Chapter 2 Rural Management

Chapter 2
Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.
The Rural Marketing Environment
Rural Marketing, 2e
Describe the evolution of rural marketing
Track the rural marketing environment

demographic, physical, social, cultural,
technological aspects
Understand the rural economic environment, the changing

rural economic structure, and income spending pattern
Understand rural infrastructure, government support, and

its relevance for marketing
Describe the initiatives in the rural employment generation

programme
Rural Marketing, 2e
in terms of
political and
Learning Objectives
The Evolution of Rural

Marketing
Rural Marketing, 2e
Rural Environment
Rural Marketing, 2e
Rural population is nearly 70% of total population down

marginally from 74% in 1991
The Rural Population in India
Rural Marketing, 2e
Rural Demographic
Environment
Rural Demographic
Environment
Joint family structure giving way to individualized joint
families staying in the same house but with separate kitchens
A Break-up of the Type of Households in India

Others includes siblings living together, etc.
Source: Indian Readership Survey
Rural Marketing, 2e
Rural Demographic
Environment
35% of the population is in the consuming age group of 15 to
34 years
The Rural Population in India
Rural Marketing, 2e
Literacy rate up from 53% in 2000 to 63% in 2010
Literacy Among Individuals of Age 12 years and Above
Rural Marketing, 2e
Rural Demographic
Environment
Rural Demographic
Environment
Land fragmentation, rising education and increased skill sets
have encouraged shift from agricultural to non-agricultural
occupation
Occupation Break-up in Rural Areas
Rural Marketing, 2e
Total land under farming almost constant but growth in

small and marginal farmers
The Landholding Pattern in Rural India
Per capita income up from INR 11,227 in 2004-05 to INR

15,173 in 2010
Rural Marketing, 2e
Rural Demographic
Environment
Settlement Size
Total of 6.39 lac villages of
which 5.93 lac inhabited
Spread of Villages in Rural India
Housing Structure
Type of houses indicators
of economic growth
Share of pucca houses up
from 31% in 1990 to 65%
in 2010
The Housing Pattern in Rural Areas

Source: Census of India and Indian
Readership Survey.
Rural Marketing, 2e
Rural Physical Environment
Settlement Size
36.4%
of villages have
population of 500 or less
with no shops
Villages with population of
2,000+
(15.7%)
most
prosperous with 50% of the
rural population and 60% of
the rural wealth
Rural Marketing, 2e
Housing Structure
Type of house was part of
SEC classification in rural
Rural Physical Environment
India has 56 socio-cultural regions which were later split into 90

to be used for market segmentation and targeting
Villages have local Gram Panchayats with reservations on caste

and gender lines
The role of elders as influencers now giving way to youth and

knowledgeable
Houses in villages are owner occupied
Houses in villages are clustered by caste or religion
Rural Marketing, 2e
Rural Social and Cultural

Environment
Panchayati Raj provides a three-tier system of selfgovernance in all states with a population of over two
million with elections every five years
Villages with a population of 5,000 or a cluster of villages

with a population of 5,000 form a panchayat
A minimum of 33% seats are reserved for scheduled castes,

scheduled tribe and women
Involved in preparation of economic development plans and

their implementation
Rural
Gram
Sabhas
Marketing, 2e
(assembly of all sections of society) to meet
Rural Political Environment
Rapid mechanization
Total cropped area constant at around 190 million
hectares
Tractors nearly doubled between 1994 and 2006

Rapid Growth of Farm Mechanization
Rural Marketing, 2e
Rural Technological
Environment
15
Rural Technological
Environment
Share of animal power down from 16% to 7%
Increasing Mechanization: Source of Power

Source: India Brand Equity Foundation, www.ibef.org
Rural Marketing, 2e
Information and communication revolution enhancing

exposure to weather forecasts, mandi rates, health and legal
advice, job opportunities
Effectiveness of e-Choupal introduced by ITC
Rural Marketing, 2e
Rural Technological
Environment
17
The Rural Economic

Environment
Rising rural incomes is
fuelling consumption growth
increasing the share of total
Rural
growth
highest in 2009
was
the
All
human
development
indicators on the rise
Persons
line
22%
below the poverty

down from 27% to
Rural Marketing, 2e
Parameter
Contribution of Rural India (%)
Total Population
70
Total Income
56
Total Expenditure
64
Total Savings
33
Table 2.9
18
Growth in nominal rural GDP has increased to over 12% per

annum over the last few years.
Growth in Rural Consumption

Source: Credit-Suisse
The Changing Face of Rural Development
Political environment more friendly.
Rural Marketing, 2e
19
Six fold increase in budget allocations for agriculture and

rural development between the 8th and the 11th Five Year
Plan
Sectoral Allocations During Five Year Plans (billion, INR)
Farm to non-farm income at 40:60 in 2010
Rural Marketing, 2e
The Changing Face of Rural Development
20
Transition has occurred at three

levels:
Food grain crops
On-land activities
Farm activities
Transition
linked
to
high
opportunity for value addition
resulting in high rural incomes.
Farm sector now contributes
only 40% of the rural income
with
non-farm
activity
contributing to 60%.
Rural Marketing, 2e
The Transition of the Rural

Economy
From
food
grain-scarce
economy to a food grainsurplus economy
India largest producer of
coconut,
mangoes,
bananas, milk and dairy
products,
cashew
nuts,
pulses, ginger, turmeric and
black pepper.
Second largest producer of
rice, wheat, sugar, cotton,
fruits and vegetables.
Rural Marketing, 2e
The Rural Economic

Structure
Shift from staples to more lucrative cash crops
Area under food grains and coarse grains declined by 2 and

18% while sugarcane and cotton up by 25 and 10%
respectively
Minimum Support Prices now being increased at a faster

pace
Production of foodgrains in 200910 is estimated at 216.8

million tonnes.
Allied activities like dairy, poultry and fishing also growing
Rural Marketing, 2e
The Farm Sector
23
Secondary sector
Cotton textiles, wood, pottery, food, metal products,
handicrafts
Electrical equipment, paper, chemicals and power looms
Tertiary sectors
Trade, transport, food business, education, personal
services
The Non-farm Sector
Non-farm sector accounts for 60% of rural GDP employing

only 27% of the rural workforce
Estimated to contribute 70% by 2020
Rural Marketing, 2e
24
Total rural enterprises 25.54 million (61% of total)
Non-agricultural enterprises 19.83 million (58% of total)
Retail trade (39%)

manufacturing (26%)
Number of workers employed up by 20 million between

1990 and 2005
Rural Marketing, 2e
dominant
activity
followed
by
Rural Enterprises
25
Rural Enterprises
The Status of Rural Enterprises in India
Non-agricultural Establishments in Rural India

Source: Economic Census, 2005.
Rural Marketing, 2e
26
Migration from rural areas

has a positive impact on
rural incomes since money is
remitted home
Migration from rural to rural

highest
indicating
higher
opportunities in rural.
Migration Pattern
24% of male migrants

returned to their homelands
in 200708
Rural Marketing, 2e
Changing Migration Trends
27
Income and Expenditures

Healthy increase of 50% in rural incomes in last five years
The Rural IncomeExpenditure Profile (in INR)

Source: MaxNCAER and EdelweissMART Survey
Spending up by 33% in same period.
Maximum
Rural Marketing, 2e
income
growth
experienced
by
labourers
Non-farm households reported higher incomes led by

salaried and self-employed
Changes in Rural Income by Occupation Groups
Rural Marketing, 2e

More buying power among non-farm households
The Rural IncomeExpenditure Profile (in INR)

Source: MaxNCAER and EdelweissMART Survey.
Rural Marketing, 2e
Income Disparity
Top quintile earns seven times that of bottom quintile
Top two quintiles contribute to 60% of total rural incomes

Distribution of Rural Population and Income by Income Quintiles
Rural Marketing, 2e
Rural consumption market: USD 190 billion
Share of food dropped from 58% to 42% in the last decade
Sectors gaining were transport, education and recreation
Shift from unbranded to branded goods
Durables have not grown in wallet share largely due to

drop in prices
Rural consumption market will triple by 2020 as per

Edelweiss estimates
Rural Marketing, 2e
Rural Spending
The Changing Wallet Share in Rural India

Source: NSSO and EdelweissMART Survey
Rural Marketing, 2e
Bharat
Nirman,
covering
development launched in 2005
all-round
infrastructural
Areas of Development Under Bharat Nirman
Rural Marketing, 2e
The Rural Infrastructure
34
Rural eletrification is 95% although proportion of electrified

households is only 60%
Rural housing (Indira Awas Yojna): 7.2

households built between 200506 and 200809
million
Drinking water through Rajiv Gandhi National Drinking

Water Mission (RGND-WM) under Bharat Nirman
Provide a supply of 40 litres of safe drinking water per
capita per day to rural households
Rural Marketing, 2e
35
Telecommunications
Total rural users: 219 million
26 fold growth in teledensity in the last eight years
Between 2006 and 2010 mobile penetration grew seven

times in rural India against threefold growth in urban
Rural Teledensity Growth
Rural Marketing, 2e
The Mahatma Gandhi National Rural Employment

Guarantee Act (MNREGA)
Launched in February 2006 covering 619 districts and
promising 100 days of guaranteed wage employment in a
financial year
The Swarnjyanti Gram Swarozgar Yojna (SGSY)
Launched in April 1999 and now covers over four million
Self Help Groups and 15.4 million swarozgaris
The Pradhan Mantri Rojgar Yojna (PMRY)
Launched in October 1993 and provides self-employment to
educated unemployed youth from economically weaker
sections
Rural Marketing, 2e
The Rural Employment Generation

Programmes
37
Refer to video case and answer the following questions:

How
have ICT-enabled info-kiosks helped NREGA workers

in rural India?
What
kind of technology is being used in NREGA and why?
What
kind of benefits are NREGA workers getting with

ICTs intervention?
Rural Marketing, 2e
Rural Marketing Case

NREGA
38
Rural marketing is marketing to a

rural mindset, not a rural market.
It is all about understanding the
mind rather than manipulating it
or adapting marketing theory to a
rural environment.
Rural Marketing, 2e
Successful Mantra in Studying

Rural Marketing Environment

Chapter 2 Rural Management

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Chapter 2

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

The Rural Marketing Environment

Describe the evolution of rural marketing

Track the rural marketing environment

Understand the rural economic environment, the changing

Understand rural infrastructure, government support, and

Describe the initiatives in the rural employment generation

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

The Evolution of Rural

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Rural population is nearly 70% of total population down

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

A Break-up of the Type of Households in India

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Literacy rate up from 53% in 2000 to 63% in 2010

Literacy Among Individuals of Age 12 years and Above

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Total land under farming almost constant but growth in

Per capita income up from INR 11,227 in 2004-05 to INR

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

The Housing Pattern in Rural Areas

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Rural Physical Environment

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Rural Physical Environment

India has 56 socio-cultural regions which were later split into 90

Villages have local Gram Panchayats with reservations on caste

The role of elders as influencers now giving way to youth and

Houses in villages are owner occupied

Houses in villages are clustered by caste or religion

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Rural Social and Cultural

Villages with a population of 5,000 or a cluster of villages

A minimum of 33% seats are reserved for scheduled castes,

Involved in preparation of economic development plans and

(assembly of all sections of society) to meet

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Rural Political Environment

Tractors nearly doubled between 1994 and 2006

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Increasing Mechanization: Source of Power

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Information and communication revolution enhancing

Effectiveness of e-Choupal introduced by ITC

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

The Rural Economic

below the poverty

Contribution of Rural India (%)

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

Growth in nominal rural GDP has increased to over 12% per

Growth in Rural Consumption

Copyright 2012 Dorling Kindersley (India) Pvt. Ltd.

The Changing Face of Rural Development

Political environment more friendly.

Six fold increase in budget allocations for agriculture and