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Rural marketing

Rural marketing satya Acharya Bangalore B-School

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Rural marketing

  1. 1. SATYA RURAL MARKETING Page 14.45. M1: Rural MarketingMODULE 1RURAL MARKETING: AN INTRODUCTIONA silent revolution is sweeping the Indian country side. It has compelled marketing whiz kids togo rural. The marketing battle has shifted from cities to villages.―Go rural‖ seems to be the latest slogan.Adi Godrej says―The rural consumer is discerning and the rural markets are vibrant. At the current rate of growthit will soon outstrip the urban market. The rural market is no longer sleeping we are‖The real India lies in the villages. All smart marketers Indian as well as MNCs have revered thisgospel.Companies like Hindustan lever, Godrej, Colgate Palmolive, Parle Foods, Nirma works, Philips,have made inroads into the countryside. Rural reach is on the rise and it is fast becoming the mostimportant route to growth. .Definition,―Rural Marketing can be defined as a function that manages all activities involved in assessing,stimulating, and converting the purchasing power of rural consumers into an effective demand for specificproducts and services and moving these products and services to the people in rural areas to createsatisfaction and a better standard of living and thereby achieving organizational goals.‖Nature, Character of Rural MarketsThe big question facing marketers entering the rural sector is whether it needs atransactional or developmental approach.The role of rural marketing is more developmental than transactional. It is more processof delivering better standard of living and quality of life to rural environment taking intoconsideration the prevailing rural location.The model of rural marketing represents a combination of transactional and developmentalapproaches.Rural marketing process is both which the outcome of general is and rural development process.Initiation and management of social and economic change in the rural sector is core of the ruralmarketing process.Innovation is the real meaning of marketing. It narrows down the rural and urban divide.
  2. 2. SATYA RURAL MARKETING Page 2The process of change can be evolutionary and not revolutionary.The exposure of rural ties to variety of marketing transactions puts them in the role ofbeneficiaries than just buyers of modern input.Communication is the vital element of rural marketing. It should serve to reduce conflictencourage cooperation and strengthen competitive spirit between rural as well as within ruralareas. Communication is the point of conversion of retaliate from an ―induced beneficiary‖ to an―autonomous buyerPotential of Rural Markets,1. Large Population: According to 2001 census rural population is 72% of total population and it isscattered over a wide range of geographical area2. Rising Rural Prosperity: Average income level has improved due to modern farming practices,contract farming, industrialization, migration to urban areas and remittance of money by familymembers settled abroad.3. Growth in Consumption: There is a growth in purchasing power of or rural consumers. Theaverage per capita household expenditure is Rs. 382.4. Changing Lifestyle: Lifestyle of rural consumer changed considerably.5. Life Cycle Advantage: The products, which have attained the maturity stage in urban market, arestill in growth stage in rural market. E.g. popular soaps, skin cream, talcum powder, etc.6. Market Growth Rate Higher than Urban: As per the survey made by NCAER the growth rateof FMCG market and durables market is higher in rural areas. The rural market share is morethan 50% for products like body talcum powder, toilet soaps cooking oil, hair oil etc.7. Rural Marketing is not Expensive: To promote consumer durables inside a state costs Rs onecrore while in urban areas it will costs in millions.Rural market Environment, Population Occupation Pattern Income Generation Location of rural population Expenditure Pattern Literacy Level Land Distribution Land Use Pattern
  3. 3. SATYA RURAL MARKETING Page 3 Irrigation Infrastructure Facilities Rural Electrification- Rural Communication:i) Road Networkii) Rail Networkiii) Cinema Housesiv) Televisionv) PostalConstitution of Rural Markets,Traditionally, consumers can be divided into two broad categories: individuals and households.The household sector is a major consumer of food products, user of manufactured goods rangingfrom low-priced durables such as transistors, electric irons etc to high priced colour TV sets,motorcycles etc. This sector meets the needs of a wide range of consumer from rural to urban,from rich to poor, from wage earners to professionals.A rural market broadly comprises of consumer markets, institutional markets and Services, beinga relatively new entrant in this market.Consumer markets constitutes of Fast Moving Consumer Goods (FMCG) like personal care (oralcare, hair care, soaps, cosmetics and toiletries and household care (fabric wash and householdcleaners) and Consumer durables like home appliances, watches, bicycles, TV sets, radio,automobiles etc.Institutional markets constitutes agricultural and related activities like food processing, poultryfarming fisheries, cottage industries, schools, NGOs etc. It includes products like agri inputs,animal feed, fuel, engine oil etc and agri implements like tractors, pumps sets etc.Services market constitutes Banking, Insurance, Retail, Healthcare, IT, power, communicationetc.Size of Rural Markets, Indian Rural Market: Brief OverviewA World Bank study has revealed that nearly two-thirds of Indias 120 crore population still livein rural areas. Most of the companies are increasingly transforming their rural operations intoviable profit centers. They have been devising ‗reach strategies‘ which proved to be instrumental
  4. 4. SATYA RURAL MARKETING Page 4in selling to simple buyers in geographically dispersed locations. The rural market in India isbeginning to emerge as an important consumption area. The total size of the rural market isestimated at Rs.1, 23, 000 crore which includes FMCGs, durables and agri-products.Key Investments/ DevelopmentsBig companies are increasingly molding their operations and strategies to persuade consumers inIndian hinterlands as people residing in rural areas differ in terms of lifestyles, mind-sets andcultures.Hindustan Unilever aimed to empower rural women to make its products reach every rural homeby training rural women as Shakti Ammas. Reportedly, the Shakti initiative delivers around 20per cent of Unilever‘s overall rural sales. Meanwhile Godrej Consumer Products trains ruralyouth in channel sales. ITC has Choupal Sagar and Godrej Agrovet has large format retail storescalled Adhaar in Indian hinterlandsWhile Coca-Cola, the beverage major on completing 20 years since it re-entered India, intends toincrease its rural reach, India‘s passenger vehicle giant Maruti Suzuki India Ltd is looking topenetrate into the rural market to a greater degree, in order to further boost its sales volume andmargins. Maruti‘s deliveries in small towns and villages were more than those in big citiesduring the first quarter of 2013Pune-based non-banking financial company (NBFC) Bajaj Finance, which has operations inurban areas and a few semi-urban regions, is planning to enter rural markets in the secondquarter of the FY14. Initially, the company would offer gold loans and loans for used vehiclesand farm equipment. The operations, to be launched in Maharashtra and Gujarat, would beexpanded at a later stageVodafone India has recently reported that most of its growth (in terms of subscriber base forvoice services) is coming from the rural parts of the country. The GSM operator has emerged asthe largest telecom operator in rural India, by amassing a total rural subscriber base of 82.24million (as of March 31, 2013). Moreover, the company‘s venture with ICICI Bank for M-pesa isalso helping it make inroads into the rural sector. M-pesa, a financial inclusion initiative, hasbeen launched in Kolkata, West Bengal, Bihar and Jharkhand, and is planned to be rolled out toother parts of the nation by 2014-15Havells India Ltd is planning to harness opportunities in semi-urban and rural markets with itsnon-modular switch brand Reo. The fast-moving electrical goods company hopes to achieve atleast Rs 200 crore (US$ 36.44 million) business from this category. The company is in the
  5. 5. SATYA RURAL MARKETING Page 5process of ramping up its production capacity at its Baddi (Himachal Pradesh) facility from thecurrent five lakh to 10 lakh units per day in the next couple of monthsTaxonomy of the Rural Economy,The rural market can be classified in way to similar to urban market. Consumer Market: Constituents : Individuals and households Products: Consumables Food products, toiletries, cosmetics, Textiles and Garments. FootWear, etc. Durables: Watches, Bicycles Radio, TV, Kitchen appliances, Furniture, Sewing machine,wheelers etc. Industrial market Constituents: agricultural and allied activities, poultry farming, fishing animal husbandry cottagehealth center school co-operatives etc. Products: consumable seeds, fertilizer, pesticides, animal feed. Fishnets, medicines, petrol dieseletc. Services market Constituents: individuals, households, offices and production firms. Services market: repairs transport. Banking, credit insurance, healthcare, education, andcommunication, power etc.Rural V/S Urban Markets,URBAN MARKET RURAL MARKETMostly concentrated Widely spread and scatteredHigh infrastructural level Low infrastructural levelHigh density of population per sq km Low density of population per sq kmGood physical connectivity and high mobility Poor physical connectivity and low mobilityIncomes are more stable and permanent People work in less certain environmentOccupations are government employment, business, etc. Mostly agricultural occupationIncome received at regular income Acute seasonality in income receiptsHigh exposure to variety of products Low exposure to variety of productsHigh brand awareness Low brand awareness
  6. 6. SATYA RURAL MARKETING Page 6Problems and Constraints of Rural Markets8 Important Constraints in Rural Marketing are given below:1. Vastness and Uneven Growth: India has about 5 lakhs villages, which are scattered over a widerange of geographical area, and also they are not uniform in size.2. Transport Problem: Transportation infrastructure is very poor in rural India. Though India has thefourth largest railway system in the world, many villages remain outside the railway network. Manyvillages have only kaccha roads while many of rural interiors are totally unconnected by the roads.Because of this the physical distribution is difficult in rural areas.3. Communication Problems: Communication infrastructure consisting of posts, telegraphs andtelephones are inadequate.4. Warehousing Problems: Central Warehousing Corporation and State Warehousing Corporation donot extend their services to the rural parts. The warehouses at mandi level are managed by co-operativesocieties who provide services to members only.5. Many Languages and Dialects: The number of language and dialects vary widely from state to state,region to region and even from district to district. Though the recognized languages are only 16 thenumber of dialects is around 850.6. Market Organization & Staff: Rural marketing needs large marketing organization and staff to havean effective control, which requires huge investment.7. Non-Availability of Dealers: It is not possible to have direct outlets in each rural market; firms need tohave service of dealers, which is not easily available.8. Hierarchy of Market: Rural consumers have identified market places for different items of theirrequirements. Thus depending upon the purchase habit of rural people, the distribution network ofdifferent commodities has to be different.MODULE 2 Rural Consumer BehaviorIntroduction,1) Consumer is the basic foundation of every business. What consumer see, thinks, prefers and buys isof great importance to marketers to fine tune their marketing offers and achieve high level ofconsumer acceptance and Satisfaction.2) CB in RM is even more confusing – lack of consistency in groups which are in homogeneous inparameters of demographics – age, education, and income3) For high-involvement products/consumer durables –more disparity in CB – decisions are swayed byopinion leaders, influencers from the reference group and others.
  7. 7. SATYA RURAL MARKETING Page 74) For low-involvement products – there is a definite homogeneity among people with similardemographics – common perceptions of message, content and imagery of brandsCharacteristics of Rural Consumer, Occupation Age and life style Economic situation Life style Personality and self concept Psychological factorsConsumer buying behavior models,
  8. 8. SATYA RURAL MARKETING Page 8Factors affecting Consumer Behavior,1) Cultural factorsIt is the most fundamental determinant of person‘s behavior.Rural India lives in a society which is bound by culture. As the child grows in rural environment he acquires a set of values, perceptions,preferences, and behaviors, through family or other key institutions involved ateach stage of his life. The time-tested true behavior exhibited by a collective group is thereforedetermined by culture.The degree of impact of culture will have on behavior depends on its intermingling with othercultures, the influence of sub-cultures and the evolving of a hybrid culture.2) Social factors A consumer is influenced by newly emerging social factors that are emerging in the environment helives and works in. These supplements the traditional reference groups, the family, friends, opinion leaders. Emergence of new institutions in rural India, which have brought forward new reference points andinfluencers in the form of professional workers such as Anganwadi workers, the auxiliary NurseMidwife, Self Help Groups or members of community based programmes etc.3) Technological factors Technology has an impact on the occupation and lifestyle of the rural people. Occupation like dairy, poultry, farming and animal husbandry have become more productiveand profitable. New technology has boosted the income of rural folks; it has reduced drudgery of manualworkers. It has saved both time and energy and has made the framework acceptable even to theeducated youth.4) Economic factors The rural economic environment is characterized by the following features Poverty 2.8% below poverty line per capita income 1200 per month. Low income occupations 70% in agriculture and 21% in services.Ex: Banking, women working opportunities, non-agriculture-linked industries
  9. 9. SATYA RURAL MARKETING Page 95).Political factors The philosophy and decisions of the ruling party and the thinking of rival partiesgreatly influence the fortunes of rural people. The governments at the center and state levels are by and large helpful to ruralpeople. However the development plans so far the urban are benefitted more than rural. A emphasis has been laid down on developmental programmes and fewhighlights are as followsa) Four fold increase in outlayb) Programs for self employmentc) Empowerment for Panchayati Raj –developmental funds, compulsory representation ofwomen etcConsumer Buying Decision Process, Need recognition:-when the buyer recognizes a gap between his desired state and theactual state buying process starts. Such recognition is caused by stimuli either internal orexternal. At this stage the marketer should help consumers identify their current andfuture problems and felt latent needs. To do this marketers have to research on consumerproblems and needs. Information search The consumers try to find information pertaining to their want satisfying products tomake the right choices. The amount of information required depends on
  10. 10. SATYA RURAL MARKETING Page 10 Type of product-convenience shopping or specialty good Nature of product-complex, high-tech or simple and easy to distinguish. Personal –family, friends, neighbors. Commercial- advertising sales people displays Public – TV, Radio, Internet Experiential- handling, examining, using the product. Evaluation of alternativesThe evaluation process may be done more carefully and logically in some cases for exampleconsumer durables. In case of goods which are consumed in one shot the evaluation may beless. Evaluation is designing and applying suitable criteria Purchase decision All the existing brands in the market make a total set. Through information searchconsumer will become aware of some brands in the total set. Awareness set consist ofbrands which the consumer, is aware of the brands, which meet initial buying criteria,will be considered for further evaluation. They make up consideration set. Throughapplication of final criteria the consumer evolves his choice set. All brands are acceptableto the consumer. However final choice will be made in favor of one brand. The factorswhich influence final choice Attitude of others Unanticipated situational factors Perceived risk. Post purchase feelingsA buyer feels satisfied when the perceived product performance is close to his or herexpectations. If it exceeds expectation the customer is delighted. If it falls short ofexpectation the customer is disappointed. He develops cognitive dissonanceOpinion Leadership Process,Reference groups often include individuals known as opinion leaders who influence others.1. A person whose word acts and actions informally influence the actions or attitude of other isopinion leader. The influence is informal and usually verbal. Opinion leadership can be nonverbal
  11. 11. SATYA RURAL MARKETING Page 11based on observation of behavior. The leadership comes from social status, power or success inpublic life2. Opinion leaders exert a greater influence in products and services that directly impact theiroccupations and sources of livelihood, or significantly improve their daily living conditions ratherthan like those of urban India who mostly influence consumers for a range of products thatreflects their lifestyles are status symbols or are items of conspicuous consumption.Discussion/Team Activity:Name examples of opinion leaders, and the promoted products/services, in each of the categories Teenagers Movie stars Sports figures CelebritiesDiffusion of Innovation,The flow of technology from international boundaries to metros to cities to towns, to kasba to thevillage to the rural consumer is long chain. This long chain ensures that rural consumer is lessexposed to and therefore less aware of products and services evolving regularly in the market.Also the reach of communication achieve is through word of mouth especially large area is notcovered by the mass media. While external environment is limited rural consumer is also limitedin his ability or desire to adopt innovations due to low levels of literacyBrand Loyalty, Brand value, brand loyalty are terms and concepts long familiar to the urban consumer.But the rural consumer is only now beginning to appreciate the relevance of brands andtheir meeting wants and needs. He is faced with lot of choice as more brands appear onrural retail shelves. Some brands like Ghari, Parle-G, Lux, Fair and Lovely and Colgate were entrants to ruralmarkets and have gained high acceptance over a period of time.
  12. 12. SATYA RURAL MARKETING Page 12Concepts and process of Rural Market Segmentation Bases, Targeting,Positioning Selecting and attracting markets involves three key decisions, viz., segmenting, targetingand positioning Segmenting is the process of dividing or categorizing market into different groups basedon one or more variables. Targeting is selecting the market segments, which can be served efficiently andprofitability. It is, deciding on market coverage strategies. Positioning is a market attraction strategy, which involves placing the brand in the mindsof the customers in the target market.BASES OF SEGMENTATON There is no one way of segmenting the market. A marketer may look for one or more variablesviz., geographic, demographic, psychographic and behavioral, to distinguish and describe theirmarket segments.(1) Geographic SegmentationGeographic segmentation is made based on variables like zones/regions, states, districts,cities/town/ villages by size, density, climate and culture.(a) Zones: The country is divided into four zones. East : West Bengal, Assam West : Maharashtra, Punjab, Haryana North: Delhi, UP, Bihar. Himachal Pradesh South: Tamil Nadu, Andhra Pradesh, Kerala, Karnataka.(b) States, Districts and Villages: The country is divided into states on the basis of language. For theconvenience of administration each state is divided into districts.c) Density: The density of population per square kilometer in the rural areas isVery low(d) Climate: The country is divided by climatic conditions as follows: Tropical• Rainy• Cold(e) Culture: Media will be effective when its messages are fine-tuned to the culture of the people. Assuch, the political division is immaterial for the various media. Ogilvy-Rural has divided the country into56 Socio-Cultural Regions (SCR).
  13. 13. SATYA RURAL MARKETING Page 132) Demographic SegmentationMarkets are divided into segments based on variables such as age, lifecycle, gender, family size, income,occupation, education, religion and nationality. Age: Under 6, 6—12, 13—19, 20—40, 41—60, 60+. Life—cycle: Infants, children, teens, young adults, elders,seniors. Gender: Male—Female. Marital status: Married—Unmarried. Family size : 1—2, 3—4, 5+ Income : Rs.25, 000 and below, Rs.25, 001-50,000, Rs.50,001-75,000, Rs. 75,001, Rs. 1 lakh,above Rs. 1 lakh. Occupation : Farmer, agricultural labourer, artisan, non agricultural laborer, Business,Professional employee, retired, student, unemployed Education: Illiterate, literate, elementary school, high School, college, university. Religion: Hindu, Muslim, Christian and Others.3) Psychographic SegmentationWhile geographic and demographic segmentations provide a physical view of the markets, the truedynamics of purchase can be assessed and marketing offer can be designed only on the basis ofpsychographics of the people. An example, to prove this point:Market is divided into different segments based on three variables viz. Social class Life style, and Personality4)Behavioral segmentationBehaviour of consumers is a better guide to segment the markets. To understand the behaviours thefollowing questions may be raised. When do people buy? Occasions Why do people buy? Benefits sought Do they buy? Once? More? User status How much do they buy? Usage rate Do they repeat the buy? Loyalty status Where do they buy? Place-retail outlet.What do they buy? Products possessed
  14. 14. SATYA RURAL MARKETING Page 14TARGETTING:-Segmentation is the process of identifying and establishing alternative market segments. As a next step,targeting involves evaluating the various segments and selecting how many and which ones to target. Thethree aspects in targeting are evaluation, selection and coverage. Evaluation of SegmentsIn evaluating market segments a company has to first identify the criteria for evaluation. Thefollowing criteria may be applied to determine the attractiveness of segments.(a) Profitability: The Company has to collect information on aspects required to conduct cost benefitanalysis and ascertain profitability of the segment. Relevant information includes: · sales volumes · Distribution costs · Promotion costs · Sales revenues · Profit margins(b) Attractiveness: Marketers should know whether they should design effective programmes to attractand serve the market skills. Smaller companies or new companies may lack the skills, experience andresources needed to serve the larger segments. Some segments may be less attractive when there isalready more competition.(c) Growth rate: A segment‘s attractiveness depends not only on its current profitability but also futureprospects. The growth rate of the segment in terms of growth in population, rise in purchasing power, andincrease in preferences for the use of the products is to be considered(d) Company objectives: Company should evaluate the segment opportunity with reference to their shortterm and long term objectives. If a company‘s objective is to expand the sales, it has to go rural instead ofpulling rural consumers to the nearby town.(e) Limitations: Finally, a company should examine whether the entry into the segment is acceptable tothe society and government. If its entry provokes unnecessary criticisms, the company may have tostruggle hard to explain its stand and safeguard its image Selection of SegmentsSegments may be ranked based on the scores obtained and be considered for selection. Those with highscores will be accepted and others will be kept aside for future consideration Coverage of SegmentsOrganization has three alternative coverage strategies to suit their segmentation approaches(a) Undifferentiated strategy: Undifferentiated marketing strategy focuses on ―What iscommon‖ among the consumers and tries to employ it in the design of its marketing offer. For
  15. 15. SATYA RURAL MARKETING Page 15instance, many toilet soap users prefer medicinal value, cosmetic strength, economy andfreshness feeling in toilet soap. Medimix offers all these and claims that, it is a beauty careAyurvedic family soap(B)Differentiated strategy:- Differentiated marketing strategy investigates and identifiesdifferences between segments and tries to match the market offer to the desires and expectationsof each segment. The results of such exercise would be-Strong identification of the company inthe product category. More costs but higher sales. Hence more profits and more loyal consumersAre companies using differentiated strategy within rural areas? Obviously, there are products,which are exclusive to rural areas like fertilizers, tractors, seeds, etc. Following examples explainthe use of this strategy.(C) Concentrated strategy:- Concentrated strategy directs all marketing efforts towards oneselected segment. It facilitates specialization in serving the segment and achieving higher level ofconsumer satisfaction, delight and loyaltyPositioning:- Positioning is the act of finding a place in the minds of consumers and Locating the brandtherein. Companies have to plan positions that give their products the necessaryadvantage in the target markets. Positioning involves three tasks— Identifying the differences of the offer vis-a-vis competitors‘ offers. Selecting the differences that have greater competitive advantage. Communicating such advantages effectively to the target audience. Identify DifferencesThe marketing offer may be differentiated along the following lines: · Product · Services · People, or image(a) Product differentiation: Products can be differentiated on attributes like
  16. 16. SATYA RURAL MARKETING Page 16Shape, size, color, quality, composition, and performance Functional differentiations signify easein process and benefits of use. · Coke has 400 calories where as Diet coke has 1 calorie. DietCoke is for diabetics.Coke has 400 calories where as Diet coke has 1 calorie. Diet Coke is for diabetics.‗Singer‘ sewing machine stitches, ‗memory craft‘ can even scan designs. Usha ‗fighter‘ is low priced fan whereas ‗senator‘ delivers air to the far corners of aroom. Cinthol Sandal promises twin benefits of flawless, blemish free complexion andfreedom from perspiration odor owing to TCC. (Trichlora carbanalide content) Products come in different sizes, shapes and colours.B).Services differentiation: Services may be differentiated in respect of delivery, installationand maintenance. Long warranty periods, free service coupons, service at phone call distance, 24hours service, emergency care, etc., are some examples.(C) People: People, who come into contact with users, may quite often influence the decision ofconsumers. In this era of relationship marketing, differentiation by people is worth considering.Service organizations like hospital schools, banks, road transport and telecommunication, requirepeople who serve with smile and are efficient. Service organizations mainly emphasis on thecompetencies of their peoples(d) Image: The image of a brand or company may win the consumer, even though the product isvery much similar to a competitive one. Image is built by advertisements, symbols, signs,colours, logos, atmosphere of organization, and social activities. .MODULE 3 PRODUCT AND DISTRIBUTION STRATEGIES FOR RURAL MARKETINGIntroduction, Distribution has been defined as how to get the product or service to the customer. It is one of the four aspects of marketing. a distributor is the middleman between themanufacturer and the retailer. After a product is manufactured by a factory, it is stored in thedistributors‘ warehouse. The product is then sold to customer.1).Physical distribution TRANSPORTATION WAREHOUSING
  17. 17. SATYA RURAL MARKETING Page 17 COMMUNICATION2) Channels of distribution Old set up for distribution1) Wholesaler2) Retailer 3) mobile van 4) weekly haats & bazar5) melas & fairProduct concepts and Classification,Products required in rural areas may be classified in different ways. In the process, let us whether thereare any significant differences between urban and rural product classifications.(i) Based on tangibility goods are classified into two groups: Tangible goods referred to as products Intangible goods referred to as servicesBased on the price and qualityTwo types of goods are identified Mass product (cheaper and economy goods) Premium products (superior goods) Cheaper goods are those, which are characterized by, low quality and low price. Theyperform the core function but they lack certain attributes, which make theiruse lesscomfortable, less pleasant and less desirable. Shopping goods (clothing. furniture, home appliances, etc) Moderate OccasionalComplex.For example: Jewellery. silk sarees, cars, bungalows, high priced cosmetics,toiletries and perfumesBased on product development Innovations Imitations (Novelties, Me-too goods, Copy Cats)Innovations: Innovation is the key for survival in a highly competitive environment. Acompany which innovates always has an edge over others.1. Every organization will have to learn to innovate and this can now be organized in asystematic process.
  18. 18. SATYA RURAL MARKETING Page 182. Product mix of the companies is heavily skewed towards "me too" types of products and theirsuccess largely depends upon the companys expertise in developing and using marketinginnovations thereby enabling them to get differential advantages for their "me too" productsagainst those of their competitors.3. Implementation of marketing innovations on a national scale involves a lot of risk andtherefore it is desirable that the companies experiment these innovations in controlled areas andverify their results before they are finally adopted on a national scaleImitations: Imitations may result in two types of goods depending upon the purposecommitment, and competence of imitator. A poor imitator will end up in producing deceptivespurious, fake, copy cat products. He dupes the gullible customer by offering products havingclose resemblance with the original. In quality, it is a poor cousin to the original. On the otherhand, the competent imitator may even produce an improved version of the original productProduct mix decisions,Product mix is a set of all product lines and items offered by the companyHorizon one Horizon two Horizon threeSoaps and Detergents Popular foods Direct-to-homeproductsBeverages Culinary products Value-added foodsOil and Dairy fats Personal products Bread and biscuitsSpecialty chemicals Ice-creamsAnimal feeds Home care productsNew BeveragesProfitable growth Top line growth Development andlearning
  19. 19. SATYA RURAL MARKETING Page 19 Product line is a group of closely related products priced within a range and distributedthe -some channels to the same customer groups. It has two dimensions: Length andDepth. Length - It refers to the total number of items in the line. Depth - It is the total number of variants to product items.Length of Product line: How long the product line should be? It is like asking, ‗how long relegs should be? The reply to this question is: ‗long enough to reach the ground.‘ Similarly,product- line length should be evaluated in the light of company profitability. If profitabilitycan be increased by dropping items, the existing length is more than necessary. Ifprofitability can be increase: ‗adding items, the existing length is short. There is a need towork out optimal length. It should be neither too short nor too. Arguments in favor of shortand long lines are summarized below.Rural Product Categories,The NCAER has categorized the consumer goods into three categories.Category I- Products are of immediate use to the family. E.g.- bicycles, fans etc.Category II- Products are a combination of entertainment products and products that easehousehold work strain. E.g. - mixer grinder, cassette player etc.Category III- Here products are a combination of means to supplement income, easy householdworking, and source of entertainment. E.g. - washing machine, motorcycle, etc.Branding in Rural Markets,Brand Concept: Brand is a name, term, sign, symbol, design or colouring or a combination ofthem, which help identify seller‘s products and differentiate them from those of competitors.Branding- The need: Arguments for1. Identity helps processing: Brand name gives identity to a company’s product. It helpsrecognition and processing easy for the company, distributors and consumers. It thus saves costsand time in manufacturing, warehousing, transporting and order processing for the company inselling. Distributors can reap similar benefits in handling the products and selling them.Consumers find it easy to spot and select the product.
  20. 20. SATYA RURAL MARKETING Page 202. Image gives competitive advantage: Brands earn recognition and reputation by theirperformance. The image helps the existing products in the line as well as new products. It givescommanding position to the marketer to charge higher prices than competitors and to convincedistributors to carry the products.3. Personality convinces consumers: Brands in course of their association with consumersdevelop personality. Advertisers take this opportunity to match personality of brands with that ofprospects. It helps build brand loyalty-a lasting companionship, a strong bondage between abrand and consumer.4. Equity enhances value: Brands by their popularity not only enhance their value-in-use butalso value-in-exchange. A company that has built brand image over a period of time by itsincessant innovative effort gets a reward for example, premium price offer for its brand from acompetitor or interested entrepreneur willing to own it.Arguments against1. Investment-returns doubtful: Brand building is not an easy task. It requires a great dealof long range investment. It is to be supported by R & D investment, advertising budget anddealer discounts. However, there is no assurance of returns. Many brands have failed. Many arestruggling hard despite the good images they have built over a time.2. Image and personality an emotional nonsense: All the talk about brand personality andimage are psychological fantasies created by self-seeking marketers. No product sells on brandname. Only when it fulfills a need, it stays and succeeds in the market. The image of a product orbrand cannot help other brands. Instances of such failures are many. Brand personality issues aremore academic rhetoric. It is an overstretched concept with little practical value. When a personbuys the product, the overriding, considerations are cost (price and operational economics) andfunctional benefits. It is true with a vast majority of consumers.3. Brand equity—sensible but not new: Brand equity concept replaces the old term goodwill‘. It is not, something new to be argued in favor of a ‗brand‘. It is outcome of business builtover a period. Why marketers glorify branding in this context? It is only an identification factorthat helps marketers promote distinctiveness
  21. 21. SATYA RURAL MARKETING Page 21Fake Brands,Spurious products are the copy of established brand name at a cost of few thousandrupees and sold it in the rural market. This duplication takes place in all sectors andespecially in FMCG, food items and medicines.Counterfeiting is a kind of duplication where the fake products bear the identical nameof the original product, its packaging, graphics, color pattern, design and even samename and address as the genuine manufacturer. A pass-off product is one that comeswith a few minor changes from the original product. The slight changes are made toavoid legal problems.Example:Head and Shower – Head and ShoulderPantane – Pantene, Sunmilk – Sunsilk, Lifebuoy – Loveboy, Climik Plus – Clinic PlusParla G – Parle G, Vikas – VicksProduct Life Cycle
  22. 22. SATYA RURAL MARKETING Page 22Introduction/Launch:– Advertising and promotion campaigns– Target campaign at specific audience?– Monitor initial sales– Maximise publicity– High cost/low sales– Length of time – type of product• Growth:– Increased consumer awareness– Sales rise– Revenues increase– Costs - fixed costs/variable costs, profits may be made– Monitor market – competitor‘s reaction?• Maturity:– Sales reach peak– Cost of supporting the product declines– Ratio of revenue to cost high– Sales growth likely to be low– Market share may be high– Competition likely to be greater– Price elasticity of demand?• Saturation:• New entrants likely to mean market is ‗flooded‘• Necessity to develop new strategies becomes more pressing:– Searching out new markets:• Linking to changing fashions• Seeking new or exploiting market segments• Linking to joint ventures – media/music, etc– Developing new uses– Focus on adapting the product– Re-packaging or format– Improving the standard or quality– Developing the product range
  23. 23. SATYA RURAL MARKETING Page 23• Decline and Withdrawal:– Product outlives/outgrows its usefulness/value– Fashions change– Technology changes– Sales decline– Cost of supporting starts to rise too far– Decision to withdraw may be dependent on availability of new products andwhether fashions/trends will come around again?PRICING STRATEGY1. Low Cost Products Rural customer is price conscious manly because of low income. Theprice can be kept low, by low unit packaging. This is a common strategy adopted by manycompanies marketing in rural areas. Example –same as of small unit packs.2. Application of Value Engineering The aim of value engineering is to reduce the value ofthe product so that a larger segment of population can afford it to buy. Example: Soya proteincan be used instead of milk protein, nutrition content of both is same but the soya protein ischeaper then milk protein.3. Refill / Reusable Packaging Refill packs benefits the rural consumers in terms of price andalso the packaging material should be reusable in rural areas. Example– Many farmers demandfor fertilizers packed in LDPE or HDPE sacks. They feel that they get sacks free of cost bypurchasing fertilizers.4. Discounts In order to motivate the rural retailer to sell more, a discount of 5-10% is given onthe MRP particularly in case of FMC goods.5. Promotional Schemes Rural consumer normally buys household articles during festivals likeEid, Diwali, and Pongola etc. special promotional schemes could be introduced on suchoccasions like exchange offers, special discounts, etc.RURAL PRICING OBJECTIVES1. Deeper penetration of market: Basically rural markets are adopted for deeper penetration andexpansion because of its size. Hence the pricing objectives are different for rural and urbanmarkets. E.g. VIM washing bar is Rs. 15 (400 gm) in the urban market but it is offered for Rs. 4(200 gm) in rural markets.2. Long run profit maximization: A company enters in rural market should wait for success in longrun. Hence penetration-pricing strategy is the best option.
  24. 24. SATYA RURAL MARKETING Page 243. Recover distribution cost: The pricing objective of a rural marketer should recover the costsinvolved in distribution along with production cost and dealer margin.4. Competing pricing: Rural marketer should study the pricing strategy of its competitors andaccordingly fix its prices.5. Increased sales and market share: The pricing objectives should be such that it boosts the salesin rural markets. E.g. Anchor white toothpaste launched with much lower price than the leadingbrands and captured the market.CONSUMER CATEGORIESQuality Conscious Consumers– They are very rich and are mainly concerned with quality ofthe products and servicesPricing Methods: (A) Discriminatory Pricing – charging different customer groups differently(B) Skimming pricing – Charging high prices at initial level, E.g. P&G launched Tide detergentat high price and then reduced it lower than other brandsValue Conscious Customers – They are of middle class and are mainly concerned withfunctional benefits and value for moneyPricing Methods: (A) Penetration Pricing – Charging low prices at initial level then increasesgradually when brand name has been established E.g. Maggie noodles, Vicks, Rin detergent. (B)Value Pricing – Setting the price reasonably lower than the competitor‘s price.Price Conscious Customers– They are climbers, aspirants and destitute. They watch forpromotional offers and purchase cheap or fake products.Pricing Methods (A) Psychological Pricing – Psychological pricing is one that ends in an oddnumber e.g. Rs. 99.95. It conveys two notions to consumer that there is a discount or bargain andit belongs to lower price category. (B) Promotional Pricing – It includes mini packs, price-off,special discounts, credit facilities etc.Rural Distribution, Historically, the rural distribution system has included wholesalers, retailers, mobile traders,vans and weekly haats. In the feedermarkets, retailers act as wholesalers and vice versa to sell to small retailers whocome from surrounding villages.
  25. 25. SATYA RURAL MARKETING Page 25Some town retailers send their salesmen to villages to book orders and supply goods to theseDistribution Channels in Rural IndiaUse of cooperative societies– There are over 4 lakh co-operatives operating for differentpurposes like marketing, credit and dairy cooperative in rural areas. For e.g. Farmers Service Co-operative Societies function like a mini super market for rural consumers where they sell soaps,detergents, cloth, seeds, fertilizers, pesticides etc. at economical and reasonable prices. Sincethese societies have necessary infrastructure for storage and distribution, companies may contactthese societies to sell their productsUse of Public Distribution System – In India, the Public Distribution System is well organized.There are about 4.37 lakh fair price shops operating in the country. Since the PDS outlets coverthe entire country they can be utilized for marketing consumable items and low value durables inrural areas.Utilization of Petrol Pumps – These petrol pumps, in addition to petrol/diesel, oil and lubricantsare also selling consumables such as soaps, detergents, biscuits etc, particularly on the highways.These bunks may also think of stocking certain consumable agricultural inputs like fertilizers,seeds and pesticidesChallenges in rural Distribution Large number of small markets Dispersed population and trade Poor road connectivityMultiple tiers Poor availability of suitable dealers Low density of shops per villageInadequate banks and credit facilities Poor storage system Low investment capacity ofretailers Poor visibility and display of products on rural shop shelves.Promotion, FORMAL MEDIA :1. Local language newspapers: eg: loksatta in Maharashtra.2. Television: eg: DD national3. Radio: eg : regional radio OTHER INFORMAL MEDIA :1. Farm to Farm/House to House2. Group meeting : eg: MRF tyres3. Opinion leaders: eg: asian paints(house painting)4. Melas: eg: asian paints(horn painting)
  26. 26. SATYA RURAL MARKETING Page 265. Folk dances: eg: Thums-up sponsors LavnisRural Communication Mix,What is Communication Mix ―Communication Mix‖ is aimed at not only creating awareness about theproduct/service but also at persuading the customer to use and experience it.Communication Mix is also called as ―Promotion Mix‖The Marketing Communications Mix is the specific mix of advertising, personal selling, salespromotion, public relations, and direct marketing a company uses to pursue its advertising andmarketing objectives.Advertising - Any paid form of no personal presentation and promotion of ideas, goods, orservices by an identified sponsor.Personal selling - Personal presentation by the firm‘s sales force for the purpose of making salesand building customer relationshipsSales promotion - Short-term incentives to encourage the purchase or sale of a product orservicePublic relations - Building good relationships with the company‘s various publics by obtainingfavorable publicity, building up a good & quot; corporate image & quot;, and handling orheading off unfavorable rumors, stories, and events.
  27. 27. SATYA RURAL MARKETING Page 27Direct marketing - Direct communications with carefully targeted individual consumers toobtain an immediate response and cultivate lasting customer relationshipsRural Media and Creative strategies,Personal Selling Personal selling is where businesses use people (the ―sales force‖) to sell theproduct after meeting face-to-face with the customer. The sellers promote the product throughtheir attitude, appearance and specialist product knowledge. They aim to inform and encouragethe customer to buy, or at least trial the product. A good example of personal selling is found indepartment stores on the perfume and cosmetic counters. A customer can get advice on how toapply the product and can try different products. Products with relatively high prices, or withcomplex features, are often sold using personal selling. Great examples include cars, officeequipment (e.g. photocopiers) and many products that are sold by businesses to other industrialcustomers.Personal selling occurs where an individual salesperson sells a product, service or solution to a client. Salespeople match the benefits of their offering to the specific needs of a client.Today, personal selling involves the development of longstanding client relationships.
  28. 28. SATYA RURAL MARKETING Page 28MODULE 4AGRICULTURAL MARKETSAccording to National Commission on Agriculture ―Agricultural marketing is a process whichstarts with a decision to produce a farm commodity, involves all aspects of market structure andincludes pre and post harvest operations like assembling, grading, storage, transpiration anddistribution‖.Trends in Agricultural Marketing,It might be amusing to think that things as mundane and commonplace as fruits and vegetables, cerealsand marine produce need to be marketed. The agricultural produce sector has been one of the mostimportant components of the Indian economy. The increasing trend of agricultural production hasbrought, in its wake, new challenges in terms of finding market for the marketed surplus. There is also aneed to respond to the challenges and opportunities, that the global markets offer in the liberalized traderegime. To benefit the farming community from the new global market access opportunities, the internalagricultural marketing system in the country needs to be integrated and strengthened. Government ofIndia is striving to prepare the Indian agricultural markets and marketing environment so as to providemaximum benefit to the producers and in turn, compete with the global markets. Agriculture andagricultural marketing need to be re-oriented to respond to the market needs and consumer preferences.Agricultural marketing reforms and creation of marketing infrastructure has been initiated to achieve theabove purpose.Defects in Agricultural Marketing,Following are the main problems of agricultural marketing:1. Lack of Transportation Facility:-It is the main obstacle in the way of efficient marketing. The ruralareas are not linked with the market by roads. A lot of agricultural product is wasted due to transportproblem.2. Poor Quality of Product:-Farmer is not using the improved seeds and fertilizers so quality ofproduction is very poor and its prices are low in the market.3. Role of Middleman:-The middleman also takes a big share of farmers income without doing anything.A poor farmer borrows the money from them and sells his product at lower rates.4. Lack of Grading:-In case of agricultural commodities the mixing of good and bad products is verycommon in developing countries like India and Pakistan. There is no proper method of grading thesecrops. It creates a problem of marketing inside and outside the country.5. Lack of Credit Facilities:-The credit facilities are not adequate to meet the farmers requirement. Poorfarmer is borrows the money from private money lenders at tied conditions.
  29. 29. SATYA RURAL MARKETING Page 296. Problems of Produce Collection:-The collection of produce from small farmers is very expensive anda difficult process. It is a great problem for the efficient marketing.7. Lack of Storage Facility:-The storage facilities are required by the producers as well as by thegovernment. The farmers need storage to sell their product at a suitable time. The government needsstores for keeping reserve stocks. Due to lack of storage facilities a lot of product is damaged on railwaystations and in open air.8. Weight and Measures:-In various parts of weight and measures are not same. So a farmer suffers aloss at the time of buying selling of his product.9. Market News:-Most of farmers in underdeveloped countries are uneducated and they know nothingabout the market conditions. So farmer is unable to achieve the real price of his product.Agricultural Products, The following Agricultural Products are not, at present (2008), traded on any exchange, and,therefore, no spot or futures market where producers, consumers and traders can fix an official orsettlement price exists for these minerals. Generally the only price information that is available isbased on information from producers, consumers and traders. Fresh Flowers, Cut Flowers, Melons, Lemons, Tung Oil, Gum Arabic, Pine Oil, Xanthan, Milk,Tomatoes, Grapes, Eggs, Potatoes, and Figs.Classification of Markets,1] On the Basis of Location1. Village Markets: Located in small villages2. Primary Wholesale Markets: Held weekly or bi-weekly at different villages and locally called as‗Shandi‘ or ‗Haat‘.3. Secondary Wholesale Markets: Located at taluka or district headquarters and towns and knownas ‗Mandi‘ or ‗Gunj‘4. Terminal Markets: Located in metro cities where buyers and sellers come from different regionsor nations..2] On the Basis of Area Coverage1. Local Markets: Buyers and sellers are from same village or nearby villages.2. Regional Markets: Buyers and sellers come from large areas.
  30. 30. SATYA RURAL MARKETING Page 303. National Markets: Buyers and sellers are from whole India.4. World Markets: Buyers and sellers are from whole world.3] Time Span1. Short Period Markets: Perishable products such as fish, milk etc. are traded.2. Long Period Markets: less perishable products such as oilseed food grains are traded.3. Secular Markets: Deal in manufactured goods, which are permanent in nature.4] Volume of Transaction1. Wholesale Markets: Goods are bought and sold in large quantities.2. Retail Markets: Goods are bought and sold according to the consumer’s requirement.5] Nature of Transaction1. Spot or Cash Market: Money is realized immediately after the sale.2. Forward Market: Process of purchase and sale is done but goods and money are exchangedat some specific date.6] Number of Commodities1. General Market: All types of commodities are bought and sold2. Specialized Market: Only one or two commodities are sold, e.g. cloth market.7] Nature of Commodities1. Service of Market: Deals in service such as professional consultancy2. Capital Market: Deals in bonds, shares and securities.3. Commodity Market: Deals on goods and raw materials such as cotton, grains.8] Degree of Competition1. Perfect Market: Has large number of buyers and sellers.2. Imperfect Market: Has monopolistic competition9] Public Interventions1. Regulated Market: Business is carried as per rules and regulations framed by statutoryorganization.2. Unregulated Market: Traders frame their own rules for conduct of business and run the market.
  31. 31. SATYA RURAL MARKETING Page 31Regulated Markets-Role and Problems,Definition ―A market regulated by government appointed bodies often to control charges andensure that fair services are offered to customers‖. For example, service provision such as gas,water, and electricity supply are often monitored by the government to prevent monopoly andensure competition that will ultimately guarantee quality service..Objectives of Regulated Market1. To prevent development of farmers.2. To provide ethical environment for proper trade practices by prohibiting malpractice.3. To promote orderly marketing of agricultural produce.4. To provide incentive prices to farmers to induce them to increase production.5. To ensure that farmers get better prices for their produce and consumer get goods atreasonable prices.6. To avoid wide fluctuations in prices for agricultural produce.Features of Regulated Markets1. Method of Sale: In a regular market the sale takes place either by open auction or by closedtender. These methods of sale ensure a fair and competitive price and prevent the cheating offarmers.2. Weighing of Produce: Weighing of produce is done by a licensed weighman with standardweights and scale platforms.3. Grading of Produce: The produce in regulated market is expected to be sold after grading butonly 13 regulated markets have grading facilities.4. Market Charges: In regulated market, the unwanted market charges such as dharmada,muddat, dhalta and kanda were abolished.5. Payment of Value: In regulated market it is obligatory to make prompt payment. The muddatsystem no more exists.6. Licensing of Market Functionaries: All market functionaries even Hamaal is working inregulated market are have to obtain license from market committee.7. Settlement of Disputes: Disputes arises between sellers, producers and traders are solved bysub-committee of market committee.8. * Market Committee: Market committee consists of representatives of farmers, traders, co-operative marketing societies, banks, panchyat and government officials. Its important functionsare:1. Manage the market yards in the interest of farmers and traders.
  32. 32. SATYA RURAL MARKETING Page 322. Fix market charges for various functions and services.3. Provide facilities for grading and standardisation.4. Take steps for prevention of adulteration of the agricultural products.5. Issue, renew or withdraw licenses of market functionaries.6. Realise market fees either from the buyer or seller.7. Control and regulate the behaviour of traders.Defects of Regulated Markets1. Not Accessible to All Farmers: Most of the farmers are not aware of the benefits of theregulated markets and also not accessible to the farmers in far villages.2. Presence of Commission Agents: Presence of commission agents and their heavy chargesare unfavorable to the regulated markets.3. Payment System: Farmers are not given prompt payment by traders; due to this they cannotmeet their working capital requirements.4. Auction System: Auction system has a number of defects for which the farmer has to bear thenumber of losses.5. Improper of Representation: Small and marginal farmers are dined to serve on the committeeand also there are lots of political interference in the committees.6. Lack of Incentives: Incentives provided are not sufficient also the illiterate farmers are not wareof the available incentives and subsidies.7. Defective Transactions: The business of regulated market is confined only to a few fixedhours. The illiterate farmers find it difficult to find out the exact dates and times of transaction.Role:- Advice on production planning:- careful selection of the crop from marketability viewpoint-internal or export Marketing information:- price and arrivals, forecasting of market trends, demand of othermarkets, facilities available in the target markets, quality requirements, market fees etc Securing markets for the farmers:-Awareness about regulated market laws and reforms,Information regarding procurement by Govt. agencies, contract farming arrangement for cashcrops with wholesalers, processors etc. Advice on improved marketing practices:- packaging, appropriate storing methods,standardization and grading and other post harvest management practices such as maintenance ofquality, awareness about post-harvest losses etc.
  33. 33. SATYA RURAL MARKETING Page 33 Advice on establishing and operating markets:-Farmers groups to set up and run their ownmarkets within framework of rules Processing and value addition:- Farmers to be educated about value addition through primaryprocessing Group action:- Promotion of informal groups and Self Help Groups(SHGs) Marketing Credit:- Educating farmers about different schemes of marketing credits, Advice onwarehousing with pledge finance scheme Problem solving methods: micro-level Marketing extension for export market: WTO implications, Codex, HACCP, Euro gapstandards, Awareness on ill effects of pesticide/insecticides residue etcCooperative Marketing,Co-operative Marketing Societies: They have been established under the Integrated Rural Credit andMarketing Scheme initiated under the second FYP. The main function of these societies is to sell the product of their members. They also undertakeoutright purchases, provide storage facilities for storage and grading and thus save cultivatorsfrom middlemen.Methods of Sales of agricultural products-Hatha , In this method, the buyer or his broker and commission agents join hands under the coverof cloth usually a towel or a dhoti or front portion of kurta or shirt. The price is settled bypressing the fingers. The negotiation is go on in this secret manner till they are called offdue to failure in arriving at as on agreed price or a price is settled. Ample scope for malpractices against the sellers because of secrete negotiationsE Choupal, An initiative by ITC, e-Choupal aims to empower farmers with up-to-date agricultural andmarketing information through access to internet and computers. The campaign was launched in2000 and targets to empower 10 million farmers by 2012. e-Choupal delivers real-time information and customized knowledge to improve thefarmers decision-making ability, thereby better aligning farm output to market demands;securing better quality, productivity and improved price discovery.
  34. 34. SATYA RURAL MARKETING Page 34 Is an initiative of ITC Limited, a large multi business conglomerate in India, to link directly withrural farmers via the Internet for procurement of agricultural and aquaculture products likesoybeans, wheat, coffee, and prawns. The programme involves the installation of computers with Internet access in rural areas of Indiato offer farmers up-to-date marketing and agricultural information ITC training farmers to manage the Internet kiosk and one of them become the e-ChoupalSanchalak in the village. Today, the community of e-farmers with access to daily prices of a variety of crops in India andabroad – this helps us to get the best price. We can also find out about many other important things – weather forecasts, the latest farmingtechniques, crop insurance, etc. e-Choupal has not only changed the quality of farmer lives, but their entire outlook.E-Choupal – benefits elimination of non value added activities differentiated product through identity preserved supply chains value added products traceable to farm practices e-market place for spot transactions and support services to futures exchangeDara Auction, The prospective buyers gather around separate heaps of grains and announce their bids loudly.When the bids have reached their highest, the auctioneer who is generally a commission agent, inconsultation with the seller sells the produce to the highest bidder. Better than the Hatha methodCommodity Markets, Commodity market is a place where trading in commodities takes place. These are the marketswhere raw and primary products are exchanged. These raw commodities are traded on regulated commodity exchanges, in which they are boughtand sold in standardized contracts. It is similar to an equity market, but instead of buying orselling shares one buys or sells commodities.Commodity Exchange An entity, usually an incorporated non-profit association that determines and enforces rules andprocedures for the trading of commodities and related investments, such as commodity futures.
  35. 35. SATYA RURAL MARKETING Page 35 Commodities exchange also refers to the physical center where trading takes place 18 existing commodity exchanges in India offering domestic contracts in 8 commodities and 2exchanges that have permission to conduct trading in international (USD denominated) contracts. The two most important commodity exchanges in India are; 1)Multi-Commodity Exchange of India Limited (MCX), 2) National Multi-Commodity & Derivatives Exchange of India Limited (NCDEX)Commodity TradingSpot tradingSpot trading is any transaction where delivery either takes place immediately, or if there is a minimumlag, due to technical constraints, between the trade and delivery. Commodities constitute the only spotmarkets which have existed nearly throughout the history of humankind.FORWARD CONTRACT A forward contract is an agreement between two parties (counterparties) for the delivery of aphysical asset (e.g., oil or gold) at a certain time in the future for a certain price that is fixed at theinception of the contract. Forward contracts can be customized to accommodate any commodity, in any quantity, fordelivery at any point in the future, at any place.Role of Warehousing,Warehousing plays a very vital role in promoting agriculture marketing, rural banking andfinancing and ensuring Food Security in the county. It enables the markets to ease the pressureduring harvest season and to maintain uninterrupted supply of agricultural commodities duringoff season. Hence, it solves the problems of glut and scarcity, which are the usual problems inagricultural marketing. Though warehousing is an independent economic activity, yet is closelylinked with production, consumption and trade. Development of agro processing agriculturalmarketing needs a strong warehousing system. Warehousing is the most important auxiliaryservice for development of trade and commerce.Agro Processing Sector in India,
  36. 36. SATYA RURAL MARKETING Page 36Food processing sectorThe Indian food processing industry accounts for 32% of the country‘s total food market. Estimated to beworth USD 121 billion, it is one of the largest industries in India, and is ranked fifth in terms ofproduction, consumption and exports. The industry employs 13 million people directly and 35 millionpeople indirectly. It accounts for 14% of manufacturing GDP, nearly 13% of India‘s exports and 6% oftotal industrial investment. Currently growing at more than 10% per annum, it is expected to touch USD194 billion by 2015.Policy and PromotionThe Government of India allows 100% FDI under the automatic route in the food processing sector, inagri-products, milk and milk products, and marine and meat products, except in the case of the following:Proposals that require an industrial license and cases where foreign investment exceeds 24% equity inunits that manufacture items reserved for small-scale industries.Proposals in which the foreign collaborator has a previous venture or tie-up in India as on January 12,2005Automatic approvals are provided for foreign investment and technology transfer in most cases. Unitsbased on agri-products that are 100% export-oriented are allowed to sell up to 50% in the domesticmarket. There is no import duty on capital goods and raw material for 100% export-oriented units.Earnings from export activities are exempt from corporate tax. Additionally, there is 100% tax exemptionfor five years, followed by 25% tax exemption for the next five years, for new agro-processing industries.MODULE 5 INNOVATIONS IN RURAL MARKETINGRole of Innovations in Rural Markets Nature,Importance of ICT in Rural DistributionInformation and communication technologies (ICTs) generally refer to an expanding Assemblyof technologies that are used to handle information and aid communication.The importance of ICTs in development process was long recognized and access to ICTs waseven made one of the targets of the Millennium Development Goal which emphasizes thebenefits of new technologies, especially ICTs in the fight against poverty. ―With 10 percentincrease in high-speed internet connections, economic growth increases by 1.3 percent‖ observedthe recent World Bank report on Information and Communication for Development (World
  37. 37. SATYA RURAL MARKETING Page 37Bank, 2009). The same report also observed ―connectivity – whether the Internet or mobilephones -- is increasingly bringing market information, financial services, and health services toremote areas, and is helping to change peoples lives in unprecedented ways‖.Information and communication technologies (ICTs), and particularly the Internet, aretransforming broad areas where information is a central activity, including rural developmentand food security. The transformation is based on the opportunities for individuals andcommunities to be information producers as well as consumers and which builds on andintegrates the capacities of other media (e.g. radio and television). This enables increasingly low-cost access and distribution of information and also facilitates interactive participation in thecreation and use of information. In this process there is a priority role for generating anddistributing public information. This in turn is transforming organizations everywhere whocreate, manage and distribute information.ICT Initiatives in Rural Markets,Emergence of Organized Retailing