RURAL MARKETING ENVIRONMENT

CONCEPT OF ENVIRONMENT
Environment literally means the surroundings, external
objects, influences or circumstances under which
someone or something exists.
The environment of any organization is the aggregate of
all conditions, events and influences that surround and
effect it.

EXTERNAL ENVIRONMENT
Socio-Cultural
Economic
Technological
Political & Legal

SOME IMPORTANT VARIABLE IN MEGA ENVIRONMENT

Economic

Technological

Political & Legal

GDP

Spending

Type

trends
Interest rates
Inflation
Type of
economy
Income
Disposable
income
Wage-price
control
Money
supply

by govt

Socio-Cultural

of Govt.
Life-Style
on R&D
Tax Laws
Religion
Industry spending Foreign trade
Language
on R&D
regulations
Customs
Focus of
Constitutional
Age distribution
technology
framework
Languages
Patent protection
Anti trust litigation
Growth rate of
Productivity
Labor laws
population
Communication & Attitude toward
Infrastructural
foreign co.
New products
Stability of govt
Commercialization
of technology

RURAL ECONOMIC ENVIRONMENT

Rural Economy
Farm Sector

Non-farm Sector

Agriculture

Rural Industries

Rural Services

Animal Husbandry

Agro Processing

Retailing & Trading

Horticulture

Forestry

Fishery

Manufacturing

Mining &
Quarrying

Construction

Community & Social

Service
Transport & Storage

Communication

JAJMANI SYSTEM

A self-sufficient economy system

Revolved around the farmers who owned land

Specialist castes who provided services to the farmers

and to each other

System under threat due to urbanization that provided

relief from exploitation

SOURCES AND PATTERNS OF INCOME

Primary source is agriculture

No regular income throughout the year (Seasonality)

Cash only at the time of harvest

Marketers should notice of time of year when incomes are

due

Crop patterns vary, and time of cash surpluses from

harvests vary geographically

Cash crops and services leading to stable cash flows

throughout the year.

Remittances from outside.

RURAL INCOME DISTRIBUTION

Rural Income
Rs. 7,006 billion
(100%)

Agricultural
(53%)

Self-employed
(43%)

Non-agricultural
(47%)

Wage-earners
(10%)

Formal
(31%)

Informal
(16%)

PER CAPITA RURAL INCOME

Rural Per Capita Income
Rs. 9,481

Agricultural
Rs. 6,855

Self-employed
Rs. 10,150

Non-agricultural
Rs. 16,464

Wage-earners
Rs. 2,860

Formal
Rs. 19,514

Informal
Rs. 12,595

DISTRIBUTION OF RURAL HOUSEHOLD BY INCOME

Annual Income (Rs.)

Income class

at 1998-99 prices

1989-90

1998-99

(%HHs)

(%HHs)

<=35000

Low

63.7

47.9

35001-70000

Low Middle

23.9

34.8

70001-105000

Middle

7.1

10.4

105001-140000

Upper Middle

1.2

3.9

>140000

High

0.5

100

100

Total

DISTRIBUTION OF HOUSEHOLDS BY INCOME

FROM 1989-90 TO 2009-10
1989-90

2001-02

Urban

Rural

AI

Urban

Rural

Middle High

11270

9095

20365

28884

23978

Low Middle

13957

24458

38415

16956

Low

14879

68870

83749

Total

40106

102334

142440

Middle High = above Rs 90,000 p.a.

Low Middle = Rs 45,000-90,000 p.a.
Low = below Rs 45,000 p.a.

2009-10
AI

Urban

Rural

52862

51140

56363

107503

53208

70164

14809

64916

9725

7648

57518

65166

3253

31465

34718

53488

134704

188192

69202

152744

AI = All India
(in, 000 families)

AI

221946

SAVING PATTERN

Households Availing Banking facilities

Households (HHs)

(figures in million)

Total

% of HHs

Rural
HHs

192

100

138

72

54

26

68

35.5

42

30.1

27

49.5

% of Total

HHs

% of
Urban

HHs

No of HHs Availing
banking services

RURAL SOCIO-CULTURAL ENVIRONMENT

RURAL SOCIO-CULTURAL SCENARIO

Religious bent of mind.
Social customs.
Caste system.
Gender Discrimination.
Literacy.
Cultural diversity.
Group influence on behavior.

CASTE SYSTEM
BRAHMINS at top, then kshatriyas, vaishyas, and
the shudras at bottom.
Each have their sub castes.
Shudras suffered from entering places visited by
top.
Change in zamindari system helps in abolition.
Marketers have to be sensitive on this issue.

DEMOGRAPHIC ENVIRONMENT

1981

1991

2001

Total population (million)

683.3 848.3

1026.9

Rural population (million)

524.0 628.8

741.6

Rural proportion to urban pop (%)

76.7

72.2

74.3

DISTRIBUTION OF POPULATION BY AGE GROUPS

(1991)
Age groups
0-4
05-14
15-19
20-34
35-54
55+
Total

Rural
13
26
9
23
19
10
100

Urban
11
23
10
28
20
8
100

EDUCATION AND THE LEVEL OF DEMAND

Rural literacy

1981 1991

% of Literates

36

2001

45

59

Education level

Rural

Urban

Below primary

29.2

18.4

Primary but below middle

31.6

23.9

Middle but below matriculation

21.0

20.8

Matriculation but below graduate

15.5

26.1

Graduate and above

2.7

10.8

HOUSEHOLD PATTERN

1991

Particulars

2001

Rural

Urban

Total

Rural

Urban

Total

Households
(million)

112

40

152

138

54

192

Family size
(number)

5.55

5.32

5.36

5.31

HOUSEHOLD TYPE IN INDIA

Type of household

Definition

Single member

Single member

Nuclear pair

Head and spouse

Nuclear

Head and spouse with unmarried children

Broken nuclear

Head and spouse with or without unmarried

children but with other relations who are not
currently having spouse

Supplemented nuclear Head and spouse with or without unmarried

children but with other unmarried or separated or
divorced or widowed relations
Supplemented broken
nuclear

Head without spouse with or without unmarried

children but with other unmarried or separated or
divorced or widowed relations

Rural

urban

5.15

7.91

4.91

5.20

37.88

41.57

4.58

4.24

16.81

15.44

5.76

5.13

CONTD
Broken extended
nuclear

Head without spouse but with other relations of

whom only one is having spouse

3.62

3.07

Lineally extended

Head and spouse with married son/daughter and

spouses and/or parents with or without other not
currently relations/ head without spouse but with at
least 2 married /daughter and their spouses and/or
parents with or without other not currently married
relations

17.6
5

13.2
3

Collaterally extended

Head and spouse with married brother /sister and

their spouses with or without other relations
(including married relations)/ head without spouse
but with at least 2 married brother/sister and their
spouses with or without other relations

3.53

3.85

Others

Other households not covered elsewhere

0.11

0.36

100

100

TOTAL

RURAL HOUSING PATTERN

House type

1981

1991

2001

Pucca

22

31

41

Semi-Pucca

37

36

36

Kuccha

41

33

23

Total

100

100

100

RURAL OCCUPATION PATTERN

Rural Population = 742 million

Rural Employed = 312 million
(100%)

Agricultural
(73%)

Self-employed
(40%)

Non-agricultural
(27%)

Wage-earners
(33%)

Formal
(15%)

Informal
(12%)

OCCUPATIONAL PATTERN
Distribution of households by occupation of the head, 1999-2000
Head's occupation

Distribution of households (%)

Urban

Rural

All

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

6.9

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

Total

100

100

100

RURAL POLITICAL ENVIRONMENT

POLITICAL ENVIRONMENT
Historically controlled by upper castes (panchayat &
village pardhan)
Then Panchayati raj system came into effect in which all
government departments, such as; education, health,
agriculture, development etc. form an integrated approach
for the development of rural areas.

PANCHAYATI RAJ INSTITUTIONS

Provide 3 tire system to panchayati raj for all the
states population exceeding 2 mn.
To hold panchayat elections regularly every 5
years.
To provide reservations for SC/ST/Women at least
33%
To appoint a state finance commission.
Preparation for economic development & social
justice
To collect taxes, duties, tolls & fees.

RURAL TECHNOLOGICAL ENVIRONMENT

TECHNOLOGICAL ENVIRONMENT
It is triggered by three main revolutions :
Green revolution
White revolution
Introduction of non-govt. agencies in the
development sector.

GREEN REVOLUTION
Period under 1967-1978 aimed to improve in food
self sufficiency.
Introduction of mechanization first time.
Increase in farm production also introduced
mechanized processing spurring growth of
manufacturing sector.
Boosted farm productivity, employment creation,
standard of living changes.

WHITE REVOLUTION
Aims for achieving self sufficiency in milk products
by the govt.
Develops linkage between rural producers & urban
consumers.
Formation of producers cooperatives which
institutionalizing & producing processing milk.
Milk production increases almost 5 folds(from 1950
to 2001)
Areas effected Gujarat, Punjab, Haryana, U.P.

NGO MOVEMENT
Provide numerous services for up gradation of rural
sector
Helps in providing assistance of technological
extensions in rural areas.
Also providing basic health and child care services
education training opportunities which helps in
development.

RURAL PHYSICAL ENVIRONMENT

PHYSICAL ENVIRONMENT
RURAL AND URBAN LIFE: DISTINGUISHING FEATURES
Population Density (Urban & Rural) (per sq. km.)

Pop. Density (total)

1971

1981

1991

2001

177

216

267

312

171

214

253

Rural

Distribution of Towns and Villages

1991

2001

3697

5161

No. of inhabited

580779

593154

Total no. of Villages

634321

638588

No. of towns

Total no. of Villages also include non-inhabited villages

CONT.
Inhabited Villages Classified by Population Size, 1991 and 2001
Villages in size group
(1991)

Villages in size group

(2001)

Number

Number

Less than 200

102952

17.9

92541

15.6

201-500

141143

24.3

127054

21.4

501-1000

144998

25

144817

24.4

1001-2000

114395

19.7

129662

21.9

2001-5000

62915

10.8

80313

13.5

5000+

13376

2.3

18758

3.2

Total

580779

100

593154

100

INFRASTRUCTURE
Physical

Infrastructure

-Roads
-Electricity
-Telecommunication
Marketing

-Mandis, Melas, Haats

-Small Kirana shops
-PDS shops
-Post-offices, PHCs, Petrol Pumps
Commercial

-Credit Availability
-Banking facility
-Political Policy

RURAL MARKET STRUCTURE

PRODUCTS AND SERVICES IN RURAL MARKETS

(A) Products

For personal consumption

-FMCGs
-Durables
Agricultural Inputs
-Perishable
-Durable

(B) Services

Personal
Agricultural
Financial
-Personal
-Agricultural

CONSTITUTION OF RURAL MARKETS

CONSUMER MARKET
INSTITUTIONAL MARKET
SERVICES MARKET
FMCG MARKET
DURABLES MARKET

CONSUMER MARKET
Constituents: Individuals & Households
Products

Consumables: food products, toiletries, cosmetics,

textiles.
Durables: watches, bicycles, radios, TV, home
appliances.

INSTITUTIONAL MARKETS
Constituents: agriculture & allied activities, food
processing, poultry, fishery, animal husbandry, NGO, etc.
Products

Consumables: agri-inputs animal feed, fishnets, fuel etc.

Durables: agri-implements (tractors, pump sets)

SERVICE MARKET
Constitution: individuals, households, production
firms.
Services: banking, insurance, credit, tuition,
communication power etc.

SIZE OF RURAL MARKET

FMCG- Rs.65000cr
DURABLES-Rs.5000cr
AGRI INPUTS- Rs.45000cr
2-4 WHEELER- Rs.8000cr
TOTAL Rs.1,23,000cr

FMCG: RURAL SHARE

Washing Cake

1998-99
67%

Tea
Toilet Soap
Tooth Paste
Tooth Powder
Electric Bulb
Shampoo

60%
58%
47%
78%
42%
33%

MOST POPULAR ITEMS

Rural Ranking

Urban Ranking

Toilet Soap

Toilet Soap

Washing Powder

Biscuits

Packaged Tea

Washing Powder

Biscuits

Packaged Tea

Detergent Cakes

Detergent cakes

RURAL CONSUMERS EXPENDITURE

PATTERN
Per capita consumption Expenditure (Rs. Per month)
Rural

Urban

1983

112

166

1991

281

458

2001

486

855

Consumption of Rural per capita consumption

expenditure
Food

Non-Food

1983

66

34

1991

63

37

2001

59

41

COMPARISON OF RURAL AND URBAN

ENVIRONMENT

Urban

Rural
Size and Characteristics

Large population size

growing at a fast growth
rate
Incoming immigration
from the rural area for
education and
employment.
The population density is
high.
Towns are smaller urban
units.

Villages is the human

settlement with a small
administrative unit.
Comprises few hundred
households and the
population growth due to
immigration is insignificant.
Migration from village to
city/Towns is to get better
education and employment.

Settlement Pattern
City settlement is compact though
spread over a larger area. Land used is
residential, commercial, industrial and
community facilities, etc.

Village have land for human settlement

and for cultivation. The settlement are
clustered but in some areas
households settle on cultivable land
holdings.

Structure of houses is permanent and

often rises to more than one storey.
Housing on rental is highly prevalent.

Houses are largely semi-pucca or

kuchha. They are owner occupied.

Clustering pattern based on class. e.g.

neighbourhoods and streets indicate
some caste/sub-caste and extended
family influences.

Clustered according to kinship, caste or

religious groups. Some villages are
locally referred to as thakur gaon or
harijan basti depending on the
majority caste residing in the village.

Primary resource base is production

and distribution of industrial goods and
services.

Land is the primary resources for

livelihoods. Other forms of resources
are water bodies, forest and
mountains. Cows, buffaloes and poultry
are kept for households need for milk,
eggs, and meat.

Occupation
Occupations are diverse, ranging
from professionals, skilled, semiskilled to unskilled workers.
Occupational specialization is
achieved with higher education
and training to build skills.

Predominant occupations are

cultivation and agricultural labour.
People continue to practice
traditional occupations.
Skill upgradation with technology
has been limited.

Realms of activities
Interaction and mobility is spread
over large geographical, social
and economic area.
Relationship is more complex with
differentiation in personal and
professional life. There is erosion
of custom, tradition, and religion.
Women have freedom in choice of
activity and interest.

Restricted to smaller
geographical, social, and
economic areas.
Individuals are recognized or
referred to on the basis of family,
caste and village. Individual
behavior is governed by custom,
tradition and religion.
Women have limited freedom in
choice of activity and interest.