12453_Session I - Rural Marketing

8/7/2019 12453_Session I - Rural Marketing

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Introduction to RuralIntroduction to Rural

MarketingMarketing



Why should we do t his course?Why should we do t his course?

Agricultures share in GDP is going down, but, India stillAgricultures share in GDP is going down, but, India still

lives in her villageslives in her villages

Urban markets are crowded and saturatedUrban markets are crowded and saturated

The understanding of rural is diffused and sometimesThe understanding of rural is diffused and sometimes

confusingconfusing

Is rural marketing different from urban marketing ?Is rural marketing different from urban marketing ?



Session CoverageSession Coverage

Rural IndiaRural India Some definitional issuesSome definitional issues

Phases/ stages in rural marketingPhases/ stages in rural marketing

Scope of rural marketingScope of rural marketing

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

Schools of t hought Schools of t hought-- Approaches to Rural MarketsApproaches to Rural Markets

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



Defining Rural IndiaDefining Rural India

OrganisationOrganisation DefinitionDefinition LimitationsLimitations

CensusCensus

Population density < 400 / Sq KmPopulation density < 400 / Sq Km

75 percent of the male working75 percent of the male workingpopulation is engaged in agriculturepopulation is engaged in agriculture

No Municipal corporation / boardNo Municipal corporation / board

rural not definedrural not defined

PlanningPlanningCommissionCommission

TownsTowns uptoupto 15,000 population are15,000 population areconsidered ruralconsidered rural

TownTowncharacteristics notcharacteristics notdefineddefined



ContdContd

LG ElectronicsLG Electronics All places other than theAll places other than the7 metros7 metros

Only clarifies what areOnly clarifies what arethe citiesthe cities

NABARD (National bankNABARD (National bankof agriculture and ruralof agriculture and ruraldevelopment)development)

All locations with aAll locations with apopulation upto 10, 000population upto 10, 000considered ruralconsidered rural

Village & townVillage & towncharacteristics notcharacteristics notdefineddefined

SaharaSahara CommercialCommercialestablishments locatedestablishments locatedin areas servicing lessin areas servicing lessthan 1000 populationthan 1000 population

PopulationPopulationcharacteristics unknowncharacteristics unknown

Source: The Rural Marketing Book- Text &P

ractice, Kashyap.P

and Raut. S (2007)



Defining Rural MarketingDefining Rural Marketing

National Commission onNational Commission onAgricultureAgriculture

NGOsNGOs Corporate RuralCorporate RuralMarketing DefinitionMarketing Definition

Decisions to produceDecisions to producesaleable farmsaleable farm

commodities involvingcommodities involving

all the aspects of theall the aspects of themarket system ormarket system or

structure, bothstructure, bothfunctional andfunctional and

institutional, based oninstitutional, based ontechnical & economictechnical & economic

considerations andconsiderations and

includes the pre & postincludes the pre & postharvest operations.harvest operations.

Marketing productsMarketing productsproduced in rural areasproduced in rural areas

to urban areasto urban areas

Marketing productsMarketing productsproduced in rural areasproduced in rural areas

in rural marketsin rural markets

Function that managesFunction that managesall activities involved inall activities involved inassessing, stimulatingassessing, stimulating

and converting theand converting thepurchasing power ofpurchasing power ofrural consumers intorural consumers intoeffective demand foreffective demand forspecific products andspecific products and

services to createservices to createsatisfaction & a bettersatisfaction & a better

standard of living forstandard of living forachievingachieving organisationalorganisational

goals.goals.



Phases in Rural MarketingPhases in Rural Marketing

Sr. NoSr. No Time FrameTime Frame Key Events & TrendsKey Events & Trends

11 Phase One( Pre 1960s)Phase One( Pre 1960s) Marketing ruralMarketing ruralproducts in rural andproducts in rural andurban areasurban areas

Agricultural inputs inAgricultural inputs in

rural areasrural areas

AgriculturalAgriculturalmarketingmarketing

Farming methods wereFarming methods wereprimitive andprimitive andmechanisation was lowmechanisation was low

Markets unorganisedMarkets unorganised



ContdContd

22 Phase Two ( 1960s to 1990s)Phase Two ( 1960s to 1990s) Green RevolutionGreen Revolution

Companies likeCompanies likeMahindra and Mahindra,Mahindra and Mahindra,Sri Ram Fertilizers andSri Ram Fertilizers andIFFCO (Indian farmersIFFCO (Indian farmers

fertilizers cooperativefertilizers cooperativelimited)emergelimited)emerge

Rural products wereRural products werealso marketed throughalso marketed throughagencies like KVICagencies like KVIC

33 Phase Three( 1990s to Present)Phase Three( 1990s to Present) Demand forDemand forconsumables andconsumables anddurables risedurables rise

Companies find growthCompanies find growthin urban marketsin urban marketsstagnating or fallingstagnating or falling



Transitions In Rural IndiaTransitions 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)

SectorSector YearYear 1987 ( % share in1987 ( % share inemployment)employment)

YearYear --2004 ( % share in2004 ( % share inemployment)employment)

AgricultureAgriculture 7575 6767

Transport &Transport &CommunicationCommunication

22 88

Trade & HotelsTrade & Hotels 55 77

ConstructionConstruction 44 77

ManufacturingManufacturing 77 88

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



Rural IndiaRural India Population TrendsPopulation Trends

19711971 19811981 19911991 20012001

TotalTotalPopulation (inPopulation (in

million)million)

548.2548.2 683.3683.3 848.3848.3 1026.91026.9

RuralRuralPopulation (inPopulation (in

million)million)

524.0524.0 628.8628.8 741.6741.6

As a proportionAs a proportionof totalof total

populationpopulation

76.776.7 74.374.3 72.272.2

DecadalDecadalVariationVariation

19.819.8 16.716.7 15.215.2

Source: Census 2001Source: Census 2001



ContdContd

The joint family system is being replaced by t he nuclearThe joint family system is being replaced by t he nuclear

family systemfamily system

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

cultivators and wage earnerscultivators and wage earners

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

according to NCAER(according to NCAER(National Council For APPLIED EconomicNational Council For APPLIED Economic

Research)Research) studies (2002)studies (2002)



Rural Settlement & Habitation TrendsRural Settlement & Habitation Trends

Key findings from 2001 censusKey findings from 2001 census

Population densit y 253/ sq kilometer and total number of Population densit y 253/ sq kilometer and total number of

villages is 638, 588villages is 638, 588

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

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



ContdContd

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

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

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



Rural Income TrendsRural Income Trends

Annual Income (Annual Income (at 1998at 1998--9999

prices)prices)

Income ClassIncome Class 19891989--90( %90( %Households)Households)

19981998--99 ( %99 ( %Households)Households)

<= 35,000<= 35,000 LowLow 67.367.3 47.947.9

35,00135,001-- 70,00070,000 Low MiddleLow Middle 23.923.9 34.834.8

70,00170,001 1,05,0001,05,000 MiddleMiddle 7.17.1 10.410.4

1,05,0011,05,001--

1,40,0001,40,000

Upper MiddleUpper Middle 1.21.2 3.93.9

> 1,40,000> 1,40,000 HighHigh 0.50.5 3.03.0

Source: National Council for Applied Economic Research, 2000



Myt hs abound about rural sectorMyt hs abound about rural sector

Rural people do not buy brandsRural people do not buy brands

Rural customer buy cheap productsRural customer buy cheap products

Homogenous marketHomogenous market



Understanding rural customersUnderstanding rural customers

Regional differencesRegional differences

Purchase decisionPurchase decision

Communit y decision makingCommunit y decision making



New influencersNew influencers

Changes because of education andChanges because of education andinformation ageinformation age



ProductsProducts

Ground cookingGround cooking

Electrical gadgetsElectrical gadgets

Small packsSmall packs



Rural CommunicationRural Communication

Face to face interactive communicationFace to face interactive communication

AWARENESSAWARENESS INTERESTINTEREST

CONVICTIONCONVICTION

DESIREDESIRE ACTIONACTION



Developing Rural MarketsDeveloping Rural Markets

Through Information TechnologyThrough Information Technology EE--ChoupalChoupal

Dairy portal by Dairy portal by AmulAmul

Telephone serviceTelephone service KisanKisan call centercall center



The way aheadThe way ahead

AwarenessAwareness

Acceptabilit yAcceptabilit y

Availabilit yAvailabilit y Affordabilit yAffordabilit y

Documents

12453_Session I - Rural Marketing