Introduction to Rural
Marketing
Session – I
Xavier Institute of Management,
Bhubaneswar
Why should we do this course?

Agriculture’s share in GDP is going down, but, India still
lives in her villages

Urban markets are crowded and saturated

The understanding of “rural” is diffused and sometimes
confusing

Is “rural marketing” different from “urban marketing” ?
Session Coverage

Rural India – Some definitional issues

Phases/ stages in rural marketing

Scope of rural marketing

How is rural India changing?

Schools of thought- Approaches to Rural Markets

Strategic Issues & Directions in rural marketing
Defining Rural India
Organisation
NSSO (
Census)
Planning
Commission
Definition
Limitations

rural not defined
Population density < 400 / Sq Km
 75 percent of the male working
population is engaged in agriculture
No Municipal corporation / board

Towns upto 15,000 population are
considered rural

Town
characteristics not
defined
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)
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.
Marketing products
produced in rural areas
to urban areas
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.
Marketing products
produced in rural areas
in rural markets
Phases in Rural Marketing
Sr. No
Time Frame
1
Phase One( Pre 1960’s)
Key Events & Trends
Marketing
rural
products in rural and
urban areas
Agricultural inputs in
rural areas
“Agricultural
marketing”
Farming methods were
primitive and
mechanisation was low
Markets unorganised
Cont’d
2
Phase Two ( 1960s to 1990s)
3
Phase Three( 1990s to Present)
Green
Revolution
Companies like
Mahindra and Mahindra,
Sri Ram Fertilisers and
IFFCO emerge
Rural products were
also marketed through
agencies like KVIC
Demand
for
consumables and
durables rise
Companies find growth
in urban markets
stagnating or falling
Scope of Rural Marketing

Keenly debated topic

Definitions based on organisational/ institutional vision,
mission & goals

Need for a comprehensive and modular understanding

Rural Marketing is a “ work in progress”

Multi – disciplinary approach is necessary for sharper
understanding
Domain of Rural Marketing
To
Rural
Urban
Rural
From
Urban
Source: M. Jha, Rural Marketing- Some Conceptual Issues, EPW, 1988
Scope of Rural Marketing
Domain of
Rural
Marketing
Dimensions of the transaction
Participants
Rural to
Rural
Rural to
Urban
Urban to
Rural
Products/
services
Modalities
Norms
Outcomes
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
Transitions In Rural India
•Non –food, cash crops
•
Food Grain Crops
•
On land activities
•
Farm Activities
•Livestock & fisheries
•Manufacturing &
services
Rural Employment Patterns( Male)
Sector
Year – 1987 ( % share in
employment)
Year -2004 ( % share in
employment)
Agriculture
75
67
Transport &
Communication
2
8
Trade & Hotels
5
7
Construction
4
7
Manufacturing
7
8
Source: NSSO data, Mckinsey Global Institute Study, 2004-05
Rural India – Population Trends
1971
1981
1991
2001
548.2
683.3
848.3
1026.9
Rural
Population (in
million)
524.0
628.8
741.6
As a proportion
of total
population
76.7
74.3
72.2
Decadal
Variation
19.8
16.7
15.2
Total
Population (in
million)
Source: Census 2001
Cont’d

The joint family system is being replaced by the nuclear
family system

The occupational pattern shows a predominance of
cultivators and wage earners

Cultivators( 40.86 %) and Wage Earners( 35.28 %)
according to NCAER studies (2002)
Rural Settlement & Habitation Trends

Key findings from 2001 census

Population density 253/ sq kilometer and total number of
villages is 638, 588

Villages having less than 500 population are falling

Villages having 2000 + population most prosperous

What are the implications of these trends?
Cont’d

Size of villages/ habitations are changing

Role & influence of towns is changing

Social interaction is a mix of rural and urban

Let’s look at some key trends in detail
Rural Income Trends
Annual Income (
at 1998-99
prices)
Income Class
1989-90( %
Households)
1998-99 ( %
Households)
<= 35,000
Low
67.3
47.9
35,001- 70,000
Low Middle
23.9
34.8
70,001 – 1,05,000
Middle
7.1
10.4
1,05,0011,40,000
Upper Middle
1.2
3.9
> 1,40,000
High
0.5
3.0
Source: National Council for Applied Economic Research, 2000
Rural Marketing- Schools of Thought

Determinist School

Activist School

What is the right approach?

Dependent on level of market development, stage in the
PLC and access to resources

Amul & ITC prominent examples

No water-tight compartmentalisation
Strategic Issues & Directions in Rural
Marketing

Evolutionary Vs revolutionary changes in rural markets

Role of state & market forces

ICT based interventions

Partnership innovations

Developmental role of rural marketing

Scalability & replication of rural marketing programmes
ICT in Rural Markets
Category
Government
Private
NGO/ PPP
Infrastructure
Provision
NIC
N- Logue
Simputer
Rural Services
Bhoomi(
Karnataka)
Agri Marketing
Agmarknet
E- Choupal
Agri extension
Universities
EID Parry
Sewa
Ozhwar
Sandhiyes
Close of Session
Thank You