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Introduction to Rural

MarketingAnil Kanwar

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Why should we do this course?

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

lives in her villages

Urban markets are crowded and saturated

The understanding of rural is diffused and sometimes

confusing

Is rural marketing different from urban marketing ?

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Session Coverage

Rural India Some definitional issues

Phases/ stages in rural marketing

Scope of rural marketing

How is rural India changing?

Schools of thought- Approaches to Rural Markets

Strategic Issues & Directions in rural marketing

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Defining Rural India

Organisation Definition Limitations

NSSO (Census) Population density < 400 / Sq Km

75 percent of the male workingpopulation is engaged in agriculture

No Municipal corporation / board

rural not defined

PlanningCommission

Towns upto 15,000 population areconsidered rural

Towncharacteristics notdefined

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Contd

LG Electronics All places other than the7 metros

Only clarifies what arethe cities

NABARD All locations with apopulation upto 10, 000considered rural

Village & towncharacteristics notdefined

Sahara Commercialestablishments locatedin areas servicing lessthan 1000 population

Populationcharacteristics unknown

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

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Defining Rural Marketing

National Commission onAgriculture

NGOs Corporate RuralMarketing Definition

Decisions to producesaleable farm

commodities involving

all the aspects of themarket system orstructure, bothfunctional and

institutional, based ontechnical & economic

considerations and

includes the pre & postharvest operations.

Marketing productsproduced in rural areas

to urban areas

Marketing productsproduced in rural areas

in rural markets

Function that managesall activities involved inassessing, stimulating

and converting thepurchasing power ofrural consumers intoeffective demand forspecific products and

services to createsatisfaction & a better

standard of living forachieving organisational

goals.

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Phases in Rural Marketing

Sr. No Time Frame Key Events & Trends

1 Phase One( Pre 1960s) Marketing ruralproducts in rural andurban areas

Agricultural inputs in

rural areasAgriculturalmarketing

Farming methods wereprimitive andmechanisation was low

Markets unorganised

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Contd

2 Phase Two ( 1960s to 1990s) Green Revolution

Companies likeMahindra and Mahindra,Sri Ram Fertilisers andIFFCO emerge

Rural products werealso marketed throughagencies like KVIC

3 Phase Three( 1990s to Present) Demand forconsumables anddurables rise

Companies find growthin urban marketsstagnating or falling

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Scope of Rural Marketing

Keenly debated topic

Definitions based on organisational/ institutional vision,

mission & goals

Need for a comprehensive and modular understanding

Rural Marketing is a work in progress

Multi disciplinary approach is necessary for sharper

understanding

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Domain of Rural Marketing

To

Rural Urban

From

Rural

Urban

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

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Scope of Rural Marketing

Domain ofRuralMarketing

Dimensions of the transaction

Participants Products/services

Modalities Norms Outcomes

Rural toRural

Rural to

Urban

Urban toRural

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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

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Transitions In Rural India

Food Grain Crops

On land activities

Farm Activities

Nonfood, cash crops

Livestock & fisheries

Manufacturing &services

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Rural Employment Patterns( Male)

Sector Year 1987 ( % share inemployment)

Year -2004 ( % share inemployment)

Agriculture 75 67

Transport &Communication

2 8

Trade & Hotels 5 7

Construction 4 7

Manufacturing 7 8

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

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Rural India Population Trends

1971 1981 1991 2001

TotalPopulation (in

million)

548.2 683.3 848.3 1026.9

RuralPopulation (in

million)

524.0 628.8 741.6

As a proportionof total

population

76.7 74.3 72.2

DecadalVariation

19.8 16.7 15.2

Source: Census 2001

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Contd

The joint family system is being replaced by the nuclear

family system

The occupational pattern shows a predominance ofcultivators and wage earners

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

according to NCAER studies (2002)

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Rural Settlement & Habitation Trends

Key findings from 2001 census

Population density 253/ sq kilometer and total number of

villages is 638, 588

Villages having less than 500 population are falling

Villages having 2000 + population most prosperous

What are the implications of these trends?

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Contd

Size of villages/ habitations are changing

Role & influence of towns is changing

Social interaction is a mix of rural and urban

Lets look at some key trends in detail

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Rural Income Trends

Annual Income (at 1998-99

prices)

Income Class 1989-90( %Households)

1998-99 ( %Households)

1,40,000 High 0.5 3.0

Source: National Council for Applied Economic Research, 2000

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Rural Marketing- Schools of Thought

Determinist School

Activist School

What is the right approach?

Dependent on level of market development, stage in the

PLC and access to resources

Amul & ITC prominent examples

No water-tight compartmentalisation

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Strategic Issues & Directions in RuralMarketing

Evolutionary Vs revolutionary changes in rural markets

Role of state & market forces

ICT based interventions

Partnership innovations

Developmental role of rural marketing

Scalability & replication of rural marketing programmes

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ICT in Rural Markets

Category Government Private NGO/ PPP

InfrastructureProvision

NIC N- Logue Simputer

Rural Services Bhoomi(

Karnataka)

Sewa

Agri Marketing Agmarknet E- Choupal OzhwarSandhiyes

Agri extension Universities EID Parry

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Close of Session

Thank You