Introduction To Rural
Marketing
Module-1
Topics Covered
Profile Of Indian Rural Market
Evolution Of Rural Marketing
Definition
Scope Of Rural Marketing
Components Of Rural Market
Classification Of Rural Markets
Rural Vs Urban Markets
Profile of Indian Market
India ranks as the 12th biggest economy in the world. It is
scattered market & it is vital to ensure availability &
Visibility to get a strong competitive edge.
Media reach in village is around 35%.
India comprised of land mass of 3,287.590sq km of which
60% is agriculture.
The country consists of 3700 cities & towns and above
6,30,000 villages.
Only 27% of the Population lives in urban area, while 73%
of the people in villages.
About 300 towns have a Population of over 100000, they
a/c for about 40 to 50% of sales of all consumer product.
As per NSS survey, there are shops in over 90% of the
villages & of these almost 66% have a small provision
store selling consumer products
Evolution of Rural Marketing
Phase I (Before the 1960s):
During this phase “Rural marketing” is considered synonymous
with “Agricultural Marketing”.
Mechanization equipments like tractors, pump sets &
agriculture inputs like fertilizers, seeds and pesticides was
limited.
Marketing of products like earthen & metallic utensils, ploughs,
bamboo baskets & wooden products like bullock carts, window
and door frames by skilled workers was a important activity.
Phase II(1960s-1990s)
With the advent of agricultural inputs and implements, poverty
stricken villages turned into cash-rich centers.
This period saw the emergence of companies such as Mahendra
& Mahendra, Escorts, Eicher, Sriram Fertilizers & IFFCO
Rural products received considerable attention through agencies
like “Khadi &village indus commission”, Bunkar societies, and
handicraft emporiums.
Village industries were supported through exhibitions and
“Gram shree melas” & “Shilpa melas”
Phase III(1990 to the Present):
Industrial sector gained in strength and maturity, service
sector emerged signifying the transition of an agricultural
society to industrial one.
Central & State Govt outlay accelerated the growth of
rural areas and further initiated the competition thus
resulting in the growth of household consumables and
durables.
Summarization
Phase Origin Function Major Source Destinat
Products Market ion
Market
I Since Agri- Agricultur Rural Urban
Indepen Marketing al produce
dence
II Mid- Marketing Agri- Urban Rural
Sixties of Agri- inputs
inputs
III Mid- Rural Consumable Urban Rural
Ninetie Marketing & durables
for Rural
s production
&consumptio
n
Definitions
According to national commission on agriculture: ‘Rural
marketing is a process which starts with the decision to produce
a saleable farm commodity and involves all the aspects of
market structure or system, both functional & institutional,
based on technical and economic considerations and includes
pre and post harvest operation, assembling, grading, storage,
transportation and distribution.’
According to Thompson: ‘The study of Rural marketing comprises
of all the operations and 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 operation on producers,
consumers and middleman.’
Broader Definition
“Rural marketing is a two way marketing process that
includes the flow of goods and services from
rural to urban area and vice versa as well as the
flow of goods and services within rural areas.”
Therefore rural marketing has 2 major areas
a. Marketing of agricultural products.
b. Marketing of Manufactured products in rural
areas.
Scope of Rural Marketing
Growth in agriculture has resulted in the rapid rise of rural income, the
disposable surplus in rural areas is much higher than urban people.
Rural markets are proving to be vital for the growth of most companies. Eg.
HLL (half of 11,700 crores)
In durables, the average ownership of electrical goods is 2. 48 per rural
family, a figure compares favorably with the ownership of 3.39 durables per
family in urban.
There are 42000 rural supermarkets in India, that exceed the total number of
retail chain stores in the US(35000).
In 2001-2002, the LIC sold 55% of its policies in rural India.
Of the 20 lakh BSNL mobile phone connections, 50% are in small towns
and villages.
Of the six lakh odd villages in the entire country, 5.22 lakh had a
village public telephone
Of the 2 crore who have signed up for Rediffmail, 60% are from small
towns. Of the one lakh who have transacted on Rediff online shopping
site, 50% are from small towns.
Electrical consumption by the agricultural sector has shown a sharp
increase from 17.6% of total consumption to 29.2%.
According NCAER for 2006-2007 shows the no of poor households
will shrink by half to 28 million from 61 million in 1997-1998,
whereas middle income households will double and rich households
will treble over the decade in Rural India.
Attractiveness Of Rural Market
Larger Population
Raising prosperity: There were 61.4% of people whose
income was 25k or below in 1994-95, it will shrink to 20.2
by 2006-07.
Growth in Consumption
Life-style changes
Life-cycle advantages
Market growth rate higher than urban: More than 50%
for FMCG
Rural Marketing is not expensive
Components of Rural marketing
Rural market is made up of 2 broad components
The market for consumer goods which includes both
durables & Non-durable goods. &
The market for agricultural inputs & other investment
goods.
Classification Of Rural Markets
Rural market can be classified into 3 categories
A. Consumer Market:
Constituent: Individuals and households.
Products: Consumables: Food products, toiletries, cosmetics,
textiles and garments, footwear.
Durables: Watches, bicycles, television sets, radios, home
appliances, two-wheelers, etc
B. Institutional Market
Constituents: Agricultural and allied activities, food processing,
poultry farming, fishery, animal husbandry, cottage
industries, health centers, schools, cooperatives, NGOs, etc
Products: Consumables: Agri inputs, animal feed, fishnets,
fuel, engine oil, etc
Durables: Agri implements, boats.
C. Services Market:
Constitution: Individuals, Households, Production firms.
Services: banking, Insurance, Credit, Healthcare, tuition, IT
and Communication, Power, etc.
Rural Vs Urban Markets
Aspect Urban Rural
1.Philosophy Marketing and Marketing and
societal concepts, societal concepts,
Green marketing Developmental
and relationship marketing and
marketing. relationship
marketing.
2. Market
a. Demand High Low
b. competition Among units in Mostly among
organised sector unorganised units
c. Consumers
-Location Concentrated Widely spread
-Literacy High Low
-Income High Low
-Expenditure Planned, Even Seasonal Variations
-Needs High level Low level
-Innovation adoption Faster Slow
3. Product
-Awareness High Low
-Concept Known Less known
-Positioning Easy Difficult
-Usage method Easily grasped Difficult to grasp
-Quality preference Good Moderate
-Features Important Less important
4. Price
-Sensitive Yes Very much
-Level desired Medium-High Low-Medium
5. Distribution
-Channels Wholesalers, stockiest, Village shops, shandies,
retailers, supermarkets, Haats and jatras
specialty stores and
authorised show rooms.
-Transport facilities Good Average
-Product availability High Limited
6.Promotion
-Advertising Print, audio-visual, TV, Radio, print media
media, out doors, to some extent.
exhibitions, etc
Few languages. More languages.
-Personal selling Door-to-door Occasionally
frequently
Contests, gifts, prices, Gifts, price discounts
-Sales promotion
discounts
-Publicity
Good opportunities
Less opportunities
7. Mobility of People change their Social mobility is nil.
society occupation, place, People do not change
religion, or political their occupation, place,
ideas. There is social religion, or political
mobility ideas
8.Social uniformity People choose their job In rural society, due to
irrespective of caste. caste the occupations
There are many jobs or are fixed. There are
occupation limited job activity
9. Status of women Most women have No independent
independent economic economic status.
status
Treated at par with Considered subservient
men in all fields of life and given low status
10. Density of -Thickly populated and -Low density, village
population large numbers stay consists of small
closeby population
-All belong to different -All belong to same
class and status class may be of same
caste. There is a
homogeneity
11.Size of the Generally large and Small with one main
society many with occupation occupation agriculture
of different categories
Challenges in Agricultural
Marketing
1. Transport and distribution
2. Communication
3. Scattered villages
4. Warehousing facilities
5 .Inadequate credit facilities
6 .Nature of commodities
7 .Middle men
8 .Sellers market
THANK YOU
Questions
1. Define rural marketing (3 marks)
2. Bring out the components of rural marketing (3)
3. Bring out the scope of rural marketing(7)
4. Explain the evolution of rural marketing(7)
5. List out the differences between Rural and urban
markets(10)
