Rural Marketing

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Rural Marketing Notes
by Faraz.Vehvaria on NOVEMBER 8, 2010 in NOTES
(These are notes are for reference, if any topics are missing, please check your ref books) CHAPTER 1
PROFILE OF RURAL MARKETING
Definition of Rural                                                                                                   (Nov. 05) 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                                                                     (Nov. 03, May 08) According to National Commission on Agriculture “Rural marketing is a process which starts with a decision to produce a salable farm commodity and it involves all the aspects of market system, and includes pre and post harvest operations i.e. assembling, grading, storage, transportation and distribution”. Rural Profile  / Features of Rural Market in India (Nov. 08) 1. Large and scattered market: According to 2001 census rural population is 72% of total population and it is scattered over a wide range of geographical area. 2. Diverse socio-economic background: This is different in different parts of the country and brings diversity in rural markets. 3. Changing demand pattern: Demand pattern of rural customer is fast changing due to increasing in income and credit facilities offered by banks like ‘kisan credit card’. 4. Major income comes from agriculture: About 60% of the rural income is from agriculture and hence the demand for consumer goods is high during harvesting season. 5. Saving habits: Rural consumer is now having saving habits due to the efforts of co-operative and commercial banks. 6. Traditional outlook: Rural customer values old customs and traditions. 7. Low standard of living: Rural consumer have low standard of living because of low literacy, low per capita income and social backwardness. 8. Poor infrastructure facilities: Facilities like roads, warehouses, communication system, etc. are inadequate in rural areas. Hence physical distribution becomes costly. 9. Media reach: The reach of pint media is 10% followed by TV 31%, radio 31% and cinema 33%. 10.  Communication: As per Indian Express report about 6 lakhs villages are without telephone facilities. 11.  Electrification: About 88% of villages have been electrified and rest will soon get electricity by “Rural Electricity Corporation”. Potential of Rural Market (May 04, 07, 08)

With urban market showing signs of saturation, companies are excited about the potential of rural India. Some major companies that have focused in the rural sector are Philips, Parle, Proctor & Gamble, Colgate-Palmolive, Godrej Soap, Bajaj Auto, TVS, Atlas Cycle and HUL. Following points indicate the potential of rural markets:

Scope / Attractiveness of Rural Market / Why Companies Go Rural (May 06) 1. Large Population: According to 2001 census rural population is 72% of total population and it is scattered over a wide range of geographical area 2. Rising Rural Prosperity: Average income level has improved due to modern farming practices, contract farming, industrialisation, migration to urban areas and remittance of money by family members settled abroad. 3. Growth in Consumption: There is a growth in purchasing power of or rural consumers. The average per capita household expenditure is Rs. 382. 4. Changing Lifestyle: Lifestyle of rural consumer changed considerably. 5. Life Cycle Advantage: The products, which have attained the maturity stage in urban market, is still in growth stage in rural market. E.g. popular soaps, skin cream, talcum powder, etc. 6. Market Growth Rate Higher than Urban: As per the survey made by NCAER the growth rate of FMCG market and durables market is higher in rural areas. The rural market share is more than 50% for products like body talcum powder, toilet soaps cooking oil, hair oil etc. 7. Rural...
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