The Rural Marketing Environment

Chapter 2

87,320 villages, 4466 Union, 130 million people, myriad of

languages, many traditions and a rich culture. A vibrant land

with a long history. Rural Bangladeshi people are known as much for their warmth as their diversity. Welcome to the land of mysticism. The Real Bangladesh. EXPLORE THE RURAL MARKETS, DONOT EXPLOIT THEM

Chapter Objectives
The facts and figures of rural Evolution of rural marketing in India Holistic view of the marketing environment The household, institutional and service sectors in rural The need for business-social sector partnerships

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 Internationally the standard determinant of rurality is population density. Hence the rural areas are defined as those with low numbers of people living on any given area of land. It is this approach that underpins the official definition of rural areas within England and Wales.

 Much has been written on the concept of rural. The treatises of alternative views are numerous and varied. One of the longstanding debates concerns whether rural is a geographical concept, a location with identifiable boundaries on a map, or whether it is a social representation, a community of interest, a culture and way of life.

Definition of Rural
Any habitation with a population density of less than 400 sq. km., where at least 75% of the male population is engaged in agriculture and where there exists no municipality or board (Census 2001). The rural and semi urban area is defined as all other cities other than the 7 Metros (LG India).

Locations having shops or commercial establishments with up to 10,000 people are treated as rural (Sahara, ITC, HUL)

Village with a population of less than 5000 with 75% of the male population engaged in agriculture --- IRDA & NCAER

Definition of Rural Market

Rural markets have:
Population density less than 400 per sq. Km. At least 75% of the male working population engaged in agricultural activities No municipality or board

Most FMCG companies consider towns with population less than 20,000 as rural

For durable companies cut-off point is 50,000

LG

 A rural market can be defined as any market that exists in a

area where the population is less than

10, 000. The rural market in India is scattered and spread over a wide geographical area. Indian market is divided into urban and rural markets.

 Rural Markets constitute an important segment of overall economy, for example, in the USA, out of about 3000 countries, around 2000 counties are rural, that is, nonurbanized, with population of 55 million. Typically, a rural market will represent a community in a rural area with a population of 2500 to 30000

 Rural market is the set of consumers who are located in

rural area and who exhibit behavior that is different from

the behavior of consumers in urban areas. The marketing issues and, therefore, the marketing decisions in serving the rural markets vary considerably compared to marketing for the urban consumers.

Phases In Rural Marketing

Sr. No Time Frame Key Events & Trends

Phase One( Pre 1960s)

Marketing rural products in rural and urban areas Agricultural inputs in rural areas Agricultural marketing Farming methods were primitive and mechanisation was low Markets unorganised

Phases In Rural Marketing

2 Phase Two ( 1960s to 1990s) Green Revolution Companies like Mahindra and Mahindra, Sri Ram Fertilisers and IFFCO emerge Rural products were also marketed through agencies like KVIC Demand for consumables and durables rise Companies find growth in urban markets stagnating or falling

Phase Three( 1990s to Present)

Definition of Rural Marketing

National Commission on Agriculture NGOs Corporate Rural Marketing Definition

Decisions to produce Marketing products produced Function that manages all saleable farm commodities in rural areas to urban areas activities involved in involving all the aspects of assessing, stimulating and the market system or Marketing products produced converting the purchasing structure, both functional and in rural areas in rural markets power of rural consumers into institutional, based on effective demand for specific technical & economic products and services to considerations and includes create satisfaction & a better the pre & post harvest standard of living for operations. achieving organisational goals.

Definition of Rural Marketing

Rural marketing involves the process of developing, pricing,

promoting, distributing rural specific product and a service

leading to exchange between rural and urban market which satisfies consumer demand and also achieves organizational objectives. --Ramkishen.Y

Definition of Rural Marketing

Function that manages all activates involved in assessing,

stimulating and converting the purchasing power of rural

consumers into effective demand for specific products and services to create satisfaction & a better standard of living for achieving organizational goals.

Definition of Rural Marketing

Rural marketing involves delivering manufactured or

processed inputs or services to rural producers or

consumers so as to soak up the huge size of the untapped rural market.

Rural marketing is marketing to a rural mindset ; not a rural market

It is all about understanding the mind rather than manipulating it or adapting marketing theory to a rural environment.

Differences between Rural & Agricultural Marketing

Agricultural Marketing which signifies marketing of
rural products to the urban consumer or institutional markets.

Rural Marketing basically deals with delivering

manufactured or processed inputs or services to rural producers, the demand for which is basically a derived outcome.

Rural vs Urban Marketing

Rural vs Urban Marketing

Rural vs Urban Marketing

Rural vs Urban Marketing

Rural vs Urban Marketing

Rural Market Structure

Demographic Environment
Share of rural population down from 84.33% in 1981 census to 76.1% in 2001 census. The number at 130.6 million indicates an

increase of over 15%

Youth (20 to 34) 22.2% of rural population Rural literacy up from 17% in 1981 to 33% in 2001 census

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Rural Market Structure

Rural households up by 15% in last 7 years

Family size has gone down marginally due to migration

Joint families now breaking apart. Concept of individualised joint families staying in the same house but having separate kitchens

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Some Comparisons
Distribution of Population by age groups (2001) Lower due to migration factor Age Groups 04 5 14 15 19 20 34 35 54 55+
Source : 2001 Census RMB 02

Rural 12% 26% 10.1% 22.2% 21.6% 10.2%

Urban 10.6% 22.3% 11.6% 25.2% 22.8% 7.5%

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Some Comparisons
Education in Bangladesh (2005) Education Level Rural Urban

Not passed class I

Class I-V Class VI-IX Lower due to lack of facilities SSC, HSC equivalent Graduate and equivalent Post Graduate Doctor/Engineer

55.39
19.03 17.97 8.09 1.59 0.07 0.00

34.97
20.78 21.75 16.08 3.20 1.88 0.20

Diploma/ Vocational
Others
Source : 2001 Census RMB 02

0.01
0.00

0.01
0.02

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 Number of Household by size (in million)

Rural Housing Pattern

Housing Structure (head of households) Roof material pattern

 Housing Structure( head of households) Wall material percent)

Occupational Pattern
Over 28.7% of rural population is in cultivation followed by

28.1% wage earners

17.3% of the rural population are involved in Business and commerce and nearly 12% in gift & remittance. 5.1% in Housing Services. The cultivators disposable income is highly seasonal being

available at the time of harvesting

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 Expenditure TK ( per month)

 Share of Food Expenditure TK ( per month)

Percentage share of food expenditures by residence & major food items

Food Expenditure in Bangladesh (2005)

Food Items
Cereals Pulses Fish Meat & Eggs Vegetables Milk/Milk Products Edible Oil Spices Fruits Sugar/gur Beverages Miscellanies

Rural
42.25 2.39 11.46 7.64 8.34 3.46 4.07 7.18 2.97 1.54 0.45 8.25

Urban
31.30 3.28 14.11 10.56 8.48 4.41 4.67 8.31 3.83 1.62 1.21 8.23
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Physical Environment
Rural and Urban Life: Distinguishing Features Settlements ( scattered and clustered)

Average monthly expenditure and consumption expenditure per household by residence

Year Residence Avg. Expenditure per month 5319 Avg. Consumption per month 5165

2005

Rural

Urban 2000
1995-96 1991-92

8533 4257 7337

3473 7274 2721 4377

8315 3879 7125

3426 7084 2690 4280

Rural Urban
Rural Urban Rural Urban

Social and Cultural Environment

Variations between regions and sub-regions Distinct socio-cultural regions cutting across political/administrative boundaries exist

In villages inward migration is insignificant while outward migration

to urban and foreign is reasonably high.

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Social and Cultural Environment

Migration Per 1000 Population

Direction
2002 Rural to Rural Rural to Urban Urban to Rural Urban to Urban 10.30 11.00 2.70 39.80
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2003 10.34 17.37 2.78 34.34

2004 13.80 6.00 13.10 38.10

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Village Community
Villages are self-sufficient and autonomous.

Each village has a council of elders (Union)

Unions have the constitutional authority for self-governance The Union structure has undergone change with elections and reservation for underprivileged families. Shift from subsistence farming to commercial and mixed farming has

made the village dependent on external factors.

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Caste System
Islam is the basis of social organization. Society in Bangladesh, with the exception of the Hindu caste system, was not rigidly stratified rather, loose because most Hindus belonged to the lower castes.

About 75 percent of the Hindus in Bangladesh

belonged to the lower castes, notably namasudras (lesser cultivators).
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Caste System
Traditional Muslim class distinctions had little importance in Bangladesh. The prohibition against marriage between individuals of high-born and low-born families, once an indicator of the social gap between the two groups, had long

ago disappeared;
Most matrimonial alliances were based on wealth and power and not on the ties of family distinction.
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Political Environment
Local Government in Bangladesh Rural System Zila Parishad (None) Upazila (481) Thana (499) Union Parishads (4,498) Gram Sarkar (1,92,348) Urban System City Corporations (6) , Paurashavas (286) RMB 02

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Political Environment
Union Parishad is the lowest tier of administrative unit in Bangladesh. The Union Parishad consists of a chairman, nine members, and three women members. The voters of the Union Parishad directly elect all. An average village in the late 1980s contained 1,300 to 1,400 people. An average union contained about 15 villages and a population of about 20,000, and an average subdistrict had 8 to 10 unions with about 200,000 people.

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Technological Environment
Triggered by three major revolutions: Green Revolution to bring about food self-sufficiency. Resulted in adoption of high yield seeds, fertilisers, pesticides, and farm mechanisationes Poultry and Fisheries

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NGO Movement
The NGO movement has created grass root level adjustment of technological extensions in rural areas.

NGOs have also been instrumental in providing health, homes, hygiene, child care, education and other social development programmes also

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Constitution of Rural Markets

Consumers Market
FMCG Durables

Institutional Market Food processing, poultry, fishery,

animal husbandry, cottage industries, health centres, schools
Consumables

Durables

Services Market Banking, insurance credit cards, communication.

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Size of Rural Market

In the FMCG market the size of the pie is larger than the urban pie. Problems

of logistics, supply and storage

Rural markets accounted for 54% of the durables sold in the country The decadal growth rate for consumer durables is 100% in rural against 40% in urban.

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Nature of Rural Market

The big question transactional or developmental approach to the rural

markets
Agri-input companies follow an extension services approach to increase productivity

HPCL is promoting concept of community kitchens to popularise cooking

gas. HULs Project Shakti (Joyita) improves the income of rural women

The rural marketing process needs to be evolutionary and not revolutionary.

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Marketing Management in Non-Profit Sectors

NGOs have started partnering with corporates Corporates are facing saturation in the urban segment and do not understand the rural environment

The potential for a marriage between the two to fulfill each

others needs exists

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Successful Mantra in Rural

Business Mind, Social Heart