Rural Management

Dharmendra Pandey
Assistant Professor
Amity School of Business
Amity University, Noida
@profdpandey

Defining Rural Markets

The Census of India defines rural as any habitation:

With a population density of less than 400 per sq. km.
Where at least 75 percent of the male working population is engaged in
agriculture .
Where there exists no municipality or board.

Defining Rural Management

Rural Management can be defined as a function that manages all
activities involved in assessing, stimulating, and converting the
purchasing power of rural consumers into an effective demand for
specific products and services and moving these products and
services to the people in rural areas to create satisfaction and a better
standard of living and thereby achieving organizational goals.

Key statistics:Snapshot of india

Area

3,287mn sq km

Population

1026.9 mn people

Population

Urban 28%, Rural 72%

No. of villages 6,38,365

Source- Census 2001

Myth

Reality

Rural people do not buy

brands

Branded Consumption
accounts for 80 % of sales
for FMCGs

Rural consumers buy cheap

products

They seek value for money

Rural market is a
homogeneous mass

It is heterogeneous

 The annual consumer durable market for products like colour

tvs,washing machines, refrigerators and air conditioners is
growing at 7-10 %.
While the rural market is zooming at 25 %
F.m.c.g Rs.65000 crores (53 % share in total revenues)
Of the 20 lacs BSNL mobile phone connections, 50 percent
are in small towns and villages.
There are 42,000 rural supermarkets (Haats) in India that
exceed the total number of retail chain stores in the United
States (35,000)

 Rs.45000 cr.for tractors

Rs.8000 cr.for two and four wheelers.
50 % of Indias national income is generated in rural India.
HLL,Colgate Palmolive ,Toyota 50 % revenues coming
from rural areas.
Hero Honda- 40 %
Kinetic motors 30 %
Godrej- 30%

Evolution of Rural Market

Phases of Rural Marketing
Phase I (Before 1960s)
-Age of agricultural marketing
- Agricultural produces like foodgrains and industrial
inputs like cotton , sugarcane,etc. were the primary
- Rural economy was in a primitive stage.
-Traditional farming methods
- Unorganised market

products.

Phase II (1960s-1990s)
- Green revolution
- scientific farming practices
- Poverty-stricken villages turned into cash rich centres.
- Exponential growth of agricultural production
- Shift from Agricultural marketing to Marketing of agricultural inputs
- Emergence of Mahindra & Mahindra, Escorts, Eicher, Sriram Fertilizers and
IFFCO

Phase III (1990s to the Present

- Marketing of consumables and durables
- Economic reforms, increased plan outlay by state and central govt.
- Competition

Rural Marketing Vs Urban Marketing

Infrastructure availability
Income streams
Lifestyle
Socio-cultural background
Media reach and habits
Nature of competition
Consumer behaviour

Profile of a Rural/Urban consumer

Age and stages of the life cycle
Occupation and income
Lifestyle
Economic circumstances
Personality and self concept

Profile of a Rural/Urban consumer

Contd..

Personality and psychological factors

Perception and Brand belief
Information search and pre purchase evaluation
Rise of consumerism

Challenges in Rural Markets

Distribution
Understanding the Psyche of the Rural consumer
Limited Knowledge
Communication
Cost per contact
Sale of Fakes and spurious Products
Budgetary allocations
Urban orientation and bias
Lack of right competence and commitment at frontline level

Opportunities in Rural Markets

Rising rural prosperity
Lesser dependence on agriculture and monsoon
Increasing rural consumption
Rural Marketing efforts
Increasing sale of branded products
Large population

Rural Marketing Mix

Marketing Mix refers to the set of actions,

tactics, tools or variables that a company uses
to promote and sells its brand or product in a
markets

4 Ps of Rural Marketing

Product

Place

Price

Promotion

Every Product and promotion, which is a hit in cities , might not

work in rural areas

Product :Product refers to anything that is capable of

or can be offered to satisfy need or want?

Price :Price refers to the amount the customers has to

pay in order to acquire a product or services

3Cs of Pricing
Customer Value
Competitors Prices
Cost of Company

Place : refers to point of sale.

Promotion: This refers to all the activities undertaken

to make the product or service known to and preferred
amongst the user and trade.

New Product Development

Process
Marketing
Strategy
Development
Concept
Development
and Testing
Idea
Screening
Idea
Generation

Business
Analysis
Product
Development

Market
Testing

Commercialization

Examples:
Max gas LPG cylinder
Mahindra MaXX
HPCL 5-kg gas cylinder
Vardaan Bidi for rural
Water purifier: Jalshodhak

Channels of Distribution

Distribution is the most important variable in the

marketing plans of most consumer goods manufacturers,
because managing such a massive sales and distribution
network is in itself a huge task.

The major area of concern for companies is to make

their products available in the remotest corners of the 6
lakh villages in the country.

The challenge and the dilemma

Marketers encounter the following problems in rural distribution
Large number of small markets
Dispersed population and trade
lack of all weather roads, inadequate transport facilities
Multiple tiers (large number of intermediaries) leading to higher costs
Poor availability of suitable dealers
Low density of shops per village and high variation in their concentration
Inadequate bank and credit facilities for rural retailers, leading to poor viability
of retail outlets

The challenge and the dilemma

contd..

Poor storage system, leading to inadequate stocking of

products
Highly credit-driven market and low investment capacity of
retailers
Poor visibility and display of product on rural shop shelves
Poor communication of offers and schemes due to poor reach of media

LAYER

CHANNEL
PARTNER

LOCATION

Level 1

Company depot/C&FA

National/state level

Level 2

Distributor/van
operator/super
stockist/rural
distributor

District level

Level 3

Sub-distributor/retail
stockist/substockist/star seller/
shakti dealer

Tehsil HQ, towns and

large villages

Level 4

Wholesaler

Feeder towns, large

villages, haats

Level 5

Retailer

Villages, haats

ral Mobile Traders: The Last-Mile Distribution

Mobile traders sell a variety of daily-need products,

mostly local brands, ranging from detergent, cosmetics
and personal-care products to garments and footwear.

They carry their products on bicycles, mopeds,

handcarts, or on foot.

They visit one or two villages and 30-40 households per

day

ral Mobile Traders: The Last-Mile Distribution

They have a deep reach since they target small villages

(<2,000 population) to avoid competition from shops in
bigger villages.

As they are not organized into associations and since

they mostly sell fakes and local brands, not many
companies have considered using mobile traders for the
last-mile distribution.

ral Mobile Traders: The Last-Mile Distribution

A MART study in 2002 found that some

mobile traders do carry a few genuine
brands ( accounting for 5-7% of their
sales).
Companies like HUL, ITC, Godfrey
Philips and Perfetti India are exploring
ways to organize this highly
fragmented sales forece and setup
monitoring mechanism through
stockists and maintaining proper
database.

Rural Haats/Shandies

Periodic markets are the oldest marketing channel in India.

First contact point for villagers.
Each haat caters to the needs of a minimum of 10 to 50
villages, drawing about 4,000 persons.
The average number of outlets in a haat is 314 and sales
exceed Rs 2 lakh on the haat day
PDS
Cooperative societies

Communication
Challenges in Rural Communication

Hetrogeneity and spread

Literacy

Media reach

Cultural conflicts

Communication
Challenges in Rural Communication

Hetrogeneity and spread

Literacy

Media reach

Cultural conflicts

Rural Development

Rural Development
Rural development is a strategy designed to improve
the economic and social life of rural poor.
Rural Development is all about bringing change
among rural community from the traditional way of
living to progressive way of living. It is also
expressed as a movement for progress.

The United Nations defines

Rural Development as:

Rural Development is a process of change,

by which the efforts of the people
themselves are united, those of government
authorities to improve their economic,
social
and
cultural
conditions
of
communities in to the life of the nation and
to enable them to contribute fully to
national programme.

DEVELOPMENT IN RURAL AREA CAN

BRING

OBJECTIVES OF RURAL DEVELOPMENT

1. To develop farm, home, public service and village
community.
2. To bring improvement in producing of crops and
animals living condition.
3. To improve health and education condition etc.
improvement of the rural people.
4. To improve villagers with their own efforts.
5. To improve village communication.

Main Objectives

PROBLEMS IN RURAL DEVELOPMENT

1.

People related

2.

Agricultural related problems

3.

Infrastructure related problems

4.

Economic problems

5.

Social and Cultural problems

6.

Leadership related problems

7.

Administrative problems

PEOPLE RELATED PROBLEMS

1. Traditional way of thinking.

2. Poor understanding.
3. Low level of education to understand developmental
efforts and new technology.
4. Deprived psychology and scientific orientation.
5. Lack of confidence.
6. Poor awareness.
7. Low level of education.
8. Existence of unfelt needs.
9. Personal ego.

AGRICULTURE RELATED
PROBLEMS

1. Lack of expected awareness, knowledge, skill and

attitude.
2. Unavailability of inputs.
3. Poor marketing facility.
4. Insufficient extension staff and services.
5. Multidimensional tasks to extension personnel.
6. Small size of land holding.
7. Division of land.
8. Unwillingness to work and stay in rural areas.

INFASTRUCTRAL RELATED PROB.

Poor infrastructure facilities like-:
1.Water
2.Electricity
3.Transport
4.Educational

institutions

5.Communication
6.Health
7.Employment
8.Storage

facility etc.

ECONOMIC PROBLEMS
1. Unfavourable economic condition to
adopt high cost technology.
2. High cost of inputs.
3. Under privileged
rural industries

LEADERSHIP RELATED
PROBLEM
1.

Leadership among the hands

of inactive and incompetent people.

2. Self interest of leaders.
3. Biased political will

ADMINISTRATIVE PROBLEMS
1. Political interference.
2. Lack of motivation and interest.
3. Unwillingness to work in villages.
4. Improper utilization of budget.
5. No proper monitoring of programs.
and lack in their implementation.

SCOPE & IMPORTANCE OF

RURAL DEVELOPMENT

Importance of Rural Development

Rural development is a dynamic process, which is
mainly concerned with the rural areas. These includeAgricultural growth, putting up of economic and social
infrastructure, fair wages as also housing and house
sites for the landless, village planning, public health,
education and functional literacy, communication etc.
Rural development is a national necessity and has
considerable importance in India

Rural development is needed because-:

1. To develop rural area as whole in terms of culture,
society, economy, technology and health.
2. To develop living standered of rural mass.
3. To develop rural youths, children and women.
4. To develop and empower human resource of rural area in
terms of their psychology, skill, knowledge, attitude and
other abilities.
5. To solve the problems faced by the rural mass for their
development.

6. To develop infrastructure facility of rural area.

7. To provide minimum facility to rural mass in terms of
drinking water, education, transport, electricity and
communication.
8. To develop rural institutions like Panchayat,
cooperatives, post, banking and credit.
9. To develop rural industries through the development of
handicrafts, small scaled industries, village industries,
rural crafts, cottage industries and other related economic
operations in the rural sector.
10. To develop agriculture, animal husbandry and other
agricultural related areas.

11. To restore uncultivated land, provide irrigation

facilities and motivate farmers to adopt improved seed,
fertilizers, package of practices of crop cultivation and soil
conservation methods.
12. To develop entertainment and recreational facility for
rural mass.
13. To develop leadership quality of rural area.
14. To improve rural marketing facility.
15. To minimise gap between the urban and rural in terms
of facilities availed.

16. To improve rural peoples participation in the

development of state and nation as whole.
17. To improve scopes of employment for rural mass.
18. For the sustainable development of rural area.
19. To eliminate rural poverty.
20. To empower them.

Additional Ps of Rural Marketing

Passion

Passion to earn Goodwill for the company.

Passion to serve and educate the consumer

Passion to give 100% to the rural marketing effort

Pace

4 As of Rural Marketing Mix

Affordability

Availability

Awareness

Acceptability

e development exercise: The Five-Year P

For the purposes of planning, the Government of India has classified
economic activity into three major sectors:
Primary sector: Includes agriculture and allied activities such as
livestock, fishing, and forestry.
Secondary sector: Includes mining and manufacturing activities.
Tertiary sector: Encompasses all services such as transport,
communication, trade, financial services and community services

Transition of the Rural Economy

1. Food grain crops

2. On land activities
3. Farm activities

1. Non-food grain crops, cash crops

2. Off land allied activities like
livestock and fisheries.
3. Non-farm activities, including
manufacturing and services

The Rural Economic Structure

rm Sector: Agriculture and Allied Activiti

Indian agriculture has graduated from being food grain-scarce
economy to a food grain surplus economy.
Agriculture now contributes 14.1% GDP
The agri-allied sector has also grown significantly, particularly dairy,
poultry, fish and meat products.
India has become the largest milk producer in the world.
Second largest producer of inland fish and the sixth largest in overall
production of fish in the world.

Mechanization and Inputs

India is leading tractor-producing country.
Annual production-2.5 lakh tractors
7 lakh pump sets
4 lakh power threshers
The consumption of fertilizers has increased by 300% between 1980-81 to 200102
The gross irrigated area has grown from 29% in 1980-81 to 38% in 1996-97.

Incomes and Consumption

Rural Incomes
Rural income (farm + non farm) contributes around 57% share of the total
incomes in India
The per capital income for the rural sector has increased from Rs 5,783 in
1993-94 to Rs. 9,481 in 1999-2000 ( 19,407) in urban India).
The share of non-farm income has increased rapidly from 32 percent in 197071 to 47 percent in 1993-94

Profile of Expenditure

Changing consumption patterns

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.

Components of Non-food items

Tobacco
Fuel and light
Clothing
Footwear
Education
Medical
Toiletries
Sundry (telephone, postal, barber etc)
Consumer services
Conveyence
Rental and taxes
Durables
Entertainment

Rural Infrastructure
Transport and communication
Road connectivity

Good connectivity, particularly in rural areas, between sub-divisional towns

and districts 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.
70% of the population continues to live in rural areas and where over 50% of
villages with population of less than 1,000 have yet to be connected by roads.
Pradhan Mantri Gram Sadak Yojna
Launched in Dec 2000 with the objective of providing connectivity through
good all weather roads to all unconnected habitations with a population of more than
500 persons.

Post offices
India with its 1,55,279 post offices as on 31 march 2002 (1,38,756) post
offices are in rural areas) has a postal network that is largest in the world.

On an average, a post office serves an area of 21.17 sq km. and a

population of 6,614 persons

Radio
Six radio stations at the time of independence.
All India Radio today has 208 radio stations.
123 FM channels
Provide coverage to a population of 98.8%% spread over 90% of the country.

Television
Doordarshan (DD), the national television of India, is one of the largest terestrial
networks in the world.
Reaches over 87% of the population.
Community television sets have been introduced under various schemes
operated by central and state governments.
Doordarshan has a maximum viewership of 90%, the lowest cost per thousand
audience.
Advent of DTH services

Press and Print Media

As per the Registrar of Newspapers for India (RNI), the total number of
newspapers and periodicals published in India in the year 2000 was 49,145,
appearing in 101 languages and dialects.
The reach of newspapers in rural areas is very poor; only15% of the copies of
newspapers (regional languages) reach rural.

Telecom Services
By 2004, over 80% of all villages had been connected through 5.4 lakh Village
Public Telephones (VPTs).
1.42 crore telephone connections had been given in rural areas.
84% villages are now covered by VPTs.

PCOs licences where there is no VPTs

Mobile Services
Out of 3.6 crore current mobile phone users, nearly 15% are in rural areas
Faced with the prospect that the growth in the mobile phone user base would hit
a saturation point in big cities, Indian cellular service providers are gearing up to
delve deeper into under-penetrated rural areas.

Mobile Postman Scheme- A scheme by GOI

Social Infrastructure
Rural Health services
Sub-Centres

Primary Health Services

Community Health services

Public Distribution System

PDS means the distribution of essential commodoties to a large number of
through a network of FPS ( Fair Prices shops) on a regular basis ( often referred to
as ration shops).
The commodities distributed are wheat, rice sugar, edible oil and kerosene.
PDS with network of about 4.76 lakh FPSs is perhaps the largest distribution
network of its kind in the world. Of the total number of FPSs, 80 percent (i.e 3.8
lakh) are in rural areas.
As per the norms presribed by the Government, one FPS caters to 1000
population in rural areas

Agri Infrastructure
Mandis
Mandis are agricultural markets set up by state governments to procure
agricultural produce directly from farmers.
Located in high production centres of different crops, these markets may be
categorized as grain mandis, cotton mandis, soya mandis and so on.
Most agricultural areas with a population of more than 10,000 have mandis and
each mandi on an average caters to 1 36,000 population.

Marketing Infrastructure
Haats
Despite rapid urbanization and the establishment of permanent shops in
villages, haats (Periodic markets) still play an important role in the rural economy
as well as in the social life of villagers.
A first-point contact for villagers with the market
A means of distributing local products and exchanging rural surplus.
An opportunity for buying daily necessities as well as farm supplies and
equipment
A place for political, social, and cultural contact.

Marketing Infrastructure
Melas
Melas are gatherings of people away from their residences for entertainment
and for the sale and purchase of goods and services at a particular time.
Melas may be classified on the following basis:
Religious, cultural, or commercial ( commodity, cattle, exhibition)
Local, regional, and national
One day, short duration (2-7) days), or long duration ( more than a week)

Marketing Infrastructure
Shops
As per the 2001 census, out of the 1.33 crore shops in India , 55 lakh are in rural
areas.
The types of outlets found in villages include the grocery store, paan shops, flour
mills and tailor, barber and cycle repair shops.

RURAL DEVELOPMENT EFFORTS /

PROGRAMMES AFTER INDEPENDENCE
No
1
2
3
4
5
6
7
8
9
10
11
12
13

Year
1948
1950
1952
1953
1961
1963
1964-65
1964
1965
1966
1966-67
1966
1966

Name of the Programme after independence

GMFC Grow More Food Campaign
JMPC Japanese Method of Paddy Cultivation
CDP
Community Development Programme
NES
National Extension Service
IADP
Intensive Agriculture District Programme
ANP
Applied Nutrition Programme
IAAP
Integrated Agricultural Area Programme
ICDP
Integrated Cattle Development Programme
NDP
National Demonstration Project
ODP
Oilseed Development Programme
HYVP High Yielding Varieties Programme
FTEP Farmers Training and Education Programme
FTC
Farmers Training Centre

RURAL DEVELOPMENT EFFORTS /

PROGRAMMES AFTER INDEPENDENCE
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

1966
1970
1970
1971
1971
1971
1971
1971-72
1973
1974
1974
1974
1975
1976
1976
1976
1977

MCP
DPAP
DFAP
ICDP
WVDP
SFDA
MFAL
TADP
HADP
T&V
KVK
TDB
CADP
IRDP
ORP
SF
DDP

Multiple Crop Programme

Draught Prone Area Programme
Dry Farming Area Programme
Integrated Cotton Development Programme
Whole Village Development Programme
Small Farmers Development Agency
Marginal Farmers and Agricultural Labour Agency
Tribal Area Development Programme
Hill Area Development Programme
Training and Visit System
Krushi Vigyan Kendra
Tribal Development Block
Command Area Development Programme
Intergraded Rural Development Programme
Operational Research Project
Social Forestry
Desert Development Programme

RURAL DEVELOPMENT EFFORTS /

PROGRAMMES AFTER INDEPENDENCE
31
32
33
34
35
36
37
38
39
40
41
42

1978
1978
1979
1980
1980
1980-81
1981
1982
1984-85
1986-87
1989
1990-91

LLP
Lab-to-Land Programme
NARP National Agricultural Research Project
TRYSEM Training of Rural Youth for Self Employment
NREP National Rural Employment Programme
DRDA District Rural Development Agency
TUP
Tribal Upliftment Project
RLEGP Rural Landless Employment Guarantee Programme
DWCRA Development of Women and Children in Rural Areas
NAEP National Agricultural Extension Project
NWDP National Watershed Development Project
JRY
Jawahar Rojgar Yojana
NWDPRA National Water Development Project for Rain fed Areas

43
44
45

1998
1998
2005

NATP
ATMA
NAIP

National Agricultural Technology Project

Agricultural Technology Management Agency
National Agricultural Innovation Project

SWARNJAYANTI GRAM SWAROZGAR

YOJANA (SGSY)
Swarnjayanti Gram Swarojagar Yojana is centrally sponsored which
came into effect from 01/04/1999
Scheme basically emphasizes on self-employment.
Scheme covers all aspect of self- employment like capacity building,
subsidy, and infrastructure facility, and credit, skill upgradation, insurance
etc

MAHATMA GANDHI NATIONAL RURAL EMPLOYMENT

GUARANTEE ACT (MGNREGA) THE NATIONAL RURAL
EMPLOYMENT GUARANTEES ACT- 2005
NREGA Launched on 2nd February 2006 as a momentous
initiative towards pro-poor growth. For the first time, rural
communities have been given not just a development
programme but also a regime of rights. The National Rural
Employment Guarantee Act, 2005 (NREGA) guarantees 100
days of employment in a financial year to any rural household
whose adult members are willing to do unskilled manual work.

PRADHAN MANTRI GRAM SADAK

YOJANA
Government has launched the Pradhan Mantri Gram Sadak
Yojana on 25th December, 2000 to provide all-weather access to
unconnected habitations. The Pradhan Mantri Gram Sadak
Yojana (PMGSY) is a 100% Centrally Sponsored Scheme.

INDIRA AWAAS YOJANA

The objective of Indira Awaas Yojana is primarily to help

construction of dwelling units by members of Scheduled
Castes/ Schedule Tribes, freed bonded labourers and also
non- SC/ST rural poor below the poverty line by providing them
with grant-in-aid.

NON GOVERNMENTAL
ORGANIZATIONS (NGOs)
A non-governmental organization (NGO) is a legally
constituted organization created by legal persons that
operates independently from any government and a term
usually used by governments to refer to entities that have
no government status

The future of Rural Marketing

1. Focused Marketing Strategies
2. Market Research
3. Consumer Finance
4. Rural Vertical
5. Retail and IT models
6. Rural Managers
7. Glamorize Rural Marketing
8. Public-Private Partnership

Sales consultants: A key drivers

Q&A