Rural Marketing

RURAL MARKETING
ENVIRONMENT
 Topics to be covered

 Rural Marketing Environment : Population,

occupation Pattern, income generation, location of
rural population
 Expenditure pattern, literacy level, land distribution,
land use pattern, irrigation
 Development programs, infrastructure facilities,
rural credit institutions, rural retail outlets, print
media in rural areas
 Rural areas requirement, problems in rural
marketing, rural demand, rural market index.
 Study of Rural environment

 Consumer decisions and actions can be properly

comprehend only when the force field in which they
are operating is understood.
 Study of environmental factors is important for
marketers to realize the developments and trends
rather than know the static picture of the
environment.
 Today‟sdecisions are not only for current problems
but also for future opportunities, performance nad
results.
 Rural Environment
 Social Environment – Population and households,
education and literacy levels, social groups, festivals and
melas, entertainment and arts.
 Technological Environment – Power and energy sources,
postal services, telecommunications, information and
communication technology, appropriate technology and
innovations.
 Economic environment – Occupations, land distribution,
land use pattern, irrigation, asset holding, income,
consumption, savings, disposable incomes, rural
lifestyles and sales potential, rural credit institutions,
rural retail outlets, micro financing and rural industry.
 Political Environment – Development initiatives and
administrative bodies.
 Marketing decisions and environment
[Link] (size and distribution
1. Demand Estimation
of population by age, gender,
occupation, education, geographic
areas, income, savings and investment.
[Link], lifestyle indicators,
2. Segmentation and target
purchase and usage of inventories.
marketing
3. Income, quality consciousness,
brand awareness, preference of
consumers and competition.
3. Product decision 4. Disposable incomes, propensity to
consume, competition, demand etc.
5. Availability of trade channels,
4. Price decision physical distribution facilities,
competition and location.
5. Place decision 6. Media availability and costs, media
habits of target customers,
6. Promotion decision competition etc.
 Population

 Country‟spopulation : 1027 million

 Share of rural population : 68 percent
 No. of households : 205.9 million (30% are in urban
areas and 70% in rural areas.)
 Average family size in the country – 5 members
 Rural Family size – 5.08
 Low income states: Assam, Bihar, Madhya Pradesh,
Meghalaya, Orissa, Rajasthan, Uttar Pradesh,
Chattisgarh, Uttaranchal and Jharkhand.
 Middle Income States : Andhra Pradesh, Himachal
Pradesh, Karnataka, Kerala, Tamil Nadu and West
Bengal
 High Income States : Goa, Gujarat, Haryana,
Maharashtra, Punjab, Pondicherry, Chandigarh and
Delhi
 Distribution of Population

factors rural urban All India

Population (mn) 732 295 1,027

households 144.5 61.4 205.9

household size ( 5.08 4.81 5.00

number of
members )

Number of earning 1.43 1.34 1.40

members
 Distribution of population across states

factors LI states MI states HI states All India

states

Estimated 493 314 220 1027

population

Estimated 91.7 69.6 44.3 205.6

households

Average 5.38 4.51 4.97 5

household size

Per capita 9749 14543 18172 13018

income

Share of rural 80.7 68.2 54.5 71.2

population

ngs
 Gender-wise Ratio

 Sex Ratio for India is 933 females per 1000 males.

 Women and men are almost in equal number in many of
the states.
 The male population is larger in Union Territories like
Dadra and Nagar Haveli, Chandigarh, Andaman &
Nicobar Islands, Delhi and many of the Northern States
such as Bihar, Rajasthan, Gujarat, Haryana, Madhya
Pradesh, Maharashtra, Nagaland and Punjab.
 In almost all the southern states, male and female
population are almost in equal number except Kerala,
where female population dominates the male population.
 Demographic Environment
 Though the rural proportion in population has come
down moderately over the years, there has been a
considerable increase in absolute number of people living
in rural areas.
 With the increased working population, the purchasing
power of the rural population has gone up from 40% in
1991 to 45% in 2011.
 For marketers, the largest age group shapes the
marketing environment. In the case of rural, it is school
going children and young adults who define the
consumption patterns of consumables and lifestyle
products.
 The potential for marketers in the rural sector can be
assessed by the fact that 48% of the rural population is
below the age of 20.
 Distribution of Population by Age groups

Age groups Rural Urban

0-4 11.5 8.9

5-14 25.7 21.8

15-19 9.5 10.6

20-34 23.1 26.8

35-54 19.7 22.5

55+ 10.5 9.4

 Education in India

Education Level Rural Urban

Below Primary 31.7 18

Primary but below middle 29.5 22.9

Middle but below 16.9 16.3

Matriculation
Matriculation but below 18.4 29.6
Graduate
Graduate and above 3.5 13.2
 Education and the level of demand
 Lower levels of education in the rural sector lead to
little or low demand for a range of products such as
literary books, magazines, notebooks, pens, pencils,
drawing instruments, calculators, computers etc.
 But change is taking place because literacy rate in the
rural sector has risen 23% over the last 20 years.
This has contributed significantly to an improvement
in the socio-economic status of the people.
 With this growth, the demand for educational
products has increased.
 Education and the level of demand

Rural Literacy 1991 2001 2011

% of literates 45 59 69
 Distribution of households by Occupation of
the Head
Head’s Urban Rural All
Occupation
Housewife 0.84 1.01 0.96

Cultivator 3.45 40.86 29.99

Wage Earner 20.93 35.28 31.12

Salary Earner 40.72 11.28 19.84

Professional 3.59 0.73 1.56

Artisan 6.90 3.41 4.42

Petty Shopkeeper 16.05 4.97 8.19

Businessman 3.68 0.46 1.4

Others 3.85 1.98 2.52
 Occupation Pattern
 The occupational pattern of people in a segment
naturally affects their buying behavior.
 A daily wage earner has to account for variations in
income, whereas a salary earner brings home an assured
fixed amount and therefore can plan expenses in a better
way.
 Three-fourths of rural household heads are either
cultivators or wage earners, whereas three-fourths of
urban household heads are salary earners, petty
shopkeepers and wage earners.
 The cultivator‟s disposable income is highly seasonal, with
more disposable income available immediately after the
harvesting season. This is therefore the time when he is
more inclined to make purchases, especially of durables
and high-involvement products.
 Occupation Pattern
Basic occupations that exist and help directly agro-related
works are:
 Farm Labourer – The farm labourer helps a village
through his agricultural activity directly. The labourer
works by tilling, weeding out, sowing, reaping, cleaning
the produce, guarding the field at harvest time and many
other odd jobs related to agriculture.
 Priest – He reads horoscopes, arranges poojas, tells
villagers regarding auspicious dates for marriages, house
warming, sowing in addition to his duties in the temple.
 Blacksmith – The agricultural implements are made
and repaired by the village blacksmith.
 Carpenter
 Household Pattern (Family Structure)
 Rural households have grown by 26 million during the
last decade. The average size of the rural family has
decreased due to movement of more families from the
joint to the nuclear structure.
 The traditional households in rural were joint families, in
which a group of people lived under one roof, ate food
from common chulha, held income and property in
common and were related to each other by bonds of
kinship.
 But with rise in population and resulting pressure on
land and several other socio-economic factors, joint
families are now breaking apart and moving towards
nuclear family culture.
 With the increasing number of „individualised joint‟
(families stay in the same house, but use separate
kitchens) and nuclear families, the range and
number of branded products coming into the family
can increase.
Size of Household Rural Urban

1-2 members 11.1 10.7

3-4 members 30.4 38.8

5-6 members 34.0 32.8

7 and above 24.5 17.7

 Rural Housing Pattern

 The types of houses in rural areas are a very strong

indicator of economic growth.
 Over the last twenty years, the trend in house types
has changed dramatically from less permanent semi-
pucca or kuccha to more permanent pucca types.
Today, 40 percent of rural houses, i.e. 50 million are
pucca, which is growing at a rate of almost 5%
annually.
 Statistics indicate that the owners of such houses
possess sufficient disposable income.
House Type 1981 1991 2001

Pucca 22 31 41

Semi-Pucca 37 36 36

Kuccha 41 33 23
 Estimates of Incomes

Urban Rural All India

No. of earners per 1.34 1.43 1.4

household
Income 95,827 51,922 65041
(Rs/annum/house
hold)
Poverty Ratio 18.7 21.7 20.8

Per capita income 19,935 10,227 13018

Population below 55.2 159.0 214.2

poverty line
 Rural Income Dispersal
Consumer Class Annual Income 1995-96 2006-07

Very Rich Above Rs. 215000 0.3 0.9

Consuming Class Rs. 45001-2,15000 13.5 25.0

Climbers Rs. 22001 – 31.6 49.0

45000

Aspirants Rs. 16001 – 22000 31.2 14.0

Destitutes Rs. 16000 & below 23.4 11.1

ngs
 Income Generation
 By sale of agricultural produce
 By sale of animal produce
 By service – Rendered by teacher, doctor or nurse.
 By interest on investment
 Government subsidies and grants
 By mortgage of properties and gold
 By charities and donations
 By labour and wages – Labourers do jobs in
construction of roads, bridges and buildings.
 Rural Income Pattern
 Income of Rural Sector is rising at a considerable rate.
Percentage of Very Rich, Consuming Class, and Climbers
are rising whereas Aspirants and Destitutes are
declining.
 The structure of Rural Income depicts the following
trends:
1. On the income ladder, the top two slots are occupied by
the non-farm sector, whereas the farmer is at the third
place and wage earner is at the bottom.
2. The highest per capita income in rural comes from the
formal segment of the non-farm sector at Rs. 19514
which is higher than the urban per capita income at Rs.
19407.
 Rural Income
Rs 7006 billion

Agriculture Non-agriculture
53% 47%

Informal
Wage Formal 31% 16%
Self
employed earner
43% 10%
 Rural population – 742
million
Proportion of rural

Non-
Agriculture
agriculture
73%
27%

Formal Informal
Self Wage 15% 12%
employed earner 33%
40%
 Per Capita (Per Annum)
Incomes Rural : Rs 9481

Agriculture Rs Non-agriculture
6855 Rs 16464

Self Wage Formal Informal

Employed Earner Rs 19514 Rs 12595
Rs 10,150 Rs2860
 Overall, the rural per person spending of Rs. 5830
per annum is a little above half of the urban
spending of Rs. 10,260.
 The gap between rural and urban spending widens as
we move from poor households to rich households.
But as the total number of the rural population is
three times larger than the urban, the overall
spending in rural is much higher than in urban.
 The rural rich and middle classes present a great
opportunity for marketers to sell their products.
 Changing Consumption Patterns

Monthly per capita Percentage

value of consumption

Food 289 59

Non-food 197 41
 Monthly per capita consumption expenditure on non food items
Rural Percentage Urban Percentage
Amount Amount
Pan+Tobacco 13.97 7 16.23 4
Fuel and Light 36.56 18 66.25 15
Clothing & 33.27 17 51.71 12
Bedding
Footwear 5.37 3 10.05 2
Education 9.37 5 37.05 8
Medical 29.58 15 43.28 10
Toiletries 12.96 6 29.09 6
Sundry 10 5 17.98 4
Consumer 14.51 8 40.43 9
Services
Conveyance 14.28 8 47.19 11
Rentals 2.96 1 44.02 10
Durables 12.72 30.85 7
Entertainment 2.26 6 9.88 2
 Rural Spending

 Analysing the consumption patterns of non-food

items of rural consumers, we find that the major
share of spending goes to clothing, medical services
and fuel needs, whereas urban consumers spend
much more on rentals, education and conveyance.
 White Revolution
 Initiated by the government with the aim of
achieving self-sufficiency in the area of milk
production.
 Cornerstone of the government dairy development
policy was producing milk in rural areas through
producer cooperatives and moving processed milk to
urban-demand centres.
 Gave a boost to dairy development and initiated the
process of establishing the much-needed linkages
between rural producers and urban consumers.
 Formation of producer‟s cooperatives has played a
significant role in institutionalizing milk production
and processing.
 Contd.

 Socio-economic and demographic factors such as

urbanization and changing food habits and lifestyles
have also reinforced the growth in demand for dairy
products (ice creams, chocolate, yoghurt, butter,
flavoured milk etc.).
 Milk production has increased from 17 million
tonnes in 1950-51 to 84.6 million tonnes in 2001-02.
 Most successful story in dairy development has been
in Gujarat, Punjab, Haryana, Uttar Pradesh and
Andhra pradesh.
 The NGO Movement
 Important in providing assistance at the grassroots level
assimilation of technological extensions in rural areas.
 Stepped in to create awareness, build skills, introduce
technology and develop capacities for maintenance and
sustainability.
 Government programmes implemented through NABARD,
CAPART(Council for Advancement of Peoples’ Action &
Rural Technology), KVIC, SKDRDP
([Link] and
others are given shape by these organizations.
 Introduction of low-cost spindles, weaving machinery,
technology for leather processing, food processing, natural
resources management etc have been some
contributions in bringing about change at the grassroots.
 NGO‟s have been also active in providing basic health and
child care services, running homes for destitutes and the
distressed and providing education and training
opportunities.
 Land Distribution
 India has a large geographical land area of 3.288
million square kms.
Land Classification based on Use:
 Forest Land : Area covered by forest
 Uncultivable Land : The land which includes land
with tree crops, cultivable waste or permanent
pastures are not fit for cultivation.
 Land not available for Cultivation : Land area
used for human dwelling, industry areas,
transportation roads, military establishment roads,
railways etc.
 Cultivable Land : Consists of area under
cultivation or sown. This includes irrigated land.
Classification of Land based on Topography

 Mountains : High lands above 7000 ft in altitude.

This forms 10.7 percent in India.
 Hills : Weathered high lands upto an altitude of
7000 ft. They form 18.6 percent in India.
 Plateaus : Flat land with an elevation between 1000
ft and 3000ft. They constitute 27.7 percent in India.
 Plains : Flat land upto an elevation of 1000 ft. This
forms 43 percent in India.
 Land Use Pattern
 Land Management is gaining importance because of
increasing demands on land and growth of the
population.
 Forest area and cultivable land percentages have
increased. Forest has increased from a level of 14% to
22%. Area sown has increased from 20% to 43%.
 Area not available for cultivation has reduced and
 Change of mindset of common man towards ecology,
increasing greenery and that every square meter of
land be used gainfully. Multi-storeyed buildings form
part of the city‟slandscape.
 Increase of Irrigated Land in India
 In last four decades, the irrigated area has doubled.
 For centuries, Indian agriculture has depended on rains.
The special programmes launched by Government of
India to increase the irrigation facilities along length and
breadth of India have yielded results and reduced
dependence on rain.
 There is considerable difference in irrigation patterns
from state to state in India. States like Punjab and
Haryana, where there are enough natural water
resources have a good percentage of gross irrigated area
to total crop area.
 If a farmer owns many patches scattered at distances, it
makes the entire efforts in agriculture less remunerative.
 Mechanical farming or agricultural methods cannot be
adopted for small land holdings.
 Cropped Area and Irrigated Area

Sown Cropped Irrigated Area Irrigated

Area Irrigated as % of
Cropped
Area
1999-2000 142.9 185.7 48 63.2 34.0

2000-2001 142.2 186.6 53.4 71.4 38.3

2001-2002 142.8 189.5 55.1 73.3 38.7

2002-2003 142 190.8 54.6 76.4 39.7

 Rural infrastructure
Road Connectivity
 Good road connectivity, particularly in rural areas,
between sub-divisional towns and district
headquarters is often the primary means of
supplementing public efforts directed at providing
basic health and educational services, as well as
infrastructural support for production and trade and
commerce at the local village level.
 It is particularly relevant in the Indian context where
over 70% of the population continues to live in rural
areas and where over 50% of villages with population
of less than 1000 have yet to be connected by roads.
 Among the major states, Kerala has the highest road
length per hundred square kilometres (375 km in
1997).
Population Population Population
less than between 1000 more than
1000 & 1500 1500

1991-92 36.52% 72.32% 89.82%

1997-98 37.45% 76.54% 91.72%

2005-06 49.18% 74.58% 78.04%

 Post Offices

 India with its 1,55,279 post offices as on 31 March 2002

(138756 post offices are in rural areas) has a postal
network that is the largest in the world. On an average, a
post office serves an area of 21.17 km and a population of
6614 persons.
 For providing postal services, the whole country has been
divided into 22 postal circles. Each circle is further
divided into regions. A postmaster general who is the
postal manager of the area heads each region.
 Post offices in the country are categorized as head, sub
and branch post offices.
 Radio
 From six radio stations at the time of Independence,
All India Radio today has 208 radio stations. All
Stations of All India Radio broadcast farm
programmes and home programmes directed at rural
audience. The thrust of the broadcast is on
increasing production of agri-products and various
programmes adopted by the Government of India.
 Television
 DD-1 operates through a network of 1042 terrestrial
transmitters of varying powers reaching over 87% of
the population. Over the years, the viewership of
Doordarshan as increased enormously, reaching 7.5
crore homes. Community television sets have been
introduced under various schemes operated by
Central and State Government.
 Telecom Services
 By 2004, over 80% of all villages had been connected
through 5.4 lakh Village Public Telephones.
Similarly, 1.42 crore telephone connections had been
given in rural areas.
 People who are unable to afford a telephone facility
of their own can now have access to VPTs in rural
areas in addition to Public Call Offices.
 Rural Health Services

 Sub-centres : The health Sub-Centre is the contact point

between the primary health care system and the community.
The Staff at health Sub-Centres are assigned tasks related to
interpersonal communication in order to bring about
behavioral change in relation to maternal and child health,
family welfare, nutrition, immunization, control of diarrhoea
and control of communicable diseases.
 Primary health Centres : First contact point between the
village community and a medical officer. These are
established and maintained by the State Government under
the Minimum Needs / Basic Minimum Services Programme.
Manned by a medical officer and is supported by 14
paramedical and other staff. Activities include curative,
preventive and promotive health care as well as family welfare
services.
 Contd.

 Community Health Centres : Established and

maintained by the State Governments under the
MNP/BMS programme. Four medical specialists, i.e.
surgeon, physician, gynaecologist and paediatrician
supported by 21 paramediacal and other staff. 30
indoor beds, with X-ray, labour room, operation
theatre and laboratory facilities.
 Print Media

 The total number of newspapers and periodicals being

published in the year 2000 was 49,145. Newspapers were
published in as many as 101 languages and dialects
during 2000.
 The reach of newspapers in rural areas are very poor,
only 15% of the copies of newspapers reach rural areas.
Newspapers normally reach the feeder market or small
towns and are read in shops or road side hotels.
 People sometimes buy newspapers in small towns and
take back home, where it is read at home or at common
gathering or social gathering.
 Thomson Rural Market Index
 Market Research is done by market research companies
and experts in the field to provide data about
consumption patterns, purchase preferences and rural
market potential. Hindustan Thompson Associates
Limited, a market research and advertising company in
India studied the rural areas in India in year 1972.
 HTAL made its report in 1972 and developed overall
indicators of rural market potential in India. These are
known as Thompson Rural Market Index.
 HTAL compiled data of 335 districts based on 26
measurable scale variables. HTAL collated data
regarding agricultural details of output in each district.
 Contd.
Indicators considered in developing TRMI are:
 Agricultural Labourers
 Gross Cropped Area
 Gross Irrigated Area
 Area under non food crops
 Pump sets
 Fertilizer consumption
 Tractors
 Rural Credit
 Rural Deposits
 Villages electrified
 TRMI has become a useful guide in segmenting and
targeting rural markets.
 Based on TRMI data, the districts have been
classified A,B,C,D and E classes. The classification is
given:
Class of Index Range No. of districts Percentage of
Markets Markets
A 60.00-100.00 22 17.80

B 40.00-59.99 39 20.5

C 30.00-39.99 54 20.4

D 20.00-29.99 86 23.00

E Below 20 154 18.30

ngs
 Contd.

 The TRMI data needs regular updating due to

changes that are continuously taking place in rural
India. This is particularly true due to globalisation
and changes in government policies and WTO policy
issues. TRMI give a comparative analysis for
qualitative decision making in rural marketing areas.
 Problems in Rural marketing
 Unevenly Scattered Population – The spread of population in
about 4000 cities and towns is to the extent of 25% and the balance
is in six lakh villages. Only 6300 villages have a population of more
than 500. This makes the marketers go through a lot of difficulty to
reach out to the rural masses effectively.
 Underdeveloped People and Underdeveloped Market –
Since 1947 a number of initiatives have been taken to improve the
quality of life in rural areas. In 1947 the rank of India in terms of
poverty, unemployment and level of development was 86 in the
world but in 1991 it reached the level of 123. The situation has
further worsened and the 1996 report on Human Development
Index shows that India ranks 136th in 156 countries of the world.
 Lack of proper Physical Communication Facilities – In
India only 50% of the road length is provided with a proper surface.
About 36% of the villages in the country do not have road
connection and over 65% of our villages are without all-weather
road. Thus the road grid makes distribution cost higher , as the road
grid as a whole suffers from serious capacity constraints, delays,
congestions, fuel wastage and higher vehicle operating costs,
marketers face a lot of problems in distribution of products.
 Contd.
 Low per capita incomes – Share of rural income accounted for 55.6
percent with 74.6 percent of country‟s population, thus reducing the
demand of expensive products.
 Many Languages and Dialects – In India, the number of languages and
dialects vary widely from state to state , region to region. The number of
languages spoken are only 16, the total number of dialects is estimated to be
around 850. The messages to be delivered in the local languages and
dialects is a big problem to the marketers.
 Low level of literacy – This leads to the problem of communication for
promotion purposes. In this case, print medium becomes less effective and
the dependence on audio visual messages is more relevant in rural areas.
 Logistics Problems – The rural markets have few selling points like
retailers, co-operatives, haats and melas. Lack of infrastructure for storage
and handling and limited transport facilities act as a constraint for
marketing action.
 Low Exposure to Market Stimuli – In rural areas, the rural people
have low exposure to branded products, low product exposure, limited
sources of information and learning which creates big challenge to the
marketers to stimulate the rural consumers.
 Contd.
 Less Retail Outlets – Due to less capital, the shops in the
villages have limited availability of stock and limited or a few
range of branded products to sell to rural people and these
shops keep only fast moving items with a number of fake
brands.
 Seasonal Demand – As 70% of rural population depends
on agriculture and most of them with small land holdings
highly dependent of natural environment that is rain, if the
rains and weather conditions are good and on time the
farmers will get good harvest which leads to good income,
otherwise, if there is shortage of water the demand may be
minimal.
 Traditional Life – Life in rural areas is still governed by
customs and traditions and people do not easily adopt new
practices. For eg. Even rich and educated class of farmers do
not wear jeans or branded shoes in most of the rural areas.
 Rural Areas Requirement
Considering the importance of agriculture and rural
majority the nine five year plans have made considerable
progress in improving the agriculture sector and the
rural farmer. The rural requirements vary from state to
state and the priorities also change. Rural requirements
are listed under:
 Improved seeds and fertilisers
 Increased means and methods of irrigation
 Multipurpose farming
 Use of modern farming equipments and methods
 Warehousing and preservation of agri-produce.
 Marketing development and remunerative prices for the
produce
 Improvements in pest control and preservation of crops.
 Contd.
 R & D work and benchmarking with the best agricultural
practices, yields in the world
 Training of Farmers
 Increased investments and credit facilities
 Small land holdings to be consolidated and improvements in
tenancy.
 Animal heath and veterinary facilities.
 Literacy of farmers and families.
 Develop village agro-based industries/cottage and village
industries
 Population control
 Crop insurance
 Health of farmers
 Environment friendly agriculture methods
 Water availability management
 Remunerative price for milk and milk products and
 Provision for subsidiary occupations and incomes
Thank you