Rural and Agricultural Marketing. - Book Publisher in ... · PDF fileRural and Agricultural Marketing By ... Hindustan Unilever and P&G have made special ... management students to

- PARTHA SARATHI SENAPATI

i Sample Copy. Not for Distribution.

Rural and Agricultural

Marketing….

ii Sample Copy. Not for Distribution.

Publishing-in-support-of,

EDUCREATION PUBLISHING

RZ 94, Sector - 6, Dwarka, New Delhi - 110075 Shubham Vihar, Mangla, Bilaspur, Chhattisgarh - 495001

Website: www.educreation.in __________________________________________________

© Copyright, Author

All rights reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted, in any form by any means, electronic, mechanical, magnetic, optical, chemical, manual, photocopying, recording or otherwise, without the prior written consent of its writer.

ISBN: 978-81-928823-6-9

Price: ` 225.00

The opinions/ contents expressed in this book are solely of the author and do not represent the opinions/ standings/ thoughts of Educreation.

Printed in India

iii Sample Copy. Not for Distribution.

Rural and Agricultural

Marketing

By

Mr. Partha Sarathi Senapati

EDUCREATION PUBLISHING (Since 2011)

www.educreation.in

iv Sample Copy. Not for Distribution.

v Sample Copy. Not for Distribution.

ABOUT THE AUTHOR

The author, Mr. Partha Sarathi Senapati, is an

academician working as an Asst.Professor, in the

affiliated colleges under Utkal University,

Bhubaneswar. He has been a visiting faculty to a

number of Management institutes in state. He

received his MBA degree under Biju Patnaik

University of Technology (BPUT). The author is

UGC-NET qualified and currently pursuing his PhD

in management in Berhampur University, Odisha.

The author has around 2 years experience in

Corporate and 9 years of experience in teaching

management students in Under graduate and Post

graduate level in the area of marketing

management, strategic management, corporate

governance, business ethics, production and

operation management, etc. The author has

published number of research papers in reputed

national and international journals and presented

papers at various seminars. He is a member of

Odisha Commerce Association (OCA). His

upcoming book is on Marketing environment and

Business Ethics.

vi Sample Copy. Not for Distribution.

vii Sample Copy. Not for Distribution.

ABOUT THE BOOK

India is a country where majority of the population

lives in villages. Appreciating the size and business

potential of rural sector, major companies, including

Hindustan Unilever and P&G have made special

strategies for targeting rural markets.

The thrust on rural markets is getting

stronger day by day and it needs complete

knowledge base of rural marketing. The book Rural

and Agriculture marketing has been written looking

into the needs of the students pursuing their

management degrees.

It is meant to create interest in business

management students to get into the rural marketing

mind set for bringing the desired organizational

focus on the subject. Considering the importance of

rural markets, most business schools have included

Rural Marketing Management as a key knowledge

area in their syllabus.

Rural Marketing as a separate discipline in

management teaching has emerged recently. The

growing importance of the subject has been well

realized by the marketers, policymakers and

management interns. The present book has

viii Sample Copy. Not for Distribution.

endeavoured to cover the entire gamut of rural

marketing.

There are few books on rural marketing

which mostly deal with this subject and I hope this

book will be a great help to student communities.

The book is written in simple, easy to understand

language.

So wishing you all a very happy reading…

ix Sample Copy. Not for Distribution.

DEDICATION

The book is dedicated to the God, Almighty,

students and my beloved family members, who are

all the source of my constant inspiration.

x Sample Copy. Not for Distribution.

xi Sample Copy. Not for Distribution.

TABLE OF CONTENT

s.no. Title Page no.

01 Opportunities in Indian

Rural markets 01

02 What is Rural Marketing? 10

03 Agricultural Marketing 43

04 Agricultural Marketing

Finance 60

05 Rural market Index 75

06

Recent trends and

Innovation in Rural

marketing

92

- Case Study 1 107

- Case Study 2 114

- Bibliography -

xii Sample Copy. Not for Distribution.

Rural And Agricultural Marketing

1

CHAPTER 1

Opportunities in Indian

Rural Markets

The fact that rural India has enormous business

potential is widely accepted across all segments of

the industry. And it is attributed not merely to the

population of 700 Million that reside here; other

statistics make an equally strong statement. For

instance, while rural households contribute to 45%

of the total household income of the country, the

savings to income percentage in rural, at 30%, is

even higher than urban. The early success of

FMCG, telecom and consumer durables is only a

pointer to inherent purchasing power this segment

has. Within the rural sector, however there are vast

variations in socio-economic profiles. The entire

population is spread over 6,30,000 villages across

the vast expanse of the country. The income

distribution amongst these is highly skewed with

some of the villages reaping the rewards of

agricultural revolution and enjoying similar

Partha S. Senapati

2 Sample Copy. Not for Distribution.

standards of living like their urban counterparts,

while a bulk of villages are still grappling with the

basic issues of electricity and water. These

variations are not only at the regional level, but

even within the state and the district. The income

patterns too are diverse. All the above factors make

the execution of rural strategy a daunting task for

any product or services provider. To increase the

penetration of insurance in this sector, the regulator

IRDA, had made it mandatory for insurers to write a

growing proportion of its business in the rural

market. Most of the early forays of the private life

insurance companies in the rural sector have been

towards meeting these requirements. The products

sold are typically low premium term insurance

product. The average risk cover provided is low

enough not to warrant any medical check-ups.

Lately however, there is a growing

realization amongst the life insurers about the

potential of the rural market and there are visible

initiatives being taken. Most of the studies suggest

that the awareness of insurance in rural India is

high. However, unlike in urban areas where tax and

investment are the main considerations, here

insurance is considered a long term savings tool.

Traditionally the endowment products have been

sold in this segment.


3

There are several challenges confronting

sales and marketing executives in the rural domain.

The first one is a strong need for regionalization.

The entire sales delivery should preferably be in the

local language. This calls for not just the translation

of sales and marketing content but also

customization of the same to suit the regional

cultural sensitivities.

Rural incomes are largely seasonal in nature

–dependent on the monsoon and consequently the

crop cycle. Therefore the premium payments on a

regular basis are tough for rural consumers. This

leads to a high percentage of policy terminations.

Other operational challenge is in procuring reliable

and standard documentation. In most cases income

and age proof documents are not available at all.

This leads to difficulties in policy issuance as well

as during claim processing. Managing a high

number of cash transactions also adds to the risk

and cost.

From a branding perspective, the primary

challenge for the new entrants is to create an

awareness of the brand. A physical presence in

terms of a branch office in the vicinity could be the

biggest collateral for the brand. A brick and mortar

presence also goes a long way in establishing

credibility in the minds of the rural consumers, who

Partha S. Senapati


might be wary of trusting their funds to a hitherto

unknown entity. However the cost of putting up

infrastructure has to be looked into from a long term

returns point of view. Some of the other commonly

employed marketing initiatives are sponsoring the

local festivals and fairs (melas), creating visibility

around haats and mandis, road shows, hoarding,

wall paintings, etc.

Opportunities

The rural market has been growing gradually over

the past few years and is now even bigger than the

urban market. The saving to income percentage in

rural area is 30% higher than urban area. At present

53% of all FMCGs and 59% of consumers durables

are being sold in rural area. Major opportunities

available in rural market are as follow:

Increase in Literacy Rate

Literacy rate is increasing in rural areas. According

to census 2011 it stood at 68.9% (2001 census

58.7%).


5

Table: 1.1 Increase in literacy rate

2001 2011 Difference

Overall

India

64.8 74.0 +9.2

Rural 58.7 68.9 +10.2

Urban 79.9 85.0 +5.1

*Source: census of India 2011

There are more graduates in rural than in urban

India. This brings social and cultural changes in

buying behavior of the rural customers and more

aware about national and international brand. Due

to increase in literacy rate they get jobs in nearby

towns. They earn urban salaries but continue to live

in self-owned homes in the villages, they have high

purchasing power and prefer to buy branded

product.

Increasing in disposable income

and purchasing power

Projects from private companies and the rural

employment initiatives by the Government like

MNREGA (Mahatma Gandhi National Rural

Employment Guarantee Act) schemes have given

the rural population an opportunity to meet their

daily needs. Government decided to expand the

agriculture loan at lower rate of interest and

distribute million of Kisan Credit Cards, has given a

boost to the income level to the rural sector.

Partha S. Senapati


According to advanced estimates of national income

released by center statistic organization “The Per

Capita income at current prices during 2011-12 is

estimated to be Rs. 60,972 compared to Rs. 53,332

during 2010-11 showing a rise of 14.3%.

Companies have the opportunity to enter in this new

market and take the advantage of increased

disposable income.

Reduction of Risk during Recession:

It has been observed that companies which cater

both urban and rural markets tackle the recession in

the better way. The demands for goods in the urban

market often follow a cyclic whereas in the rural

market it is steady. So companies can safeguard

themselves from the harmful effects of recession

after entering in the rural market.

IT Penetration in Rural India

Today‟s rural children and youth will grow up in an

environment where they have “information access”

to education opportunities, job opportunities,

government schemes, and worldwide news and

mandi prices. Rural areas offer a great potential for

growth in internet usage with the number of claimed

internet users in these spaces to be reached at

45million by Dec. 2012, according to the recent

IMRB survey, conducted jointly with internet and

Mobile Association of India (IMAI). The number of

claimed internet users has witnessed a compounded

annual growth rate of 73% since Dec. 2010. As the

electronic ethos and IT culture moves into rural


7

India, the possibility of change are becoming

visible.

Infrastructure improving rapidly

In 50 years only, 40% villages have been connected

by roads, in next 10 years another 30% would be

connected. Rural telephone density has gone up by

300% in the last 10 years. Government of India is

planning its most ambitious national program in

Jan.2013 to facilitate electricity through

decentralized renewable energy sources. The

government aims to provide LED lights to around

400million homes that do not have an electricity

connection by 2017. Rapid development of rural

infrastructure is also major attraction for marketers.

Marketers can make effective use of the large

available infrastructure-

Post Offices 1,38,000

Haats (periodic markets) 42,000

Melas (exhibitions) 25,000

Mandis (agri markets) 7,000

Public Distribution Shops 3,80,000

Bank Branches 32,000

Partha S. Senapati


Increase Population and hence

Increase in Demand

The rural market in India is vast and scattered and

offers a plethora of opportunities in comparison to

the urban sector. It covers the maximum population

and regions and thereby, the maximum number of

consumers. More than eighty percent of rural

markets in India still do not have access to any sort

of organized marketing and distribution.

Table: 1.2 Low rate of penetration

Above table shows the rural and urban share in

stock of consumer durables like: colour T.V and

refrigerator and in stock of FMCGs like shampoo

and toothpaste. It is clear from the table that 30.4%

urban population have colour T.V and 33.5% have

refrigerator on the other hand only 4.8% rural

population have colour T.V and 3.5% have

refrigerator. Other table shows that 66.3 urban

Durables Urban Rural Total(%of

rural HH)

CTV 30.4 4.8 12.1

Refrigerator 33.5 3.5 12.0

FMCGs Urban Rural Total(%of

rural HH)

Shampoo 66.3 35.2 44.2

Toothpaste 82.2 44.9 55.6


9

population use shampoo and 82.2% use toothpaste,

while 35.2% rural population use shampoo and

44.9% use toothpaste. It is clear that penetration rate

in rural market is low as compared to urban market;

low penetration indicates the existence of

unsaturated markets, which are likely to expand as

the income level rise as well as awareness increases.

It provides an excellent opportunity for the industry

players in form of vastly untapped market.

Partha S. Senapati


CHAPTER 2

What is Rural

Marketing?

In a diverse market like India, having second largest

population in the world, the urban-rural divide is

quite significant. According to various studies,

around 12.2 per cent of the world‟s population lives

in rural India. Considering this as an untapped

potential, a special marketing strategy, namely,

rural marketing has emerged. It involves delivering

manufactured or processed inputs or services to

rural producers or consumers.

PROFILE OF RURAL MARKETING

Definition of rural: Government agencies from

IRDA & NCAER define „Rural‟ as “a village with a

population of less than 5,000 with 75% of the male

population engaged in agriculture etc.”

Definition of Rural Marketing:

According to National Commission on Agriculture

“Rural marketing is a process which starts with a


11

Get Complete Book At Educreation Store

www.educreation.in

EDUCREATION PUBLISHING (Delhi) www.educreation.in

Also available as an eBook

ACADEMIC

India is a country where majority of the population lives in

villages. Appreciating the size and business potential of rural

sector, major companies, including Hindustan Unilever and

P&G have made special strategies for targeting rural markets.

The thrust on rural markets is getting stronger day by day and

it needs complete knowledge base of rural marketing. The

book Rural and Agriculture marketing has been written

looking into the needs of the students pursuing their

management degrees.

It is meant to create interest in business management students

to get into the rural marketing mind set for bringing the

desired organizational focus on the subject. Considering the

importance of rural markets, most business schools have

included Rural Marketing Management as a key knowledge

area in their syllabus.

Rural Marketing as a separate discipline in management

teaching has emerged recently. The growing importance of

the subject has been well realized by the marketers,

policymakers and management interns. The present book has

endeavoured to cover the entire gamut of rural marketing.

There are few books on rural marketing which mostly deal

with this subject and I hope this book will be a great help to

student communities. The book is written in simple, easy to

understand language.

So wishing you all a very happy reading…

- Partha S. Senapati (Author)

Documents

Rural and Agricultural Marketing. - Book Publisher in ... · PDF fileRural and Agricultural Marketing By ... Hindustan Unilever and P&G have made special ... management students to