farm without tractor support and the way in

which his family threshes rice by crushing it with a massivestone roller, have remained the same. How?

The change has been brought about by a cell phone. Thelittle, attractive gadget is helping him make decisions relatedto farming. When to plant and harvest, at what price to sell

the produce and how and when to transport and sell-all theseintriguing questions are now resolved intelligently. IdeaCellular, Mr. Srinivasas service provider, has effectivelyutilized its first mover advantages.

C td

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Contd. Close to half the 800 people in the village, including Mr.

Srinivasa, have become its subscribers. Most of the villagersmake voice calls as they dont know how to text message ordownload e-mails. On an average, rural Indians use theirphones around 8.5 hours a month, up by 10 percent over thepast year. The villagers are very amused with their new foundconnectivity with the world. They are now aware of thepeople and events affecting the rest of India and the world.

They can answer quiz questions such as who is AmericasPresident and why there is an economic slowdown. They haveunderstood that recession is hurting their hi-tech neighboursin Bengaluru much more and that the Indian economy is ableto absorb the shocks much better than other developednations. After the global crises, says Mr. Srinivasa, thefarmer, I think we are in better shape.

This is an example of one of the many changes in the ruralenvironment that we have had a profound impact on rurallives.

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Study of Rural environment Consumer decisions and actions can be properly

comprehend only when the force field in which theyare operating is understood.

Study of environmental factors is important formarketers to realize the developments and trendsrather than know the static picture of theenvironment.

Todays decisions are not only for current problems butalso for future opportunities, performance nad results.

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Rural Environment

Social Environment Population and households, education

and literacy levels, social groups, festivals and melas,entertainment and arts.

Technological Environment Power and energy sources,postal services, telecommunications, information andcommunication technology, appropriate technology and

innovations. Economic environment Occupations, land distribution,

land use pattern, irrigation, asset holding, income,consumption, savings, disposable incomes, rural lifestylesand sales potential, rural credit institutions, rural retailoutlets, micro financing and rural industry.

Political Environment Development initiatives andadministrative bodies.

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Marketing decisions and

environment1. Demand Estimation

2. Segmentation and targetmarketing

3. Product decision

4. Price decision

5. Place decision

6. Promotion decision

1. Demographics (size and distributionof population by age, gender,occupation, education, geographicareas, income, savings and investment.2. Demographics, lifestyle indicators,purchase and usage of inventories.3. Income, quality consciousness,

brand awareness, preference ofconsumers and competition.4. Disposable incomes, propensity to

consume, competition, demand etc.5. Availability of trade channels,

physical distribution facilities,

competition and location.6. Media availability and costs, mediahabits of target customers,competition etc.

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Population Countrys population : 1027 million

Share of rural population : 68 percent

No. of households : 205.9 million (30% are in urban areas and70% in rural areas.)

Average family size in the country 5 members

Rural Family size 5.08 Low income states: Assam, Bihar, Madhya Pradesh,

Meghalaya, Orissa, Rajasthan, Uttar Pradesh, Chattisgarh,Uttaranchal and Jharkhand.

Middle Income States : Andhra Pradesh, Himachal Pradesh,Karnataka, Kerala, Tamil Nadu and West Bengal

High Income States : Goa, Gujarat, Haryana, Maharashtra,Punjab, Pondicherry, Chandigarh and Delhi

Di ib i f P l i

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factors rural urban All India

Population (mn) 732 295 1,027

households 144.5 61.4 205.9

household size (number ofmembers )

5.08 4.81 5.00

Number of earningmembers

1.43 1.34 1.40

Distribution of Population

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Distribution of population across

statesfactors LI states MI states HI states All IndiastatesEstimatedpopulation

493 314 220 1027

Estimatedhouseholds 91.7 69.6 44.3 205.6

Averagehousehold size

5.38 4.51 4.97 5

Per capitaincome

9749 14543 18172 13018

Share of ruralpopulation

80.7 68.2 54.5 71.2

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Gender-wise Ratio Sex Ratio for India is 933 females per 1000 males.

Women and men are almost in equal number in many ofthe states.

The male population is larger in Union Territories likeDadra and Nagar Haveli, Chandigarh, Andaman & NicobarIslands, Delhi and many of the Northern States such asBihar, Rajasthan, Gujarat, Haryana, Madhya Pradesh,

Maharashtra, Nagaland and Punjab. In almost all the southern states, male and female

population are almost in equal number except Kerala,where female population dominates the male population.

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Demographic Environment

Though the rural proportion in population has come down

moderately over the years, there has been a considerableincrease in absolute number of people living in rural areas.

With the increased working population, the purchasingpower of the rural population has gone up from 40% in 1991to 45% in 2011.

For marketers, the largest age group shapes the marketingenvironment. In the case of rural, it is school going childrenand young adults who define the consumption patterns ofconsumables and lifestyle products.

The potential for marketers in the rural sector can beassessed by the fact that 48% of the rural population is belowthe age of 20.

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Distribution of Population by Age

groupsAge groups Rural Urban0-4 11.5 8.9

5-14 25.7 21.8

15-19 9.5 10.6

20-34 23.1 26.8

35-54 19.7 22.5

55+ 10.5 9.4

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Education in IndiaEducation Level Rural UrbanBelow Primary 31.7 18

Primary but below middle 29.5 22.9

Middle but belowMatriculation

16.9 16.3

Matriculation but belowGraduate

18.4 29.6

Graduate and above 3.5 13.2

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Education and the level of demand

Lower levels of education in the rural sector lead to little

or low demand for a range of products such as literarybooks, magazines, notebooks, pens, pencils, drawinginstruments, calculators, computers etc.

But change is taking place because literacy rate in the

rural sector has risen 23% over the last 20 years. This hascontributed significantly to an improvement in thesocio-economic status of the people.

With this growth, the demand for educational productshas increased.

Ed ti d th l l f d d

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Education and the level of demandRural Literacy 1991 2001 2011

% of literates 45 59 69

Distri ution o ouse o s y

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Distri ution o ouse o s yOccupation of the Head

HeadsOccupation

Urban Rural All

Housewife 0.84 1.01 0.96

Cultivator 3.45 40.86 29.99

Wage Earner 20.93 35.28 31.12Salary 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 1.4

Others 3.85 1.98 2.52

O ti P tt

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Occupation Pattern

The occupational pattern of people in a segment naturally

affects their buying behavior. A daily wage earner has to account for variations in income,

whereas a salary earner brings home an assured fixed amountand therefore can plan expenses in a better way.

Three-fourths of rural household heads are either cultivatorsor wage earners, whereas three-fourths of urban householdheads are salary earners, petty shopkeepers and wage earners.

The cultivators disposable income is highly seasonal, withmore disposable income available immediately after the

harvesting season. This is therefore the time when he is moreinclined to make purchases, especially of durables and high-involvement products.

Occupation Pattern

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Occupation PatternBasic occupations that exist and help directly agro-related

works are:

Farm Labourer The farm labourer helps a villagethrough his agricultural activity directly. The labourerworks by tilling, weeding out, sowing, reaping, cleaningthe produce, guarding the field at harvest time andmany other odd jobs related to agriculture.

Priest He reads horoscopes, arranges poojas, tellsvillagers regarding auspicious dates for marriages, house

warming, sowing in addition to his duties in the temple. Blacksmith The agricultural implements are made

and repaired by the village blacksmith.

Carpenter

Contd

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Contd.Washerman

Barber

Shoe maker

Potter

Milk man

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Household Pattern (Family

Structure)

Rural households have grown by 26 million during the

last decade. The average size of the rural family hasdecreased due to movement of more families from thejoint to the nuclear structure.

The traditional households in rural were joint families,

in which a group of people lived under one roof, ate foodfrom common chulha, held income and property incommon and were related to each other by bonds ofkinship.

But with rise in population and resulting pressure onland and several other socio-economic factors, jointfamilies are now breaking apart and moving towardsnuclear family culture.

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With the increasing number of individualisedjoint(families stay in the same house, but use separatekitchens) and nuclear families, the range and number of

branded products coming into the family can increase.

Size of Household Rural Urban

1-2 members 11.1 10.7

3-4 members 30.4 38.8

5-6 members 34.0 32.8

7 and above 24.5 17.7

Household size

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Rural Housing Pattern The types of houses in rural areas are a very strong

indicator of economic growth.

Over the last twenty years, the trend in house typeshas changed dramatically from less permanent semi-pucca or kuccha to more permanent pucca types.Today, 40 percent of rural houses, i.e. 50 million arepucca, which is growing at a rate of almost 5%

annually.

Statistics indicate that the owners of such housespossess sufficient disposable income.

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House Type 1981 1991 2001

Pucca 22 31 41

Semi-Pucca 37 36 36

Kuccha 41 33 23

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Estimates of IncomesUrban Rural All IndiaNo. of earners perhousehold

1.34 1.43 1.4

Income

(Rs/annum/household)

95,827 51,922 65041

Poverty Ratio 18.7 21.7 20.8

Per capita income 19,935 10,227 13018

Population belowpoverty line

55.2 159.0 214.2

R l I Di l

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Rural Income DispersalConsumer Class Annual Income 1995-96 2006-07

Very Rich Above Rs. 215000 0.3 0.9

Consuming Class Rs. 45001-2,15000 13.5 25.0

Climbers Rs. 22001 45000 31.6 49.0

Aspirants Rs. 16001 22000 31.2 14.0

Destitutes Rs. 16000 & below 23.4 11.1

Income Generation

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Income Generation

By sale of agricultural produce

By sale of animal produce

By service Rendered by teacher, doctor or nurse.

By interest on investment

Government subsidies and grants

By mortgage of properties and gold

By charities and donations

By labour and wages Labourers do jobs in construction

of roads, bridges and buildings.

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Rural Income Pattern

Income of Rural Sector is rising at a considerable rate.

Percentage of Very Rich, Consuming Class, and Climbersare rising whereas Aspirants and Destitutes aredeclining.

The structure of Rural Income depicts the following

trends:1. On the income ladder, the top two slots are occupiedby the non-farm sector, whereas the farmer is at thethird place and wage earner is at the bottom.

2. The highest per capita income in rural comes from theformal segment of the non-farm sector at Rs. 19514which is higher than the urban per capita income at Rs.19407.

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Rural Income Rs

7006 billion

Agriculture 53%Non-agriculture

47%

Self

employed43%

Wage

earner10%

Formal 31%

Informal16%

Rural population 742

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Rural population 742million

Proportion of ruralemployed 312 million

Agriculture 73%Non-

agriculture27%

Selfemployed

40%

Wageearner 33%

Formal15%

Informal12%

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Per Capita (Per Annum) IncomesRural : Rs 9481

Agriculture Rs6855

Non-agricultureRs 16464

SelfEmployedRs 10,150

WageEarner

Rs2860

FormalRs 19514

InformalRs 12595

Overall the rural per person spending of Rs 5830 per

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Overall, the rural per person spending of Rs. 5830 perannum is a little above half of the urban spending of Rs.10,260.

The gap between rural and urban spending widens as wemove from poor households to rich households. But asthe total number of the rural population is three timeslarger than the urban, the overall spending in rural is

much higher than in urban. The rural rich and middle classes present a great

opportunity for marketers to sell their products.

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Changing Consumption PatternsMonthly per capitavalue of consumption Percentage

Food 289 59

Non-food 197 41

Monthly per capita consumption expenditure on non food items

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y p p p p

Rural Amount Percentage UrbanAmount

Percentage

Pan+Tobacco 13.97 7 16.23 4

Fuel and Light 36.56 18 66.25 15

Clothing &Bedding

33.27 17 51.71 12

Footwear 5.37 3 10.05 2

Education 9.37 5 37.05 8Medical 29.58 15 43.28 10

Toiletries 12.96 6 29.09 6

Sundry 10 5 17.98 4

ConsumerServices 14.51 8 40.43 9

Conveyance 14.28 8 47.19 11

Rentals 2.96 1 44.02 10

Durables 12.72 6 30.85 7

Entertainment 2.02 1 9.88 2

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Rural SpendingAnalysing the consumption patterns of non-food

items of rural consumers, we find that the major shareof spending goes to clothing, medical services and fuel

needs, whereas urban consumers spend much more onrentals, education and conveyance.

Khabar Lahariya

A weekly

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y

yNewspaper in BundeliA group of women from various sections of the society

from the interiors of Chitrakoot and Banda inUttarPradesh were in the news for winning theprestigious Chameli Devi Jain Award for OutstandingWomen Media Person.

The recognition was given to them for running a weeklynewspaper in Bundeli (the local dialect of Bundelkhand)that provided infotainment for the people in the nearbyvillages.

It was in the year 2008 that the Khabar Lahariya groupregistered themselves as an independent organization,Pahal drawing inspiration from Nirantar, an acclaimedcentre for gender and education.

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Contd. The eight page newsletter focuses on issues of importanceto the masses, youth and women. Accordingly, it hassections presenting current affairs, national andinternational news, cases of violence against women,problems of Dalits, school education, marriage, health careand more.

The teamwork of the women is impressive. They divide theresearch and writing works among themselves and work to

contribute to the different items of the paper. They go allthe way to the nearest city of Allahabad for printing. Thewomen are tech-savvy too. The offices of KL havecomputers with broadband connections.

ree a or evo u ons n e ura

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Technological EnvironmentGreen Revolution in the Agricultural Sector

Period from 1967 to 1978 heralded a technological thrust into ruralareas aimed at improving food grain production in the country andhence achieving food self-sufficiency.

Green Revolution generated some notable economic results:

1. Crop areas under high-yield varieties required fertilizers,

pesticides, fungicides and other inputs. Farm equipments liketractors with farm implements, diesel pump sets etc. introducedmechanization into the farm sector for the first time.

2. The increase in farm production also introduced mechanizedprocessing, spurring growth of the local manufacturing sector.

The modernization and mechanization of the farm sector boostedfarm productivity, triggered industrial growth, created jobs andinitiated a change in the quality of life in villages.

White Revolution

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White Revolution Initiated by the government with the aim of achieving

self-sufficiency in the area of milk production.

Cornerstone of the government dairy developmentpolicy was producing milk in rural areas throughproducer cooperatives and moving processed milk to

urban-demand centres. Gave a boost to dairy development and initiated the

process of establishing the much-needed linkagesbetween rural producers and urban consumers.

Formation of producers cooperatives has played asignificant role in institutionalizing milk production andprocessing.

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Contd. Socio-economic and demographic factors such as

urbanization and changing food habits and lifestyleshave also reinforced the growth in demand for dairy

products (ice creams, chocolate, yoghurt, butter,flavoured milk etc.).

Milk production has increased from 17 million tonnesin 1950-51 to 84.6 million tonnes in 2001-02.

Most successful story in dairy development has been inGujarat, Punjab, Haryana, Uttar Pradesh and Andhrapradesh.

The NGO Movement

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The NGO Movement Important in providing assistance at the grassroots level

assimilation of technological extensions in rural areas.

Stepped in to create awareness, build skills, introducetechnology and develop capacities for maintenance andsustainability.

Government programmes implemented through NABARD,CAPART, KVIC and others are given shape by these

organizations. Introduction of low-cost spindles, weaving machinery,

technology for leather processing, food processing, naturalresources management etc have been some contributions inbringing about change at the grassroots.

NGOs have been also active in providing basic health andchild care services, running homes for destitutes and thedistressed and providing education and trainingopportunities.

Land Distribution

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Land Distribution India has a large geographical land area of 3.288 million

square kms.

Land Classification based on Use:

Forest Land :Area covered by forest

Uncultivable Land : The land which includes land with

tree crops, cultivable waste or permanent pastures arenot fit for cultivation.

Land not available for Cultivation : Land area usedfor human dwelling, industry areas, transportation

roads, military establishment roads, railways etc. Cultivable Land : Consists of area under cultivation or

sown. This includes irrigated land.

l f f d b d

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Classification of Land based on

Topography Mountains : High lands above 7000 ft in altitude. This

forms 10.7 percent in India.

Hills :Weathered high lands upto an altitude of 7000 ft.They form 18.6 percent in India.

Plateaus : Flat land with an elevation between 1000 ftand 3000ft. They constitute 27.7 percent in India.

Plains : Flat land upto an elevation of 1000 ft. This forms43 percent in India.

Land Use Pattern

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Land Use Pattern Land Management is gaining importance because of

increasing demands on land and growth of thepopulation.

Forest area and cultivable land percentages haveincreased. Forest has increased from a level of 14% to

22%. Area sown has increased from 20% to 43%.Area not available for cultivation has reduced and

Change of mindset of common man towards ecology,increasing greenery and that every square meter of land

be used gainfully. Multi-storeyed buildings form part ofthe citys landscape.

Increase of Irrigated Land in India

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Increase of Irrigated Land in India In last four decades, the irrigated area has doubled.

For centuries, Indian agriculture has depended on rains. Thespecial programmes launched by Government of India toincrease the irrigation facilities along length and breadth ofIndia have yielded results and reduced dependence on rain.

There is considerable difference in irrigation patterns fromstate to state in India. States like Punjab and Haryana, wherethere are enough natural water resources have a goodpercentage of gross irrigated area to total crop area.

If a farmer owns many patches scattered at distances, it

makes the entire efforts in agriculture less remunerative. Mechanical farming or agricultural methods cannot be

adopted for small land holdings.

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Cropped Area and Irrigated Area

Net Area

Sown

Gross

CroppedArea

Net area

Irrigated

Gross Area

Irrigated

Gross

Irrigated as% ofCroppedArea

1999-2000 142.9 185.7 48 63.2 34.0

2000-2001 142.2 186.6 53.4 71.4 38.3

2001-2002 142.8 189.5 55.1 73.3 38.7

2002-2003 142 190.8 54.6 76.4 39.7

Rural infrastructure

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Road Connectivity

Good road connectivity, particularly in rural areas,between sub-divisional towns and district headquartersis often the primary means of supplementing publicefforts directed at providing basic health andeducational services, as well as infrastructural supportfor production and trade and commerce at the localvillage level.

It is particularly relevant in the Indian context whereover 70% of the population continues to live in ruralareas and where over 50% of villages with population ofless than 1000 have yet to be connected by roads.

Among the major states, Kerala has the highest road

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g j , glength per hundred square kilometres (375 km in 1997).

Population lessthan 1000

Populationbetween 1000 &1500

Populationmore than1500

1991-92 36.52% 72.32% 89.82%

1997-98 37.45% 76.54% 91.72%

2005-06 49.18% 74.58% 78.04%

Road connectivity at the village level

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Post Offices India with its 1,55,279 post offices as on 31 March 2002(138756 post offices are in rural areas) has a postalnetwork that is the largest in the world. On an

average, a post office serves an area of 21.17 km and apopulation of 6614 persons.

For providing postal services, the whole country hasbeen divided into 22 postal circles. Each circle isfurther divided into regions. A postmaster general whois the postal manager of the area heads each region.

Post offices in the country are categorized as head, suband branch post offices.

Radio

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Radio From six radio stations at the time of Independence, All

India Radio today has 208 radio stations. All Stations ofAll India Radio broadcast farm programmes and homeprogrammes directed at rural audience. The thrust ofthe broadcast is on increasing production of agri-products and various programmes adopted by the

Government of India.

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Television

DD-1 operates through a network of 1042 terrestrial

transmitters of varying powers reaching over 87% of thepopulation. Over the years, the viewership ofDoordarshan as increased enormously, reaching 7.5crore homes. Community television sets have been

introduced under various schemes operated by Centraland State Government.

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Telecom Services

By 2004, over 80% of all villages had been connected

through 5.4 lakh Village Public Telephones. Similarly,1.42 crore telephone connections had been given in ruralareas.

People who are unable to afford a telephone facility of

their own can now have access to VPTs in rural areas inaddition to Public Call Offices.

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Rural Health Services Sub-centres : The health Sub-Centre is the contact pointbetween the primary health care system and the community. TheStaff at health Sub-Centres are assigned tasks related tointerpersonal communication in order to bring about behavioral

change in relation to maternal and child health, family welfare,nutrition, immunization, control of diarrhoea and control ofcommunicable diseases.

Primary health Centres : First contact point between the villagecommunity and a medical officer. These are established and

maintained by the State Government under the Minimum Needs/ Basic Minimum Services Programme. Manned by a medicalofficer and is supported by 14 paramedical and other staff.

Activities include curative, preventive and promotive health careas well as family welfare services.

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Contd. Community Health Centres : Established andmaintained by the State Governments under theMNP/BMS programme. Four medical specialists, i.e.

surgeon, physician, gynaecologist and paediatriciansupported by 21 paramediacal and other staff. 30indoor beds, with X-ray, labour room, operationtheatre and laboratory facilities.

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Print Media The total number of newspapers and periodicals beingpublished in the year 2000 was 49,145. Newspaperswere published in as many as 101 languages and

dialects during 2000. The reach of newspapers in rural areas are very poor,

only 15% of the copies of newspapers reach rural areas.Newspapers normally reach the feeder market or smalltowns and are read in shops or road side hotels.

People sometimes buy newspapers in small towns andtake back home, where it is read at home or atcommon gathering or social gathering.

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Market Research is done by market research companies and experts inthe field to provide data about consumption patterns, purchasepreferences and rural market potential. Hindustan Thompson

Associates Limited, a market research and advertising company in

India studied the rural areas in India in year 1972.HTAL made its report in 1972 and developed overall indicators of ruralmarket potential in India. These are known as Thompson Rural MarketIndex.

HTAL compiled data of 335 districts based on 26 measurable scalevariables. HTAL collated data regarding agricultural details of outputin each district.

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Contd.Indicators considered in developing TRMI are:

Agricultural Laborers Gross Cropped Area

Gross Irrigated Area

Area under non food crops

Pump sets

Fertilizer consumption

Tractors

Rural Credit Rural Deposits

Villages electrified

TRMI has become a useful guide in segmenting and

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TRMI has become a useful guide in segmenting andtargeting rural markets.

Based on TRMI data, the districts have been classifiedA,B,C,D and E classes. The classification is given:

Class of Markets Index Range No. of districts Percentage ofMarkets

A 60.00-100.00 22 17.80

B 40.00-59.99 39 20.5

C 30.00-39.99 54 20.4

D 20.00-29.99 86 23.00

E Below 20 154 18.30

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Contd. The TRMI data needs regular updating due to changes

that are continuously taking place in rural India. This isparticularly true due to globalisation and changes ingovernment policies and WTO policy issues. TRMI givea comparative analysis for qualitative decision making inrural marketing areas.

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Problems in Rural marketing

Unevenly Scattered Population The spread of population in about4000 cities and towns is to the extent of 25% and the balance is in six lakh

villages. Only 6300 villages have a population of more than 500. Thismakes the marketers go through a lot of difficulty to reach out to the ruralmasses effectively.

Underdeveloped People and Underdeveloped Market Since 1947 anumber of initiatives have been taken to improve the quality of life inrural areas. In 1947 the rank of India in terms of poverty, unemploymentand level of development was 86 in the world but in 1991 it reached the

level of 123. The situation has further worsened and the 1996 report onHuman Development Index shows that India ranks 136th in 156 countriesof the world.

Lack of proper Physical Communication Facilities In India only50% of the road length is provided with a proper surface. About 36% ofthe villages in the country do not have road connection and over 65% of

our villages are without all-weather road. Thus the road grid makesdistribution cost higher , as the road grid as a whole suffers from seriouscapacity constraints, delays, congestions, fuel wastage and higher vehicleoperating costs, marketers face a lot of problems in distribution ofproducts.

Contd.L i i Sh f l i d f 6

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Low per capita incomes Share of rural income accounted for 55.6percent with 74.6 percent of countrys population, thus reducing thedemand of expensive products.

Many Languages and Dialects

In India, the number of languages anddialects vary widely from state to state , region to region. The number oflanguages spoken are only 16, the total number of dialects is estimated tobe around 850. The messages to be delivered in the local languages anddialects is a big problem to the marketers.

Low level of literacyThis leads to the problem of communication forpromotion purposes. In this case, print medium becomes less effective

and the dependence on audio visual messages is more relevant in ruralareas.

Logistics Problems The rural markets have few selling points likeretailers, co-operatives, haats and melas. Lack of infrastructure for storageand handling and limited transport facilities act as a constraint formarketing action.

Low Exposure to Market Stimuli In rural areas, the rural people havelow exposure to branded products, low product exposure, limited sourcesof information and learning which creates big challenge to the marketersto stimulate the rural consumers.

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Contd.

Less Retail Outlets Due to less capital, the shops in the

villages have limited availability of stock and limited or a fewrange of branded products to sell to rural people and theseshops keep only fast moving items with a number of fakebrands.

Seasonal Demand As 70% of rural population depends on

agriculture and most of them with small land holdings highlydependent of natural environment that is rain, if the rainsand weather conditions are good and on time the farmers willget good harvest which leads to good income, otherwise, ifthere is shortage of water the demand may be minimal.

Traditional Life Life in rural areas is still governed bycustoms and traditions and people do not easily adopt newpractices. For eg. Even rich and educated class of farmers donot wear jeans or branded shoes in most of the rural areas.

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Rural Areas Requirement

Considering the importance of agriculture and ruralmajority the nine five year plans have made considerableprogress in improving the agriculture sector and therural farmer. The rural requirements vary from state tostate and the priorities also change. Rural requirementsare listed under:

Improved seeds and fertilisers Increased means and methods of irrigation

Multipurpose farming

Use of modern farming equipments and methods

Warehousing and preservation of agri-produce.

Marketing development and remunerative prices for theproduce

Improvements in pest control and preservation of crops.

Contd.R & D k d b h ki ith th b t i lt l ti

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R & D work and benchmarking with the best agricultural practices,yields in the world

Training of Farmers

Increased investments and credit facilities Small land holdings to be consolidated and improvements in

tenancy. Animal heath and veterinary facilities. Literacy of farmers and families.

Develop village agro-based industries/cottage and villageindustries

Population control Crop insurance Health of farmers

Environment friendly agriculture methods Water availability management Remunerative price for milk and milk products and Provision for subsidiary occupations and incomes