Rural Marketing-Mod2 (1)

8/6/2019 Rural Marketing-Mod2 (1)

1/50

Rural Marketing EnvironmentRural Marketing Environment


2/50

Why Rural MarketingWhy Rural Marketing

is a New Discipline?is a New Discipline?

Rural Marketing is a new discipline because:-

India is a predominantly agrarian society.

Western Marketing has no experience tomanage it.

Urban markets are saturating in India.

There are immense opportunities at thebottom of the pyramid.

R. M. can change rural business.

Retail boom will also expedite the growthof rural marketing.


3/50

What is Rural?What is Rural?Definitions of Rural

Census Village: Basic Unit for rural areas is the revenue village, mightcomprise several hamlets demarcated by physical boundaries.

Town: Towns are actually rural areas but satisfy the following criteria. Minimum Population >=5,000 Population density>= 400/ sq. km. 75% of the male population engaged in non- agri activity.

RBI Locations with population up to 10,000 will be considered as ruraland 10,000 to 100,000 as semi-urban.

Nabard All locations irrespective of villages or town, up to a population of10,000 will be considered as rural.

PlanningCommission

Towns with population up to 15,000 are considered as rural.

Sahara Locations having shops/ commercials establishments up to 10,000are treated as rural.

LG Electronics The rural and semi urban area is defined as all other than the sevenmetros.


4/50

What is RuralWhat is Rural

Marketing?Marketing?

According to the National Commission on Agriculture:Rural Marketing is a process which starts with a decisionto produce a saleable farm commodity and it involves allthe aspects of market structure or system, bothfunctional and institutional, abase on technical andeconomic considerations and includes pre and postharvest operations, assembling, grading, storage,

transportation and distributions.

Rural Marketing can be defined as a function thatmanages all activities involved in assessing, stimulating,and converting the purchasing power of rural consumersinto an effective demand for specific products andservices and moving these products and services to thepeople in rural areas to create satisfaction and a better

standard of living and thereby achieving organizationalgoals.

-Pradeep Kashyap


5/50

Why Rural MarketingWhy Rural Marketing

is hot?is hot?

Rural Push Policy of UPA GovernmentRural Push Policy of UPA Government Four Consecutive years of positive growthFour Consecutive years of positive growth

in rural GDPin rural GDP

40% hike in MSP40% hike in MSP( minimum supportprices)of Crops over last two yearsof Crops over last two years Farm Loan Waiver & NREGSFarm Loan Waiver & NREGS Growing Industry Demand for landGrowing Industry Demand for land

(Overnight Wealth)(Overnight Wealth)

Big rise in remittances from CitiesBig rise in remittances from Cities Slowing urban demand forcing corporateSlowing urban demand forcing corporate

to rural marketsto rural markets


6/50

NREGSNREGS The Mahatma Gandhi National Rural Employment

Guarantee Act aims at enhancing the livelihoodsecurity of people in rural areas by guaranteeinghundred days of wage-employment in a financialyear to a rural household whose adult membersvolunteer to do unskilled manual work.

Website:

nrega.nic.in

Budget is likely to make a provision of Rs 64,000crore (Rs 640 billion) for the NREGS in 2011-12,against Rs 40,100 crore (Rs 401 billion) in thecurrent fiscal.

That is a 60% rise

The huge increase in outlay will be mainly onaccount of two factors:

Linking wages under the scheme with the consumerprice index for agriculture labour.

A marginal increase in the number of working days

guaranteed under the programme.


7/50

Farm Loan WaiverFarm Loan Waiver

India raised the net amount available for theambitious farmer loan waiver scheme to Rs.716.8billion from the Rs.600 billion in 2008

Against the original estimate of 30 million smalland marginal farmers and 10 million others whowere to benefit from the scheme, the currentestimates are 36.9 million and 5.97 million,respectively, the finance minister said

In the case of a small and marginal farmer, theentire eligible amount would be waived, while forother farmers, there would be a one-time

settlement scheme and a 25 percent rebate of theeligible amount would be extended.


8/50

Scope ofScope of

Rural MarketingRural Marketing

The Rural Marketing MatrixThe Rural Marketing Matrix

(Mar

ke

t)

Handicrafts, Handloom

Textiles, Leather

products (Semi-

organized)

Farm & Non-Farm

and services

(Unorganized Sector)

Rural

Brand Consumables

and durables

(Organized)

Urban

Rural Urban

(Production)


9/50

Evolution of RuralEvolution of Rural

MarketingMarketing

Phase Origin Function Major Products

SourceMarket

DestinationMarket

I Sinceindependence

Agriculturalmarketing

Agriculturalproduce

Rural Urban

II Mid-Sixties Marketingofagriculturalinputs

Agriculturalinputs

Urban Rural

III Mid-Nineties Ruralmarketing

Consumablesand durables

forconsumptionand production

Urban/ Rural Rural

IV 21st Century


10/50

Nature of RuralNature of Rural

MarketingMarketing

(Transactional Vs Development Marketing)(Transactional Vs Development Marketing)S. No. Aspect Transactional Development1 Concept Consumer orientation,

Marketing conceptSociety orientation, societal concept

2 Role Stimulating and conversionalmarketing

Catalytic and transformation agent

3 Focus Product-market fit Social change

4 Key task Product innovations andcommunications

Social Innovations and communications.

5 Nature of activity Commercial Socio-cultural, economic

6 Participants Corporate enterprises, Sellers Government, voluntary agencies, corporateenterprises, benefactors

7 Offer Products and services Development Projects/Schemes/Programmes

8 Target group Buyers Beneficiaries and buyers

9 Communication Functional Development

10 Goal Profits Customer satisfactionBrand image

Market Development Corporate Image

11 Time-Frame Short-Medium Medium-Long

12 Motivation Profit-motive Business policy Service-motive Ideological or Public policy


11/50

% Annual Change% Annual Change

in Rural GDPin Rural GDP

Year Change

2003-04 10%

2004-05 -6.7%

2005-06 5.8%

2006-07 4%

2007-08 4.9%

2008-09(Estimates)

2.6%

51%

Rs. 13,65,000

Crore

49%

Rs 13,17,018

Crore


12/50

Taxonomy of RuralTaxonomy of Rural

MarketsMarkets(Classification of Rural Markets(Classification of Rural Markets))

Constituents Products Durables Services

ConsumerMarket

Individuals andhouseholds

Consumables: Foodsproducts, Toiletries,Cosmetics, Textiles andGarments, Foot Wearetc.

Watches, Bicycles,Radio, T.V., Kitchenappliances,Furniture, Sewingmachines, TwoWheelers etc.

-------

IndustrialMarket

Agricultural andallied activities,Poultry farming,Fishing, Animal,Husbandry cottageindustries, HealthCentre, School,Cooperatives,Panchayat office etc.

Consumables: Seeds,Fertilizers, Pesticides,Animal feed, Fishnets,Medicines, Petrol/Dieseletc.

Tillers, Tractors,Pump sets,Generators,Harvesters, Boatsetc.

-------

ServicesMarket

Individuals, Households, Officers, andProduction firms

------- ------- Repairs,Transport,Banking, Credit,Insurance Healthcare, Education,Communication,Power etc.


13/50

Are Rural MarketsAre Rural Markets

Attractive?Attractive?

Large population

Rising prosperity

Growth in consumption Life-style changes

Life-cycle advantages

Market growth rates higher than Urban

Rural marketing is not expensive

Remoteness is no longer a problem.


14/50

Rural Vs UrbanRural Vs Urban

MarketingMarketingS. No. Aspect Urban Rural

1 Philosophy Marketing and societalconcepts, Greenmarketingand relationshipmarketing

Marketing and societalconcepts, developmentmarketing, andrelationshipmarketing.

2 Market(a) Demand

(b) Competition

(c) Consumerso Locationo Literacyo Incomeo Expenditureo Needso Innovation

adoption

High

Among units in organizedsector

ConcentratedHighHighPlanned, EvenHigh levelFaster

Low

Mostly from unorganizedunits

Widely spreadLowLowSeasonal variationsLow levelSlow

3 Productso Awarenesso Conceptso Positioningo Usage methodo Quality preferenceo Features

HighKnownEasyEasily graspedGoodImportant

LowLess knownDifficultDifficult to graspModerateLess Important

Contd.


15/50

Rural Vs Urban Marketing Rural Vs Urban Marketing

Contd.Contd.

S. No. Aspect Urban Rural

4 Priceo Sensitiveo Level desired

YesMedium-High

Very muchLow-Medium

5 Distributiono Channels

o Transport facilitieso Product availability

Wholesalers, StockistsRetailers, Supermarkets,

Specialty stores andauthorized show rooms

GoodHigh

Village shopsShandies Haats and

Jatras

AverageLimited

6 Promotiono Advertising

o Personal Selling

o Sales promotion

o Publicity

Print audio-visual media,

out doors, exhibitions etc.Few languages

Door-to-door frequently

Contests, Gifts, PriceDiscountsGood opportunities

TV, Radio, Print Media to

some extent. Morelanguages

Occasionally

Gifts, Price discounts

Less


16/50

Value Added RuralValue Added Rural

MarketingMarketing

Ensure

increase in

customervalue

Communicat

e uniqueproposition

Build special

brands forrural customers

Provide

functionalbenefits

Segment

ruralcustomers

Study

demographicpatterns

Study

productownership

patterns

Identify unique

characteristics ofrural customer

HOW TO ADD VALUE THROUGH RURAL MARKETING

Are relevant

needs beingmet?

Are the

clusters large

enough?

No YesNo No


17/50

Rural Marketing EnvironmentRural Marketing Environment

& Rural Economy& Rural Economy


18/50

IntroductionIntroduction

Rural marketing environment leads the scope of manyRural marketing environment leads the scope of manysystem. The points for improving scope aresystem. The points for improving scope are

Due importance to co-operative institutionsDue importance to co-operative institutions

Coordinating with procurement agenciesCoordinating with procurement agencies

Demand side management-Demand side management- DSM is the implementation of thosemeasures that help the customers to use electricity more efficiency and itdoing so reduce the customers to use the utility costs.

Price Policy: Based on computerized data, price toPrice Policy: Based on computerized data, price to

consumers can be calculatedconsumers can be calculated

Market studies and market intelligence: The detailsMarket studies and market intelligence: The details

like daily arrivals, quality, market surpluses averagelike daily arrivals, quality, market surpluses average

prices and demand for different varieties of data canprices and demand for different varieties of data canbe collected for strategic decision-making.be collected for strategic decision-making.

Education to farmersEducation to farmers

f l


19/50

Structure of RuralStructure of Rural

MarketsMarkets

DemographicDemographicEnvironmentEnvironment

1971 1981 1991 2001

Total population (million) 548.2 683.3 848.3 1026.9

Rural population (million) 524.0 628.8 741.6

Rural Proportion to total population (%) 80.1 76.7 74.3 72.2

Decadal Variation - 19.8 16.7 15.2

Source: Census of India 2001

Forms major portion of Indian population

70% of Indian people reside in rural areas

School children and yound adults( between 20 and 35years) define the consumption patterns of consumables

and lifestyle products


20/50

Education and theEducation and the

Level of DemandLevel of Demand

Rural Literacy 1981 1991 2001

% of literates 36 45 59



21/50

Household PatternHousehold Pattern

Family StructureFamily Structure

Particulars 1991 2001

Rural Urban Total Rural Urban Total

Households (Million) 112 40 152 138 54 192

Family Size (Number) 5.55 5.32 5.36 5.31



22/50

Rural Housing PatternRural Housing Pattern

House Type 1981 1991 2001

Pucca (%) 22 31 41

Semi-Pucca (%) 37 36 36

Kuccha (%) 41 33 23

Total 100 100 100



23/50

Occupational PatternOccupational Pattern

Distribution of Households by Occupation of theHead, 1999-2000

Heads Occupation Distribution of households (%)

Urban Rural All

Housewife 0.84 1.01 0.96

Cultivator 3.45 40.86 29.99

Wage earner 20.93 35.28 31.12

Salary 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 1.40

Other 3.85 1.98 2.52

Total 100.00 100.00 100.00

Source: NCAER 2002


24/50

Physical EnvironmentPhysical Environment

Rural and Urban Life:Rural and Urban Life:

Distinguishing FeaturesDistinguishing Features

Population Density (Urban + Rural) (Per Sq. Km.)

1971 1981 1991 2001

Popu. Density (Total) 177 216 267 312

Rural 171 214 253

Distribution of Towns and Villages

1991 2001

No. of Towns 3,697 5,161

No. of inhabited Villages 580,779 593,154

Total no. of Villages 634,321* 638,588*

* The total number of Villages also includes non-inhabited Villages.



25/50

Villages comprise of homestead land(abadi) and cultivated land.

Settlement pattern is either in cluster inthe abadi or in individualized land-holdings or a combination of the two.

Houses found according ot kinship, caste,

religious groups etc

Sometimes the entire villages classifiedon the basis of dominant caste groups


26/50

SettlementsSettlements

(Scattered and Clustered)(Scattered and Clustered)

Townclass

Population No. of Towns

% of totalTowns

% ofPopulation

DecadalGrowth

(1991-2001)

Class-I 1 Lakh and above 423 8.2 61.5 24

Class-II 50,000 99,999 498 9.6 12.3 15

Class-III 20,000 49,999 1,386 26.9 15.0 16

Class-IV 10,000 19,999 1,560 30.2 8.1 7

Class-V 05,000 09,999 1,057 20.5 2.8 8

Class-VI Less than 5,000 237 4.6 0.3 -22

Total 5,161 100.0 100.0

* 10 Lakh + : 27; 5-10 Lakh: 42; 1-5 Lakh:354

Source: Census 2001


27/50

Economic EnvironmentEconomic Environment

%H

ouseholds

80 --

70 --

60 --

50 --

40 --

30--

20--

10--

0--

23.9

8.8

39.5

42.7 42.5

67.3

17.8

36.9

20.6

1989 -90 2001 -02 2009 -10

Source: Market Information Survey of Households, NCAER

_________ Low (Rs.90k p.a)


28/50

Changing RuralChanging Rural

Consumers ExpenditureConsumers Expenditure

PatternPattern

Per capita consumption expenditure(Rs. Per month)

Rural Urban

1983 112 166

1991 281 458

2001 486 855

Source: NSSO

Composition of rural per capitaconsumption expenditure

Food Non-Food

1983 66 34

1991 63 37

2001 59 41

Source: NSSO


29/50

TechnologicalTechnological

EnvironmentEnvironment


30/50

Size of Rural MarketSize of Rural Market

Estimated Annual Size : Rural Market

FMCG Rs. 65000 Crore

Durables Rs. 5000 Crore

Agri-inputs (incl. tractors) Rs. 45000 Crore

2/4 Wheelers Rs. 8000 Crore

Total Rs. 1,23,000 Crore

Source: Francis Kanoi 2002


31/50

II-The Rural Economy:II-The Rural Economy:


32/50

The Economic ScenarioThe Economic Scenario

in Rural Indiain Rural India

Human Development Index(HDI)

Year Rural Urban Total

1981 0.26 0.44 0.30

1991 0.34 0.51 0.38

2001 ------ ------ 0.47

Source: Human DevelopmentReport, 2001

The HDI is a composite of

variables capturing attainments in

three dimensions of human

development, viz., economic,educational and health.


33/50

The Changing Face ofThe Changing Face of

Rural DevelopmentRural Development

Population below the poverty line (Rural)

Period No. of Persons

(Million)

% of Persons Poverty line

(Rs.)

1983 252 46 89.5

1993-94 244 37 206

1999-2000 193 27 328

Source: Human Development Report, 2001


34/50

The Development Exercise:The Development Exercise:

The Five-Year PlansThe Five-Year Plans

Sectoral allocations during the five-year plans (Rs. Billion)

Head ofDevelopment

SeventhPlan

Eighth Plan Ninth Plan Tenth Plan

(1985-90) (1992-97) (1997-2002) (2002-07)

1. Agriculture 105 225 372 589

2. Rural Development 89 344 890 1,219

Source: Planning Commission 2002

Percentage share of the different sectors in GDP (at 1993-94 prices)

Year Primary

(Agri and Allied)

Secondary

(Manufacturing)

Tertiary

(Services)

Total

1950-51 57.2 14.8 28.0 100.0

1980-81 39.7 23.7 36.6 100.0

2001-02 23.9 26.6 49.5 100.0

Source: National Account Statistics, 1951-2001


35/50

Transition of theTransition of the

Rural EconomyRural Economy

1. Food grain crops

2. On-land activities

3. Farm activities

1. Non-food grain crops, cash

crops

2. Off-land allied activities like

livestock and fisheries

3. Non-farm activities, including

manufacturing and services.


36/50

The Rural EconomicThe Rural Economic

StructureStructure

Farm Sector(Agri & Allied)

Agriculture

Animal Husbandry(Dairy, Goat, Poultry)

Horticulture

Forestry

Fishing

Rural Economy

Non-Farm Sector(Formal & Informal Sector)

Rural Industries Rural Services

Agro Processing(Sugarcane, Oilseed etc)

Retailing & Trading

Manufacturing(Handloom, Handicrafts etc)

Community & SocialService

Mining & Quarrying Transport & Storage

Construction Communication


37/50

Income DisparityIncome Disparity

Rural-Urban Income Comparison

Sector Bottom (30%) Middle (40%) Top (30%) All Classes

Rural Urban Rural Urban Rural Urban Rural Urban

AverageConsumptionExpenditure(Rs./Annum)

3,270 4,580 5,110 8,150 9,400 18,720 5,830 10,260

Population(Million)

223 86 297 114 223 86 742 285

Source: NSS 55th Round (1999-2000), Census 2001


38/50

The Rural InfrastructureThe Rural Infrastructure

Road ConnectivityRoad Connectivity

Road Connectivity at the Village level (%)

Populationless than

1,000

Populationbetween

1,000 and1,500

Populationmore than

1991-92 36.52 72.32 89.82

1994-95 37.45 76.54 91.72

1996-97 49.18 74.58 78.04

Source: National Human Development Report 2001


39/50

Telephone ServicesTelephone Services

Telecom Density (Phone per 100)

2000 2005 Increase

Urban 8.2 26.2 220%

Rural 0.7 1.74 148%

All 2.9 9.08 213%

Source : Telecom Regulatory Authorityof India Report, 2005


40/50

Why Agriculture GrowthWhy Agriculture Growth

has been slow & tardy?has been slow & tardy?

1.1. Low priority to AgricultureLow priority to Agriculture

2.2. Subsistence Orientation of AgricultureSubsistence Orientation of Agriculture

3.3. Failure of Land ReformsFailure of Land Reforms

4.4. Low size of operational LandholdingsLow size of operational Landholdings

5.5. Inadequate Food SuppliesInadequate Food Supplies

6.6. Sluggish Infrastructural GrowthSluggish Infrastructural Growth

7.7. Disconnect between Research &Disconnect between Research &FarmersFarmers

8.8. Insufficient Availability of CreditInsufficient Availability of Credit

9.9. Inadequate InputsInadequate Inputs

10.10. Slowdown of Rural IndustrializationSlowdown of Rural Industrialization


41/50

Policy InterventionsPolicy Interventions

RequiredRequired

1.1. Thrust on Land ReformsThrust on Land Reforms

2.2. Strengthening the Panchayat Raj InstitutionsStrengthening the Panchayat Raj Institutions

3.3. Financial Inclusion (Innovative Credit Delivery)Financial Inclusion (Innovative Credit Delivery)

4.4. Development of Rural InfrastructureDevelopment of Rural Infrastructure

5.5. Expansion of Kissan Credit Card SchemeExpansion of Kissan Credit Card Scheme

6.6. Protection of Farmers from natural calamitiesProtection of Farmers from natural calamities

7.7. Extensive use ofExtensive use ofICT(ICT(information communicationinformation communication

technologies )technologies )

8.8. Higher Investment in Agriculture & Rural Development.Higher Investment in Agriculture & Rural Development.

9.9. Focus on High Value Crops & Non-farm Incomes.Focus on High Value Crops & Non-farm Incomes.

10.10. Bridging the Gap Between Agri-Research & FarmingBridging the Gap Between Agri-Research & Farming..


42/50


43/50

Rural electrification- central government credited anorganisation called Rural Electrification Corporation for

financing electrification projects. Result is 88% of the villageshave electricity. 100% to be achieved through PMGY scheme by

2010.

Rural communication- road network( goldenquadrilateral project is on, a central sponsored scheme PMGSY is

launched which aims to provide connectivity to all rural areas,

rail network, cinema houses, television, postal system

Infrastructural facilities


44/50

Rural Credit

InstitutionsPrimary Agricultural Credit Cooperative Societies 1 lakh

Regional Rural Banks 196

Objective is developing the rural economy through the promotion of

agriculture, trade and commerce and industry and by extending credit,

particularly to small and marginal farmers, agricultural labourers and

small entrepreneurs.

SARDB- 90% loans provided to buy tractors

Scheduled Commercial Banks

Are those banks that are included in the second schedule of the

Reserve Bank of India Act, 1934. Out of 65,413 branches of

scheduled commercial banks, 37,098 are in rural areas


45/50

Cooperative Banks

There is a three-tier pyramidal cooperative credit

structure in the rural cooperative banking sector,

with the state cooperative bank (SCB) at the apex

(state) level, the district central cooperative bank

(DCCB) at the intermediate (district) level and the

primary agricultural cooperative society (PACS) at

the grass-roots (village) level, essentially to ensure

flows of short-term credit for production purposes.


46/50

Print Media

Reach in rural areas is very poor

Hardly 5% of news paper copies

reach rural areas

Ex: Samyukta Karnataka in

Karnataka, Malayala Manorama in

Kerala , Lok Satta in Maharastra etc

Rural Area


47/50

Rural Area

requirements

Rural house hold consumption

goods

Hosehold durable goods

Construction materials

Consumable Agricultural inputs

Transportation EquipmentsServices

Problems in Rural


48/50

Problems in Rural

Marketing

Underdeveloped people andunderdeveloped market

Lack of proper physicalcommunication facilities Media for rural communication Many languages and dialects

Vastness and Uneven Spread Low per capita incomes


49/50

Logistics, Storage, Handling and

Transport

Market Organization and Staff

Product Positioning

Hierarchy of markets

Low levels of literacy

Seasonal demand


50/50

Rural market Index

The indicators considered for Ruralmarket Index proposed by Thompsonare

Area of the district in sq kms Demographics Occupation pattern

Agriculture related data Agricultural inputs data Rural electrification data Commercial Bank data

Rural Marketing-Mod2 (1)

Documents

Transcript of Rural Marketing-Mod2 (1)