2. Topics to be covered
Definition, Scope of Rural Marketing
Concepts, Components of Rural Markets
Classification of Rural Markets
Rural Vs Urban Markets
Concept of agri-business
Components of agri-business
Agri-business in India – issues
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3. Definition
According to the National Commission on Agriculture –
“Rural Marketing is a process which starts with a
decision to produce a saleable farm commodity and it
involves all the aspects of market structure or system,
both functional and institutional, based on technical and
economic considerations, and includes pre and post
harvest operations , assembling, grading, storage,
transportation and distribution.
According to Thomsen – “the study of Rural Marketing
comprises of all the operations, and the agencies
conducting them, involved in the movement of farm
produced food, raw materials and their derivatives, such
as textiles, from the farms to the final consumers, and
the effects of such operations on producers, middlemen
and consumers.
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4. Rural marketing has also been defined as the
process of developing, pricing, promoting,
distributing rural-specific goods and services
leading to exchange between urban and rural
markets, which satisfies consumer demand
and also achieves organisational objectives.
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5. Rural
Urban
Urban Rural
1. Agricultural products
(Food grains etc.)
2. Oil seeds, Cotton,
Tobacco, Sugar, Cane
etc.
3. Handicrafts and Rural
Industry Products
1. Small Agricultural
Tools.
2. Household earthen
items, wooden items
etc.
Not
concerned
1. Consumables and
consumer durables.
2. Agricultural inputs
like seeds, fertilizers,
pesticides, tractors
etc.
3. Services like Health,
education, Market
information etc.
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6. Census Record
Rural Population in India : 64.8%
Rural nail polish market : Rs 270 million against
Rs 81 million.
Rural market for lipstick : Rs 250 million against
Rs 131 million.
Rural market for face cream : 1099 tonnes against
426 tonnes.
Shampoo market ; 2257 tonnes against 718
tonnes.
Mosquito Repellant Market : Rs 173 million against
Rs 79 million.
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7. Scope of Rural Marketing
The difference in rural and urban sector is due to
vast difference in:
• Income level
• Expenditure capacity
• Taste and preferences
• Educational level
• Social, Cultural and environmental
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8. 8
Following Service areas have great potential in rural markets:
1. Agricultural consultancy:
Rural customers require proper consultancy services about
the best methods, timings and seasons, technology, tools,
prices and best markets for selling their farming products.
2. Banking, microfinance and loan facilities:
The rural market has huge potential for banking services for
providing following facilities at affordable prices:
• Agricultural loans
• Educational loans
• Housing loans
• Savings accounts and safe deposits
• Automobile loans
• Personal loans
9. 3. Healthcare:
The availability and location of these services is of great concern as most of the
areas either do not have any or many rural and remote areas needs to be
dependent on very few and distantly located Hospitals
4. Telecomm services:
The government’s policies for reduced tariffs, call rates, lesser mobile handset
prices and private participation involvement has helped in increasing the level of
competition, continuous improvement in technology and thus has resulted in the
growth of the rural telecomm market
5. Automobiles Services:
There has been a huge increase in the number of two wheeler, four wheeler and
Agricultural tools and vehicles in past few decades because of reduction in prices
and government support to the rural population. This has given rise to a new
business for providing maintenance and repair services to rural consumers.
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10. 10
6. T.V. Channels Services:
Due to the increased awareness, arenas of interest, leisure requirements,
and number of entertainment options like televisions and computers due to
reduced & affordable prices, the demand for entertainment services like
T.V. entertainment channels have increased. Many companies have already
gained profits by targeting rural markets which include Airtel (DISH TV),
Reliance (BIG TV), and Tata (SKY).
7. Travel and reservation Services:
The travel and reservation booking and organizing services for booking
train, busses, taxies and tour consultancy has also been observed to create
a huge demand in last few decades as more and more rural population
need to mobilize for business and personal reasons.
8. Low Cost Hotels:
Due to increased mobilization because of business and personal needs,
there is also increased demand for hotel and lodging services to the
travellers.
11. 9. Event Managements:
The rural population are majorly involved in celebrating and
organizing festivals, which require lighting arrangements, venue
decoration, food, lodging, transportation, catering and event planning
etc. for:
i. Family gatherings, Marriages, engagements, birthday parties,etc.
ii. Festivals like Diwali, Onam,Christmas, lohri, Eid, Dushera,
Kannada Rajamahotsava, Navratri, Garba and Dandia mahotsava
etc.
10. Beauty Parlours:
As there has been major improvement in the quality of life style and
increased awareness among the rural customers (especially
females), there has been great demand observed for beauty products
and services. This market is still dominated by unorganized and local
players who lack adequate tools, methods, skills, process, technology
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12. 12
11. Affordable Movie theatres:
Till now the entertainment service providers for movie
theatres at affordable prices in rural markets are dominated
by local and unorganized players who lack proper facilities
and infrastructure as well as quality delivered.
12. Educational and Career consultancy:
The rural markets lack adequate and quality educational
services which are majorly catered by government agencies
and bodies. But due to lack of proper infrastructure, expertise,
knowledge, talent, funds and participation of the service
provider, this sector is unable to meet the desired level of
service expectation of the rural customer for career building.
13. Emerging Areas in Rural
Marketing
Agri-Business Management
NGO Management
Natural resource Management
Rural Infrastructure Management
Micro-finance
Corporate Social Responsibility
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14. Concept of Agri-business
Agri-business can be defined as
commercialization of agriculture, which
refers to market orientation of agricultural
production process.
Transition from subsistence to commercial
agriculture.
From production oriented approach to
market oriented approach
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15. Agri-business: Current Status and
Issues
The food chain in India from the farmer to
the consumer involves several
intermediaries leading to handling at
multiple points and longer transit time.
It is estimated that 20% of the food
produced in India is wasted. This is
valued at Rs 50,000 crores approximately.
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16. Agri-business: Current Status and
Issues
This wastage is equal to the amount that
the government spends on food subsidy
by more than six times.
Only 25% of the consumer’s rupees
reaches the farmer as compared to 50%
in developed countries.
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17. Agri-business: Current Status and
Issues
India produce a wide range of fruits and
vegetables of both the topical and
temperate varieties because of the varied
climatic conditions in our country.
Unfortunately, less than 2% of our
produce is processed as against 30% in
Thailand, 70% in Brazil, 78% in
Philippines and 80% in Malaysia.
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18. Agri-business: Current Status and
Issues
The wastage is estimated as high as over 25% of
the total production of fruits and vegetables.
The cold chain system is primitive and under
developed.
The existing capacity of 1 million tonnes is
primarily used for storage of potatoes.
The current method of forecasting of agricultural
produce does not provide for any time to take
corrective action in terms of crop failure or
surplus.
There is need to develop efficient market
information system.
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19. Distinction between Rural and
Urban Markets
Urban Market Rural Market
1. City has a large population
size growing at a fast growth
rate due to immigration from
rural areas for education and
employment. The population
density is high. Towns are
smaller urban units.
1. Village is a human settlement
with a small administrative unit. It
comprises few hundred households
and the population growth due to
immigration is insignificant.
Migration from village to city/town
is to get better education and
employment.
2. The city settlement is
compact though spread over
a larger area. Land use is
residential, commercial ,
industrial roads and streets,
institutional and community
facilities etc.
2. Village has land for human
settlement and for cultivation.
The settlements are
predominantly clustered but in
some areas households settle on
respective cultivable land
holdings.
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20. 3. Structure of houses is
permanent and often rises to
more than one storey. Housing
on rental is highly prevalent.
3. Houses are largely semi-pucca or
kachha. They are owner occupied.
4. Primary resource base is
production and distribution of
industrial goods and services.
4. Land is the primary resource for
livelihoods. Other forms of resources
are water bodies, forests , and
mountains. Cows, buffaloes and
poultry are kept for household need
for milk, eggs and meat.
5. Occupations are diverse
ranging from professionals,
skilled, semi-skilled to unskilled
workers. Higher education and
training is required to build
skills.
5. Predominant occupations are
cultivation and agricultural labour.
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21. 6. Rigid, conservative in approach
and custom bound. Society is
guided by age old customs. No
scientific outlook.
6. Free from traditional
outlook. More scientific
approach to the issues.
7. Media reach is very
high. Marketers generally
prefer Televisions,
internet and print media
to be reached to the
target customers.
7. Media reach is very low.
Marketers prefer Radio,
loudspeaker on rickshaws to
reach to the target customers.
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22. Nature of the Rural Market
Large and Scattered Market – Consists of
approximately 75 crore rural consumers who live
in approximately 638365 villages spread over 32
lakh square km area. Covering such a large and
widely scattered geographical market, raises the
inventory and transportation costs.
Heterogeneous Market – As many as 20000
ethnic groups are present in rural India. There are
24 languages and 1624 dialects and the dialect
varies every 100 km, making it extremely difficult
to develop a uniform promotional message.
Divisions based on caste, community and other
factors also continue to exist.
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23. Income from Agriculture – Nearly 55% of rural income
comes from the agriculture sector, hence rural
prosperity is tied with agricultural prosperity to a great
extent.
Standard of Living – Over 70% of the rural population
is employed in small-scale agricultural and related
occupations. This dependence on agriculture and
natural factors has led to an acute seasonality and high
chance element in income receipts in rural areas.
Infrastructural Facilities – Roads, warehouses,
communication system and financial facilities are
inadequate in rural areas. Roads do not connect nearly
50% villages in the country. Over 50% rural
households have access to electricity as a main source
of lighting but 46% still use kerosene for lighting.
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24. Classification of Rural Market
Rural
Economy
Farm Sector
(Agri & Allied)
Non-farm sector (Formal &
Informal sector)
Agriculture
Animal Husbandry
Horticulture
Forestry, Fishing
Rural Industries Rural Services
Agro Processing
(Sugarcane,
Oilseed etc.)
Retailing &
Trading
Manufacturing
(Handloom,
Handicrafts etc.)
Community &
Social Service
Mining,
Construction
Communication
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25. Classification of Economic
Activity
Primary Sector – Agriculture and allied
services such as livestock, fishing and forestry.
Secondary sector – Mining and manufacturing
activities.
Tertiary Sector – Services such as transport,
communication, trade, financial services and
community services.
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26. Transition
1. Food grain crops
2. On-land activities
3. Farm activities
1. Non-food grain
crops, cash crops
2. Off-land activities
like livestock and
fisheries
3. Non-farm
activities, includes
manufacturing and
services.
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27. Mandis
Agricultural markets set up by state government to
procure agricultural products directly from farmers.
Located in high production centres of different
crops, these markets may be categorized as grain
mandis, soya mandis, cotton mandis.
Most agricultural areas with a Population of more
than 10000 have mandis and caters to 136000
population.
Displays the latest commodity prices. The price
quote from the seller may vary depending on
factors such as quantity, packaging, delivery
terms, payment method etc.
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28. Road Connectivity
Pradhan Mantri Gram Sadak Yojana – It was
launched in December 2000 with the objective
of providing connectivity through good all-
weather roads to all unconnected habitations
with a population of more than 500 persons,
with an anticipated investment of Rs 60000
crore.
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29. Mobile Postman Scheme
The scheme is designed to make a telephone
available at the doorstep of every rural
household. Under the scheme, a mobile
telephone will be provided to a postman. When
the postman goes to a house to deliver a letter,
he will carry a telephone with him. Since a
postman reaches practically every house, the
scheme will enable the telephone services to
be made available practically to all citizens in
his area.
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30. Pradhan Mantri Gramodaya
Yojana
This Yojana for the primary health sector is an
initiative to strengthen and revitalize the
primary health infrastructure for the improved
provisioning of basic minimum services in rural
areas so as to improve the quality of life. The
Planning Commission of India has allocated
additional Central Assistance of Rs 2800 crore
for six sectors, i.e. rural electrification, primary
health, primary education, shelter, drinking
water and nutrition.
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31. Rural Electrification
Indian planners visualized the necessity of Electrical Energy
and included it in the Five Year Plans.
A rural electrification programme was devised for increasing
the infrastructural input for agricultural production programs.
To implement the program effectively, the Rural Electric
Corporation (REC) was set up.
REC has been a catalyst for rural development. The
Corporation has sanctioned financial assistance of Rs. 28,588
crore under 37335 rural electrification projects so far. About
3.05 lakh villages have been electrified through REC funded
schemes.
Over 78 lakh pumpsets stand energised with the corporation’s
assistance.
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32. Public Distribution System
Distribution of essential commodities to a large
number of people through a network of FPS
(Fair Price Shops) on a regular basis (often
referred to as ration shops). The commodities
distributed are wheat, rice, sugar, edible oil
and kerosene.
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33. Haats
Haats (Periodic markets) play an important role
in the rural economy as well as in the social life
of villagers.
First point contact for villagers with the market.
Means of distributing local products and
exchanging agricultural surplus.
Opportunity for buying daily necessities as well
as farm supplies and equipment.
A place for political, social and cultural contact.
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34. Melas
Serve as the meeting ground for people from
different communities and religious groups, for
livelihood and agricultural commodities, for crafts
and craftsmen and for displaying various skills.
Melas are gatherings of people away from their
residences for entertainment and for the sale and
purchase of goods and services at a particular
time.
Melas may be classified on the following basis:
o Religious, cultural or commercial (commodity,
cattle, exhibition)
o Local, regional and national
o One day, short duration or long duration.
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35. Regional Rural Banks
Set up under an Act of Parliament in 1976 with
the objective of developing the rural economy
through the promotion of agriculture, trade and
commerce and industry and by extending
credit to small and marginal farmers.
Authorized capital of RRB is Rs. 5 crore.
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36. Cooperative Banks
There is a three-tier pyramidal cooperative credit
structure in the rural cooperative banking
sector, with the
State cooperative bank (SCB) at the state level
District Central Cooperative Bank at the district
level
Primary Agricultural Cooperative Society at the
village level, essentially to ensure flows of short-
term credit for production purposes.
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37. NABARD
NABARD has been the primary government
institution dedicated to developing systems and
delivering institutional finance in rural for both the
farm sector and the non-farm sector. It refinances
assistance for financing farm mechanization, i.e.
purchase of tractors, power tillers and also the
accessories.
It also provides agricultural credit through the
Kisan Credit Card. This scheme aims at the
provision of adequate and timely support from the
banking system to the farmers for their cultivation
needs, including the purchase of inputs in a
flexible and cost-effective manner.
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38. Innovations in the rural credit domains
by NABARD
Self-help groups and micro finance
Farmers clubs
Rural Infrastructure Development Fund
Watershed Development
Tribal Development
Women and Development
District Rural Industries Project
Rural Entrepreneurship Development Programme
Rural marketing
Revival of the Short term Rural Co-operative Structure
Co-financing
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39. DRDA (District Rural Development Agency)
It has been the principal organ over the years
at the district level for overseeing the
implementation of various anti-poverty
programs.
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40. Employment Opportunities
With the objective of promoting self-
employment among the educated unemployed
rural youth, government programs such as the
Pradhan Mantri Rojgar yojana and the
Integrated Rural Development Project, were
developed. These programs aim to provide
skill-based training and link access to bank
credit(subsidized).
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41. Sampoorna Grameen Rojgar
Yojana
The Employment Assurance Scheme and the
Jawahar Gram Samridhi Yojana 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 work for
the rural poor living below the poverty line.
The JGSY aims at the creation of need-based
rural infrastructure at the village level.
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42. Rural Housing
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
annually.
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