Rural marketing

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  • What Does Market Penetration Mean? A measure of the amount of sales or adoption of a product or service compared to the total theoretical market for that product or service. The amount of sales or adoption can be an individual company's sale or industry while the theoretical market can be the total population or an estimate of total potential consumers for the product.
  • NCAER has done pioneering research work in areas of applied economics with an emphasis on policy analysis and application of modern quantitative techniques to development issues, regional development and planning, household income, consumption, savings /investment and energy.
  • Rural marketing

    1. 2. <ul><li>Rural marketing is a function which manages all those activates involved in assessing, stimulating and converting the purchasing power into an effective demand for specific products and services, and moving them to the people in rural area to create satisfaction and a standard of living to them and thereby achieves the goals of the organization. </li></ul>
    2. 3. <ul><li>India’s vast rural market offers a huge potential for a marketer facing stiff competition in the urban markets. The rural market environment is very different from the familiar surroundings of the urban market. Rural consumers have customs and behaviour that the marketer may find difficult to contend with. </li></ul>
    3. 4. <ul><li>Prime Minister Manmohan Singh recently talked about his vision for rural India: &quot;My vision of rural India is of a modern agrarian, industrial and services economy co-existing side by side, where people can live in well-equipped villages and commute easily to work, be it on the farm or in the non-farm economy. There is much that modern science and technology can do to realize this vision. Rural incomes have to be increased. Rural infrastructure has to be improved. Rural health and education needs have to be met. Employment opportunities have to be created in rural areas.&quot; </li></ul>
    4. 5. <ul><li>When rural customers discover the new and exciting choice of brands available in urban markets, a demand for these brands is created in rural areas. Marketers have entered the rural markets by extending the distribution of their existing offering or developing a separate marketing strategy for the rural markets. When Titan, the watch manufacturer, found rural consumers purchasing their Sonata brand of quartz watches, they formulated a marketing strategy tailored to the requirements of the rural market. </li></ul>
    5. 6. <ul><li>There are quite a few reasons for the growing interest in rural markets. A very straightforward reason is the growth of these markets are : </li></ul><ul><li>Untapped Potential </li></ul><ul><ul><li>The large number of consumers </li></ul></ul><ul><ul><li>Largely untapped markets </li></ul></ul><ul><li>Market Size and Potential </li></ul><ul><li>Unmet Needs/Low Penetration </li></ul><ul><li>Current Consumption a Pointer to Potential </li></ul><ul><li>Increasing Income and Purchasing Power </li></ul><ul><li>Accessibility of Markets </li></ul><ul><li>Competition in Urban Markets </li></ul><ul><li>Consumer Behaviour Changes </li></ul>
    6. 7. <ul><li>The size of rural markets, demographic profi le of the rural market and market volume help us to draw a broad mental picture of the rural markets. The number of villages, population and the number of households indicates the market size. The demographic profile of the rural market is described in terms of household size, sex distribution, literacy levels, occupation and income. </li></ul>
    7. 8. <ul><li>The market volume is an indication of the market attractiveness and this is influenced by the market size and also the market profile. The large population and increasing incomes make the rural markets an attractive proposition for marketers. The market volume is captured by the consumption expenditure. The ownership of consumer durables is useful in understanding market volume; and in the case of consumer non-durables the consumption expenditure pattern is a useful measure of market volume. </li></ul>
    8. 9. <ul><li>The number of villages, population and number of households captures the rural market size. </li></ul><ul><ul><li>Physical Coverage </li></ul></ul><ul><ul><ul><li>The number of villages in India is more than .64 million. The number of villages or locations that are to be served is 124 times that of the urban markets as the number of urban locations or towns is 5,161. </li></ul></ul></ul>
    9. 10. <ul><li>The demographic profile of the rural market is captured by the household size, sex distribution, literacy level, occupation and income. </li></ul><ul><li>Literacy Rate </li></ul><ul><ul><li>Literacy rate is available from National Sample Survey Organization (NSSO). The rural markets have lower levels of literacy as compared to the urban markets. </li></ul></ul>
    10. 11. <ul><li>The National Sample Survey (NSS), initiated in the year 1950, is a nation-wide, large-scale, continuous survey operation conducted in the form of successive rounds. </li></ul><ul><li>The Steering Committee consisted of 8 Non-official and 8 Official members. The Non-official members are men of eminence in either of the fields of economics, statistics and social sciences. </li></ul><ul><li>The Official Members are all senior officers of the Ministry of Statistics and Programme Implementation, Planning Commission and State Directorates of Economics & Statistics. The Director General and Chief Executive Officer (DG & CEO) of NSSO is the Convener of the Steering Committee. </li></ul><ul><li>NSS is involved in three types of surveys. </li></ul><ul><ul><li>Socio-economic surveys </li></ul></ul><ul><ul><li>Annual Survey of Industries </li></ul></ul><ul><ul><li>Agricultural surveys </li></ul></ul>
    11. 12. <ul><li>Occupation </li></ul><ul><ul><li>Although majority of the rural population is employed in agriculture, yet a large percentage of more than 30 per cent employed is in the non-agricultural sector. Salary earners in the rural areas are a significant group with more than 11 per cent of the head of the households as salary earners. </li></ul></ul><ul><li>Income </li></ul><ul><ul><li>It is short-sighted to view rural markets as an extension of urban markets. The issue facing the rural marketer is not of adequate consumers who can afford what the urban market consumes. The situation, instead, requires the marketer to identify and reach out to consumers with offers that meet variations in their ability to purchase. </li></ul></ul>
    12. 14. <ul><li>Rural consumers exhibit a skewed use of consumer durables possibly reflecting the lack of suitability of the current products available in the market. The rural consumers require products suited to their needs. Rewards await the marketer willing to invest in understanding their needs and translating them into products and services. </li></ul>
    13. 15. <ul><li>A barrier to adoption of a number of consumer durable goods that require electricity to operate, is the lack of electricity in many rural households. Thirty-seven per cent of the rural-urban difference in the penetration levels for consumer durable products is explained by the lack of the spread of electricity in rural areas. </li></ul>
    14. 16. <ul><li>The rural household spends, on an average, Rs 3,384 per year for 22 consumer non-durable products that include toiletries, cosmetics, packaged foods, washing products, etc. The urban households spend on an average Rs 7,559 a year for the 22 consumer non-durables. </li></ul>
    15. 18. <ul><li>The results from another study which was conducted by Business world also support the above findings. According to this study: </li></ul><ul><ul><li>(a) Fast-moving consumer goods purchased by rural consumers include toilet soaps, washing soap bars, edible oil, tea and washing powders. These indicate that rural consumers buy basic products. </li></ul></ul><ul><ul><li>(b) The acceptance of hair wash preparations like shampoos is less than that of products like soaps. This shows that personal hygiene is also considered important by a number of rural consumers. </li></ul></ul><ul><ul><li>(c) The purchase of superior products is also indicated in this study. Toothpowders were long considered to be the only sort of oral-care product rural markets would buy, yet toothpaste penetration has actually overtaken toothpowder penetration. </li></ul></ul>
    16. 19. <ul><li>Infrastructural facilities like roads and communication network, rural electrification, public distribution system, cinemas, television coverage and the like also received considerable attention in rural areas. </li></ul>
    17. 20. <ul><li>Rural electrification has been going on in a big way. Statistics indicates that 5,09,620, which is about 88 %, now have an electricity connection. </li></ul><ul><li>To achieve its goals the central government created an organisation called ‘RURAL ELECTRIFICATION CORPORATION’ with the sole idea of financing rural electrification projects. </li></ul><ul><li>Rural Electricity Supply Technology (REST), Pradhan Mantri Gramodaya Yojna (PMGY). </li></ul>
    18. 21. <ul><li>Road Network : The road network of over three million kilometers in India is the largest in the world. </li></ul><ul><li>Rail Network : Indian railway network consists of approx. 63000 km which is connected to thousands of villages. </li></ul><ul><li>Cinema Hall </li></ul><ul><li>Television Network </li></ul><ul><li>Postal system </li></ul><ul><li>Telecommunication </li></ul>
    19. 23. <ul><li>The popular image of a rural consumer is of one who has limited educational background, is exposed to limited products and brands, chooses price over quality, and is influenced by word-of-mouth communication. There is also the view that a rural consumer is no different from his urban counterpart. Changing consumption patterns reflect the evolving lifestyle of rural consumers. </li></ul><ul><li>Examining the lifestyle of the rural consumer helps to understand the consumption pattern and the influence of the environment on consumer behavior. </li></ul>
    20. 24. <ul><li>Increasing incomes and income distribution. </li></ul><ul><li>Marketers’ efforts to reach out and educate potential consumers. </li></ul><ul><li>The situation in which the consumer utilizes the product. </li></ul>
    21. 25. <ul><li>1. Many households in the rural area are not electrified which: </li></ul><ul><ul><li>affects the ability of the rural consumer to use electrical products </li></ul></ul><ul><ul><li>(b) increases the demand for batteries. </li></ul></ul><ul><li>2. The non-availability of piped running water affects both the durable and non-durable markets: </li></ul><ul><ul><li>(a) automatic washing machines have no demand in such situations; </li></ul></ul><ul><ul><li>(b) washing powders cannot be used if clothes are washed in streams or ponds. </li></ul></ul><ul><li>3. The availability of roads influences the purchase of motorized vehicles. In direct contrast: </li></ul><ul><ul><li>more than half the rural households own bicycles; </li></ul></ul><ul><ul><li>(b) Automobile manufacturer will face the hurdle to sell car or bikes to rural households. </li></ul></ul>
    22. 26. <ul><li>Since a stereotype of the rural consumer or of rural consumer behavior is absent, it creates problems as well as opportunities for the marketer. Variations in behaviour reflect geographical, demographical and behavioural influences on lifestyle, which provides marketers with options to segment the market. The creative use of products suggests possibilities for market development. Behavioural bases for segmenting could be socio-cultural or consumer perceptions and attitudes. </li></ul>
    23. 27. <ul><li>To understand rural buying behavior, a marketer must first understand </li></ul><ul><ul><li>(a) the factors that influence buying behavior and </li></ul></ul><ul><ul><li>(b) the variations in behavior. </li></ul></ul><ul><li>These help to generate information upon which a marketer can create bases to segment the rural market. </li></ul><ul><ul><li>Environment of the consumer </li></ul></ul><ul><ul><li>Geographical influences </li></ul></ul><ul><ul><li>Influence of occupation </li></ul></ul><ul><ul><li>Place of purchase </li></ul></ul><ul><ul><li>Creative use of products </li></ul></ul>
    24. 28. <ul><li>Virtually all radios, cassette players and television sets are made to urban power supply specifications. In many villages, particularly in power-strapped states, voltages fluctuate wildly, making electrical products susceptible to frequent breakdowns. Rural consumers may not mind paying more for products like the television or radio if they can withstand frequent voltage fluctuations. </li></ul>
    25. 29. <ul><li>The rural market is not a homogeneous one. Variations in economic development and in consumer willingness to accept innovations are evident in rural markets. </li></ul><ul><li>for example, the difference between parts of western and eastern Uttar Pradesh (UP) is extreme. </li></ul><ul><li>In western UP, villagers speak Hindi whereas in eastern UP they speak Bhojpuri. </li></ul><ul><li>Variations in consumer behaviour due to geographical locations are also reflected in the variations in their innovativeness. </li></ul>
    26. 30. <ul><li>The perception that the rural consumer is either a farmer or an agricultural laborer restricts marketing effectiveness. In fact there are other groups of consumers with different needs and behaviour and having significant purchase volumes. </li></ul><ul><li>Except Farmers other occupation profiles of consumer indicate that the nonagricultural occupation groups of shopkeepers or traders and those employed in service (government administration jobs, banks, teachers, other professionals, etc.) are the high consumption segment. Television owners in the service class constitute 43 per cent, which means one in two persons owns a television set. </li></ul>
    27. 31. <ul><li>Not all rural consumers buy from the same location. It is also true that the same consumer could buy from different locations depending on the product and the need. </li></ul><ul><li>A study on haats indicates that, despite the same product being available in the village shop, 58 per cent of the rural consumers visiting the haats preferred to buy these from a haat because of better prices, quality and variety. </li></ul><ul><li>Rural consumers do not rely on the local outlets and haats alone, as some of the purchases are made in the urban areas </li></ul>
    28. 32. <ul><li>Understanding the social and attitudinal influences on rural consumer behaviour is important to the marketer, as these serve as a guide to decisions on product offering, pricing, distribution, media and message; in effect forming the ‘rural marketing strategy’. </li></ul>
    29. 33. <ul><li>In rural areas the houses are painted during festival season. The demand for distemper paints is therefore very large. This demand is met by local brands, which are of low quality. Asian Paints developed a product with bright colour shades (preferred by the rural consumers) for rural markets and which had greater durability than the local brands. It launched the product in a pouch form and with the brand name Utsav. </li></ul><ul><li>Utsav was promoted as a good quality economy brand. It used wall paintings and point-of-purchase displays to create awareness. It identified dealers and sub-dealers who had the potential to stock and sell Utsav. To demonstrate the quality of Utsav , the company painted the headman’s house or post office. The brand was well accepted by the rural consumer. </li></ul>
    30. 35. <ul><li>The marketer who seeks to modify the behaviour of the rural consumer needs to influence the consumer’s perception and attitude. It is here that the marketer has to be careful in designing products and developing message for the rural market. </li></ul><ul><li>The interpretations of the rural consumer differ from those of the urban consumers. Colours are interpreted differently, so are sizes and shapes. </li></ul><ul><li>In interior markets, brand identification is through visual patterns—a red soap cake signifies Lifebuoy soap. </li></ul>
    31. 36. <ul><li>Conventional wisdom on rural marketing believes that the villager craves, but can’t afford the products his city cousin consumes. As a result, companies usually try to reduce the prices of their products either by creating smaller pack sizes, or by compromising on quality. This works sometimes, and with some products. </li></ul><ul><li>However, it is not true that only cheap brands sell in rural markets. Usha found that the sale of its economy models was falling sharply in rural areas. Farmers preferred Usha’s premier ‘Century’ brand, though it was priced 20 per cent higher. </li></ul>
    32. 37. <ul><li>The rural consumer has a very high involvement in any product purchased, especially when he decides to buy high-end products which cost a few hundreds or thousands of rupees. He has his daily routine, and there is no sense of urgency in his lifestyle. He understands symbols and colours better, and looks for endorsement by local leaders or icons </li></ul>
    33. 38. <ul><li>A marketer does not perceive an opportunity in rural market when he or she thinks that the rural consumer buys only unbranded items. It is useful to have a good understanding of the purchase behaviour of the consumer in order to guide decisions in the rural markets. </li></ul><ul><li>The loyalty of rural consumers to a brand varies according to product categories. It has been seen that loyalty is low in toilet soaps, toothpaste, batteries and washing cakes but high in home insecticides, chyavanprash, shaving preparations and skin cream. </li></ul>
    34. 40. <ul><li>A successful attempt in the direction of assessing the potential of rural markets has been made by Hindustan Thompson Associates limited. </li></ul><ul><li>They made the first attempt in 1972. since most of the data are available at district level, they collected these data for 334 districts. They identified 11 factors and assigned a weightage to each other. However, this was not considered to be satisfactory approach. </li></ul><ul><li>Hence another attempt was made in the year 1986. During the second attempt, they considered 26 factors for constructing the rural marketing index, in this attempt they considered 383 districts. </li></ul>
    35. 41. <ul><li>Area of the district in sq km </li></ul><ul><li>Demographics </li></ul><ul><ul><li>Population </li></ul></ul><ul><ul><li>Males </li></ul></ul><ul><ul><li>Females </li></ul></ul><ul><ul><li>Density per sq km </li></ul></ul><ul><ul><li>Number of villages </li></ul></ul><ul><ul><li>Percentage distribution of villages </li></ul></ul><ul><ul><li>Literate – rural numbers </li></ul></ul><ul><ul><li>Percentage of literacy </li></ul></ul><ul><ul><li>Literate : males </li></ul></ul><ul><ul><li>Literate : females </li></ul></ul><ul><li>Occupational pattern </li></ul><ul><ul><li>Cultivators </li></ul></ul><ul><ul><li>Agricultural laborers </li></ul></ul><ul><ul><li>Non Agricultural laborers </li></ul></ul>
    36. 42. <ul><li>Agricultural related data </li></ul><ul><ul><li>Gross cropped area in hectares </li></ul></ul><ul><ul><li>Gross irrigated area in hectares </li></ul></ul><ul><ul><li>Area under non food crops in hectares </li></ul></ul><ul><ul><li>Average size of operational holdings in hectares </li></ul></ul><ul><li>Agricultural inputs data </li></ul><ul><ul><li>Pump sets and tube wells </li></ul></ul><ul><ul><li>Fertilizer consumption in metric tonnes </li></ul></ul><ul><ul><li>Number of tractors </li></ul></ul><ul><li>Rural electrification data </li></ul><ul><ul><li>Percentage of villages electrified </li></ul></ul><ul><li>Commercial banks data : </li></ul><ul><ul><li>Number of rural branches </li></ul></ul><ul><ul><li>Deposits in lakh of rupees </li></ul></ul><ul><ul><li>Advances in lakh of rupees </li></ul></ul>
    37. 43. <ul><li>Considering the environment in which the rural market operates and its associated problems, and the experience of manufacturer and marketing men who operates in the rural market, it is possible to evolve certain strategies specifically for rural marketing. </li></ul><ul><li>In this section we try to draw a framework for the adoption of a mix of marketing strategies pertinent for rural marketing. </li></ul>
    38. 44. <ul><li>Drawn from the experience of companies operating in the rural market, meaningful product strategies for the rural market and rural consumer have been discussed here. </li></ul><ul><li>Small unit packaging : this appears to be an effective strategy for realizing the potential of rural market. The reduced pack sizes attract a large number of rural consumers to at least try and test the products. </li></ul><ul><li>Low priced packaging : take an e.g. of ‘Janta blend, they marketed a brand of tea which contained 70 percent tea, 20 percent of chicory and 10 percent of tipoca flour. </li></ul><ul><li>New product designs </li></ul><ul><li>Sturdy products </li></ul><ul><li>Utility oriented products </li></ul><ul><li>Brand name </li></ul>
    39. 45. <ul><li>Pricing strategies are linked to the product strategies. The product packaging and presentation also keeps the price low to suit the rural consumer. </li></ul><ul><li>Some of the pricing strategies are discussed below: </li></ul><ul><li>Low cost/ cheap products: the price can be kept low by low unit packing's like paisa pack of tea, shampoo sachets, Vicks 5 grams tin, etc. this is a common strategy widely adopted by many manufacturing and marketing concerns. </li></ul><ul><li>Refill packs / Reusable packaging : in urban areas most of the health drinks are available. The containers can be put to multipurpose uses. Such measures can a significant impact in the rural market. </li></ul>
    40. 46. <ul><li>Application of value engineering: in food industry, Soya protein is being used instead of milk protein. Milk protein is expensive while Soya protein is cheaper, but the nutrition content of both is the same. The basic aim is to reduce the value of the product, so that a larger segment can afford it, thus, expanding the market </li></ul>
    41. 47. <ul><li>While it is necessary to formulate specific strategies for distribution in rural areas, the characteristic of the product – whether it is consumable or durable, the life of the product and other factors have to kept in mind. </li></ul><ul><li>The following strategies formulated for the rural category. </li></ul><ul><ul><li>Coverage of villages with 2000 and above population: Ideally, coverage of villages with up to 2000 and above population could be the break-even point for a distribution setup. By doing so the percentage of villages covered comes to only 10% of all the rural population covered will b substantial. With improved communication facilities it is possible to reach distribution vas to these villages. </li></ul></ul>
    42. 48. <ul><li>Use of co-operative societies: There are over 3 lacks co-operative societies operating in rural areas for different purposes like marketing cooperatives, farmers service cooperatives and other multipurpose cooperatives. These cooperatives have an arrangement for centralized procurement and distribution through their respective state level federation. </li></ul><ul><li>Utilization of public distributory system: The PDS in the country is fairly well organized. The revamped PDS places more emphasis on reaching remote rural areas like the hills and tribals. The purpose of PDS is to make available essential commodities like food grains, sugar, kerosene, edible oils and others to the consumers at a reasonable price. </li></ul><ul><li>Utilization of multipurpose distribution centres by petroleum/oil companies: In order to cater to the rural areas the petroleum/oil companies have evolved a concept of multipurpose distribution centres in rural areas. In addition to petrol/diesel, lubricants, these outlets also stock consumables agricultural inputs like fertilizers, pesticides and seeds. </li></ul>
    43. 49. <ul><li>Distribution upto feeder markets/mandi towns: Keeping in view the hierarchy of markets for the rural consumers, the feeder markets and mandi towns offer excellent scope for distribution. The rural customers visit these towns at regular intervals not only for selling the agricultural produce but also for purchasing cloth, jewelry, hardware, radios, torch cells and other durables and consumer products. </li></ul><ul><li>Shandies/Haaths/Jathras/Melas: These are places where the rural consumers congregate as a rule. While shandies/heaths are held a particular day every week, Jathras and melas are held once or twice a year for longer durations. They are normally timed with religious festivals. Such places attract large number of itinerant merchants. Only temporary shops come up selling goods of all kinds. It can be beneficial for companies to organize sales of their product at such places. </li></ul>
    44. 50. <ul><li>Agricultural Input Dealers: Fertilizers should be made available to the farmers within the range of 4-5 km from their residence, as per the essential commodities act. This is why there are about 2 lakh fertilizer dealers in the country, both in cooperative & private sector. Example of Varana Nagar in Maharashtra proved an eye opener in this regard where the sugar and milk co-operatives have totally changed the life style of people. The supermarket in Varana Nagar caters exclusively to rural consumers. Similarly a co-operative supermarket called ‘Chintamani’ in Coimbatore (T.N) arranges free transit of rural consumers to the supermarket of their purchases. </li></ul>
    45. 51. <ul><li>The burgeoning rural markets have become a great opportunity for many companies to expand sales. However, many of them back out as they find distribution as a major problem. Used to the developed distribution network in the urban markets, they try the same tricks in rural markets, namely, extensive retailing and sustained pull generation through mass media advertising. As a result they fail and place the blame on the less developed infrastructure of the rural markets. Creative companies like HLL, have been experimenting to find innovative ways of reaching the rural consumers. </li></ul>
    46. 52. <ul><li>Difficulty in reaching rural consumers </li></ul><ul><li>The major problems are: </li></ul><ul><ul><li>Lack of adequate transport facilities, </li></ul></ul><ul><ul><li>Large distances between villages, </li></ul></ul><ul><ul><li>Lack of pucca roads connecting villages to nearest townships, </li></ul></ul><ul><ul><li>Lack of proper retail out lets </li></ul></ul>
    47. 53. <ul><li>the rural distribution chain needs the village level shopkeeper, the mandi-level distributor and the wholesaler/stockiest in the town. And on top of them are the manufacturers’ own warehouses/branch office operations at selected centers in the marketing territory. Such multiple tiers and scattered outfits push up costs and make channel management a major problem. The scope for manufacturers’ direct outlets such as show rooms or depots is quite limited in the rural market unlike in urban areas. Lit become expensive as well as unmanageable. </li></ul>
    48. 54. <ul><li>Another problem is the availability of dealers. Many firms find that there are a limited number of suitable dealers. Even if the firm is willing to start from scratch and try out rank newcomers, the choice of candidates is really limited. </li></ul>
    49. 55. <ul><li>Retail sales outlets in the rural market suffer from poor viability. A familiar paradox in rural distribution is that the manufacturer incurs additional expenses on distribution; still the retail outlets find that the business is un remunerative. The scattered nature of the market and the multiplicity of tiers in the chain use up the additional funds the manufacturer is prepared to part with And no additional money comes to any of the groups. </li></ul>
    50. 56. <ul><li>Inadequacy of institutional/bank credit is another constraint. Rural outlets are unable to carry adequate stocks due to lack of credit facilities. They are unable to extend credit to their customers. Thus there is a vicious circle of lack of credit facilities leading to inadequate stocking and loss of business, finally resulting in poor viability of outlets. </li></ul>
    51. 57. <ul><li>There are wide regional variations in the prosperity levels of the districts and hence in their market potential. These need to be analyzed and understood sectorally in order to determine the methods for approaching them. </li></ul><ul><li>A socio-economic survey undertaken in four progressive districts, one from each part of the country—Tanjore, Ludhiana, Burdwan and Kolhapur—revealed a healthy per capita income growth of 5 per cent per annum among big and small farmer against a nation average of 1.5 per cent. This has come about through improved use of land coupled with a reduction in family size. </li></ul>
    52. 58. <ul><li>Consider Hero Honda Motors. Its 360 dealers allover the country has reported the emergence of an unofficial channel of distribution –village mechanics, local real estate agents, shopkeepers who sell non-durables and so on. These people are taking motorcycles from the official dealers-usually in twos and threes— displaying them outside their premises and closing a sale. The paper work, though, is left to the dealer to complete. </li></ul>
    53. 59. <ul><li>In terms of their coverage of population and their share in total supply of agricultural inputs, including credit, Cooperatives occupy an important place in India’s rural economy. India has largest network of cooperatives in the world. Rural scan reports that there are 4398 primary marketing societies and 2933 large agricultural multipurpose primary marketing services(LAMPS) in the country. </li></ul>
    54. 60. <ul><li>Public Distribution System (PDS) </li></ul><ul><li>The fair price shops run by government can be utilized to sell consumables and low value durables. </li></ul><ul><li>Agricultural Input Dealers </li></ul><ul><li>Fertilizer companies have retail outlets within a range of 5 km to any village. They offer a scope for marketers. </li></ul><ul><li>NGOs </li></ul><ul><li>Non government organizations (NGOs), can reach interiors of villages. Most NGOs have progrms focusing on sustainable development through providing avenue for income generation. They command substantial influence in the villages covered by them. Companies may join hands with them to mutual benefit. With NGOs undertaking distribution, companies realize benefits accruing from infrastructure and grass roots level networking. Also organization security would provide a buffer against delayed retail collections. From the NGOs standpoint, such association with companies could yield employment opportunities for local residents. </li></ul>
    55. 61. <ul><li>Barefoot Salesmen </li></ul><ul><li>One useful option is to train sons –of-the soil to operate as barefoot salesmen. The important requirements like fluency in the local dialect and familiarity with persons and terrain will be the advantage in hire the persons form villages. </li></ul><ul><li>A barefoot salesman, operating on a retailer-cum-commission basis, could book orders from retailers in villages with in a limited radius of his village. When orders are aggregated and served there will be economies in distribution. </li></ul><ul><li>Syndicated distribution </li></ul><ul><li>A new alternative approach is syndicated distribution. Under this approach, marketers of household products could group together and consider the formation of a syndicated trading organization, which could jointly distribute collective group of household products in the rural market and enjoy shared economies. </li></ul>
    56. 62. <ul><li>Network Marketing: Network marketing is a form of direct selling. It can take place at two levels. </li></ul><ul><ul><li>Single level—distributor appoints sales persons. He earns profits on sales, made by him. </li></ul></ul><ul><ul><li>Multi-level-distributor introduces another distributor (a friend or relative, in general), who in turns introduces another distributor. </li></ul></ul>
    57. 63. <ul><li>The promotion measure should be cost effective due to the low literacy rate of the rural population. Word of mouth is an important message carrier in the rural areas and “opinion leader” play a significant role in influencing the prospective rural consumers about accepting or rejecting a product or a brand. </li></ul><ul><li>There are other attributes in the promotion strategy which are explained as under: </li></ul><ul><ul><li>Mass media: In the present world mass media is a powerful medium of communication. The following are the mass media generally used: </li></ul></ul><ul><ul><li>Television. </li></ul></ul><ul><ul><li>Cinema </li></ul></ul><ul><ul><li>Radio </li></ul></ul><ul><ul><li>Print media: Handbills and Booklets, posters, stickers, banners, </li></ul></ul>
    58. 64. <ul><li>Personal selling and opinion leaders: In personal selling it is required that the potential users are identified and awareness is created among them about the product, its features, uses and benefits. This can be achieved only by personal selling by highly motivated sales person. In fact the word of mouth information holds lot validity in rural areas even today. </li></ul><ul><li>Special campaigns: During crop harvest and marketing seasons it is beneficial to take up special promotion campaigns in rural areas. Tractor owners (tonee) conducted by MRF Limited is one such example. Brooks Bond carries out marches in rural areas with band, music and caparisoned elephants to promote their brand of tea. </li></ul>
    59. 65. <ul><li>Philips India was among the first consumer durables companies to hit the rural 143 market with its Bahadur brand of Transistors in the 1950s. but somewhere down the line, the rural focus was gone. However, in the mid-1998, Philips felt the need to improve its market share in upcountry markets. It decided to launch a special project in Tamil Nadu and Andra Pradesh at a total cost of Rs. 5 Crore. Rural consumers need to be seen as ‘different’ and ‘not inferior’. </li></ul><ul><li>It is with this belief that Philips approached rural buyers in Tamil Nadu and Andra Pradesh. “the idea was to present Philips in a relevant manner to the rural consumer, position it as a truly International brand, the way a rural buyer would understand it,”says V.Swaminathan, Philips general manager (distribution & rural marketing) at its consumer electronics department division. So Philips held road shows, van promotions, merchandising etc. in villages with populations of about 5000. </li></ul>
    60. 66. <ul><li>During the exercise, Philips painted 1 lakh square ft of wall area in Tamil Nadu and Andhra Pradesh. 4 ad campaigns- 2 for B&W (Black &White) TV and 1 each of C (Colour) TV and audio systems- were created in Tamil and Telugu. These were executed in cinemas, theatres and through video vans (68% of people in Tamil Nadu watch films and 81% in Andhra). The electronic media ads were slickly used. Philips did not compromise on the production values. </li></ul><ul><li>In the ad film for Andhra Pradesh, Philips used popular singer S P Balasubramanyam. The ad showed star complementing his son for buying a worldclass Philips TV. The results of the entire exercise: sales rose by between 25% and 30% in these states in the last 6 months. Now, Philips is extending the exercise to Uttar Pradesh and Maharashtra. </li></ul>
    61. 67. <ul><li>&quot;The medium is the message&quot; acquires critical importance for advertisers and marketers in India as different media have varying penetration levels. For example terrestrial TV has the highest penetration among all types of media with 78 per cent penetration in urban India and 36 per cent in rural India. It's reach is the highest in the 14 to 19 age group with 62 per cent. </li></ul><ul><li>In contrast satellite TV reaches only 13 per cent of India. The medium's highest penetration of 52 per cent is in urban Maharashtra. But in the rural parts of the state it has a penetration of a mere 4 per cent. Similarly in Assam and Orissa satellite TV reaches only 4 per cent of the population. </li></ul><ul><li>Given the high literacy levels it is natural that print media has the highest penetration in Kerala. It reaches 76 per cent in urban Kerala and 65 per cent in rural parts of the state. Print media has the lowest reach in Assam with 11 per cent. </li></ul>
    62. 68. <ul><li>Few of the available options in the traditional media are Puppetry, Folk Theater & Song, Wall Painting, Demonstration, Posters, Agricultural Games, and Post Cards etc. </li></ul><ul><li>Puppetry </li></ul><ul><ul><li>Puppetry is the indigenous theatre of India. From time immortal it has been the most popular form and well-appreciated form of entertainment available to the village people. It is an inexpensive activity. The manipulator uses the puppets as a medium to express and communicate ideas, values and social messages. </li></ul></ul><ul><ul><li>Life Insurance Corporation of India used puppets to educate rural masses about Life Insurance; enlisting the help of the literacy house in Luck now. These plays were shown to the audience in villages in UP, Bihar, & MP. The number of inquires at local Life Insurance Companies during the period immediately following the performance was compared with normal frequency and found to be considerable higher. The field staff of the corporation also reported a definite impact on the business. </li></ul></ul>
    63. 69. <ul><li>Folk Theater </li></ul><ul><ul><li>Folk theaters are mainly short and rhythmic in form. The simple tunes help in informing and educating the people in informal and interesting manner. It has been used as an effective medium for social protest against injustice, exploitation and oppression. Folk Theater / Songs Forms In India Andhra Pradesh: Veethi Natakam, Kuchupudi, Burratatha Assam: Ankiya Nat, Kirtania Natak, Ojapali Bihar: Bidesia, Serikela Chhau, Jat-Jatni Bidpada, Ramkhelia Gujarat: Bhavai etc. </li></ul></ul><ul><li>Demonstration: </li></ul><ul><ul><li>&quot;Direct Contact&quot; is a face-to-face relationship with people individually and with groups such as the Panchayats and other village groups. Such contact helps in arousing the villager's interest in their own problem and motivating them towards self-development. Demonstration may be </li></ul></ul><ul><ul><li>A. i. Method demonstration </li></ul></ul><ul><ul><li>ii. Result demonstration </li></ul></ul><ul><ul><li>B. i. Simple Demonstration </li></ul></ul><ul><ul><li> ii. Composite Demonstration </li></ul></ul>
    64. 70. <ul><ul><li>Information about people </li></ul></ul><ul><ul><li>Objectives to be accomplished </li></ul></ul><ul><ul><li>Demonstration plan & Execution of the plan </li></ul></ul><ul><ul><li>Evaluation of the demonstration </li></ul></ul><ul><ul><li>Reconsideration after evaluation. </li></ul></ul>
    65. 71. <ul><li>The countries oldest tradition holds the key to solving these problems. The mobile supermarkets of rural India. </li></ul><ul><li>Facts & Figures: </li></ul><ul><ul><li>Over 47,000 haats and 25,000 melas are held annually. The average daily sale at a Haat is about Rs.2.25 Lacs Annual sales at melas amount to Rs.3,500 crore. Over half the shoppers at haats have shopping lists. More than 10,000 melas draw visitors from all over India. Nearly half the outlets at melas are for manufactured goods. Haats is a better opportunity for promotion after brand building has been done at Mela. Melas are organized after harvest season, so the villager has enough money, which he will be ready to spend. </li></ul></ul>
    66. 72. <ul><li>Wall Paintings are an effective and economical medium for advertising in rural areas. They are silent unlike traditional theatre .A speech or film comes to an end, but wall painting stays as long as the weather allows it to. Retailer normally welcomes paintings of their shops, walls, and name boards. Since it makes the shop look cleaner and better. Their shops look alluring and stand out among other outlets. Besides rural households shopkeepers and panchayats do not except any payment, for their wall to be painted with product messages. To get one's wall painted with the product messages is seemed as a status symbol. </li></ul>
    67. 73. <ul><li>The research process is very critical to rural marketing. There are two reasons for this: </li></ul><ul><ul><li>The marketer has limited understanding of the rural consumer; and </li></ul></ul><ul><ul><li>The marketer who is urban oriented may find it useful to unlearn consumer response to decision variables in the urban market. This requires the use of research methodology that is sensitive to social processes in rural markets. </li></ul></ul><ul><li>The research process used in urban markets may not always be appropriate in the rural markets. Selecting the research process therefore requires care in its application in the rural setting. </li></ul>
    68. 74. <ul><li>There are many problems to be tackled in rural marketing, despite rapid strides in the development of the rural sector. Some of the common problems are discussed below: </li></ul><ul><li>Transportation: Transportation is an important aspect in the process of movement of products from urban production centers to remote villages. The transportation infrastructure is extremely poor in rural India. Due to this reason, most of the villages are not accessible to the marketing man. In our country, there are six lakhs villages. Nearly 50 per cent of them are not connected by road at all. Many parts in rural India have only kachcha roads. During the monsoons, even these roads become unserviceable. </li></ul>
    69. 75. <ul><li>Communication: Marketing communication in rural markets suffers from a variety of constraints. The literacy rate among the rural consumers is very low. Print media, therefore, have limited scope in the rural context. Apart from low levels of literacy, the tradition-bound nature of rural people, their cultural barriers and their overall economic backwardness add to the difficulties of the communication task. </li></ul>
    70. 76. <ul><li>Availability of appropriate media: </li></ul><ul><li>It has been estimated that all organized media in the country put together can reach only 30 per cent of the rural population of India. The print media covers only 18 per cent of the rural population. The radio network, in theory, covers 90 per cent. But, actual listenership is much less. TV is popular, and is an ideal medium for communicating with the rural masses. But, it is not available in all interior parts of the country. It is estimated that TV covers 20 per cent of the rural population. But, the actual viewership is meager. The cinema, however, is a good medium for rural communication. But, these opportunities are very low in rural areas. </li></ul>
    71. 77. <ul><li>Warehousing: </li></ul><ul><li>A storage function is necessary because production and consumption cycles rarely match. Many agricultural commodities are produced seasonally, whereas demand for them is continuous. The storage function overcomes discrepancies in desired quantities and timing. In warehousing too, there are special problems in the rural context. The central warehousing corporation and state warehousing, which constitute the top tier in public warehousing in our country, have not extended their network of warehouses to the rural parts. </li></ul>
    72. 78. <ul><li>Village structure in India: </li></ul><ul><li>In our country, the village structure itself causes many problems. Most of the villages are small and scattered. It is estimated that 60 per cent of the villages are in the population group of below 1,000. The scattered nature of the villages increases distribution costs, and their small size affects economic viability of establishing distribution points. </li></ul><ul><li>Rural markets and sales management: </li></ul><ul><li>Rural marketing involves a greater amount of personal selling effort compared to urban marketing. The rural salesman must also be able to guide the rural customers in the choice of the products. It has been observed that rural salesmen do not properly motivate rural consumers. The rural salesman has to be a patient listener as his customers are extremely traditional. He may have to spend a lot of time on consumer visits to gain a favorable response from him. </li></ul>
    73. 79. <ul><li>Inadequate banking and credit facilities: </li></ul><ul><li>In rural markets, distribution is also handicapped due to lack of adequate banking and credit facilities. The rural outlets require banking support to enable remittances, to get replenishment of stocks, to facilitate credit transactions in general, and to obtain credit support from the bank. Retailers are unable to carry optimum stocks in the absence of adequate credit facilities. Because of this problem, the are not able to offer credit to the consumers. </li></ul>
    74. 80. <ul><li>Branding: </li></ul><ul><li>The brand is the surest means of conveying quality to rural consumers. Day by day, though national brands are getting popular, local brands are also playing a significant role in rural areas. This may be due to illiteracy, ignorance and low purchasing power of rural consumers. It has been observed that there is greater dissatisfaction among the rural consumers with regard to selling of low quality duplicate brands, particularly soaps, creams, clothes, etc. whose prices are often half of those of national brands, but sold at prices on par or sightlines than the prices of national brands. Local brands are becoming popular In rural markets in spite of their lower quality. </li></ul>
    75. 81. <ul><li>Packaging: </li></ul><ul><li>As far as packaging is concerned, as a general rule, smaller packages are more popular in the rural areas. At present, all essential products are not available in villages in smaller packaging. The lower income group consumers are not able to purchase large and medium size packaged goods. It is also found that the labeling on the package is not in the local language. This is a major constraint to rural consumers understanding the product characteristics. </li></ul>
    76. 82. <ul><li>The National Co-operative Development Corporation has been promoting and financing a wide range of economic activities in rural areas through co-operatives. The Co-operative is a unique institution in the country catering to the development of the rural economy and agriculture sector through co-operative. There is no other institution in the country which is exclusively for meeting the requirement of co-operatives. </li></ul><ul><li>NCDC has been playing special attention to weaker sections co-operatives in various part of the country. The promotional and development role of NCDC had lead to continuous diversification and expansion of co-operative programs under its preview. </li></ul>
    77. 83. <ul><li>When producers of agricultural commodities or any other product form a society with an objective of carrying out marketing of their produce, such society is called as cooperative marketing society. The need for co-operative marketing arose due to many defects observed and experienced in the private and open marketing system. </li></ul>
    78. 84. <ul><li>Several malpractices prevail in the marketing of agricultural produce. For example, arbitrary deductions from the produce, manipulation of weights and measures and cheating the farmers, collusion between the broker and the buyer while fixing the prices, delay in payment of amounts due to farmers, etc. </li></ul><ul><li>There exists a chain of intermediaries between the producer and the final consumer.They include village merchant, itinerant trader, wholesaler, commission agent, pre harvest contractor and retailer. They take their own margins for the services, they render. But these margins are generally ex-orbitant, making the commodities costly for the consumers and reducing the producer's share in the consumer's price. A cooperative marketing society can eliminate some or all of the intermediaries and can reach to the consumers and establish direct trade relations with them. </li></ul>
    79. 85. <ul><li>Under the system of co-operative marketing whole responsibility of marketing is taken up by the farmers themselves, organized on co-operative basis. The area of operation of marketing society is usually fixed with reference to local conditions - area based or commodity based. The commodity-based societies related to grapes, oranges, banana, pomegranate, etc. have wider jurisdiction covering the major areas growing each crop. </li></ul>
    80. 86. <ul><li>There are some services such as transport, storage, financing, grading, packing, loading/unloading which are carried out by some private functionaries who charge high rates for these services. A co-operative marketing society performs these services efficiently and at cheaper rates. </li></ul><ul><li>A co-operative marketing society provides market finance to farmers and ensures better returns to their produce. Besides marketing society can act as an agent of credit co-operative society and help to recover loans advanced by credit societies. </li></ul>
    81. 87. <ul><li>The Government of India has designed and implemented several issue based programmes aimed at rural development. The developmental activities under the Ministry of Rural Development cover infrastructure development and reforms in the agricultural sector, the non-farm sector and the social sector Within these sectors, issues related to production, productivity, skills, access to institutional credit, marketing of produce or services, education, health, social restructuring, empowerment of women and other socially deprived section, etc. have been the areas of focus for the policies. </li></ul>
    82. 88. <ul><li>Under the Pradhan Mantri Gramodaya Yojana (Prime Minsiter's Village Development Programme) (PGGY), announced in the 2001-02 budget, at fund of Rs 5,000 crore was earmarked for infrastructural development in village, primarily village roads for which 50 per cent of the fund was reserved. The remainder was planned for rural housing, drinking water and sanitation. The Central Government has achieved considerable success in meeting the drinking water needs of 91 per cent of rural habitations, with an investment of more than Rs 40,000 crore on the rural drinking water supply </li></ul>
    83. 89. <ul><li>Employment Opportunities </li></ul><ul><li>With the objective of promoting self-employment among the educated unemployed rural youth, government programmes such as the Pradhan Mantri Rojgar Yojna (PMRY) and the Intergrated Rural Development Project, were devloped. Thee programmes, implemented at the grass-roots level under the system of Panchayati Raj Institution, aim to provide skill-based training and link access to bank credit (subsidized). </li></ul><ul><li>Sampoorna Grameen Rojgar Yojana : </li></ul><ul><li>The Employment Assurance Scheme and the Jawahar Gram Samridhi Yojana (JGSY) are two schemes under the programme. The EAS is meant to create additional employment opportunities during periods of acute shortage of wage employment through manual world for the rural poor living below the poverty line. The JGSY aims at the creation of need-based rural infrastructure at the village level. </li></ul>
    84. 90. <ul><li>Rural Housing : </li></ul><ul><li>The 1991 Census revealed the presence of 1.4 crore household without shelter or residing in unserviceable kuccha house. The Central Government announced a National Housing and Habitat Policy in 1998 aiming to provide 'Housing for All' by facilitating the construction of 20 lakh additional housing units (13 lakh in rural areas and 7 lakh in urban areas) annually. With an emphasis on extending benefits to the poor and the deprived, the Government is committed to ending all shelterlessness by the end of the Tenth Plan period. </li></ul>
    85. 91. <ul><li>Swaranjayanti Gram Swarozgar Yojana: </li></ul><ul><li>Swarnjayanti Gram Swarozgar Yojana (SGSY), an ongoing programme for the self-employment of the rural poor, has been in effect since 1999 after the restructuring of the erstwhile Intergrated Rural Development Programme (IRDP) and allied programmes like Training of Rural Youth for Self Employment (TRYSEM) Development of Women and Children in Rural Area (DWCRA), Supply of Toolkits in Rural Areas (SITRA) and ganga Kalyan Yojana (GKY), besides the Million Wells Scheme (MWS) With the launching of the SGSY the earlier programmes are no longer in operation. </li></ul>
    86. 92. <ul><li>NABARD has decided to extend 100 per cent refinance facility to banks for financing Farmers Service Centres (FSC) set up in collaboration with Mahindra Shubhlabh Services Ltd. (MSSL) for providing various extension services to farmers, including supply of agri-inputs. FSC is internded to benefit farmers by way of higher yields and productivity through private-sector participation in technology transfer and extension services. </li></ul>
    87. 93. <ul><li>Land reforms aim at redistributing ownership holding from the viewpoint of social justice and reorganizing operational holdings as a method to optimize land utilization. </li></ul><ul><li>The reforms measures were as follows : </li></ul><ul><li>Distribute land among the landless by taking procession of surplus land from large landholders. </li></ul><ul><li>Provide security to sharecroppers or tenants on tenure and ownership </li></ul><ul><li>rights by regulating rent payable by them to landlords. </li></ul><ul><li>Protect the interests of tribals in landownership against encroachment by non-tribals. </li></ul>
    88. 94. <ul><li>The land was described as an economic unit and an economic holding was defined as one that could provide a reasonable standard of living to the cultivator and give full employment for a family. The land ceiling stated that no individual farmer should own more than three times the economic holding. Factors like soil fertility, irrigation, methods of cultivation and the nature of crops were considered when fixing the ceiling. Under this, 4 ha. or 10 acres of the best land and 7.5 acres or 18 acres of average land were fixed as the ceiling, considering that an annual net income of Rs. 15,000 would accrue to a family at 1970 prices. </li></ul>

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