THE RURAL MARKETING

ENVIRONMENT

DEMOGRAPHIC ENVIRONMENT

RM NOV2011 LPD 2

RM NOV2011 LPD 3

Some Comparisons

RM NOV2011 LPD 4

Education in India (2001)

Education Level Rural Urban

Below Primary 31.7 18.0

Primary but below Middle 29.5 22.9

Middle but below Matric 16.9 16.3

Matric but below Graduate 18.4 29.6

Graduate and above 3.5 13.2

Distribution of Population by age groups (2001)

Age Groups Rural Urban

0 – 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

Source : 2001 Census

Lower due to lack of facilities

Lower due to migration

factor

Some Comparisons

RM NOV2011 LPD 5

Family Structure

Type of Household Rural Urban

Joint 19.5% 15.2%

Nuclear without elders 60.2% 65.5%

Nuclear with elders 17.1% 15.4%

Others 3.2% 3.9%

Total (million) 138 54

Household Size

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 members and above 24.5% 17.7%

Average Family Size 5.36 5.31

Joint Family System

Breakdown

"pucca" doubled from 22% to 41%

"kuccha" houses halved (41% to 23%)

Rural Market Structure

Demographic Environment Share of rural population down from 80.1% in 1971

census to 72.2% in 2001 census. The number at 741.6 million indicates an increase of over 15%

Youth (20 to 34) 23.1% of rural population Rural literacy up from 36% in 1981 to 59% in 2001

census Rural households up by 26 million in last decade Family size has gone down marginally due to migration Joint families now breaking apart with over 77% going

nuclear in rural Concept of individualised joint families staying in the

same house but having separate kitchens

RM NOV2011 LPD 7

Population Distribution - Rural

16%

21%24%

22%14%

3%

<200 200-500 501-1000 1001-2000 2001-5000 >5000

Population Number of Villages

Less than 200 92,541

200-500 127,054

501-1,000 144,817

1,001-2,000 129,662

2,001-5,000 80,313

More than 5,000 18,758

Total number of villages 593,145

RM NOV2011 LPD 8

Source : MARTDo not include uninhabited. Total

villages including these are 638,365

Hardly any shops

in these villages

account for 50% of rural

population & 60% rural wealth

Distribution of Towns in India

Town Class Population Category Number of Towns

Literacy(%)

LPG penetration(% of HHs)

Working population(% of pop)

Class I 1 lakh & above 423 82 47 32

Class II 50,000 – 99,999 498 79 44 31

Class III 20,000 – 49,999 1,386 77 36 32

Class IV 10,000 – 19,999 1,560 76 29 34

Class V 5,000 – 9,999 1,057 76 27 35

Class VI Less than 5,000 237 80 37 34

All India 5,161 80 48 32

RM NOV2011 LPD9

Source: Census 2001

*10 lakh+ : 27, 5-10 lakh: 42, 1-5 lakh: 354

90 % of durables

purchased by rural

people from these towns

ECONOMIC ENVIRONMENT

RM NOV2011 LPD 10

Economic Environment

1995-96

2006-07

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

23.411.1

31.2

14.0

31.6

49.0

13.525.0

0.3 0.9

Very Rich

Consum-ing class

Climbers

Aspirers

Destitutes

AnnualIncome

1995-96

2006-07

Above Rs 215,000 0.3 0.9

Rs 45,001- 215,000 13.5 25.0

Rs 22,001- 45,000 31.6 49.0

Rs 16,001 - 22,000 31.2 14.0

Rs 16,000 & Below 23.4 11.1

100.0 100.0

RM NOV2011 LPD 11

All figures in %

Projections Based on 7.2% GDP Growth

• The rich and the very rich have doubled in the last ten years• The aspirers and the destitute have fallen by 50%• Increasing incomes are also changing expenditure patterns

RM NOV2011 LPD 12

Changing Rural Consumers Expenditure Pattern

Per Capita Consumption Expenditure

(Rs. Per month)

YEAR RURAL URBAN

1983 112 166

1991 281 458

2001 486 855

Source: NSSO

Consumption Expenditure – Rural

Percentage

YEAR FOOD NON-FOOD

1983 66 34

1991 63 37

2001 59 41

Source: NSSO

RM NOV2011 LPD 13

• Per capita consumption expenditure has grown 4 times in the last two decades• Expenditure on non-food items is increasing• 42 million rural households avail banking services in rural against 27 million in

urban

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Occupational Pattern

Over 40% of rural population is in cultivation followed by 35% wage earners

11% of the rural population are salary earners and nearly 5% petty shopkeepers

3.4% are artisans The cultivator’s disposable income

is highly seasonal being available at the time of harvesting

RM NOV2011 LPD 15

Infrastructure is improving rapidly

In 50 years only, 40% villages have been connected by road, in next 10 years another 30% would be connected.

More than 90% villages are electrified, though only 44% rural homes have electric connections.

Rural telephone density has gone up by 300% in the last 10 years; every 1000+ pop is connected by STD.

Social and Cultural Environment In villages inward migration is insignificant

while outward migration to urban and foreign is reasonably high

The settlement pattern is in clusters largely around caste lines

Land is the primary source of livelihood Activities limited to smaller geographic

areas resulting in higher adherence to customs and traditions

Variations between regions and sub-regions

RM NOV2011 LPD 18

Village Community Villages are self-sufficient and autonomous Each village has a council of elders

(panchayat) Panchayats have the constitutional authority

for exercising self-governance The panchayat structure has undergone

change with elections and reservation for underprivileged families

Shift from subsistence farming to commercial and mixed farming has made the village dependent on external factors

RM NOV2011 LPD 19

Caste System The rural society has a strong caste system:

Brahmins Kshatriyas (Warriors) Vaishyas (Business Class and traders) Shudras (involved in odd jobs) –

Untouchables The settlements of the lower castes are

normally on the outskirts of the village Marketers have to be sensitive to the caste

system especially in the area of communication

RM NOV2011 LPD 20

Political Environment

The panchayats were dominated by upper castes

The panchayati raj system has introduced an integrated and inclusive approach to governance in the rural sector

Villages with 5000 population or a cluster of villages with a combined population of 5000 form a panchayat

Gram Sabhas are to be organised once a quarter to bring in transperancy, accountability and achievement

The sarpanch represents the village at the tehsil/taluka/ block level

RM NOV2011 LPD 21

Tecnological Environment Triggered by three major revolutions:

Green Revolution (1967 to 1978) to bring about food self-sufficiency. Resulted in adoption of high yield seeds, fertilisers, pesticides, and farm mechanisations

White Revolution – Milk production through producer cooperatives and moving processed milk to urban-demand centres. Milk production has gone up from 17 million tonnes in 1950-51 to over 100 million tonnes in 2007-08

The NGO movement has created grassroot level assimilation of technological extensions in rural areas

NGOs have also been instrumental in providing health, homes, hygiene, child care, education and other social development programmes

RM NOV2011 LPD 22

23

GREEN REVOLUTION IN INDIA Mrs . Indira Gandhi decided to take a

major step on present Agriculture condition .

Thus "Green Revolution" was applied

to the period from 1967 to 1978 basically in

parts of Punjab and Haryana .

At this stage the Green Revolution was concern only with Wheat & Rice .

In 1965 the present government of

The introduction of high-yielding varieties of seeds after 1965 and the increased use of fertilizers and irrigation.

Provided the increase in production needed to make India self-sufficient in food grains, thus improving agriculture in India.

It introduced the new techniques and machinary to farmers

WHITE REVOLUTION

INTRODUCTION & BACKGROUND

Also known as “operation flood”. It resulted in making India the largest

producerof milk and milk products, and hence isalso called the White Revolution of India.

Operation Flood was a rural development programme started by India's National Dairy Development Board (NDDB) in 1970.

Kurien Saga the father of milk revolution India.It helped transform India into the largest milk producer of the world.

BLUE REVOLUTION Blue revolution led India to become the

second largest producer of inland fish in the world.

RM NOV2011 LPD 29

Thank you

RM NOV2011 LPD 30

Size of Rural Market

ParticularsRural

MarketCrores

FMCG products 65,000

Consumer Durables 5,000

Agri-inputs incl. tractors 45,000

2/4 wheelers 8,000

TOTAL 1,23,000

Source Francis Kanoi 2002

In the FMCG market the size of the pie is larger than the urban pie. Problems of logistics, supply and storage

Rural markets accounted for 54% of the durables sold in the country

The decadal growth rate for consumer durables is 100% in rural against 40% in urban

RM NOV2011 LPD 31

Durables Urban Rural Total (% of Rural HH)

  CTV 30.4   4.8   12.1  

  Refrigerator 33.5   3.5   12.0  

FMCGs Urban Rural Total (% of Rural HH)

  Shampoo 66.3   35.2   44.2  

  Toothpaste 82.2   44.9   55.6  

Low penetration rates in rural areas, so there are many marketing opportunities