Understanding Rural Marketing Concepts

Rajendran ananda krishnan

https://www.facebook.com/ialwaysthinkprettythin
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Topics to be covered
 Definition, Scope of Rural Marketing
 Concepts, Components of Rural Markets
 Classification of Rural Markets
 Rural Vs Urban Markets

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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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 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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Urban Rural

1. Agricultural products 1. Small Agricultural
Rural (Food grains etc.) Tools.
2. Oil seeds, Cotton, 2. Household earthen
Tobacco, Sugar, Cane items, wooden items
etc. etc.
3. Handicrafts and Rural
Industry Products

1. Consumables and
consumer durables.
Not 2. Agricultural inputs
Urban concerned like seeds, fertilizers,
pesticides, tractors etc.
3. Services like Health,
education, Market
information etc.

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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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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
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
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 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.

 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.

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 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 and beauty products
to meet the demand of rural population.

 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.

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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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Distinction between Rural and
Urban Markets
Urban Market Rural Market
1. City has a large population 1. Village is a human settlement with
size growing at a fast growth a small administrative unit. It
rate due to immigration from comprises few hundred households
rural areas for education and and the population growth due to
employment. The population immigration is insignificant.
density is high. Towns are Migration from village to city/town
smaller urban units. is to get better education and
employment.

2. The city settlement is 2. Village has land for human
compact though spread over settlement and for cultivation.
a larger area. Land use is The settlements are
residential, commercial , predominantly clustered but in
industrial roads and streets, some areas households settle on
institutional and community respective cultivable land
facilities etc. holdings.
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3. Structure of houses is 3. Houses are largely semi-pucca or
permanent and often rises to kachha. They are owner occupied.
more than one storey. Housing
on rental is highly prevalent.

4. Land is the primary resource for
4. Primary resource base is
livelihoods. Other forms of resources
production and distribution of
are water bodies, forests , and
industrial goods and services.
mountains. Cows, buffaloes and
poultry are kept for household need
for milk, eggs and meat.

5. Occupations are diverse
5. Predominant occupations are
ranging from professionals,
cultivation and agricultural labour.
skilled, semi-skilled to unskilled
workers. Higher education and
training is required to build
skills.

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6. Free from traditional
outlook. More scientific 6. Rigid, conservative in approach
approach to the issues. and custom bound. Society is
guided by age old customs. No
scientific outlook.

7. Media reach is very 7. Media reach is very low.
high. Marketers generally Marketers prefer Radio,
prefer Televisions, loudspeaker on rickshaws to
internet and print media reach to the target customers.
to be reached to the
target customers.

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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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 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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Classification of Rural Market
Rural
Economy

Farm Sector Non-farm sector (Formal &
(Agri & Allied) Informal sector)

Agriculture Rural Industries Rural Services

Agro Processing Retailing &
(Sugarcane, Trading
Animal Husbandry Oilseed etc.)

Manufacturing Community &
(Handloom, Social Service
Horticulture Handicrafts etc.)

Mining,
Communication
Construction
Forestry, Fishing https://www.facebook.com/ialwaysthinkprettythin
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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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Transition
1. Non-food grain
crops, cash crops
2. Off-land activities
1. Food grain crops like livestock and
2. On-land activities fisheries
3. Farm activities 3. Non-farm
activities, includes
manufacturing and
services.

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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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Understanding Rural Marketing Concepts

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