Cooperatives and Rural Markets

Rural Markets - Syllabus

Unit 3
Definition and Scope of Rural Markets Rural Vs Urban Markets Rural Marketing Environment Rural Consumer Profile Consumer Behaviour Rural Marketing Mix Rural Market Segmentation Targeting and Positioning Marketing of Consumer Durables Rural Sales Force Management

Unit 4
Agricultural Produce Marketing
Importance Problems Lines of Improvement Regulated Markets

Quality Orientation
Standardisation and Grading

Role of financial institutions in Agricultural marketing

Innovative Marketing Techniques and Recent Trend in Rural Markets

Impact of Globalisation on Indian Markets

E-Coupals Commodity Markets and importance

What is Rural?
Government agencies like IRDA (Insurance Regulatory And Development Agency and NCAER (National Council for applied Economic Research) define Rural as villages with a population <5000 with 75% male population engaged in agriculture According to NSSO - National Sample Survey Office ( Census) : Population density < 400 / Sq Km 75 percent of the male working population is engaged in agriculture No Municipal corporation / board

According to Planning Commission : Towns up to population of 15,000 are considered rural According to NABARD/RBI: All locations with a population up to 10, 000 are considered rural

What is Rural Marketing?

Developing of the market in the area which is defined as Rural Process of developing, pricing, promoting, distributing rural specific goods and services leading to exchange between urban and rural markets, which satisfies consumer demand and achieves organisational objectives

Aspects covered by rural marketing

1. Marketing of agricultural products from rural to urban areas 2. Marketing of manufactured goods and services in rural areas Hence rural marketing is, Marketing of1. Urban products in rural areas 2. Rural products in urban areas 3. Marketing within rural areas (rural to rural)

To Rural Eg: Bamboo baskets, ropes, small agricultural tools, household earthen utensils etc Dependent on artisans like blacksmiths, carpenters and cobblers Urban Agricultural inputs Fertilisers, pesticides, seeds, tractors Multiple types of FMCG and consumer durables Urban Agricultural productsFoodgrains, cotton, sugarcane Finished productsWooden toys, brassware, handloom textiles, safety matches, toilet soaps

Rural From

__

Why Rural Markets?

Growing urbanisation Higher purchasing power Infrastructural facilities Role of women in decision making Relevance of opinion leaders Media exposure Rise of alert buyers Saturated urban markets

Reasons for growth in rural markets

Increase in population, Increase in income

Increased productivity of agriculture- Use of scientific methods, technology

Government investment in rural development (Jawahar Rojgar Yojna, Small Industries Training, Rural Electrification, Spending on Health and Sanitation, Primary Education), initiatives like Green & White revolution (Dairy), tax exemption in backward areas etc Initiatives by banks for more branches and Kisan credit card to buy seeds, fertilizers, consumer goods on installment basis

Changing lifestyles/attraction of higher standards of living by firms like HUL, Britania ,Dabur, LG, Honda, Videocon, ITC etc.
Evolution of new cadre of entrepreneurs in rural areas

Higher rural literacy rate Almost 59%

Revenue generated by rural markets for HUL- 50% Colgate- 50 % LG- 50 % Asian Paints- 60 % Dabur- 40 % Videocon- 40 % Cadburys- 25 % Hero Honda- 40 %

Class Activity
Rural Markets Vs Urban Markets

URBAN MARKET Mostly concentrated High infrastructural level High density of population per sq km Good physical connectivity and high mobility Incomes are more stable and permanent

RURAL MARKET Widely spread and scattered Low infrastructural level Low density of population per sq km Poor physical connectivity and low mobility People work in less certain environment

Occupations are government employment, business, industry etc. Income received at regular income
Social norms are less visible Caste influence indirect and less visible High exposure to variety of products

Mostly agricultural occupation

Acute seasonality in income receipts Social norms influencing individuals Caste influence direct and strong Low exposure to variety of products

High brand awareness

High exposure to multiple sources of information More convenient buying, more retail outlets

Low brand awareness

Low exposure to and limited sources of information Less convenient buying, less retail outlets

Rural Marketing Environment

Growing Population = Growing markets?

Who is the consumer?

Consumables & Lifestyle products: School going children & young adults 20-35 yrs = 1/4th Indias consumption base 48% of the rural Indias population is below 20. Improvement in literacy rates= mature decisions, more brand awareness & hence brand consciousness

Characteristics of rural markets

48% of rural population is below age of 20

Rural literacy levels: 36% in 1981; 45% in 1991; 59% in 2001

Large and scattered market: Rural population is 72% of total population and it is scattered over a wide range of geographical area Diverse socio-economic background Changing demand pattern: Demand pattern of rural customer is fast changing due to increasing in income and credit facilities offered by banks like Kisan credit card Major income comes from agriculture: About 60% of the rural income is from agriculture and hence the demand for consumer goods is high during harvesting season

Saving habits: Rural consumer is now having saving habits due to the efforts of co-operative and commercial banks Traditional outlook: Rural customer values old customs and traditions Low standard of living compared to urban Poor infrastructure facilities: Facilities like roads, warehouses, communication system, etc. are inadequate in rural areas. Hence physical distribution becomes costly Media reach: The reach of print media is 10% followed by TV 31%, radio 31% and cinema 33%. Communication: Around 6 lakhs villages are still without telephone facilities. Electrification: About 88% of villages have been electrified

Rural Income Trends

Annual Income <= 35,000 35,001- 70,000 Income Class Low Low Middle 1989-90( % Households) 67.3 23.9 1998-99 ( % Households) 47.9 34.8

70,001 1,05,000 1,05,001- 1,40,000

Middle Upper Middle

7.1 1.2

10.4 3.9

> 1,40,000

High

0.5

3.0

Source: National Council for Applied Economic Research (NCAER), 2000

Classification of Rural Consumer by Income

Affluent Group: This group is very small and can afford luxury products. E.g. Chilly merchants in Gunthur, Andhra Pradesh and wheat farmers in Punjab. Middle Class: This class is about 30 crores in size and is expanding. E.g. Jute farmers in West Bengal and sugarcane farmers in UP. Poor: This class is about 25 crores in size. Their purchasing power is very low. E.g. Poor farmers of jawar and bajra of Bihar and Orissa.

Profile of Rural Consumer

Educational profile Occupation Low income levels Opinion leaders Media habits Increase in brand consciousness Value for money

Rural consumer behavior

What is Consumer Behaviour?
Human behaviour that go to make purchase decisions. Its the reaction of individuals in obtaining and using goods and services of a particular type.

Definition:
Is the process whereby individuals decide whether, what, when, how and from whom to purchase goods and services.

Characteristics of Rural Consumer that affect the buying process

Age and life cycle stage Occupation Purchasing power (small packs & prices, installments & discounts and free gifts) Lifestyle ( Poor, Aspirants, climbers, consuming class, very rich) Personality & self Concept Psychological factor
Perception Cognition Beliefs & attitudes Motivation

Rural consumers Buying behaviour

Socio-Cultural factors
Culture Social class Groups Family Role & status Sociability (interactions between one another)

Continued..
Technological factors Economic factors Political Factors

Buying decision process

Purchase Decision Evaluation of Alternatives Information Search

Post Purchase Behaviour

Need Recognition