GOOD AFTERNOON

RURAL MARKETING CONSTRAINTS AND INDEX

PROBLEMS OF RURAL MARKETING

Generally the manufacturers and marketers face the following constraints in rural areas:
1. Underdeveloped people as well as market: Still large areas are untouched by technological breakthroughs. Small land holdings BPL age-old customs, etc. 2. Lack of proper physical communication facilities: Still eastern part of the country face problems ray of hope Pradhan Mantri Gram Sadak Yojana to connect all villages above in plains and hill areas, etc. 3. Media for Rural communication: Television and Cinemas are fairly satisfactory. Disadvantage is of literacy poor reach of newspapers and journals in rural areas.

 4. Many languages and Dialects: Number of languages (22) and dialects (850) varies widely from state to state, region to region and probably from district to district. Multi-dialect dubbing in audio-visual presentations is a costly affair.
5. Vastness and Uneven spread: The number of villages in India is more than five lakh. Also, the villages are not uniform in size. Nearly 60% of the villages have a population of less than 1000 persons. 6. Low Per Capita Income: Low PCI and population spread in the villages adds to the existing constraint. What will be the off-take of any product by rural consumers, from a village shop? What inventory levels should be maintained by a rural shopkeeper? Etc.

 7. Logistics, Storage, Handling and Transport: Physical transportation bullock carts, camels, etc. Need to identify distribution system. Proper identification of potential shopkeepers, offer then credit, assuring prompt supplies needs to be created. 8. Product positioning: In a highly heterogeneous market, product positioning becomes difficult. The product range should be very large. In rural areas, positioning is possible in the case of durables, but positioning of consumables poses problems. It should suit the rural expectations, conditions, habits, needs and purchasing power.

 9. Seasonal Demand: Demand pattern is also seasonal. Example: Fertilizer demand is only during the start of Kharif and Rabi seasons. Distribution is geared only through the seasonal timings quite opposite to urban areas. Due to its heterogeneous nature. 10. There is Hierarchy of Markets: Rural consumers identify market places for different items of their requirements. There is no uniform distribution policy for all products. 90% of the farmers visited the nearest town, where an agricultural produce assembling market is situated at least once in three months, for either selling the produce or for purchasing their requirements.

State capital, metros and cities Secondary/Terminal Wholesale assembling markets

Primary Whole sale assembling markets Shandies, Haats, Jathras and Melas

Village Shops

 Village Shops: Matchboxes, Cigarettes, tea, Kerosene, salt, edible oils, etc. Haats and Jathras: Cloth, cosmetics, soaps, services, kitchen equipments, agricultural tools, bamboo baskets, etc. Primary/Secondary/Terminal Markets: Fertilizers,

pesticides, seeds, durables like cycles, mopeds, sewing machines, jewelry, radios, transistors, televisions, watches, electrical goods, agricultural finance, etc. Capital/metros/cities: Legal matters and casual visits.

The innumerable problems mentioned above can be grouped under major categories:

1.Consumer motivation and buying habits. 2.Location and degree of concentration of demand. 3.Dealer availability, attitude and motivation. 4.Mass communication media. 5.Logistics, Storage , Transport and handling; and 6.Marketing organizations and staff.
Strategy for rural marketing should take care of the problems in to account, so that the investments made are easily recovered.

RURAL MARKET INDEX

ASSESSING THE POTENTIAL OF RURAL MARKETS

 Hindustan Thompson Associates Limited (HTAL) has developed Thompson Rural Market Index (TRMI) as a guide to the marketers. First attempt was made by them in 1972. Data identified was for 11 factors (after assigning weightages to each) and

it was for 334 districts. It was not satisfactory.

Second attempt considering 26 factors was made in the year 1986. 383 districts was considered and the TRMI was worked out for only 355 districts only. Indicators considered for Rural Market Index are:

 1. Area of the District in square Kilometers.

Demographics: 2. Population- Rural Numbers. 3. Males- Numbers 4. Females-Numbers 5. Density per square kilometer. 6. Percentage distribution of population - strata. 7. Number of villages. 8. Percentage distribution of villages strata. 9. Literate Rural Numbers. 10. Percent of literacy. 11. Literate: Males 12. Literate: Females

Occupation Pattern: 13. Cultivators: Number 14. Agricultural laborers 15. Non-Agricultural laborers. Agricultural Related Data: 16. Gross cropped area in hectares. 17. Gross Irrigated areas in hectares. 18. Area under non-food crops in hectares 19. Average size of operational holdings in hectares.

Agricultural Inputs Data: 20. Pump sets and tube wells: Numbers. 21. Fertilizers consumption in metric tones. 22. Number of Tractors.

 Rural Electrification Data: 23.Percentage of villages electrified. Commercial Banks Data: 24. Number of rural branches. 25. Deposits in lakhs of rupees. 26. Advances in lakhs of rupees.

Value of Agricultural Output was collected for each district from the Centre for Monitoring Indian Economy. (NSSO & CMIE) Methodology: Correlation Analysis was conducted with 10 selected variables related to agriculture with the value of agricultural production. The 10 selected variables are:

1. Agricultural laborers. 2. Gross Cropped Area. 3. Gross Irrigated Area. 4. Area under Non-Food crops. 5. Pump Sets. 6. Fertilizer Consumption 7. Tractors. 8. Rural Credit. 9. Rural Deposits. 10. Electrified Villages. These variables had a high correlation ranging from 0.52 to 0.79. Based on the correlation variables the index numbers were calculated and presented. The districts were classified as A, B, C, D, and E Class based on Rural Market INDEX.

Classification of Rural Markets based on Index.

Class of Markets Index Range No. of Districts Percentage of Market

A
B C

60.00 to 100.00
40.00 to 59.99 30.00 to 39.99

22
39 54

17.8
20.5 20.4

D
E

20.00 to 29.99
Below 20.00

86
154

23.0
18.3

Total

355

100.0

 After the year 2000 Mudra Institute of Communication (MICA), Ahmedabad has developed MICA Rural Market Ratings as a guide to the marketers. The reason done is that rural markets have already overtaken urban markets in many categories of mass consumption branded goods, both in terms of volume and growth. For many companies, a strong presence on rural markets has now become crucial for achieving corporate objectives.
Methodology: Data were collected based on 1991 census reports and all the 459 districts in the country were covered. The total of 42 socio-economic indicators have been included for the study. The study was presented in three parts:

1. Digital Maps. 2. Rural Socio-economic Indicators 3. Names and population of all the 631,307 Villages in India. The objective of MICA was to develop a single value for each district which will reflect the market potential of that district as close to reality as possible. Initially 17 demographic and economic variables were identified: 1. Rural Population. 2. Total Literates. 3. Households with LPG. 4. Households having Electricity. 5. Number of Shops.

6. Number of lodging Places. 7. Number of eating houses. 8. Number of Business Establishments. 9. Number of Workshops and factories. 10. Bank Advances. 11. Cropped Area. 12. Fertilizer Consumption. 13. Number of Cultivators. 14. Number of Agricultural Laborers. 15. Food Grain Production. 16. Value of Agricultural Output
17. Bank Deposits.

The rating developed by MICA is based on a linear combination of finally selected six variables:
1. 2. 3. 4. 5. 6. Bank Advances. Cropped Area. Irrigated Area. Number of Cultivators. Fertilizer Consumption. Value of agricultural Output.

However, comparing MICA and Thompsons, one can see a number of common variables in both. MICA study appears to have taken into account the trade aspects like establishments, factories etc.

Conclusion: Agricultural related factors play an

important and vital role in indicating the market potential concerning rural areas.

THANK YOU

PPTs by Thirumagal Pillai.