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Rural Markets and Communications


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Rural Markets and Communications

  1. 1. Rural Marketing and Communications Assignment Interaction of media and technology with the rural markets in India Prof. Arbind Sinha Rohit Rohan | 20120119134 PGP.19 | MICA
  2. 2. Contents Coming of age Indian rural markets through the ages Evolution of the rural income Effects of migration on rural economy and the urban-rural income divide Connecting rural to India Role of media and technology in rural development Media activating rural scene Instances of influence of media on rural India Neck to neck Rise of rural markets in India Shift to the rural markets Corporates expanding into rural scene for success How to reach Strategies for rural market focused companies
  3. 3. Coming of age | Indian rural markets through the ages Rural Marketing meant different into three different periods. Part 1 | before 1960 This was a completely an unorganized market, where “baniyas and mahajans” dominated the market. Rural marketing was another word for agricultural marketing because agricultural produces like food grains and industrial like food grains and industrial like cotton, oil seeds, sugarcane etc occupied primary attention and the supply chain activities of firm supplying agricultural inputs and of artisans in the rural areas received secondary attention. Part 2 | 1960 to 1990 The greatest thing which happened in this period was green revolution which led to farming involving scientific and technological methods and many poor villages became prosperous business centers. With better irrigation facilities, soil testing, use of high yield variety seeds, fertilizers, pesticides and deployment of machines like power tillers, harvesters, threshers etc, the output increased especially wheat and paddies. Due to this marketing of agricultural inputs was also now there a new potential market. Now marketing of rural marketing meant “marketing of agricultural inputs” and “agricultural marketing”. Agencies like Khadi and Village Industries Commission, Girijan Co-operative Societies APCO Fabrics, IFFCO, KRIBHCO Company bloomed and government paid special attention to promote these products. Sale of handicrafts, handloom textiles, soaps, safety matches and crackers increased on large scale in urban areas. Part 3 | After mid 1990 Since 1990 ,India’s industrial sector had gained strength and maturity. It’s contribution to GNP increased substantially. There was metamorphosis of agricultural society to industrial society. With support and development programs of central and state governments, service organizations and socially responsible business groups like Mafatlal, Tatas, Birla, Goenkas and others the rural areas progressed socially and economically. Evolution of the rural income | Effects of migration on rural economy and the urban-rural income divide India has a high rate of migration from rural areas to urban cities. A major reason for the massive migration to cities was the Partition of India. More than half of the refugees from Pakistan settled In urban areas such as Delhi. It is estimated that up to 590 million people, or 40% of the Indian Population will be living in cities by 2030, much higher than the current 28%. Also, it is estimated that six states, including West Bengal, Tamil Nadu, Gujarat, Maharashtra, Karnataka and Punjab will have more than half of their total population living in Urban areas by 2030.
  4. 4. In India, urban areas have seen a much higher growth rate as compared to rural areas. Despite up to three-fourths of the population living in rural areas, rural areas contribute to only one-third of the national income. The main reason for rural India's poor performance in terms of income is the fact that rural India is mostly dependent on agriculture. The agriculture sector in India grew at a rate of only 1.6% in 2008-09, while the Indian Economy grew at a rate of 6.7%, despite the 2008 Financial Crisis.[19] An extremely slow rate of growth in the agriculture sector of the Indian economy has serious implications for the rural-urban divide, both in terms of income and GDP. Some estimates say that that the average income of a person living in an urban area may be up to 4 times higher than that of a person living in a rural area. The rising levels of urbanization in India is a major reason for the rising levels of income disparity in the country. Despite the fact that up to four-fifths of Indian households save money, almost a quarter of them spend more than they earn. Connecting rural to India | Role of media and technology in rural development At rural level, folk media has a very significant role and place in people’s lives. Modern day media still appears alien to the rural people. Folk media mainly includes folk songs, folk dances, folk theatre and other folk performing arts. The first significant international recognition of the traditional media in the communication and the development strategies of developing countries came in 1972 when the International Planned Parenthood Federation and UNESCO organized in London a series of meetings on the integrated use of the folk and the mass media in family planning communication programmers. Every village has its relevant music, dance or theatre. The folk arts cater to the needs to the local people and are in accordance with the changing traditions of the society. Traditional folk forms in India can be effectively used for social developmental communication. The communication potential of Indian traditional performing art has been proved time again and again by many instances of national importance. One can find such examples in every state of India where through awareness is created through folk dances, folk songs or through folk theater. The outcome of various researchers has established the importance of rural media in development communication. Traditional uses of folk media were primarily for entertainment, social communication and persuasive communication. International commission for the study of communication problems, the commission, also popularly known Mac bride Commission, was established by UNESCO to study among issues as increasing importance attached to communication as a social phenomenon and the consequent interest shown in the development communication. The limiting factor in case of mass media is that it appears glamorous, impersonal and unbelievable to the rural people whereas the traditional media are close to the hearts and minds of the people, so their appeal is at personal and intimate level. Folk media
  5. 5. can overcome the language barriers and can appeal to the emotions and thus souls of the rural people. Today, both the traditional and modern media complement each other. Therefore by keeping traditional media alive, we will not only be able to keep a very strong way of communicating with rural people open but also will be able to preserve the traditions and cultures of various tribes. The idea that the internet and related technologies might have an important role in aiding developmental efforts has captured a central place in international policy debates. But when it comes to India there is a digital divide between rural India and urban India. IT faces a lot of challenges in Indian villages like intermittent, inconsistent electrical power, archaic, scarce and unreliable telephony but still there are many success stories where internet has changed rural people’s lives. The Ministry of Rural Development in India has launched online public grievances system where villagers can lodge their complaints. This initiative has aided rural people a lot. It is naive to imagine that electricity, telephony and connectivity in rural areas will improve if the demand for these resources does not grow. In addition, information networks can become conduits that allow money to flow into the village through new kinds of non-discriminatory and clean industries. Information and communications technologies can also compensate for other kinds of infrastructure limitations. For example, if online work, trade, or payment were to become available for members of a village community, the poor quality of roads to and from that village becomes less of an obstacle to earnings and employment. Finally, and most importantly, if capital were to become more readily available within a village community through such networked systems, it would then be in a better position to finance the basic infrastructure that it needs, including roads, dispensaries, and water and sanitation systems. But interestingly, according to Latest Census data revealed that half of rural India now uses a mobile phone but just about one third of it has access to a proper toilet. However, rural ICT projects are yet to effectively position themselves as a vehicle for online commerce and a mechanism of employment for village communities. Digital social networks provide an opportunity to India to get out from the box of developing nations and join the league of developed countries. Social media networks have no doubt affected the lives of rural people. As far as agriculture is concerned, these have provided many opportunities to the farmers and eased the process of selling the crop through online schemes which has resulted in elimination of middlemen. There are innumerable success stories in field of health care as well. Rural politics is the area where social media networks have not achieved to the required extent. As far as IT is concerned by making the resources like unregulated supply of electricity, subsidies in purchase of computers etc. available in villages, information centers can alleviate the asymmetry between urban and rural environments. In order to accelerate rural growth, it is essential that we learn new ways of integrating social and human infrastructure development into the installation of basic information and communications infrastructure.
  6. 6. Also, it is true that if we want to penetrate the message of development among the rural masses we would have to opt for the folk forms of this country in more planned manner. Villagers comprise the core of Indian society and also represent the real India. And it is for these villagers that social media networks must realize their power as well as responsibility towards rural development. History has shown how nations have been built by social media. Now it’s India’s turn to grow with its 637,000 villages! Rural development will pave the path to India Vision 2020. Media activating rural scene | Instances of influence of media on rural India AIR | Outstanding contribution in rural agriculture All India Radio has been in rural development since India’s independence. There are so many programs being aired which caters to the needs of rural people. The most successful one has been „Kisan Vani‟ which informs farmers about day to day market rates, various agriculture techniques, new methods of farming, animal husbandry etc. Besides that, AIR also has programs for the empowerment of rural women which educate them on family planning, dowry, female feticide, child care etc. AIR (also known as Aakashvani) works hand in hand with Ministries and Departments of agriculture & rural development of central and state governments. Various other issues which are discussed on the programs being broadcasted on AIR include gender issues, importance of proper schooling and child abuse. It won’t be a hyperbole to say that All India Radio has served as the ocean of knowledge for rural people in India Facebook | A boon to rural farmers Although many of the Indian villages are deprived of regular supply of electricity and the internet connectivity is still a farfetched dream for the masses but still there are success stories where Facebook, the famous social networking site has helped to make a difference in lives of rural people. As per a report in The Economic Times, it saved many farmers of Maharashtra’s Sangli district’s farmers from perishing. Due to oversupply of turmeric, prices crashed exorbitantly in the local market. One of the local farmers used Facebook to connect to other turmeric farmers across the country and discussed the situation and discussed the prices with them. They decided not to participate in the local auction. Using social media, the news spread like a forest fire and 25000 turmeric farmers of Sangli heard of the boycott. The boycott served its purpose as the prices doubled. Earlier, a village sarpanch would sit under a tree and discuss certain issues with villagers before taking a final call. Facebook and Twitter are an extension of this concept." Farmer bodies are quick to point out the advantages of social media.
  7. 7. Shivnagar | A perfect example exhibiting social media’s power Shivnagar is a village in the northern India. Recently it has changed its name to Nagar. There was an interesting and a motivating reason behind it. The website that offers daily discounts, displayed a kind act of social good, by utilizing money for a worthwhile cause. The tiny village was devoid of proper facilities of water and villagers had to walk far as two miles to fetch fresh and clean water. A mere $5,000 from the CEO‟s pocket – helped in installing more than 15 hand pumps and changed thousands of life. Just like a simple deals and discounts site mustered efforts to get water to doorsteps of villagers in North India, Social Media holds larger promises for the general community as a whole; all that is required is someone who can act like God. NDTV-Toyota Greenathon | A campaign which light thousand of rural lives NDTV-Toyota Greenathon was launched in April 2008 and it creates a nationwide awareness to save the environment. The GREENATHON is a fund raising event that brings in people to donate money to support TERI‟s initiative which aims at providing solar power to villages without electricity. In year 1, they raised funds to light up 56 villages and in Greenathon 2, the resulted in 115 villages being provided with solar power. The initiative is greatly supported by celebs like Priyanka Chopra, Shahrukh Khan and Katrina Kaif etc. Neck to neck | Rise of rural markets in India Rural markets in India constitute a wide and untapped market for many products and services which are being marketed for the urban masses. There is a demand for telecommunication services to be provided to in these areas. Till now it was government which was trying to reach the villages through various initiates, but the rural tele-density is very poor and can be improved only through the introduction of modern and suitable technology along with participation from the private operators. India lives in villages, close to 72 percent of Indian population lives in rural areas. In the country we have 6.36 lakh villages out of which only 13 percent have population above 2000. The rural economy contributes nearly half of the country’s GDP which is mainly agriculture driven and monsoon dependant. More than 50 percent of the sales FMCG and Durable companies come from the rural areas. It is predicted that the consumer market in India predicts that in twenty years the rural Indian market will be larger than the total consumer markets in countries such as South Korea or Canada today, and almost four times the size of today’s urban Indian market and estimated the size of the rural market at $577 Billion. Census of India defines rural as any habitation with a population density less than 400 per sq. km., where at least 75 percent of the male working population is engaged in agriculture and where there exits no municipality or board, and the same definition being accepted for the paper here. A marketer trying to market his product or service in the rural areas is faced by many challenges; the first is posed
  8. 8. by the geographic spread and low population density in the villages in the country. The table below gives us the population and village size details in the country. The number of rural middle class households at 27.4 million is very close to their urban counterpart at 29.5 million. The improvement in the support prices being offered to farmers also has an impact on the disposable income with the farmers. And between, 1981-2001 there has been tremendous improvement in the literacy levels, poverty and rural housing in the villages of the country. Rural literacy levels have improved from 36 percent to 59 percent, the number of below poverty houses have declined from close to half to 46 percent and the number of pucca houses have doubled from 22 percent to 41 percent. These figures provide us with a clear picture that rural India with the increase in agricultural income and improving standards is on the verge of becoming a large untapped market which marketers have been aspiring for a very long period of time. Thus the current status of rural markets makes it an attractive market for marketers. Certain facts that strengthen the position of rural India as an economic segment are: • Rural India accounts for around 55 per cent of the manufacturing GDP; rural areas were host to nearly 75 per cent of new factories built in the last decade, and rural factories account for 70 per cent of all new manufacturing jobs. • Rural consumption per person has increased by 19 per cent yearly between 2009 and 2012; two percentage points higher than its urban peers. In incremental terms, spending in rural India during this period, increased by US$ 69 billion, significantly higher than US$ 55 billion by urban populations. There’s no second thought about the fact that the Indian rural market is increasingly becoming the economic powerhouse of the country. The hinterlands, accounting for about 50 per cent of India’s gross domestic product (GDP) and housing nearly 70 per cent of the country’s population, are showing remarkable multiplier effect and thereby excite policy makers and business leaders. Moreover, rural areas, where 12 per cent of the world population is residing, are witnessing enormous growth in their incomes and crucial shift in consumer behaviour. Companies have realised this enormous opportunity and are largely tuning their strategies to woo the rural clan through their products and services. Shift to the rural markets | Corporates expanding into rural scene for success Business conglomerates are increasingly getting attracted by the immense growth potential Indian rural markets possess. They have not only customised their offerings to suit rural consumers, but have also devised innovative ways to convince them and please them.
  9. 9. With rural consumers increasing their appetite for better products and high-standard services, fastmoving consumer goods (FMCG) companies intensified their efforts in rural India in 2012-13. FMCG majors like Dabur India and Hindustan Unilever (HUL) vouch for their rural markets and consider them to be extremely critical for the growth of their businesses. HUL’s decade-old Shakti initiative underwent a technology-overhaul in 2012 wherein about 40, 000 Shakti Ammas were equipped with a basic smartphone. These smartphones had inbuilt software that enabled them to take and bill orders, manage inventory and receive updates on promotional schemes offered by the company. This enhanced their productivity. Reportedly, the Shakti initiative delivers around 20 per cent of Unilever’s overall rural sales. While HUL empowered rural women as Shakti Ammas, Dabur India made rural people use the company’s sample products and experience the benefits for themselves. The idea was to spread the awareness about the company’s products through the word-of-mouth advertising. Havells India Ltd projects that housing sector, particularly in rural areas, is set to see a boom in coming years. As higher demand for houses imply greater demand for lighting and other domestic electrical goods, the fast moving electrical goods and power distribution equipment manufacturer plans to enter into rural India market with its newly-launched 'Rio' switches. Marketers focused on the countryside adopt a multipronged approach to reach the rural fragmented markets. They apply various permutations and combinations of strategies to woo the rural consumers. For instance, two-wheeler manufacturer Hero Motors added authorised representative dealers to its existing hub-and-spoke network. Appointed by the authorised dealers, the representatives facilitate easy purchasing and servicing of the bikes for locals. This step added more than 5, 000 touch points to Hero's channel strategy, enabling the company to extend its reach to 20 per cent of India's 600, 000 villages. How to reach | Strategies for rural market focused companies Focus: The company/organization must focus on a single service unlike Drishtee or n-logue or Akshaya. Training: Training is necessary for all stakeholders with the company (including employees, customers, vendors, etc). Why it is important? Because, in rural India you get raw talent. So they must be aligned to your requirements. Sometimes you may have to start from creating the whole ecosystem before actually scaling up your operations. Adjusting to local needs: Rural India consists of varied cultures, variety of traditions, etc. Your model should have flexibility of adapting to the local needs.
  10. 10. Technology for masses: Use technology wherever is possible. Word of mouth advertising: In rural India, people love to be your brand ambassadors and talk about all good things about your product/service if they like it. End-to-end service delivery: You need to make sure that the consumer gets service-as-a-whole delivered. For example, if you just collect a resume and charge the customer Rs. 20, and this may not be scalable. However, you collect a resume, provide him a job having salary of Rs 5000 and collect Rs. 20000. This would definitely work with rural people. Take the case of SKS, they just not only provide capital to people but also help them in their businesses similar to venture capital companies engaging with their portfolio companies. Emotional Attachment: Rural people keep the trust with your product/service and so you must live up to it. And to create such trust, you need to align with local communities in order to follow the trick, "trust is transferable". Efficient distribution: Rural India is sparsely populated and so it is obvious that the distribution costs are high. Here, one needs to deploy innovative approaches in order to bring down the costs