Rural Marketing


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A Rural project on Daruthenga Village.

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Rural Marketing

  1. 1. A RURAL MARKETING STUDY OF DARUTHENGASUBMITTED TO: Prof.L.K VaswaniBY:DIPTAKHSYA BANERJEE(076)SIBALIK NANDA(208)SATYAJIT PALO(210)PRIYANKA CHHOTRAY(228)AVINAB NANDA(243)PRATIK LATH(245)ASHISH AGRAWALLA(257)<br />ACKNOWLEDGEMENT<br />The project not only involves our sincerely efforts but also the involvement of certain people who have directly or indirectly guided us in the pursuit. We are whole-heartedly grateful to all of them.<br />We thank our project guide Prof. L.K.Vaswani for his sincere encouragement & much needed guidance. His role as a guide is an asset to us for the successful completition of our project well in time.<br />We are greatly indebted to all teaching & non-teaching staff of KIIT School of management and KIIT school of Rural Management for their suggestions & encouragement.<br />RESPONDENTS:<br />SHETADEI BEHRA(SARPANCH)<br />SHATRUGHAN BEHERA<br />JITENDRA PALTASINGH<br />CONTENTS<br /><ul><li>INTRODUCTION
  3. 3. RECOMMENDATIONS</li></ul> <br /> <br /> INTRODUCTION<br />Rural Markets are defined as those segments of overall market of any economy, which are distinct from the other types of markets like stock market, commodity markets or Labor economics. Rural Markets constitute an important segment of overall economy; typically, a rural market will represent a community in a rural area with a population of 2500 to 30000.<br />In recent years, rural markets have acquired significance in countries like China and India, as the overall growth of the economy has resulted into substantial increase in the purchasing power of the rural communities. On account of the green revolution in India, the rural areas are consuming a large quantity of industrial and urban manufactured products. In this context, a special marketing strategy, namely, rural marketing has taken shape. Sometimes, rural marketing is confused with agricultural marketing – the later denotes marketing of produce of the rural areas to the urban consumers or industrial consumers, whereas rural marketing involves delivering manufactured or processed inputs or services to rural producers or consumers. Also, when we consider the scenario of India , there is a picture that comes out, huge market for the developed products as well as the labor support. This has led to the change in the mindset of the marketers to move to these parts of the world.<br />Also rural market is getting an importance because of the saturation of the urban market. As due to the competition in the urban market, the market is more or so saturated as most of the capacity of the purchasers have been targeted by the marketers.So the marketers are looking for extending their product categories to an unexplored market i.e. the rural market. This has also led to the CSR activities being done by the corporate to help the poor people attain some wealth to spend on their product categories. Here we can think of HLL (now, HUL) initiatives in the rural India. One of such project is the Project Shakti, which is not only helping their company attain some revenue but also helping the poor women of the village to attain some money which is surely going to increase their purchasing power. Also this will increase their brand loyalty as well as recognition in that area. Similarly we can think of the ITC E-Chaupal, which is helping the poor farmers get all the information about the weather as well as the market price of the food grains they are producing.In other view these activities are also helping the companies increase their brand value. So as it is given above the significance of the rural market has increased due to the saturation of the urban market as well as in such conditions the company which will lead the way will be benefited as shown by the success of HUL and ITC initiatives.<br />Orissa has a population of 32 million. About 87% of the population lives in the villages and one third of the rural population does not own any land other than homesteads. Following India's independence, Orissa has been severely neglected by the central government in New Delhi. The government, which typically has been formed by the Congress Party, has made shockingly little investment in transportation, infrastructure and education in Orissa, which is why Orissa lags behind the other states. Only 20% of the road network is paved. <br />Daruthenga comes under the purview of the district Khorda and the sub-district of Chandaka. It is situated at a distance of 9 Kms from KISS. The number of households in this village is 522. The ratio of male and female in case of Daruthenga is quite well balanced. Total number of male population is 1,500 while female inhabitants are 1,400. This makes the total population of the village to be 2,900. The village has most of the basic amenities of modern living. Electrification and a proper drainage system are some of the many amenities that the Daruthenga has unlike many villages of Orissa. Most of the houses in the village have a modern structure which gives us an indication that the standard of living is same with respect to other villages of Orissa. Most of the low-income groups live in Kuccha houses, the percentage of this group is moderate in this village. 20% of rural household heads are daily wage earners whereas the rest of the population is cultivators. The disposable income of these cultivators is highly seasonal, with more disposable income available immediately after the harvesting season. During this period one tends to purchase more of durables and high-involvement purchases.<br />NATURE OF MARKETS<br />The nature of transactions between rural and urban markets can be categorized as:-<br />Rural Sellers-Urban BuyersRural Sellers-Rural BuyersUrban Sellers- Rural Buyers FROMRuralUrbanRuralUrbanTO<br /><ul><li>Rural Sellers- Rural Buyers : - Intra Rural Markets
  4. 4. Rural Sellers- Urban Buyers : - Farm and Non-farm Products
  5. 5. Urban Sellers- Rural Buyers : - FMCG and Agro-inputs</li></ul>It is usually seen that villages does not have a proper retail networks. Most of the villages are devoid of a proper distribution networks and that mostly survive on Haats (a form of unorganized retailing where producers pool in their harvests and other farm and non-farm offerings to the local market). Daruthenga a small village situated on a Latitude 19° 40' 0 N, Longitude 24° 55' 0 E, tell a different story to its visitors. The village has an organized retailing system apart from having a Haats unlike most of the other villages of India. <br />The village has about 30 retail stores selling items which are of daily necessaries. These kirana shops mostly sell FMCG products. Ever-since the demolition of some of the shops by the government officials, these shops have stopped selling any sort of farm products especially vegetables. The retail outlets present are small but well stocked with the essentials. Keeping in mind the local taste and preferences the shops selectively stores the products. The shops keep products which needs a low involvement from the part of the consumers. As the products are regularly purchased the shops are able to maintain a proper cash flow. It a general phenomenon that consumer from the rural market purchase in small quantities rather than buying in bulk, as buying in bulk means blocking their valuable money which they otherwise could have used in some other purposes. Urban market are increasingly becoming competitive and in many products, perhaps, even getting saturated. Consider the case of toiletries, packed tea, dry cell batteries and even electronic and entertainment products. For most of them, the demand seems to have reached a saturation level. All that one sees is brand switching behavior. Companies are expanding in those areas where they can ward off competition, generate new demand, and, in turn, increase their sales or profits. Companies like Colgate Palmolive, Nestle, Union Carbide, HUL, Cadbury’s and the like all have their presence in almost every village of India. Daruthenga is not devoid of the products of these companies. Although the village has a population of about 3,000, but still it can be seen that most of the FMCG companies do have their presence.<br /> Urban Sellers-Rural Buyers<br />Daruthenga is well connected by metal roads enabling the village to have a smooth inflow of different kinds of products in the village from the urban markets. The nearest market being Damana, the vendors purchase most of items from this market. Product like Coca-Cola is being delivered by the distributers by the means of hub and spoke distribution channel. This kind of channel enables the company to percolate through the interiors of a village. Applying a unique or a separate distribution channel may help the company to gain maximum market share in the rural market but at the same time it becomes costly as well for the company to maintain a separate distribution channel only for the rural consumers. Products which have a short self live and are used with a limited time frame are the products which are generally have a low involvement during the purchase process. Village consumers are similar and as well as different from the urban consumers in many aspects. Through observations it could be understood that the rural consumers are brand loyal; i.e. to say that they prefer to stick to only one brand only instead of switching over to other brands. On the other hand it should also be note that as a brand gives innovative sales promotions rural consumers tend to shift their existing brand to the new brand. Rural consumers tend to appreciate value of a product more than valuing its brand name. Typically in Daruthenga, the reference groups are the primary health workers, doctors, teachers and the panchayat members. One may even observe that the village trader or the grocery shop owner commonly called the baniya or majhajan, may also be an important influencer in the rural customer’s decision making process. The survey conducted revealed the facts about the consumption patterns of the different FMCG products available within the village. Mouthfreshners/pan-masalas sachet which costs Re1 is consumed and there is a regular purchase of items like these. Colgate and Close-up are the two brands with a pack size of 50gms which are sold the maximum. It was quite interesting to know that when people purchase products like toothpaste they usually stick to one brand unless there is better offer from the available competing brand. The villagers spell out the name of the brands that they are seeking for. Maggi Noodles are also sold, mainly the Rs5 pack, on an average 30 packs are sold in a week. Biscuit consumption is also seen in the village, chocolate biscuit, tiger, Horlicks biscuit, Marie, Parle G, Anmol biscuit of 120 grams and Rs 10, Britania cake (Rs3 and Rs5) are being sold. Shampoos are being purchased mainly the small sachet of Re1, Clinic Plus and Head and Shoulders are sold the maximum. Confectioneries such as Centerfresh, Cloromint, Creamfill, and Jelly Belly are some of the brands which are being purchased on a regular basis. Mixtures are procured by the shops from the local Bhubaneswar market at price of Rs 22 when the print price is Rs 32. No indigenous items are sold in the kiranas. In other words the kiranas doesnot sell any item which is produced locally, within the boundaries of the village. Wheel, Surf Excel Blue, Tide of Re1 and Rs 10 are being sold the maximum. Horlicks of 50 gms and Rs20, Tata Tea of Re1 and Rs 5, Kissan Jam of Rs 2. Superia soap a product from ITC of 120gms and Rs10 with a offer of 33% extra is being sold the maximum within the village. Shalimar Hair Oil is sold with a discount of Rs4-Rs5 on an average. Local pressed mustard oil is preferred and consumed over branded mustard oil. Among all the telecom operators Airtel has the maximum customer base in this village; this is followed by Vodafone who has the second largest number of customers. Some of the household do have connection to DTH services, which signifies the uplifitment in the living standard of the village population. Some of the Kirana shops were being recently demolished by the government. Product offers are generally preferred by the consumers. Products of OMFED especially milk is being consumed by the village inhabitants, this is seen among those who does not have cattle of their own. Fertilizers and seeds are purchased from Barang by the farmers. The rural markets in India have been increasingly recognized by businesses as potentially large market for goods and services. <br />Rural Sellers – Urban Buyers:<br />The economic integration of the urban-rural economy is essential to provide much needed pace to the growth of the rural economy. The processing of farm products offers great scope for conversion of farm produce to value-added products and in turn higher income transfer to the farmers from different classes of consumer, as processed commodities have wider market. The village Daruthenga is devoid of producing any non-farm products. Unlike other villages like Pipli where appliqué works is world renowned, and which works as an alternate source of income for the thousands of villagers. The survey revealed that the village produced different types of farm products and sells them in the nearby local markets and Haats, which assembles outside the village every alternate day. The main produce of the village are as follows:<br />Brinjals, Beans, Ladies finger, Green Chillies are being produced in small quantities. Paddy which is grown within the village mostly is being consumed by the paddy growers and the villagers. Whatever is left after consumption is then sold off to the middlemen/traders who pay every less to the farmers. Vegetables that are grown are mostly of self consumption.<br />Rural Sellers – Rural Buyers:<br />This market mainly comprises of the farm products like Brinjals, Beans, Ladies finger, Green Chillies are being produced in small quantities. A section of this village indulges in allied activities such as animal husbandry, which includes dairy and poultry. The village population does involve in non-farm activity like Retailing. <br /> RECOMMENDATIONS<br /> The survey conducted in the village of Daruthenga revealed a whole gamut of facts. The survey unearths the consumption patterns of the village population. The different dimensions of the rural market having its own specific characteristics helped us to understand the rural market from close quarters. It helped to understand the strengths and shortcomings that each one of the dimensions have in it. Overall if we see, we would find that the village lacks support from SHGs or NGOs to a large extent. The village could have been prosperous enough in several fronts if there had been some kind of support from these organizations. It was been observed that still the village uses traditional ways of farming; hence the productivity of the farm products is relatively low. Although the farmers receive an extended help from the Government through a subsidy in seeds and loans on tractors but still the economic conditions of the farmers are not improving. Another observation which was made during the study was that the production of milk is relatively low in the village of Raghunathpur. In fact the production is so low that it is unable to meet the demands of the village population itself. In order to satisfy the needs the villagers many a time have to depend on the supplies of OMFED. It can be said that the approach of animal husbandry is still traditional in method which results in death of the cattle due to diseases or in low production of milk. The government or the SHGs can intervene in this case for a further upliftment of the condition of the agri-allied activities. <br /> During the survey and the interactions that the group had with the shop-owners, reveled the fact that these shopkeepers often find difficulty in carrying goods from the market to their respective shops. Since their orders are generally small with respect to the shops located in the urban areas, these shopkeepers find the transportation cost cutting away their margins. The shopkeepers often need to visit the wholesale market more than twice a week, as they do not have a proper storage system within their shops. The fear of pilferages and damaging the goods forces these shopkeepers to purchase smaller amounts of goods from the wholesale market thereby increasing their carrying cost to many folds. In this case a proper storage system can be installed within the village. The storage system can be shared by all the shopkeepers of the village thereby minimizing the cost and maintenance of the same. <br />