1. Introduction to Rural Marketing Session – I Xavier Institute of Management, Bhubaneswar

2. Why should we do this course? Agriculture’s share in GDP is going down, but, India still lives in her villages Agriculture’s share in GDP is going down, but, India still lives in her villages Urban markets are crowded and saturated Urban markets are crowded and saturated The understanding of “rural” is diffused and sometimes confusing The understanding of “rural” is diffused and sometimes confusing Is “rural marketing” different from “urban marketing” ? Is “rural marketing” different from “urban marketing” ?

3. Session Coverage Rural India – Some definitional issues Rural India – Some definitional issues Phases/ stages in rural marketing Phases/ stages in rural marketing Scope of rural marketing Scope of rural marketing How is rural India changing? How is rural India changing? Schools of thought- Approaches to Rural Markets Schools of thought- Approaches to Rural Markets Strategic Issues & Directions in rural marketing Strategic Issues & Directions in rural marketing

4. Defining Rural India OrganisationDefinitionLimitations NSSO ( Census) Population density < 400 / Sq Km Population density < 400 / Sq Km 75 percent of the male working population is engaged in agriculture 75 percent of the male working population is engaged in agriculture No Municipal corporation / board No Municipal corporation / board rural not defined rural not defined Planning Commission Towns upto 15,000 population are considered rural Towns upto 15,000 population are considered rural Town characteristics not defined

5. Cont’d LG Electronics All places other than the 7 metros Only clarifies what are the cities NABARD All locations with a population upto 10, 000 considered “ rural” Village & town characteristics not defined Sahara Commercial establishments located in areas servicing less than 1000 population Population characteristics unknown Source: The Rural Marketing Book- Text & Practice, Kashyap. P and Raut. S ( 2007)

6. Defining Rural Marketing National Commission on Agriculture NGOs Corporate Rural Marketing Definition Decisions to produce saleable farm commodities involving all the aspects of the market system or structure, both functional and institutional, based on technical & economic considerations and includes the pre & post harvest operations. Decisions to produce saleable farm commodities involving all the aspects of the market system or structure, both functional and institutional, based on technical & economic considerations and includes the pre & post harvest operations. Marketing products produced in rural areas to urban areas Marketing products produced in rural areas in rural markets Function that manages all activities involved in assessing, stimulating and converting the purchasing power of rural consumers into effective demand for specific products and services to create satisfaction & a better standard of living for achieving organisational goals.

7. Phases in Rural Marketing Sr. No Time Frame Key Events & Trends 1 Phase One( Pre 1960’s) Marketing rural products in rural and urban areas Marketing rural products in rural and urban areas Agricultural inputs in rural areas Agricultural inputs in rural areas “Agricultural marketing” “Agricultural marketing” Farming methods were primitive and mechanisation was low Farming methods were primitive and mechanisation was low Markets unorganised Markets unorganised

8. Cont’d 2 Phase Two ( 1960s to 1990s) Green Revolution Green Revolution Companies like Mahindra and Mahindra, Sri Ram Fertilisers and IFFCO emerge Companies like Mahindra and Mahindra, Sri Ram Fertilisers and IFFCO emerge Rural products were also marketed through agencies like KVIC Rural products were also marketed through agencies like KVIC 3 Phase Three( 1990s to Present) Demand for consumables and durables rise Demand for consumables and durables rise Companies find growth in urban markets stagnating or falling Companies find growth in urban markets stagnating or falling

9. Scope of Rural Marketing Keenly debated topic Keenly debated topic Definitions based on organisational/ institutional vision, mission & goals Definitions based on organisational/ institutional vision, mission & goals Need for a comprehensive and modular understanding Need for a comprehensive and modular understanding Rural Marketing is a “ work in progress” Rural Marketing is a “ work in progress” Multi – disciplinary approach is necessary for sharper understanding Multi – disciplinary approach is necessary for sharper understanding

10. Domain of Rural Marketing To RuralUrban From Rural Urban Source: M. Jha, Rural Marketing- Some Conceptual Issues, EPW, 1988

11. Scope of Rural Marketing Domain of Rural Marketing Dimensions of the transaction Participants Products/ services ModalitiesNormsOutcomes Rural to Rural Rural to Urban Urban to Rural

12. Changes in Rural India Diverse change levers in rural India The “ pull of the cities & towns” – migration and its side effects Effect of government programmes Civil society interventions Natural & manmade disasters Slow but sure change

13. Transitions In Rural India Food Grain Crops On land activities Farm Activities Non –food, cash crops Livestock & fisheries Manufacturing & services

14. Rural Employment Patterns( Male) Sector Year – 1987 ( % share in employment) Year -2004 ( % share in employment) Agriculture 75 7567 Transport & Communication 28 Trade & Hotels 57 Construction47 Manufacturing78 Source: NSSO data, Mckinsey Global Institute Study, 2004-05

15. Rural India – Population Trends 1971198119912001 Total Population (in million) 548.2683.3848.31026.9 Rural Population (in million) 524.0628.8741.6 As a proportion of total population 76.774.372.2 Decadal Variation 19.816.715.2 Source: Census 2001

16. Cont’d The joint family system is being replaced by the nuclear family system The joint family system is being replaced by the nuclear family system The occupational pattern shows a predominance of cultivators and wage earners The occupational pattern shows a predominance of cultivators and wage earners Cultivators( 40.86 %) and Wage Earners( 35.28 %) according to NCAER studies (2002) Cultivators( 40.86 %) and Wage Earners( 35.28 %) according to NCAER studies (2002)

17. Rural Settlement & Habitation Trends Key findings from 2001 census Key findings from 2001 census Population density 253/ sq kilometer and total number of villages is 638, 588 Population density 253/ sq kilometer and total number of villages is 638, 588 Villages having less than 500 population are falling Villages having less than 500 population are falling Villages having 2000 + population most prosperous Villages having 2000 + population most prosperous What are the implications of these trends? What are the implications of these trends?

18. Cont’d Size of villages/ habitations are changing Size of villages/ habitations are changing Role & influence of towns is changing Role & influence of towns is changing Social interaction is a mix of rural and urban Social interaction is a mix of rural and urban Let’s look at some key trends in detail Let’s look at some key trends in detail

19. Rural Income Trends Annual Income ( at 1998-99 prices) Income Class 1989-90( % Households) 1998-99 ( % Households) <= 35,000 Low67.347.9 35,001- 70,000 Low Middle 23.934.8 70,001 – 1,05,000 Middle7.110.4 1,05,001- 1,40,000 Upper Middle 1.23.9 > 1,40,000 High0.53.0 Source: National Council for Applied Economic Research, 2000

20. Rural Marketing- Schools of Thought Determinist School Determinist School Activist School Activist School What is the right approach? What is the right approach? Dependent on level of market development, stage in the PLC and access to resources Dependent on level of market development, stage in the PLC and access to resources Amul & ITC prominent examples Amul & ITC prominent examples No water-tight compartmentalisation No water-tight compartmentalisation

21. Strategic Issues & Directions in Rural Marketing Evolutionary Vs revolutionary changes in rural markets Evolutionary Vs revolutionary changes in rural markets Role of state & market forces Role of state & market forces ICT based interventions ICT based interventions Partnership innovations Partnership innovations Developmental role of rural marketing Developmental role of rural marketing Scalability & replication of rural marketing programmes Scalability & replication of rural marketing programmes

22. ICT in Rural Markets CategoryGovernmentPrivate NGO/ PPP Infrastructure Provision NIC N- Logue Simputer Rural Services Bhoomi( Karnataka) Sewa Agri Marketing Agmarknet E- Choupal Ozhwar Sandhiyes Agri extension Universities EID Parry

23. Close of Session Thank You