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 IndiaOrganisation Definition LimitationsNSSO rural not defined( Census) Population density < 400 / Sq Km 75 percent of the male working population is engaged in agriculture No Municipal corporation / boardPlanning Towns upto 15,000 population are Town characteristicsCommission considered rural not defined
Cont’dLG Electronics All places other than the Only clarifies what are 7 metros the citiesNABARD All locations with a Village & town population upto 10, 000 characteristics not considered “ rural” definedSahara Commercial Population establishments located characteristics unknown in areas servicing less than 1000 populationSource: The Rural Marketing Book- Text & Practice, Kashyap. P and Raut. S( 2007)
Defining Rural MarketingNational 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 incommodities 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 betterincludes the pre & post standard of living for harvest operations. achieving organisational goals.
Phases in Rural MarketingSr. 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’d2 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 KVIC3 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 RuralFrom UrbanSource: M. Jha, Rural Marketing- Some Conceptual Issues, EPW, 1988
Scope of Rural MarketingDomain of Dimensions of the transactionRuralMarketing Participants Products/ Modalities Norms Outcomes services Rural to Rural Rural to UrbanUrban 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 8CommunicationTrade & Hotels 5 7Construction 4 7Manufacturing 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 1026.9Population (in million) Rural 524.0 628.8 741.6Population (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 34.870,001 – 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/ PPPInfrastructure NIC N- Logue Simputer ProvisionRural Services Bhoomi( Karnatak Sewa a)Agri Marketing Agmarknet E- Choupal Ozhwar SandhiyesAgri extension Universities EID Parry