Rural Mktg Module II & III - 601 EM

8/12/2019 Rural Mktg Module II & III - 601 EM

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Rural MarketingModule II & III


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Why Rural Marketing

is hot?

Rural Push Policy of UPA Government

Four Consecutive years of positive growthin rural GDP

40% hike in MSP of Crops over last twoyears

Farm Loan Waiver & NREGS

Growing Industry Demand for land(Overnight Wealth)

Big rise in remittances from Cities Slowing urban demand forcing corporates

to rural markets


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% Annual Change in

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


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Why Rural Marketing

is a New Discipline?

Rural Marketing is a new discipline because:-

India is a predominantly agrarian society. Western Marketing has no experience to

manage it.

Urban markets are saturating in India.

There are immense opportunities at the

bottom of the pyramid. R. M. can change rural business.

Retail boom will also expedite the growthof rural marketing.


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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 followingcriteria.

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 rural

and 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.


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What is Rural

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, both functionaland institutional, abase on technical and economic

considerations and includes pre and post harvestoperations, assembling, grading, storage, transportationand distributions.

Rural Marketing can be defined as a function thatmanages all activities involved in assessing, stimulating,and converting the purchasing power of rural consumers

into an effective demand for specific products andservices and moving these products and services to thepeople in rural areas to create satisfaction and a betterstandard of living and thereby achieving organizationalgoals.


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Scope of

Rural Marketing

The Rural Marketing Matrix

(Market)

Handicrafts, Handloom

Textiles, Leather

products (Semi-

organised)

Farm & Non-Farm

and services

(Unorganised Sector)

Rural

Brand Consumables

and durables

(Organised)

Urban

Rural Urban

(Production)


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Evolution of Rural

Marketing

Phase Origin Function Major

ProductsSource

MarketDestination

Market

I Sinceindependence

Agricultural

marketing

Agricultural

produce

Rural Urban

II Mid-Sixties Marketingof

agricultural

inputs

Agricultural

inputs

Urban Rural

III Mid-Nineties Ruralmarketing

Consumables

and durables

forconsumption

and production

Urban/ Rural Rural

IV 21stCentury


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Nature of Rural Marketing

(Transactional Vs Development Marketing)

S. No. Aspect Transactional Development

1 Concept Consumer orientation,Marketing concept

Society 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


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Taxonomy of Rural

Markets(Classification of Rural Markets)

Constituents Products Durables Services

ConsumerMarket

Individuals and

households

Consumables: Foods

products, Toiletries,

Cosmetics, Textiles

and Garments, Foot

Wear etc.

Watches, Bicycles,

Radio, T.V.,

Kitchen

appliances,

Furniture, Sewing

machines, Two

Wheelers etc.

-------

IndustrialMarket

Agricultural and

allied activities,

Poultry farming,

Fishing, Animal,

Husbandry cottage

industries, Health

Centre, School,

Cooperatives,

Panchayat officeetc.

Consumables: Seeds,

Fertilizers, Pesticides,

Animal feed, Fishnets,

Medicines,

Petrol/Diesel etc.

Tillers, Tractors,

Pump sets,

Generators,

Harvesters, Boats

etc.

-------

ServicesMarket

Individuals, House

holds, Officers,

and Production

firms

------- ------- Repairs,

Transport,

Banking, Credit,

Insurance

Health care,

Education,

Communication, Power etc.


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Whether Rural Markets

are 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.


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Rural Vs Urban

Marketing

S. No. Aspect Urban Rural

1 Philosophy Marketing and societalconcepts, Green

marketing

and relationship

marketing

Marketing and societal

concepts, development

marketing, and

relationship

marketing.2 Market

(a) Demand

(b) Competition

(c) Consumerso Location

o Literacyo Incomeo Expenditureo Needso

Innovationadoption

HighAmong units in organized

sectorConcentratedHighHighPlanned, EvenHigh levelFaster

Low

Mostly from unorganized

unitsWidely spreadLowLowSeasonal variationsLow levelSlow

3 Productso Awareness

o Conceptso Positioning

o Usage methodo Quality preferenceo

Features

High

KnownEasyEasily graspedGoodImportant

Low

Less knownDifficultDifficult to grasp

ModerateLess Important

Contd.


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Rural Vs Urban Marketing Contd.

S. No. Aspect Urban Rural

4 PriceoSensitiveoLevel desired YesMedium-High Very muchLow-Medium

5 DistributionoChannels

oTransport facilitiesoProduct availability

Wholesalers, Stockists

Retailers, Supermarkets,

Specialty stores and

authorized show roomsGoodHigh

Village shops

Shandies Haats and

Jatras

AverageLimited

6 PromotionoAdvertising

oPersonal Selling

oSales promotion

oPublicity

Print audio-visual media,

out doors, exhibitions etc.

Few languages

Door-to-door frequentlyContests, Gifts, Price

Discounts

Good opportunities

TV, Radio, Print Media to

some extent. More

languagesOccasionallyGifts, Price discountsLess


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Value Added Rural

Marketing

Ensure

increase in

customer

value

Communicat

e unique

proposition

Build special

brands for

rural customers

Provide

functional

benefits

Segment

rural

customers

Study

demographic

patterns

Study

product

ownership

patterns

Identify unique

characteristics

of rural

customer

HOW TO ADD VALUE THROUGH RURAL MARKETING

Are relevant

needs being

met?

Are the

clusters

large

enough?

No YesNo No


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Structure of Rural

Markets

Demographic Environment

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


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Education and the

Level of Demand

Rural Literacy 1981 1991 2001

% of literates 36 45 59



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Household Pattern

Family 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



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Rural Housing Pattern

House Type 1981 1991 2001

Pucca (%) 22 31 41

Semi-Pucca (%) 37 36 36

Kuccha (%) 41 33 23

Total 100 100 100



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Occupational 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


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Physical Environment

Rural and Urban Life:

Distinguishing 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.



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Settlements

(Scattered and Clustered)

Townclass

Population No. ofTowns

% 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


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Economic Environment

%H

ouseho

lds

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)


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Changing Rural

Consumers Expenditure

Pattern

Per capita consumptionexpenditure (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


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Technological

Environment


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Size 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


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II-The Rural Economy:


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The Economic Scenario

in 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 Development

Report, 2001

The HDI is a composite of

variables capturing attainments

in three dimensions of human

development, viz., economic,educational and health.


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The Changing Face of

Rural 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


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The Development Exercise:

The 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


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Transition of the

Rural 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.


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The Rural Economic

Structure

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


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Income Disparity

Rural-Urban Income Comparison

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

Rural Urban Rural Urban Rural Urban Rural Urban

AverageConsumption

Expenditure

(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


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The Rural Infrastructure

Road 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


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Telephone 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


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Why Agriculture Growth

has been slow & tardy?

1. Low priority to Agriculture

2. Subsistence Orientation of Agriculture

3. Failure of Land Reforms

4. Low size of operational Landholdings

5. Inadequate Food Supplies

6. Sluggish Infrastructural Growth

7. Disconnect between Research &Farmers

8. Insufficient Availability of Credit

9. Inadequate Inputs

10. Slowdown of Rural Industrialization


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Policy Interventions

Required

1. Thrust on Land Reforms

2. Strengthening the Panchayati Raj Institutions

3. Financial Inclusion (Innovative Credit Delivery)

4. Development of Rural Infrastructure

5. Expansion of Kisan Credit Card Scheme

6. Protection of Farmers from natural calamities

7. Extensive use of ICT

8. Higher Investment in Agriculture & Rural

Development.9. Focus on High Value Crops & Non-farm Incomes.

10. Bridging the Gap Between Agri-Research &

Farming.

Documents

Rural Mktg Module II & III - 601 EM