Introduction to Rural Introduction to Rural Marketing Marketing

Session – I Session – I

Xavier Institute of Management, Xavier Institute of Management, Bhubaneswar Bhubaneswar

Why should we do this course? Why should we do this course?

Agriculture’s share in GDP is going down, but, India still Agriculture’s share in GDP is going down, but, India still

lives in her villages lives in her villages

Urban markets are crowded and saturated Urban markets are crowded and saturated

The understanding of “rural” is diffused and sometimes The understanding of “rural” is diffused and sometimes

confusing confusing

Is “rural marketing” different from “urban marketing” ?Is “rural marketing” different from “urban marketing” ?

Session Coverage Session Coverage

Rural India – Some definitional issues Rural India – Some definitional issues

Phases/ stages in rural marketingPhases/ stages in rural marketing

Scope of rural marketing Scope of rural marketing

How is rural India changing?How is rural India changing?

Schools of thought- Approaches to Rural Markets Schools of thought- Approaches to Rural Markets

Strategic Issues & Directions in rural marketing Strategic Issues & Directions in rural marketing

Defining Rural India Defining Rural India

Town characteristics not defined

Towns upto 15,000 population are considered rural

Planning Commission

rural not defined Population density < 400 / Sq Km 75 percent of the male working population is engaged in agriculture No Municipal corporation / board

NSSO ( Census)

Limitations Definition Organisation

Cont’d Cont’d

Population characteristics unknown

Commercial establishments located in areas servicing less than 1000 population

Sahara

Village & town characteristics not defined

All locations with a population upto 10, 000 considered “ rural”

NABARD

Only clarifies what are the cities

All places other than the 7 metros

LG Electronics

Source: The Rural Marketing Book- Text & Practice, Kashyap. P and Raut. S ( 2007)

Defining Rural Marketing Defining Rural Marketing

Function that manages all activities involved in assessing, stimulating

and converting the purchasing power of rural consumers into effective demand for specific products and

services to create satisfaction & a better standard of living for

achieving organisational goals.

Marketing products produced in rural areas

to urban areas

Marketing products produced in rural areas

in rural markets

Decisions to produce saleable farm

commodities involving all the aspects of the

market system or structure, both functional and

institutional, based on technical & economic

considerations and includes the pre & post

harvest operations.

Corporate Rural Marketing Definition

NGOs National Commission on Agriculture

Phases in Rural Marketing Phases in Rural Marketing

Marketing rural products in rural and urban areas Agricultural inputs in rural areas “Agricultural marketing”Farming methods were primitive and mechanisation was lowMarkets unorganised

Phase One( Pre 1960’s) 1

Key Events & Trends Time FrameSr. No

Cont’d Cont’d

Demand for consumables and durables riseCompanies find growth in urban markets stagnating or falling

Phase Three( 1990s to Present) 3

Green RevolutionCompanies like Mahindra and Mahindra, Sri Ram Fertilisers and IFFCO emergeRural products were also marketed through agencies like KVIC

Phase Two ( 1960s to 1990s) 2

Scope of Rural Marketing Scope of Rural Marketing

Keenly debated topic Keenly debated topic

Definitions based on organisational/ institutional vision, Definitions based on organisational/ institutional vision,

mission & goals mission & goals

Need for a Need for a comprehensive and modularcomprehensive and modular understanding understanding

Rural Marketing is a “ work in progress” Rural Marketing is a “ work in progress”

Multi – disciplinary approach is necessary for sharper Multi – disciplinary approach is necessary for sharper

understanding understanding

Domain of Rural Marketing Domain of Rural Marketing

To

Rural Urban

From

Rural

Urban

Source: M. Jha, Rural Marketing- Some Conceptual Issues, EPW, 1988

Scope of Rural Marketing Scope of Rural Marketing

Urban to Rural

Rural to Urban

Rural to Rural

Outcomes Norms Modalities Products/ services

Participants

Dimensions of the transactionDomain of Rural Marketing

Changes in Rural India Changes in Rural India

Diverse change levers in rural India

The “ pull of the cities & towns” – migration and its side

effects

Effect of government programmes

Civil society interventions

Natural & manmade disasters

Slow but sure change

Transitions In Rural India Transitions In Rural India

• Food Grain Crops

• On land activities

• Farm Activities

•Non –food, cash crops

•Livestock & fisheries

•Manufacturing & services

Rural Employment Patterns( Male)Rural Employment Patterns( Male)

8 7Manufacturing

74Construction

7 5Trade & Hotels

82Transport & Communication

67 75 Agriculture

Sector Year -2004 ( % share in employment)

Year – 1987 ( % share in employment)

Source: NSSO data, Mckinsey Global Institute Study, 2004-05

Rural India – Population TrendsRural India – Population Trends

Source: Census 2001

15.216.719.8Decadal Variation

72.274.376.7As a proportion of total

population

741.6628.8524.0Rural Population (in

million)

1026.9848.3683.3548.2Total Population (in

million)

2001199119811971

Cont’d Cont’d

The joint family system is being replaced by the nuclear The joint family system is being replaced by the nuclear

family system family system

The occupational pattern shows a predominance of The occupational pattern shows a predominance of

cultivators and wage earners cultivators and wage earners

Cultivators( 40.86 %) and Wage Earners( 35.28 %) Cultivators( 40.86 %) and Wage Earners( 35.28 %)

according to NCAER studies (2002) according to NCAER studies (2002)

Rural Settlement & Habitation TrendsRural Settlement & Habitation Trends

Key findings from 2001 census Key findings from 2001 census

Population density 253/ sq kilometer and total number of Population density 253/ sq kilometer and total number of

villages is 638, 588 villages is 638, 588

Villages having less than 500 population are falling Villages having less than 500 population are falling

Villages having 2000 + population most prosperousVillages having 2000 + population most prosperous

What are the implications of these trends?What are the implications of these trends?

Cont’d Cont’d

Size of villages/ habitations are changing Size of villages/ habitations are changing

Role & influence of towns is changing Role & influence of towns is changing

Social interaction is a mix of rural and urban Social interaction is a mix of rural and urban

Let’s look at some key trends in detailLet’s look at some key trends in detail

Rural Income Trends Rural Income Trends

3.0 0.5 High > 1,40,000

3.9 1.2Upper Middle 1,05,001- 1,40,000

10.4 7.1 Middle 70,001 – 1,05,000

34.823.9Low Middle 35,001- 70,000

47.9 67.3Low<= 35,000

1998-99 ( % Households)

1989-90( % Households)

Income Class Annual Income ( at 1998-99

prices)

Source: National Council for Applied Economic Research, 2000

Rural Marketing- Schools of Thought Rural Marketing- Schools of Thought

Determinist School Determinist School

Activist School Activist School

What is the right approach?What is the right approach?

Dependent on level of market development, stage in the Dependent on level of market development, stage in the

PLC and access to resources PLC and access to resources

Amul & ITC prominent examples Amul & ITC prominent examples

No water-tight compartmentalisationNo water-tight compartmentalisation

Strategic Issues & Directions in Rural Strategic Issues & Directions in Rural Marketing Marketing

Evolutionary Vs revolutionary changes in rural marketsEvolutionary Vs revolutionary changes in rural markets

Role of state & market forces Role of state & market forces

ICT based interventions ICT based interventions

Partnership innovations Partnership innovations

Developmental role of rural marketing Developmental role of rural marketing

Scalability & replication of rural marketing programmes Scalability & replication of rural marketing programmes

ICT in Rural Markets ICT in Rural Markets

EID ParryUniversities Agri extension

Ozhwar Sandhiyes

E- Choupal Agmarknet Agri Marketing

Sewa Bhoomi( Karnataka)

Rural Services

Simputer N- Logue NIC Infrastructure Provision

NGO/ PPP Private GovernmentCategory

Close of Session Close of Session

Thank You Thank You