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Introduction to Rural
     Marketing
          Session – I

 Xavier Institute of Management,
          Bhubaneswar
Why should we do this course?
   Agriculture’s 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” ?
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
Defining Rural India
Organisation                  Definition                    Limitations
NSSO                                                     rural not defined
( Census)       Population density < 400 / Sq Km
                75 percent of the male working
               population is engaged in agriculture
               No Municipal corporation / board




Planning        Towns upto 15,000 population are     Town characteristics
Commission     considered rural                       not defined
Cont’d
LG Electronics            All places other than the   Only clarifies what are
                          7 metros                    the cities

NABARD                    All locations with a        Village & town
                          population upto 10, 000     characteristics not
                          considered “ rural”         defined

Sahara                    Commercial                  Population
                          establishments located      characteristics unknown
                          in areas servicing less
                          than 1000 population

Source: The Rural Marketing Book- Text & Practice, Kashyap. P and Raut. S
( 2007)
Defining Rural Marketing
National Commission on             NGOs                 Corporate Rural
      Agriculture                                     Marketing Definition
   Decisions to produce      Marketing products       Function that manages
       saleable farm       produced in rural areas   all activities involved in
commodities involving          to urban areas         assessing, stimulating
  all the aspects of the                                and converting the
    market system or                                   purchasing power of
                             Marketing products
      structure, both                                  rural consumers into
                           produced in rural areas
      functional and                                   effective demand for
                              in rural markets
 institutional, based on                               specific products and
 technical & economic                                    services to create
   considerations and                                 satisfaction & a better
includes the pre & post                                standard of living for
  harvest operations.                                achieving organisational
                                                               goals.
Phases in Rural Marketing
Sr. No            Time Frame           Key Events & Trends
  1          Phase One( Pre 1960’s)   Marketing  rural
                                      products in rural and
                                      urban areas
                                      Agricultural inputs in
                                      rural areas
                                      “Agricultural
                                      marketing”
                                      Farming methods were
                                      primitive and
                                      mechanisation was low
                                      Markets unorganised
Cont’d
2    Phase Two ( 1960s to 1990s)     Green Revolution
                                     Companies like
                                     Mahindra and Mahindra,
                                     Sri Ram Fertilisers and
                                     IFFCO emerge
                                     Rural products were
                                     also marketed through
                                     agencies like KVIC

3   Phase Three( 1990s to Present)   Demand   for
                                     consumables and
                                     durables rise
                                     Companies find growth
                                     in urban markets
                                     stagnating or falling
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
Domain of Rural Marketing
                                       To

                          Rural                    Urban



         Rural

From


        Urban



Source: M. Jha, Rural Marketing- Some Conceptual Issues, EPW, 1988
Scope of Rural Marketing
Domain of                     Dimensions of the transaction
Rural
Marketing

             Participants   Products/    Modalities     Norms   Outcomes
                             services


 Rural to
  Rural


 Rural to
 Urban


Urban to
 Rural
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
Transitions In Rural India


                         •Non –food, cash crops
•   Food Grain Crops
                         •Livestock & fisheries
•   On land activities
                         •Manufacturing &
•   Farm Activities      services
Rural Employment Patterns( Male)
   Sector           Year – 1987 ( % share in       Year -2004 ( % share in
                          employment)                   employment)

 Agriculture                   75                            67

 Transport &                   2                             8
Communication
Trade & Hotels                 5                             7


Construction                   4                             7


Manufacturing                  7                             8



         Source: NSSO data, Mckinsey Global Institute Study, 2004-05
Rural India – Population Trends

                  1971           1981           1991    2001

    Total         548.2          683.3          848.3   1026.9
Population (in
  million)
    Rural                        524.0          628.8   741.6
Population (in
   million)
As a proportion                  76.7           74.3     72.2
    of total
  population

   Decadal                       19.8           16.7     15.2
  Variation
                          Source: Census 2001
Cont’d
   The joint family system is being replaced by the nuclear
    family system
   The occupational pattern shows a predominance of
    cultivators and wage earners
   Cultivators( 40.86 %) and Wage Earners( 35.28 %)
    according to NCAER studies (2002)
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?
Cont’d
   Size of villages/ habitations are changing
   Role & influence of towns is changing
   Social interaction is a mix of rural and urban
   Let’s look at some key trends in detail
Rural Income Trends
 Annual Income      Income Class    1989-90( %        1998-99 ( %
  ( at 1998-99                      Households)       Households)
     prices)
   <= 35,000            Low             67.3             47.9

 35,001- 70,000     Low Middle          23.9             34.8


70,001 – 1,05,000     Middle            7.1              10.4


   1,05,001-        Upper Middle         1.2              3.9
   1,40,000

   > 1,40,000          High             0.5               3.0



       Source: National Council for Applied Economic Research, 2000
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
Strategic Issues & Directions in Rural
              Marketing
   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
ICT in Rural Markets
  Category         Government        Private     NGO/ PPP

Infrastructure        NIC           N- Logue     Simputer
  Provision

Rural Services   Bhoomi( Karnatak                  Sewa
                       a)

Agri Marketing     Agmarknet        E- Choupal    Ozhwar
                                                 Sandhiyes

Agri extension     Universities     EID Parry
Close of Session




 Thank You

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Mkt mgt rural marketing

  • 1. Introduction to Rural Marketing Session – I Xavier Institute of Management, Bhubaneswar
  • 2. Why should we do this course?  Agriculture’s 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” ?
  • 3. 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
  • 4. Defining Rural India Organisation Definition Limitations NSSO  rural not defined ( Census)  Population density < 400 / Sq Km  75 percent of the male working population is engaged in agriculture No Municipal corporation / board Planning  Towns upto 15,000 population are Town characteristics Commission considered rural not defined
  • 5. Cont’d LG Electronics All places other than the Only clarifies what are 7 metros the cities NABARD All locations with a Village & town population upto 10, 000 characteristics not considered “ rural” defined Sahara Commercial Population establishments located characteristics unknown in areas servicing less than 1000 population Source: The Rural Marketing Book- Text & Practice, Kashyap. P and Raut. S ( 2007)
  • 6. Defining Rural Marketing National Commission on NGOs Corporate Rural Agriculture Marketing Definition Decisions to produce Marketing products Function that manages saleable farm produced in rural areas all activities involved in commodities involving to urban areas assessing, stimulating all the aspects of the and converting the market system or purchasing power of Marketing products structure, both rural consumers into produced in rural areas functional and effective demand for in rural markets institutional, based on specific products and technical & economic services to create considerations and satisfaction & a better includes the pre & post standard of living for harvest operations. achieving organisational goals.
  • 7. Phases in Rural Marketing Sr. No Time Frame Key Events & Trends 1 Phase One( Pre 1960’s) Marketing rural products in rural and urban areas Agricultural inputs in rural areas “Agricultural marketing” Farming methods were primitive and mechanisation was low Markets unorganised
  • 8. Cont’d 2 Phase Two ( 1960s to 1990s) Green Revolution Companies like Mahindra and Mahindra, Sri Ram Fertilisers and IFFCO emerge Rural products were also marketed through agencies like KVIC 3 Phase Three( 1990s to Present) Demand for consumables and durables rise Companies find growth in urban markets stagnating or falling
  • 9. 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
  • 10. Domain of Rural Marketing To Rural Urban Rural From Urban Source: M. Jha, Rural Marketing- Some Conceptual Issues, EPW, 1988
  • 11. Scope of Rural Marketing Domain of Dimensions of the transaction Rural Marketing Participants Products/ Modalities Norms Outcomes services Rural to Rural Rural to Urban Urban to Rural
  • 12. 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
  • 13. Transitions In Rural India •Non –food, cash crops • Food Grain Crops •Livestock & fisheries • On land activities •Manufacturing & • Farm Activities services
  • 14. Rural Employment Patterns( Male) Sector Year – 1987 ( % share in Year -2004 ( % share in employment) employment) Agriculture 75 67 Transport & 2 8 Communication Trade & Hotels 5 7 Construction 4 7 Manufacturing 7 8 Source: NSSO data, Mckinsey Global Institute Study, 2004-05
  • 15. Rural India – Population Trends 1971 1981 1991 2001 Total 548.2 683.3 848.3 1026.9 Population (in million) Rural 524.0 628.8 741.6 Population (in million) As a proportion 76.7 74.3 72.2 of total population Decadal 19.8 16.7 15.2 Variation Source: Census 2001
  • 16. Cont’d  The joint family system is being replaced by the nuclear family system  The occupational pattern shows a predominance of cultivators and wage earners  Cultivators( 40.86 %) and Wage Earners( 35.28 %) according to NCAER studies (2002)
  • 17. 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?
  • 18. Cont’d  Size of villages/ habitations are changing  Role & influence of towns is changing  Social interaction is a mix of rural and urban  Let’s look at some key trends in detail
  • 19. Rural Income Trends Annual Income Income Class 1989-90( % 1998-99 ( % ( at 1998-99 Households) Households) prices) <= 35,000 Low 67.3 47.9 35,001- 70,000 Low Middle 23.9 34.8 70,001 – 1,05,000 Middle 7.1 10.4 1,05,001- Upper Middle 1.2 3.9 1,40,000 > 1,40,000 High 0.5 3.0 Source: National Council for Applied Economic Research, 2000
  • 20. 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
  • 21. Strategic Issues & Directions in Rural Marketing  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
  • 22. ICT in Rural Markets Category Government Private NGO/ PPP Infrastructure NIC N- Logue Simputer Provision Rural Services Bhoomi( Karnatak Sewa a) Agri Marketing Agmarknet E- Choupal Ozhwar Sandhiyes Agri extension Universities EID Parry
  • 23. Close of Session Thank You