Rural Marketing
BY
ASHA PRIYA GOUD

Why Rural Marketing
is hot?
 Rural Push Policy of UPA Government
 Four Consecutive years of positive growth
in rural GDP
 40% hike in MSP of Crops over last two
years
 Farm Loan Waiver & NREGS
 Growing Industry Demand for land
(Overnight Wealth)
 Big rise in remittances from Cities
 Slowing urban demand forcing corporates
to rural markets

% Annual Change in
Rural GDP
Year
Change
2003-04
10%
2004-05
-6.7%
2005-06
5.8%
2006-07
4%
2007-08
4.9%
2008-09
(Estimates)
2.6%
51%
49%
Rs. 13,65,000
Rs 13,17,018
Crore
Crore

Why Rural Marketing
is a New Discipline?
Rural Marketing is a new discipline because:





India is a predominantly agrarian society.
Western Marketing has no experience to
manage it.
Urban markets are saturating in India.
There are immense opportunities at the
bottom of the pyramid.
R. M. can change rural business.
Retail boom will also expedite the growth
of rural marketing.

What is Rural?
Definitions of Rural
Census
Village: Basic Unit for rural areas is the revenue village, might
comprise several hamlets demarcated by physical boundaries.
Town: Towns are actually rural areas but satisfy the following
criteria.
Minimum Population >=5,000
Population density>= 400/ sq. km.
75% of the male population engaged in non-agri activity.
RBI
Locations with population up to 10,000 will be considered as rural
and 10,000 to 100,000 as semi-urban.
Nabard
All locations irrespective of villages or town, up to a population of
10,000 will be considered as ‘rural’.
Planning
Commission
Towns with population up to 15,000 are considered as rural.
Sahara
Locations having shops/ commercials establishments’ up to 10,000
are treated as rural.
LG Electronics
The rural and semi urban area is defined as all other than the seven
metros.

What is Rural
Marketing?
 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, abase on technical and economic
considerations and includes pre and post harvest
operations, assembling, grading, storage, transportation
and distributions‟.
 “Rural Marketing can be defined as a function that
manages all activities involved in assessing, stimulating,
and converting the purchasing power of rural consumers
into an effective demand for specific products and
services and moving these products and services to the
people in rural areas to create satisfaction and a better
standard of living and thereby achieving organizational
goals.”
-Pradeep Kashyap

Scope of
Rural Marketing
The Rural Marketing Matrix
(Market)
Urban
Brand Consumables
and durables
(Organised)
Rural
Farm & Non-Farm
and services
(Unorganised Sector)
Handicrafts, Handloom
Textiles, Leather
products (Semiorganised)
Rural
Urban
(Production)

Evolution of Rural
Marketing
Phase
Origin
Function
Major
Products
Source
Market
Destination
Market
I
Since
independence
Agricultural
marketing
Agricultural
produce
Rural
Urban
II
Mid-Sixties
Marketing
of
agricultural
inputs
Agricultural
inputs
Urban
Rural
III
Mid-Nineties
Rural
marketing
Consumables
and durables
for
consumption
and production
Urban/ Rural
Rural
IV
21st Century

Nature of Rural Marketing
(Transactional Vs Development Marketing)
S. No.
Aspect
Transactional
Development
1
Concept
Consumer orientation,
Marketing concept
Society orientation, societal concept
2
Role
Stimulating and conversional
marketing
Catalytic and transformation agent
3
Focus
Product-market fit
Social change
4
Key task
Product innovations and
communications
Social Innovations and communications.
5
Nature of activity
Commercial
Socio-cultural, economic
6
Participants
Corporate enterprises, Sellers
Government, voluntary agencies, corporate
enterprises, benefactors
7
Offer
Products and services
Development Projects/Schemes/Programmes
8
Target group
Buyers
Beneficiaries and buyers
9
Communication
Functional
Development
10
Goal
Profits Customer satisfaction
Brand image
Market Development Corporate Image
11
Time-Frame
Short-Medium
Medium-Long
12
Motivation
Profit-motive Business policy
Service-motive Ideological or Public policy

Taxonomy of Rural
Markets
(Classification of Rural Markets)
Constituents
Products
Durables
Services
Consumer
Market
Individuals and
households
Consumables: Foods
products, Toiletries,
Cosmetics, Textiles
and Garments, Foot
Wear etc.
Watches, Bicycles,
Radio, T.V.,
Kitchen
appliances,
Furniture, Sewing
machines, Two
Wheelers etc.
-------
Industrial
Market
Agricultural and
allied activities,
Poultry farming,
Fishing, Animal,
Husbandry cottage
industries, Health
Centre, School,
Cooperatives,
Panchayat office
etc.
Consumables: Seeds,
Fertilizers, Pesticides,
Animal feed, Fishnets,
Medicines,
Petrol/Diesel etc.
Tillers, Tractors,
Pump sets,
Generators,
Harvesters, Boats
etc.
-------
Services
Market
Individuals, House
holds, Officers,
and Production
firms
-------
-------
Repairs,
Transport,
Banking, Credit,
Insurance
Health care,
Education,
Communication
, Power etc.

Whether Rural Markets
are Attractive?








Large population
Rising prosperity
Growth in consumption
Life-style changes
Life-cycle advantages
Market growth rates higher than Urban
Rural marketing is not expensive
Remoteness is no longer a problem.

Rural Vs Urban
Marketing
S. No.
Aspect
1
Philosophy
2
Market
(a) Demand
(b) Competition
(c) Consumers
o
Location
o
Literacy
o
Income
o
Expenditure
o
Needs
o
Innovation
adoption
3
Products
o
Awareness
o
Concepts
o
Positioning
o
Usage method
o
Quality preference
o
Features
Urban
Rural
Marketing and societal
concepts, Green
marketing
and relationship
marketing
Marketing and societal
concepts, development
marketing, and
relationship
marketing.
High
Among units in organized
sector
Low
Mostly from unorganized
units
Concentrated
High
High
Planned, Even
High level
Faster
Widely spread
Low
Low
Seasonal variations
Low level
Slow
High
Known
Easy
Easily grasped
Good
Important
Low
Less known
Difficult
Difficult to grasp
Moderate
Less Important
Contd.

Rural Vs Urban Marketing – Contd.
S. No.
Aspect
Urban
Rural
4
Price
o Sensitive
o Level desired
Yes
Medium-High
Very much
Low-Medium
Wholesalers, Stockists
Retailers, Supermarkets,
Specialty stores and
authorized show rooms
Village shops
Shandies Haats and
Jatras
Good
High
Average
Limited
Print audio-visual media,
out doors, exhibitions etc.
Few languages
TV, Radio, Print Media to
some extent. More
languages
o Personal Selling
Door-to-door frequently
Occasionally
o Sales promotion
Contests, Gifts, Price
Discounts
Good opportunities
Gifts, Price discounts
5
Distribution
o Channels
o Transport facilities
o Product availability
6
Promotion
o Advertising
o Publicity
Less

Value Added Rural
Marketing
HOW TO ADD VALUE THROUGH RURAL MARKETING
Identify unique
characteristics
of rural
customer
Study
demographic
patterns
Study
product
ownership
patterns
Segment
rural
customers
Provide
functional
benefits
Are the
clusters
large
enough?
No
Build special
brands for
rural customers
Ensure
increase in
customer
value
Are relevant
needs being
met?
No
No
Communicat
e unique
proposition
Yes

SESSION II
Rural Marketing Environment
& Rural Economy

Structure of Rural
Markets
Demographic Environment
1971
Total population (million)
1981
1991
2001
548.2
683.3
848.3
1026.9
524.0
628.8
741.6
Rural population (million)
Rural Proportion to total population (%)
80.1
76.7
74.3
72.2
Decadal Variation
-
19.8
16.7
15.2
Source: Census of India 2001

Education and the
Level of Demand
Rural Literacy
% of literates
1981
1991
2001
36
45
59
Source: Census of India 2001

Household Pattern
Family Structure
Particulars
1991
2001
Rural
Urban
Total
Rural
Urban
Total
Households (Million)
112
40
152
138
54
192
Family Size (Number)
5.55
5.32
5.36
5.31
Source: Census of India 2001

Rural Housing Pattern
House Type
1981
1991
2001
Pucca (%)
22
31
41
Semi-Pucca (%)
37
36
36
Kuccha (%)
41
33
23
Total
100
100
100
Source: Census of India 2001

Occupational Pattern
Distribution of Households by Occupation of the
Head, 1999-2000
Head’s Occupation
Distribution of households
(%)
Urban
Rural
All
Housewife
0.84
1.01
0.96
Cultivator
3.45
40.86
29.99
Wage earner
20.93
35.28
31.12
Salary earner
40.72
11.28
19.84
Professional
3.59
0.73
1.56
Artisan
6.90
3.41
4.42
Petty Shopkeeper
16.05
4.97
8.19
Businessman
3.68
0.46
1.40
Other
3.85
1.98
2.52
Total
100.00
100.00
100.00
Source: NCAER 2002

Physical Environment
Rural and Urban Life:
Distinguishing Features
Population Density (Urban + Rural) (Per Sq. Km.)
1971
1991
177
216
267
312
171
Popu. Density (Total)
1981
214
253
Rural
2001
Distribution of Towns and Villages
1991
No. of Towns
No. of inhabited Villages
Total no. of Villages
2001
3,697
5,161
580,779
593,154
634,321*
638,588*
* The total number of Villages also includes non-inhabited Villages.
Source: Census of India 2001

Settlements
(Scattered and Clustered)
Town
class
Population
No. of
Towns
% of total
Towns
% of
Population
Decadal
Growth
(1991-2001)
Class-I
1 Lakh and above
423
8.2
61.5
24
Class-II
50,000 – 99,999
498
9.6
12.3
15
Class-III
20,000 – 49,999
1,386
26.9
15.0
16
Class-IV
10,000 – 19,999
1,560
30.2
8.1
7
Class-V
05,000 – 09,999
1,057
20.5
2.8
8
Class-VI
Less than 5,000
237
4.6
0.3
-22
5,161
100.0
100.0
Total
* 10 Lakh + : 27; 5-10 Lakh: 42; 1-5 Lakh:354
Source: Census 2001

Economic Environment
80 -70 --
67.3
% Households
60 -50 -42.7
40 --
39.5
42.5
36.9
30-20--
23.9
17.8
20.6
10-0--
8.8
1989-90
_________ Low (<Rs.45K p.a)
_________ High (>Rs.90k p.a)
2001-02
2009-10
________ Middle (Rs.45K-90K p.a)
Source: Market Information Survey of Households, NCAER

Changing Rural
Consumers Expenditure
Pattern
Per capita consumption
expenditure (Rs. Per month)
Rural
Urban
1983
112
166
1991
281
2001
486
Composition of rural per capita
consumption expenditure
Source: NSSO
Food
Non-Food
1983
66
34
458
1991
63
37
855
2001
59
41
Source: NSSO

Technological
Environment

Size of Rural Market
Estimated Annual Size : Rural Market
FMCG
Rs. 65000 Crore
Durables
Rs. 5000 Crore
Agri-inputs (incl. tractors)
Rs. 45000 Crore
2/4 Wheelers
Rs. 8000 Crore
Total
Rs. 1,23,000 Crore
Source: Francis Kanoi 2002

II-The Rural Economy:

The Economic Scenario
in Rural India
Human Development Index
(HDI)
Year
Rural
Urban
Total
1981
0.26
0.44
0.30
1991
0.34
0.51
0.38
2001
------
------
0.47
Source: Human Development
Report, 2001
The HDI is a composite of
variables capturing attainments
in three dimensions of human
development, viz., economic,
educational and health.

The Changing Face of
Rural Development
Population below the poverty line (Rural)
Period
No. of Persons
(Million)
% of Persons
Poverty line
(Rs.)
1983
252
46
89.5
1993-94
244
37
206
1999-2000
193
27
328
Source: Human Development Report, 2001

The Development Exercise:
The Five-Year Plans
Sectoral allocations during the five-year plans (Rs. Billion)
Head of
Development
Seventh
Plan
Eighth Plan
Ninth Plan
Tenth Plan
(1985-90)
(1992-97)
(1997-2002)
(2002-07)
1.
Agriculture
105
225
372
589
2.
Rural Development
89
344
890
1,219
Source: Planning Commission 2002
Percentage share of the different sectors in GDP (at 1993-94 prices)
Year
Primary
(Agri and Allied)
Secondary
(Manufacturing)
Tertiary
(Services)
Total
1950-51
57.2
14.8
28.0
100.0
1980-81
39.7
23.7
36.6
100.0
2001-02
23.9
26.6
49.5
100.0
Source: National Account Statistics, 1951-2001

Transition of the
Rural Economy
1. Food grain crops
1. Non-food grain crops, cash
crops
2. On-land activities
2. Off-land allied activities like
livestock and fisheries
3. Farm activities
3. Non-farm activities, including
manufacturing and services.

The Rural Economic
Structure
Rural Economy
Farm Sector
(Agri & Allied)
Non-Farm Sector
(Formal & Informal Sector)
Agriculture
Rural Industries
Rural Services
Animal Husbandry
(Dairy, Goat, Poultry)
Agro Processing
(Sugarcane, Oilseed etc)
Retailing & Trading
Horticulture
Forestry
Fishing
Manufacturing
(Handloom, Handicrafts etc)
Mining & Quarrying
Construction
Community & Social
Service
Transport & Storage
Communication

Income Disparity
Rural-Urban Income Comparison
Sector
Population
(Million)
Middle (40%)
Rural
Average
Consumption
Expenditure
(Rs./Annum)
Bottom (30%)
Urban
Rural
Urban
Rural
Urban
Rural
Urban
3,270
4,580
5,110
8,150
9,400
18,720
5,830
10,260
223
86
297
114
223
86
742
285
Source: NSS 55th Round (1999-2000), Census 2001
Top (30%)
All Classes

The Rural Infrastructure
Road Connectivity
Road Connectivity at the Village level (%)
Population
less than
1,000
Population
between
1,000 and
1,500
Population
more than
1991-92
36.52
72.32
89.82
1994-95
37.45
76.54
91.72
1996-97
49.18
74.58
78.04
Source: National Human Development Report 2001

Telephone Services
Telecom Density (Phone per 100)
2000
2005
Increase
Urban
8.2
26.2
220%
Rural
0.7
1.74
148%
All
2.9
9.08
213%
Source : Telecom Regulatory Authority
of India Report, 2005

Why Agriculture Growth
has been slow & tardy?
1.
2.
3.
4.
5.
6.
7.
Low priority to Agriculture
Subsistence Orientation of Agriculture
Failure of Land Reforms
Low size of operational Landholdings
Inadequate Food Supplies
Sluggish Infrastructural Growth
Disconnect between Research &
Farmers
8. Insufficient Availability of Credit
9. Inadequate Inputs
10. Slowdown of Rural Industrialization

Policy Interventions
Required
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Thrust on Land Reforms
Strengthening the Panchayati Raj Institutions
Financial Inclusion (Innovative Credit Delivery)
Development of Rural Infrastructure
Expansion of Kisan Credit Card Scheme
Protection of Farmers from natural calamities
Extensive use of ICT
Higher Investment in Agriculture & Rural
Development.
Focus on High Value Crops & Non-farm Incomes.
Bridging the Gap Between Agri-Research &
Farming.