Ch 02 Rural Marketing Environment

The Rural Marketing Environment : 

The Rural Marketing Environment Chapter 2

Chapter Objectives : 

Chapter Objectives The facts and figures of rural Evolution of rural marketing in India Holistic view of the marketing environment The household, institutional and service sectors in rural The need for business-social sector partnerships RMB 02 2

Evolution of Rural Marketing : 

Evolution of Rural Marketing Phase I (Before 60s) Traditional farming methods Focus on marketing of rural products in urban markets and agricultural inputs in rural Phase II (1960s to Early 90s) The Green and the White Revolution Demand for agricultural inputs Domain of marketing of agricultural inputs added Phase III(Mid 90s to present) Higher development in rural sector Marketers realised the potential of the vast rural market RMB 02 3

Rural Market Structure : 

Rural Market Structure Demographic Environment Share of rural population down from 80.1% in 1971 census to 72.2% in 2001 census. The number at 741.6 million indicates an increase of over 15% Youth (20 to 34) 23.1% of rural population Rural literacy up from 36% in 1981 to 59% in 2001 census Rural households up by 26 million in last decade Family size has gone down marginally due to migration Joint families now breaking apart with over 77% going nuclear in rural Concept of individualised joint families staying in the same house but having separate kitchens RMB 02 4

Some Comparisons : 

Some Comparisons RMB 02 5 Source : 2001 Census Lower due to lack of facilities Lower due to migration factor

Some Comparisons : 

Some Comparisons RMB 02 6 Source : IRS 2005 Joint Family System Breakdown

Occupational Pattern : 

Occupational Pattern Over 40% of rural population is in cultivation followed by 35% wage earners 11% of the rural population are salary earners and nearly 5% petty shopkeepers 3.4% are artisans The cultivator’s disposable income is highly seasonal being available at the time of harvesting RMB 02 7

Population Distribution - Rural : 

Population Distribution - Rural RMB 02 8 Source : MART Do not include uninhabited. Total villages including these are 638,365 Hardly any shops in these villages account for 50% of rural population & 60% rural wealth

Distribution of Towns in India : 

Distribution of Towns in India 9 Source: Census 2001 *10 lakh+ : 27, 5-10 lakh: 42, 1-5 lakh: 354 90 % of durables purchased by rural people from these towns

Economic Environment : 

Economic Environment RMB 02 10 All figures in % Projections Based on 7.2% GDP Growth The rich and the very rich have doubled in the last ten years The aspirers and the destitute have fallen by 50% Increasing incomes are also changing expenditure patterns

Changing Rural Consumers Expenditure Pattern : 

Changing Rural Consumers Expenditure Pattern RMB 02 11 Per capita consumption expenditure has grown 4 times in the last two decades Expenditure on non-food items is increasing 42 million rural households avail banking services in rural against 27 million in urban

Social and Cultural Environment : 

Social and Cultural Environment Variations between regions and sub-regions In villages inward migration is insignificant while outward migration to urban and foreign is reasonably high The settlement pattern is in clusters largely around caste lines Houses are largely semi-pucca and kacha Land is the primary source of livelihood Activities limited to smaller geographic areas resulting in higher adherence to customs and traditions RMB 02 12

Village Community : 

Village Community Villages are self-sufficient and autonomous Each village has a council of elders (panchayat) Panchayats have the constitutional authority for exercising self-governance The panchayat structure has undergone change with elections and reservation for underprivileged families Shift from subsistence farming to commercial and mixed farming has made the village dependent on external factors RMB 02 13

Caste System : 

Caste System The rural society has a strong caste system: Brahmins Kshatriyas (Warriors) Vaishyas (Business Class and traders) Shudras (involved in odd jobs) – Untouchables The settlements of the lower castes are normally on the outskirts of the village Marketers have to be sensitive to the caste system especially in the area of communication RMB 02 14

Political Environment : 

Political Environment The panchayats were dominated by upper castes The panchayati raj system has introduced an integrated and inclusive approach to governance in the rural sector Villages with 5000 population or a cluster of villages with a combined population of 5000 form a panchayat Gram Sabhas are to be organised once a quarter to bring in transperancy, accountability and achievement The sarpanch represents the village at the tehsil/taluka/ block level RMB 02 15

Tecnological Environment : 

Tecnological Environment Triggered by three major revolutions: Green Revolution (1967 to 1978) to bring about food self-sufficiency. Resulted in adoption of high yield seeds, fertilisers, pesticides, and farm mechanisations White Revolution – Milk production through producer cooperatives and moving processed milk to urban-demand centres. Milk production has gone up from 17 million tonnes in 1950-51 to over 100 million tonnes in 2007-08 The NGO movement has created grassroot level assimilation of technological extensions in rural areas NGOs have also been instrumental in providing health, homes, hygiene, child care, education and other social development programmes RMB 02 16

Constitution of Rural Markets : 

Constitution of Rural Markets Consumers Market Constituents: Individuals and Households Products: Consumables: Food Products, Cosmetics Durables: Watches, bicycles, radios. Institutional Market – Constituents: Food processing, poultry, fishery, animal husbandry, cottage industries, health centers, schools Consumables : Agri inputs (seeds and fertilizers) animal feed, fuel Durables: Tractors, Pumpsets and threshers. Services Market – Banking, insurance credit cards, communication RMB 02 17

Size of Rural Market : 

Size of Rural Market In the FMCG market the size of the pie is larger than the urban pie. Problems of logistics, supply and storage Rural markets accounted for 54% of the durables sold in the country The decadal growth rate for consumer durables is 100% in rural against 40% in urban RMB 02 18

Nature of Rural Market : 

Nature of Rural Market The big question – transactional or developmental approach to the rural markets Agri-input companies follow an extension services approach to increase productivity HPCL is promoting concept of community kitchens to popularise cooking gas HUL’s Project Shakti improves the income of rural women The rural marketing process needs to be evolutionary and not revolutionary RMB 02 19

Marketing Management in Non-Profit Sectors : 

Marketing Management in Non-Profit Sectors NGOs have started partnering with corporates Corporates are facing saturation in the urban segment and do not understand the rural environment The potential for a marriage between the two to fulfill each other’s needs exists RMB 02 20

In 20 years the rural Indian market will be larger than the total consumer markets in such countries such as South Korea or Canada today, and almost four times the size of today’s urban market. The estimated size of rural market will be USD 577 billion : 

In 20 years the rural Indian market will be larger than the total consumer markets in such countries such as South Korea or Canada today, and almost four times the size of today’s urban market. The estimated size of rural market will be USD 577 billion - McKinsey Global Institute, May 2007

Successful Mantra in RuralBusiness Mind, Social Heart : 

Successful Mantra in RuralBusiness Mind, Social Heart