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4.45. M1: Rural Marketing
RURAL MARKETING: AN INTRODUCTION
A silent revolution is sweeping the Indian country side. It has compelled marketing whiz kids to
go rural. The marketing battle has shifted from cities to villages.
―Go rural‖ seems to be the latest slogan.
Adi Godrej says
―The rural consumer is discerning and the rural markets are vibrant. At the current rate of growth
it will soon outstrip the urban market. The rural market is no longer sleeping we are‖
The real India lies in the villages. All smart marketers Indian as well as MNCs have revered this
Companies like Hindustan lever, Godrej, Colgate Palmolive, Parle Foods, Nirma works, Philips,
have made inroads into the countryside. Rural reach is on the rise and it is fast becoming the most
important route to growth. .
―Rural Marketing 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.‖
Nature, Character of Rural Markets
The big question facing marketers entering the rural sector is whether it needs a
transactional or developmental approach.
The role of rural marketing is more developmental than transactional. It is more process
of delivering better standard of living and quality of life to rural environment taking into
consideration the prevailing rural location.
The model of rural marketing represents a combination of transactional and developmental
Rural marketing process is both which the outcome of general is and rural development process.
Initiation and management of social and economic change in the rural sector is core of the rural
Innovation is the real meaning of marketing. It narrows down the rural and urban divide.
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The process of change can be evolutionary and not revolutionary.
The exposure of rural ties to variety of marketing transactions puts them in the role of
beneficiaries than just buyers of modern input.
Communication is the vital element of rural marketing. It should serve to reduce conflict
encourage cooperation and strengthen competitive spirit between rural as well as within rural
areas. Communication is the point of conversion of retaliate from an ―induced beneficiary‖ to an
Potential of Rural Markets,
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, industrialization, 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, are
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 Marketing is not Expensive: To promote consumer durables inside a state costs Rs one
crore while in urban areas it will costs in millions.
Rural market Environment,
Location of rural population
Land Use Pattern
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- Rural Communication:
i) Road Network
ii) Rail Network
iii) Cinema Houses
Constitution of Rural Markets,
Traditionally, consumers can be divided into two broad categories: individuals and households.
The household sector is a major consumer of food products, user of manufactured goods ranging
from low-priced durables such as transistors, electric irons etc to high priced colour TV sets,
motorcycles etc. This sector meets the needs of a wide range of consumer from rural to urban,
from rich to poor, from wage earners to professionals.
A rural market broadly comprises of consumer markets, institutional markets and Services, being
a relatively new entrant in this market.
Consumer markets constitutes of Fast Moving Consumer Goods (FMCG) like personal care (oral
care, hair care, soaps, cosmetics and toiletries and household care (fabric wash and household
cleaners) and Consumer durables like home appliances, watches, bicycles, TV sets, radio,
Institutional markets constitutes agricultural and related activities like food processing, poultry
farming fisheries, cottage industries, schools, NGO's etc. It includes products like agri inputs,
animal feed, fuel, engine oil etc and agri implements like tractors, pumps sets etc.
Services market constitutes Banking, Insurance, Retail, Healthcare, IT, power, communication
Size of Rural Markets, Indian Rural Market: Brief Overview
A World Bank study has revealed that nearly two-thirds of India's 120 crore population still live
in rural areas. Most of the companies are increasingly transforming their rural operations into
viable profit centers. They have been devising ‗reach strategies‘ which proved to be instrumental
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in selling to simple buyers in geographically dispersed locations. The rural market in India is
beginning to emerge as an important consumption area. The total size of the rural market is
estimated at Rs.1, 23, 000 crore which includes FMCGs, durables and agri-products.
Key Investments/ Developments
Big companies are increasingly molding their operations and strategies to persuade consumers in
Indian hinterlands as people residing in rural areas differ in terms of lifestyles, mind-sets and
Hindustan Unilever aimed to empower rural women to make its products reach every rural home
by training rural women as Shakti Ammas. Reportedly, the Shakti initiative delivers around 20
per cent of Unilever‘s overall rural sales. Meanwhile Godrej Consumer Products trains rural
youth in channel sales. ITC has Choupal Sagar and Godrej Agrovet has large format retail stores
called Adhaar in Indian hinterlands
While Coca-Cola, the beverage major on completing 20 years since it re-entered India, intends to
increase its rural reach, India‘s passenger vehicle giant Maruti Suzuki India Ltd is looking to
penetrate into the rural market to a greater degree, in order to further boost its sales volume and
margins. Maruti‘s deliveries in small towns and villages were more than those in big cities
during the first quarter of 2013
Pune-based non-banking financial company (NBFC) Bajaj Finance, which has operations in
urban areas and a few semi-urban regions, is planning to enter rural markets in the second
quarter of the FY14. Initially, the company would offer gold loans and loans for used vehicles
and farm equipment. The operations, to be launched in Maharashtra and Gujarat, would be
expanded at a later stage
Vodafone India has recently reported that most of its growth (in terms of subscriber base for
voice services) is coming from the rural parts of the country. The GSM operator has emerged as
the largest telecom operator in rural India, by amassing a total rural subscriber base of 82.24
million (as of March 31, 2013). Moreover, the company‘s venture with ICICI Bank for M-pesa is
also helping it make inroads into the rural sector. M-pesa, a financial inclusion initiative, has
been launched in Kolkata, West Bengal, Bihar and Jharkhand, and is planned to be rolled out to
other parts of the nation by 2014-15
Havells India Ltd is planning to harness opportunities in semi-urban and rural markets with its
non-modular switch brand Reo. The fast-moving electrical goods company hopes to achieve at
least Rs 200 crore (US$ 36.44 million) business from this category. The company is in the
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process of ramping up its production capacity at its Baddi (Himachal Pradesh) facility from the
current five lakh to 10 lakh units per day in the next couple of months
Taxonomy of the Rural Economy,
The rural market can be classified in way to similar to urban market.
Constituents : Individuals and households
Products: Consumables Food products, toiletries, cosmetics, Textiles and Garments. Foot
Durables: Watches, Bicycles Radio, TV, Kitchen appliances, Furniture, Sewing machine,
Constituents: agricultural and allied activities, poultry farming, fishing animal husbandry cottage
health center school co-operatives etc.
Products: consumable seeds, fertilizer, pesticides, animal feed. Fishnets, medicines, petrol diesel
Constituents: individuals, households, offices and production firms.
Services market: repairs transport. Banking, credit insurance, healthcare, education, and
communication, power etc.
Rural V/S Urban Markets,
URBAN MARKET RURAL MARKET
Mostly concentrated Widely spread and scattered
High infrastructural level Low infrastructural level
High density of population per sq km Low density of population per sq km
Good physical connectivity and high mobility Poor physical connectivity and low mobility
Incomes are more stable and permanent People work in less certain environment
Occupations are government employment, business, etc. Mostly agricultural occupation
Income received at regular income Acute seasonality in income receipts
High exposure to variety of products Low exposure to variety of products
High brand awareness Low brand awareness
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Problems and Constraints of Rural Markets
8 Important Constraints in Rural Marketing are given below:
1. Vastness and Uneven Growth: India has about 5 lakhs villages, which are scattered over a wide
range of geographical area, and also they are not uniform in size.
2. Transport Problem: Transportation infrastructure is very poor in rural India. Though India has the
fourth largest railway system in the world, many villages remain outside the railway network. Many
villages have only kaccha roads while many of rural interiors are totally unconnected by the roads.
Because of this the physical distribution is difficult in rural areas.
3. Communication Problems: Communication infrastructure consisting of posts, telegraphs and
telephones are inadequate.
4. Warehousing Problems: Central Warehousing Corporation and State Warehousing Corporation do
not extend their services to the rural parts. The warehouses at mandi level are managed by co-operative
societies who provide services to members only.
5. Many Languages and Dialects: The number of language and dialects vary widely from state to state,
region to region and even from district to district. Though the recognized languages are only 16 the
number of dialects is around 850.
6. Market Organization & Staff: Rural marketing needs large marketing organization and staff to have
an effective control, which requires huge investment.
7. Non-Availability of Dealers: It is not possible to have direct outlets in each rural market; firms need to
have service of dealers, which is not easily available.
8. Hierarchy of Market: Rural consumers have identified market places for different items of their
requirements. Thus depending upon the purchase habit of rural people, the distribution network of
different commodities has to be different.
MODULE 2 Rural Consumer Behavior
1) Consumer is the basic foundation of every business. What consumer see, thinks, prefers and buys is
of great importance to marketers to fine tune their marketing offers and achieve high level of
consumer acceptance and Satisfaction.
2) CB in RM is even more confusing – lack of consistency in groups which are in homogeneous in
parameters of demographics – age, education, and income
3) For high-involvement products/consumer durables –more disparity in CB – decisions are swayed by
opinion leaders, influencers from the reference group and others.
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4) For low-involvement products – there is a definite homogeneity among people with similar
demographics – common perceptions of message, content and imagery of brands
Characteristics of Rural Consumer,
Age and life style
Personality and self concept
Consumer buying behavior models,
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Factors affecting Consumer Behavior,
1) Cultural factors
It is the most fundamental determinant of person‘s behavior.
Rural India lives in a society which is bound by culture.
As the child grows in rural environment he acquires a set of values, perceptions,
preferences, and behaviors, through family or other key institutions involved at
each stage of his life.
The time-tested true behavior exhibited by a collective group is therefore
determined by culture.
The degree of impact of culture will have on behavior depends on its intermingling with other
cultures, the influence of sub-cultures and the evolving of a hybrid culture.
2) Social factors
A consumer is influenced by newly emerging social factors that are emerging in the environment he
lives and works in.
These supplements the traditional reference groups, the family, friends, opinion leaders.
Emergence of new institutions in rural India, which have brought forward new reference points and
influencers in the form of professional workers such as Anganwadi workers, the auxiliary Nurse
Midwife, Self Help Groups or members of community based programmes etc.
3) Technological factors
Technology has an impact on the occupation and lifestyle of the rural people.
Occupation like dairy, poultry, farming and animal husbandry have become more productive
New technology has boosted the income of rural folks; it has reduced drudgery of manual
It has saved both time and energy and has made the framework acceptable even to the
4) Economic factors
The rural economic environment is characterized by the following features
Poverty 2.8% below poverty line per capita income 1200 per month.
Low income occupations
70% in agriculture and 21% in services.
Ex: Banking, women working opportunities, non-agriculture-linked industries
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The philosophy and decisions of the ruling party and the thinking of rival parties
greatly influence the fortunes of rural people.
The governments at the center and state levels are by and large helpful to rural
However the development plans so far the urban are benefitted more than rural.
A emphasis has been laid down on developmental programmes and few
highlights are as follows
a) Four fold increase in outlay
b) Programs for self employment
c) Empowerment for Panchayati Raj –developmental funds, compulsory representation of
Consumer Buying Decision Process,
Need recognition:-when the buyer recognizes a gap between his desired state and the
actual state buying process starts. Such recognition is caused by stimuli either internal or
external. At this stage the marketer should help consumers identify their current and
future problems and felt latent needs. To do this marketers have to research on consumer
problems and needs.
The consumers try to find information pertaining to their want satisfying products to
make the right choices. The amount of information required depends on
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Type of product-convenience shopping or specialty good
Nature of product-complex, high-tech or simple and easy to distinguish.
Personal –family, friends, neighbors'.
Commercial- advertising sales people displays
Public – TV, Radio, Internet
Experiential- handling, examining, using the product.
Evaluation of alternatives
The evaluation process may be done more carefully and logically in some cases for example
consumer durables. In case of goods which are consumed in one shot the evaluation may be
less. Evaluation is designing and applying suitable criteria
All the existing brands in the market make a total set. Through information search
consumer will become aware of some brands in the total set. Awareness set consist of
brands which the consumer, is aware of the brands, which meet initial buying criteria,
will be considered for further evaluation. They make up consideration set. Through
application of final criteria the consumer evolves his choice set. All brands are acceptable
to the consumer. However final choice will be made in favor of one brand. The factors
which influence final choice
Attitude of others
Unanticipated situational factors
Post purchase feelings
A buyer feels satisfied when the perceived product performance is close to his or her
expectations. If it exceeds expectation the customer is delighted. If it falls short of
expectation the customer is disappointed. He develops cognitive dissonance
Opinion Leadership Process,
Reference groups often include individuals known as opinion leaders who influence others.
1. A person whose word acts and actions informally influence the actions or attitude of other is
opinion leader. The influence is informal and usually verbal. Opinion leadership can be nonverbal
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based on observation of behavior. The leadership comes from social status, power or success in
2. Opinion leaders exert a greater influence in products and services that directly impact their
occupations and sources of livelihood, or significantly improve their daily living conditions rather
than like those of urban India who mostly influence consumers for a range of products that
reflects their lifestyles are status symbols or are items of conspicuous consumption.
Name examples of opinion leaders, and the promoted products/services, in each of the categories
Diffusion of Innovation,
The flow of technology from international boundaries to metros to cities to towns, to kasba to the
village to the rural consumer is long chain. This long chain ensures that rural consumer is less
exposed to and therefore less aware of products and services evolving regularly in the market.
Also the reach of communication achieve is through word of mouth especially large area is not
covered by the mass media. While external environment is limited rural consumer is also limited
in his ability or desire to adopt innovations due to low levels of literacy
Brand value, brand loyalty are terms and concepts long familiar to the urban consumer.
But the rural consumer is only now beginning to appreciate the relevance of brands and
their meeting wants and needs. He is faced with lot of choice as more brands appear on
rural retail shelves.
Some brands like Ghari, Parle-G, Lux, Fair and Lovely and Colgate were entrants to rural
markets and have gained high acceptance over a period of time.
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Concepts and process of Rural Market Segmentation Bases, Targeting,
Selecting and attracting markets involves three key decisions, viz., segmenting, targeting
Segmenting is the process of dividing or categorizing market into different groups based
on one or more variables.
Targeting is selecting the market segments, which can be served efficiently and
profitability. It is, deciding on market coverage strategies.
Positioning is a market attraction strategy, which involves placing the brand in the minds
of the customers in the target market.
BASES OF SEGMENTATON
There is no one way of segmenting the market. A marketer may look for one or more variables
viz., geographic, demographic, psychographic and behavioral, to distinguish and describe their
(1) Geographic Segmentation
Geographic segmentation is made based on variables like zones/regions, states, districts,
cities/town/ villages by size, density, climate and culture.
(a) Zones: The country is divided into four zones.
East : West Bengal, Assam
West : Maharashtra, Punjab, Haryana
North: Delhi, UP, Bihar. Himachal Pradesh
South: Tamil Nadu, Andhra Pradesh, Kerala, Karnataka.
(b) States, Districts and Villages: The country is divided into states on the basis of language. For the
convenience of administration each state is divided into districts.
c) Density: The density of population per square kilometer in the rural areas is
(d) Climate: The country is divided by climatic conditions as follows: Tropical• Rainy• Cold
(e) Culture: Media will be effective when its messages are fine-tuned to the culture of the people. As
such, the political division is immaterial for the various media. Ogilvy-Rural has divided the country into
56 Socio-Cultural Regions (SCR).
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2) Demographic Segmentation
Markets are divided into segments based on variables such as age, lifecycle, gender, family size, income,
occupation, education, religion and nationality.
Age: Under 6, 6—12, 13—19, 20—40, 41—60, 60+.
Life—cycle: Infants, children, teens, young adults, elders,seniors.
Marital status: Married—Unmarried.
Family size : 1—2, 3—4, 5+
Income : Rs.25, 000 and below, Rs.25, 001-50,000, Rs.50,001-75,000, Rs. 75,001, Rs. 1 lakh,
above Rs. 1 lakh.
Occupation : Farmer, agricultural labourer, artisan, non agricultural laborer, Business,
Professional employee, retired, student, unemployed
Education: Illiterate, literate, elementary school, high School, college, university.
Religion: Hindu, Muslim, Christian and Others.
3) Psychographic Segmentation
While geographic and demographic segmentations provide a physical view of the markets, the true
dynamics of purchase can be assessed and marketing offer can be designed only on the basis of
psychographics of the people. An example, to prove this point:
Market is divided into different segments based on three variables viz.
Life style, and
Behaviour of consumers is a better guide to segment the markets. To understand the behaviours the
following questions may be raised.
When do people buy? Occasions
Why do people buy? Benefits sought
Do they buy? Once? More? User status
How much do they buy? Usage rate
Do they repeat the buy? Loyalty status
Where do they buy? Place-retail outlet.
What do they buy? Products possessed
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Segmentation is the process of identifying and establishing alternative market segments. As a next step,
targeting involves evaluating the various segments and selecting how many and which ones to target. The
three aspects in targeting are evaluation, selection and coverage.
Evaluation of Segments
In evaluating market segments a company has to first identify the criteria for evaluation. The
following criteria may be applied to determine the attractiveness of segments.
(a) Profitability: The Company has to collect information on aspects required to conduct cost benefit
analysis and ascertain profitability of the segment. Relevant information includes:
· sales volumes
· Distribution costs
· Promotion costs
· Sales revenues
· Profit margins
(b) Attractiveness: Marketers should know whether they should design effective programmes to attract
and serve the market skills. Smaller companies or new companies may lack the skills, experience and
resources needed to serve the larger segments. Some segments may be less attractive when there is
already more competition.
(c) Growth rate: A segment‘s attractiveness depends not only on its current profitability but also future
prospects. The growth rate of the segment in terms of growth in population, rise in purchasing power, and
increase in preferences for the use of the products is to be considered
(d) Company objectives: Company should evaluate the segment opportunity with reference to their short
term and long term objectives. If a company‘s objective is to expand the sales, it has to go rural instead of
pulling rural consumers to the nearby town.
(e) Limitations: Finally, a company should examine whether the entry into the segment is acceptable to
the society and government. If its entry provokes unnecessary criticisms, the company may have to
struggle hard to explain its stand and safeguard its image
Selection of Segments
Segments may be ranked based on the scores obtained and be considered for selection. Those with high
scores will be accepted and others will be kept aside for future consideration
Coverage of Segments
Organization has three alternative coverage strategies to suit their segmentation approaches
(a) Undifferentiated strategy: Undifferentiated marketing strategy focuses on ―What is
common‖ among the consumers and tries to employ it in the design of its marketing offer. For
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instance, many toilet soap users prefer medicinal value, cosmetic strength, economy and
freshness feeling in toilet soap. Medimix offers all these and claims that, it is a beauty care
Ayurvedic family soap
(B)Differentiated strategy:- Differentiated marketing strategy investigates and identifies
differences between segments and tries to match the market offer to the desires and expectations
of each segment. The results of such exercise would be-Strong identification of the company in
the product category. More costs but higher sales. Hence more profits and more loyal consumers
Are companies using differentiated strategy within rural areas? Obviously, there are products,
which are exclusive to rural areas like fertilizers, tractors, seeds, etc. Following examples explain
the use of this strategy.
(C) Concentrated strategy:- Concentrated strategy directs all marketing efforts towards one
selected segment. It facilitates specialization in serving the segment and achieving higher level of
consumer satisfaction, delight and loyalty
Positioning is the act of finding a place in the minds of consumers and Locating the brand
therein. Companies have to plan positions that give their products the necessary
advantage in the target markets.
Positioning involves three tasks—
Identifying the differences of the offer vis-a-vis competitors‘ offers.
Selecting the differences that have greater competitive advantage.
Communicating such advantages effectively to the target audience.
The marketing offer may be differentiated along the following lines:
· Product · Services
· People, or image
(a) Product differentiation: Products can be differentiated on attributes like
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Shape, size, color, quality, composition, and performance Functional differentiations signify ease
in process and benefits of use. · Coke has 400 calories where as Diet coke has 1 calorie. Diet
Coke is for diabetics.
Coke has 400 calories where as Diet coke has 1 calorie. Diet Coke is for diabetics.
‗Singer‘ sewing machine stitches, ‗memory craft‘ can even scan designs.
Usha ‗fighter‘ is low priced fan whereas ‗senator‘ delivers air to the far corners of a
Cinthol Sandal promises twin benefits of flawless, blemish free complexion and
freedom from perspiration odor owing to TCC. (Trichlora carbanalide content)
Products come in different sizes, shapes and colours.
B).Services differentiation: Services may be differentiated in respect of delivery, installation
and maintenance. Long warranty periods, free service coupons, service at phone call distance, 24
hours service, emergency care, etc., are some examples.
(C) People: People, who come into contact with users, may quite often influence the decision of
consumers. In this era of relationship marketing, differentiation by people is worth considering.
Service organizations like hospital schools, banks, road transport and telecommunication, require
people who serve with smile and are efficient. Service organizations mainly emphasis on the
competencies of their people's
(d) Image: The image of a brand or company may win the consumer, even though the product is
very much similar to a competitive one. Image is built by advertisements, symbols, signs,
colours, logos, atmosphere of organization, and social activities. .
MODULE 3 PRODUCT AND DISTRIBUTION STRATEGIES FOR RURAL MARKETING
Distribution has been defined as how to get the product or service to the customer.
It is one of the four aspects of marketing. a distributor is the middleman between the
manufacturer and the retailer. After a product is manufactured by a factory, it is stored in the
distributors‘ warehouse. The product is then sold to customer.
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2) Channels of distribution
Old set up for distribution
2) Retailer 3) mobile van 4) weekly haats & bazar
5) melas & fair
Product concepts and Classification,
Products required in rural areas may be classified in different ways. In the process, let us whether there
are any significant differences between urban and rural product classifications.
(i) Based on tangibility goods are classified into two groups:
Tangible goods referred to as products
Intangible goods referred to as services
Based on the price and quality
Two types of goods are identified
Mass product (cheaper and economy goods)
Premium products (superior goods)
Cheaper goods are those, which are characterized by, low quality and low price. They
perform the core function but they lack certain attributes, which make theiruse less
comfortable, less pleasant and less desirable.
Shopping goods (clothing. furniture, home appliances, etc) Moderate Occasional
Complex.For example: Jewellery. silk sarees, cars, bungalows, high priced cosmetics,
toiletries and perfumes
Based on product development
Imitations (Novelties, Me-too goods, Copy Cats)
Innovations: Innovation is the key for survival in a highly competitive environment. A
company which innovates always has an edge over others.
1. Every organization will have to learn to innovate and this can now be organized in a
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2. Product mix of the companies is heavily skewed towards "me too" types of products and their
success largely depends upon the company's expertise in developing and using marketing
innovations thereby enabling them to get differential advantages for their "me too" products
against those of their competitors.
3. Implementation of marketing innovations on a national scale involves a lot of risk and
therefore it is desirable that the companies experiment these innovations in controlled areas and
verify their results before they are finally adopted on a national scale
Imitations: Imitations may result in two types of goods depending upon the purpose
commitment, and competence of imitator. A poor imitator will end up in producing deceptive
spurious, fake, copy cat products. He dupes the gullible customer by offering products having
close resemblance with the original. In quality, it is a poor cousin to the original. On the other
hand, the competent imitator may even produce an improved version of the original product
Product mix decisions,
Product mix is a set of all product lines and items offered by the company
Horizon one Horizon two Horizon three
Soaps and Detergents Popular foods Direct-to-home
Beverages Culinary products Value-added foods
Oil and Dairy fats Personal products Bread and biscuits
Specialty chemicals Ice-creams
Animal feeds Home care products
Profitable growth Top line growth Development and
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Product line is a group of closely related products priced within a range and distributed
the -some channels to the same customer groups. It has two dimensions: Length and
Length - It refers to the total number of items in the line.
Depth - It is the total number of variants to product items.
Length of Product line: How long the product line should be? It is like asking, ‗how long re
legs should be? The reply to this question is: ‗long enough to reach the ground.‘ Similarly,
product- line length should be evaluated in the light of company profitability. If profitability
can be increased by dropping items, the existing length is more than necessary. If
profitability can be increase: ‗adding items, the existing length is short. There is a need to
work out optimal length. It should be neither too short nor too. Arguments in favor of short
and long lines are summarized below.
Rural Product Categories,
The NCAER has categorized the consumer goods into three categories.
Category I- Products are of immediate use to the family. E.g.- bicycles, fans etc.
Category II- Products are a combination of entertainment products and products that ease
household work strain. E.g. - mixer grinder, cassette player etc.
Category III- Here products are a combination of means to supplement income, easy household
working, and source of entertainment. E.g. - washing machine, motorcycle, etc.
Branding in Rural Markets,
Brand Concept: Brand is a name, term, sign, symbol, design or colouring or a combination of
them, which help identify seller‘s products and differentiate them from those of competitors.
Branding- The need: Arguments for
1. Identity helps processing: Brand name gives identity to a company’s product. It helps
recognition and processing easy for the company, distributors and consumers. It thus saves costs
and time in manufacturing, warehousing, transporting and order processing for the company in
selling. Distributors can reap similar benefits in handling the products and selling them.
Consumers find it easy to spot and select the product.
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2. Image gives competitive advantage: Brands earn recognition and reputation by their
performance. The image helps the existing products in the line as well as new products. It gives
commanding position to the marketer to charge higher prices than competitors and to convince
distributors to carry the products.
3. Personality convinces consumers: Brands in course of their association with consumers
develop personality. Advertisers take this opportunity to match personality of brands with that of
prospects. It helps build brand loyalty-a lasting companionship, a strong bondage between a
brand and consumer.
4. Equity enhances value: Brands by their popularity not only enhance their value-in-use but
also value-in-exchange. A company that has built brand image over a period of time by its
incessant innovative effort gets a reward for example, premium price offer for its brand from a
competitor or interested entrepreneur willing to own it.
1. Investment-returns doubtful: Brand building is not an easy task. It requires a great deal
of long range investment. It is to be supported by R & D investment, advertising budget and
dealer discounts. However, there is no assurance of returns. Many brands have failed. Many are
struggling hard despite the good images they have built over a time.
2. Image and personality an emotional nonsense: All the talk about brand personality and
image are psychological fantasies created by self-seeking marketers. No product sells on brand
name. Only when it fulfills a need, it stays and succeeds in the market. The image of a product or
brand cannot help other brands. Instances of such failures are many. Brand personality issues are
more academic rhetoric. It is an overstretched concept with little practical value. When a person
buys the product, the overriding, considerations are cost (price and operational economics) and
functional benefits. It is true with a vast majority of consumers.
3. Brand equity—sensible but not new: Brand equity concept replaces the old term good
will‘. It is not, something new to be argued in favor of a ‗brand‘. It is outcome of business built
over a period. Why marketers glorify branding in this context? It is only an identification factor
that helps marketers promote distinctiveness
21. SATYA RURAL MARKETING Page 21
Spurious products are the copy of established brand name at a cost of few thousand
rupees and sold it in the rural market. This duplication takes place in all sectors and
especially in FMCG, food items and medicines.
Counterfeiting is a kind of duplication where the fake products bear the identical name
of the original product, its packaging, graphics, color pattern, design and even same
name and address as the genuine manufacturer. A pass-off product is one that comes
with a few minor changes from the original product. The slight changes are made to
avoid legal problems.
Head and Shower – Head and Shoulder
Pantane – Pantene, Sunmilk – Sunsilk, Lifebuoy – Loveboy, Climik Plus – Clinic Plus
Parla G – Parle G, Vikas – Vicks
Product Life Cycle
22. SATYA RURAL MARKETING Page 22
– Advertising and promotion campaigns
– Target campaign at specific audience?
– Monitor initial sales
– Maximise publicity
– High cost/low sales
– Length of time – type of product
– Increased consumer awareness
– Sales rise
– Revenues increase
– Costs - fixed costs/variable costs, profits may be made
– Monitor market – competitor‘s reaction?
– Sales reach peak
– Cost of supporting the product declines
– Ratio of revenue to cost high
– Sales growth likely to be low
– Market share may be high
– Competition likely to be greater
– Price elasticity of demand?
• New entrants likely to mean market is ‗flooded‘
• Necessity to develop new strategies becomes more pressing:
– Searching out new markets:
• Linking to changing fashions
• Seeking new or exploiting market segments
• Linking to joint ventures – media/music, etc
– Developing new uses
– Focus on adapting the product
– Re-packaging or format
– Improving the standard or quality
– Developing the product range
23. SATYA RURAL MARKETING Page 23
• Decline and Withdrawal:
– Product outlives/outgrows its usefulness/value
– Fashions change
– Technology changes
– Sales decline
– Cost of supporting starts to rise too far
– Decision to withdraw may be dependent on availability of new products and
whether fashions/trends will come around again?
1. Low Cost Products Rural customer is price conscious manly because of low income. The
price can be kept low, by low unit packaging. This is a common strategy adopted by many
companies marketing in rural areas. Example –same as of small unit packs.
2. Application of Value Engineering The aim of value engineering is to reduce the value of
the product so that a larger segment of population can afford it to buy. Example: Soya protein
can be used instead of milk protein, nutrition content of both is same but the soya protein is
cheaper then milk protein.
3. Refill / Reusable Packaging Refill packs benefits the rural consumers in terms of price and
also the packaging material should be reusable in rural areas. Example– Many farmers demand
for fertilizers packed in LDPE or HDPE sacks. They feel that they get sacks free of cost by
4. Discounts In order to motivate the rural retailer to sell more, a discount of 5-10% is given on
the MRP particularly in case of FMC goods.
5. Promotional Schemes Rural consumer normally buys household articles during festivals like
Eid, Diwali, and Pongola etc. special promotional schemes could be introduced on such
occasions like exchange offers, special discounts, etc.
RURAL PRICING OBJECTIVES
1. Deeper penetration of market: Basically rural markets are adopted for deeper penetration and
expansion because of its size. Hence the pricing objectives are different for rural and urban
markets. E.g. VIM washing bar is Rs. 15 (400 gm) in the urban market but it is offered for Rs. 4
(200 gm) in rural markets.
2. Long run profit maximization: A company enters in rural market should wait for success in long
run. Hence penetration-pricing strategy is the best option.
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3. Recover distribution cost: The pricing objective of a rural marketer should recover the costs
involved in distribution along with production cost and dealer margin.
4. Competing pricing: Rural marketer should study the pricing strategy of its competitors and
accordingly fix its prices.
5. Increased sales and market share: The pricing objectives should be such that it boosts the sales
in rural markets. E.g. Anchor white toothpaste launched with much lower price than the leading
brands and captured the market.
Quality Conscious Consumers– They are very rich and are mainly concerned with quality of
the products and services
Pricing Methods: (A) Discriminatory Pricing – charging different customer groups differently
(B) Skimming pricing – Charging high prices at initial level, E.g. P&G launched Tide detergent
at high price and then reduced it lower than other brands
Value Conscious Customers – They are of middle class and are mainly concerned with
functional benefits and value for money
Pricing Methods: (A) Penetration Pricing – Charging low prices at initial level then increases
gradually when brand name has been established E.g. Maggie noodles, Vicks, Rin detergent. (B)
Value Pricing – Setting the price reasonably lower than the competitor‘s price.
Price Conscious Customers– They are climbers, aspirants and destitute. They watch for
promotional offers and purchase cheap or fake products.
Pricing Methods (A) Psychological Pricing – Psychological pricing is one that ends in an odd
number e.g. Rs. 99.95. It conveys two notions to consumer that there is a discount or bargain and
it belongs to lower price category. (B) Promotional Pricing – It includes mini packs, price-off,
special discounts, credit facilities etc.
Historically, the rural distribution system has included wholesalers, retailers, mobile traders,
vans and weekly haats.
In the feedermarkets, retailers act as wholesalers and vice versa to sell to small retailers who
come from surrounding villages.
25. SATYA RURAL MARKETING Page 25
Some town retailers send their salesmen to villages to book orders and supply goods to these
Distribution Channels in Rural India
Use of cooperative societies– There are over 4 lakh co-operatives operating for different
purposes like marketing, credit and dairy cooperative in rural areas. For e.g. Farmers Service Co-
operative Societies function like a mini super market for rural consumers where they sell soaps,
detergents, cloth, seeds, fertilizers, pesticides etc. at economical and reasonable prices. Since
these societies have necessary infrastructure for storage and distribution, companies may contact
these societies to sell their products
Use of Public Distribution System – In India, the Public Distribution System is well organized.
There are about 4.37 lakh fair price shops operating in the country. Since the PDS outlets cover
the entire country they can be utilized for marketing consumable items and low value durables in
Utilization of Petrol Pumps – These petrol pumps, in addition to petrol/diesel, oil and lubricants
are also selling consumables such as soaps, detergents, biscuits etc, particularly on the highways.
These bunks may also think of stocking certain consumable agricultural inputs like fertilizers,
seeds and pesticides
Challenges in rural Distribution
Large number of small markets Dispersed population and trade Poor road connectivity
Multiple tiers Poor availability of suitable dealers Low density of shops per village
Inadequate banks and credit facilities Poor storage system Low investment capacity of
retailers Poor visibility and display of products on rural shop shelves.
FORMAL MEDIA :
1. Local language newspapers: eg: loksatta in Maharashtra.
2. Television: eg: DD national
3. Radio: eg : regional radio
OTHER INFORMAL MEDIA :
1. Farm to Farm/House to House
2. Group meeting : eg: MRF tyres
3. Opinion leaders: eg: asian paints(house painting)
4. Melas: eg: asian paints(horn painting)
26. SATYA RURAL MARKETING Page 26
5. Folk dances: eg: Thums-up sponsors Lavnis
Rural Communication Mix,
What is Communication Mix ―Communication Mix‖ is aimed at not only creating awareness about the
product/service but also at persuading the customer to use and experience it.
Communication Mix is also called as ―Promotion Mix‖
The Marketing Communications Mix is the specific mix of advertising, personal selling, sales
promotion, public relations, and direct marketing a company uses to pursue its advertising and
Advertising - Any paid form of no personal presentation and promotion of ideas, goods, or
services by an identified sponsor.
Personal selling - Personal presentation by the firm‘s sales force for the purpose of making sales
and building customer relationships
Sales promotion - Short-term incentives to encourage the purchase or sale of a product or
Public relations - Building good relationships with the company‘s various publics by obtaining
favorable publicity, building up a good & quot; corporate image & quot;, and handling or
heading off unfavorable rumors, stories, and events.
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Direct marketing - Direct communications with carefully targeted individual consumers to
obtain an immediate response and cultivate lasting customer relationships
Rural Media and Creative strategies,
Personal Selling Personal selling is where businesses use people (the ―sales force‖) to sell the
product after meeting face-to-face with the customer. The sellers promote the product through
their attitude, appearance and specialist product knowledge. They aim to inform and encourage
the customer to buy, or at least trial the product. A good example of personal selling is found in
department stores on the perfume and cosmetic counters. A customer can get advice on how to
apply the product and can try different products. Products with relatively high prices, or with
complex features, are often sold using personal selling. Great examples include cars, office
equipment (e.g. photocopiers) and many products that are sold by businesses to other industrial
Personal selling occurs where an individual salesperson sells a product, service or solution to a client.
Salespeople match the benefits of their offering to the specific needs of a client.
Today, personal selling involves the development of longstanding client relationships.
28. SATYA RURAL MARKETING Page 28
According to National Commission on Agriculture ―Agricultural marketing is a process which
starts with a decision to produce a farm commodity, involves all aspects of market structure and
includes pre and post harvest operations like assembling, grading, storage, transpiration and
Trends in Agricultural Marketing,
It might be amusing to think that things as mundane and commonplace as fruits and vegetables, cereals
and marine produce need to be marketed. The agricultural produce sector has been one of the most
important components of the Indian economy. The increasing trend of agricultural production has
brought, in its wake, new challenges in terms of finding market for the marketed surplus. There is also a
need to respond to the challenges and opportunities, that the global markets offer in the liberalized trade
regime. To benefit the farming community from the new global market access opportunities, the internal
agricultural marketing system in the country needs to be integrated and strengthened. Government of
India is striving to prepare the Indian agricultural markets and marketing environment so as to provide
maximum benefit to the producers and in turn, compete with the global markets. Agriculture and
agricultural marketing need to be re-oriented to respond to the market needs and consumer preferences.
Agricultural marketing reforms and creation of marketing infrastructure has been initiated to achieve the
Defects in Agricultural Marketing,
Following are the main problems of agricultural marketing:
1. Lack of Transportation Facility:-It is the main obstacle in the way of efficient marketing. The rural
areas are not linked with the market by roads. A lot of agricultural product is wasted due to transport
2. Poor Quality of Product:-Farmer is not using the improved seeds and fertilizers so quality of
production is very poor and its prices are low in the market.
3. Role of Middleman:-The middleman also takes a big share of farmer's income without doing anything.
A poor farmer borrows the money from them and sells his product at lower rates.
4. Lack of Grading:-In case of agricultural commodities the mixing of good and bad products is very
common in developing countries like India and Pakistan. There is no proper method of grading these
crops. It creates a problem of marketing inside and outside the country.
5. Lack of Credit Facilities:-The credit facilities are not adequate to meet the farmer's requirement. Poor
farmer is borrows the money from private money lenders at tied conditions.
29. SATYA RURAL MARKETING Page 29
6. Problems of Produce Collection:-The collection of produce from small farmers is very expensive and
a difficult process. It is a great problem for the efficient marketing.
7. Lack of Storage Facility:-The storage facilities are required by the producers as well as by the
government. The farmers need storage to sell their product at a suitable time. The government needs
stores for keeping reserve stocks. Due to lack of storage facilities a lot of product is damaged on railway
stations and in open air.
8. Weight and Measures:-In various parts of weight and measures are not same. So a farmer suffers a
loss at the time of buying selling of his product.
9. Market News:-Most of farmers in underdeveloped countries are uneducated and they know nothing
about the market conditions. So farmer is unable to achieve the real price of his product.
The following Agricultural Products are not, at present (2008), traded on any exchange, and,
therefore, no spot or futures market where producers, consumers and traders can fix an official or
settlement price exists for these minerals. Generally the only price information that is available is
based on information from producers, consumers and traders.
Fresh Flowers, Cut Flowers, Melons, Lemons, Tung Oil, Gum Arabic, Pine Oil, Xanthan, Milk,
Tomatoes, Grapes, Eggs, Potatoes, and Figs.
Classification of Markets,
1] On the Basis of Location
1. Village Markets: Located in small villages
2. Primary Wholesale Markets: Held weekly or bi-weekly at different villages and locally called as
‗Shandi‘ or ‗Haat‘.
3. Secondary Wholesale Markets: Located at taluka or district headquarters and towns and known
as ‗Mandi‘ or ‗Gunj‘
4. Terminal Markets: Located in metro cities where buyers and sellers come from different regions
2] On the Basis of Area Coverage
1. Local Markets: Buyers and sellers are from same village or nearby villages.
2. Regional Markets: Buyers and sellers come from large areas.
30. SATYA RURAL MARKETING Page 30
3. National Markets: Buyers and sellers are from whole India.
4. World Markets: Buyers and sellers are from whole world.
3] Time Span
1. Short Period Markets: Perishable products such as fish, milk etc. are traded.
2. Long Period Markets: less perishable products such as oilseed food grains are traded.
3. Secular Markets: Deal in manufactured goods, which are permanent in nature.
4] Volume of Transaction
1. Wholesale Markets: Goods are bought and sold in large quantities.
2. Retail Markets: Goods are bought and sold according to the consumer’s requirement.
5] Nature of Transaction
1. Spot or Cash Market: Money is realized immediately after the sale.
2. Forward Market: Process of purchase and sale is done but goods and money are exchanged
at some specific date.
6] Number of Commodities
1. General Market: All types of commodities are bought and sold
2. Specialized Market: Only one or two commodities are sold, e.g. cloth market.
7] Nature of Commodities
1. Service of Market: Deals in service such as professional consultancy
2. Capital Market: Deals in bonds, shares and securities.
3. Commodity Market: Deals on goods and raw materials such as cotton, grains.
8] Degree of Competition
1. Perfect Market: Has large number of buyers and sellers.
2. Imperfect Market: Has monopolistic competition
9] Public Interventions
1. Regulated Market: Business is carried as per rules and regulations framed by statutory
2. Unregulated Market: Traders frame their own rules for conduct of business and run the market.
31. SATYA RURAL MARKETING Page 31
Regulated Markets-Role and Problems,
Definition ―A market regulated by government appointed bodies often to control charges and
ensure that fair services are offered to customers‖. For example, service provision such as gas,
water, and electricity supply are often monitored by the government to prevent monopoly and
ensure competition that will ultimately guarantee quality service..
Objectives of Regulated Market
1. To prevent development of farmers.
2. To provide ethical environment for proper trade practices by prohibiting malpractice.
3. To promote orderly marketing of agricultural produce.
4. To provide incentive prices to farmers to induce them to increase production.
5. To ensure that farmers get better prices for their produce and consumer get goods at
6. To avoid wide fluctuations in prices for agricultural produce.
Features of Regulated Markets
1. Method of Sale: In a regular market the sale takes place either by open auction or by closed
tender. These methods of sale ensure a fair and competitive price and prevent the cheating of
2. Weighing of Produce: Weighing of produce is done by a licensed weighman with standard
weights and scale platforms.
3. Grading of Produce: The produce in regulated market is expected to be sold after grading but
only 13 regulated markets have grading facilities.
4. Market Charges: In regulated market, the unwanted market charges such as dharmada,
muddat, dhalta and kanda were abolished.
5. Payment of Value: In regulated market it is obligatory to make prompt payment. The muddat
system no more exists.
6. Licensing of Market Functionaries: All market functionaries even Hamaal is working in
regulated market are have to obtain license from market committee.
7. Settlement of Disputes: Disputes arises between sellers, producers and traders are solved by
sub-committee of market committee.
8. * Market Committee: Market committee consists of representatives of farmers, traders, co-
operative marketing societies, banks, panchyat and government officials. Its important functions
1. Manage the market yards in the interest of farmers and traders.
32. SATYA RURAL MARKETING Page 32
2. Fix market charges for various functions and services.
3. Provide facilities for grading and standardisation.
4. Take steps for prevention of adulteration of the agricultural products.
5. Issue, renew or withdraw licenses of market functionaries.
6. Realise market fees either from the buyer or seller.
7. Control and regulate the behaviour of traders.
Defects of Regulated Markets
1. Not Accessible to All Farmers: Most of the farmers are not aware of the benefits of the
regulated markets and also not accessible to the farmers in far villages.
2. Presence of Commission Agents: Presence of commission agents and their heavy charges
are unfavorable to the regulated markets.
3. Payment System: Farmers are not given prompt payment by traders; due to this they cannot
meet their working capital requirements.
4. Auction System: Auction system has a number of defects for which the farmer has to bear the
number of losses.
5. Improper of Representation: Small and marginal farmers are dined to serve on the committee
and also there are lots of political interference in the committees.
6. Lack of Incentives: Incentives provided are not sufficient also the illiterate farmers are not ware
of the available incentives and subsidies.
7. Defective Transactions: The business of regulated market is confined only to a few fixed
hours. The illiterate farmers find it difficult to find out the exact dates and times of transaction.
Advice on production planning:- careful selection of the crop from marketability viewpoint-
internal or export
Marketing information:- price and arrivals, forecasting of market trends, demand of other
markets, facilities available in the target markets, quality requirements, market fees etc
Securing markets for the farmers:-Awareness about regulated market laws and reforms,
Information regarding procurement by Govt. agencies, contract farming arrangement for cash
crops with wholesalers, processors etc.
Advice on improved marketing practices:- packaging, appropriate storing methods,
standardization and grading and other post harvest management practices such as maintenance of
quality, awareness about post-harvest losses etc.
33. SATYA RURAL MARKETING Page 33
Advice on establishing and operating markets:-Farmers groups to set up and run their own
markets within framework of rules
Processing and value addition:- Farmers to be educated about value addition through primary
Group action:- Promotion of informal groups and Self Help Groups(SHGs)
Marketing Credit:- Educating farmers about different schemes of marketing credits, Advice on
warehousing with pledge finance scheme
Problem solving methods: micro-level
Marketing extension for export market: WTO implications, Codex, HACCP, Euro gap
standards, Awareness on ill effects of pesticide/insecticides residue etc
Co-operative Marketing Societies: They have been established under the Integrated Rural Credit and
Marketing Scheme initiated under the second FYP.
The main function of these societies is to sell the product of their members. They also undertake
outright purchases, provide storage facilities for storage and grading and thus save cultivators
Methods of Sales of agricultural products-
In this method, the buyer or his broker and commission agents join hands under the cover
of cloth usually a towel or a dhoti or front portion of kurta or shirt. The price is settled by
pressing the fingers. The negotiation is go on in this secret manner till they are called off
due to failure in arriving at as on agreed price or a price is settled.
Ample scope for malpractices against the sellers because of secrete negotiations
An initiative by ITC, e-Choupal aims to empower farmers with up-to-date agricultural and
marketing information through access to internet and computers. The campaign was launched in
2000 and targets to empower 10 million farmers by 2012.
e-Choupal delivers real-time information and customized knowledge to improve the
farmer's decision-making ability, thereby better aligning farm output to market demands;
securing better quality, productivity and improved price discovery.
34. SATYA RURAL MARKETING Page 34
Is an initiative of ITC Limited, a large multi business conglomerate in India, to link directly with
rural farmers via the Internet for procurement of agricultural and aquaculture products like
soybeans, wheat, coffee, and prawns.
The programme involves the installation of computers with Internet access in rural areas of India
to offer farmers up-to-date marketing and agricultural information
ITC training farmers to manage the Internet kiosk and one of them become the e-Choupal
Sanchalak in the village.
Today, the community of e-farmers with access to daily prices of a variety of crops in India and
abroad – this helps us to get the best price.
We can also find out about many other important things – weather forecasts, the latest farming
techniques, crop insurance, etc.
e-Choupal has not only changed the quality of farmer lives, but their entire outlook.
E-Choupal – benefits
elimination of non value added activities
differentiated product through identity preserved supply chains
value added products traceable to farm practices
e-market place for spot transactions and support services to futures exchange
The prospective buyers gather around separate heaps of grains and announce their bids loudly.
When the bids have reached their highest, the auctioneer who is generally a commission agent, in
consultation with the seller sells the produce to the highest bidder.
Better than the Hatha method
Commodity market is a place where trading in commodities takes place. These are the markets
where raw and primary products are exchanged.
These raw commodities are traded on regulated commodity exchanges, in which they are bought
and sold in standardized contracts. It is similar to an equity market, but instead of buying or
selling shares one buys or sells commodities.
An entity, usually an incorporated non-profit association that determines and enforces rules and
procedures for the trading of commodities and related investments, such as commodity futures.
35. SATYA RURAL MARKETING Page 35
Commodities exchange also refers to the physical center where trading takes place
18 existing commodity exchanges in India offering domestic contracts in 8 commodities and 2
exchanges that have permission to conduct trading in international (USD denominated) contracts.
The two most important commodity exchanges in India are;
1)Multi-Commodity Exchange of India Limited (MCX),
2) National Multi-Commodity & Derivatives Exchange of India Limited (NCDEX)
Spot trading is any transaction where delivery either takes place immediately, or if there is a minimum
lag, due to technical constraints, between the trade and delivery. Commodities constitute the only spot
markets which have existed nearly throughout the history of humankind.
A forward contract is an agreement between two parties (counterparties) for the delivery of a
physical asset (e.g., oil or gold) at a certain time in the future for a certain price that is fixed at the
inception of the contract.
Forward contracts can be customized to accommodate any commodity, in any quantity, for
delivery at any point in the future, at any place.
Role of Warehousing,
Warehousing plays a very vital role in promoting agriculture marketing, rural banking and
financing and ensuring Food Security in the county. It enables the markets to ease the pressure
during harvest season and to maintain uninterrupted supply of agricultural commodities during
off season. Hence, it solves the problems of glut and scarcity, which are the usual problems in
agricultural marketing. Though warehousing is an independent economic activity, yet is closely
linked with production, consumption and trade. Development of agro processing agricultural
marketing needs a strong warehousing system. Warehousing is the most important auxiliary
service for development of trade and commerce.
Agro Processing Sector in India,
36. SATYA RURAL MARKETING Page 36
Food processing sector
The Indian food processing industry accounts for 32% of the country‘s total food market. Estimated to be
worth USD 121 billion, it is one of the largest industries in India, and is ranked fifth in terms of
production, consumption and exports. The industry employs 13 million people directly and 35 million
people indirectly. It accounts for 14% of manufacturing GDP, nearly 13% of India‘s exports and 6% of
total industrial investment. Currently growing at more than 10% per annum, it is expected to touch USD
194 billion by 2015.
Policy and Promotion
The Government of India allows 100% FDI under the automatic route in the food processing sector, in
agri-products, milk and milk products, and marine and meat products, except in the case of the following:
Proposals that require an industrial license and cases where foreign investment exceeds 24% equity in
units that manufacture items reserved for small-scale industries.
Proposals in which the foreign collaborator has a previous venture or tie-up in India as on January 12,
Automatic approvals are provided for foreign investment and technology transfer in most cases. Units
based on agri-products that are 100% export-oriented are allowed to sell up to 50% in the domestic
market. There is no import duty on capital goods and raw material for 100% export-oriented units.
Earnings from export activities are exempt from corporate tax. Additionally, there is 100% tax exemption
for five years, followed by 25% tax exemption for the next five years, for new agro-processing industries.
MODULE 5 INNOVATIONS IN RURAL MARKETING
Role of Innovations in Rural Markets Nature,
Importance of ICT in Rural Distribution
Information and communication technologies (ICTs) generally refer to an expanding Assembly
of technologies that are used to handle information and aid communication.
The importance of ICTs in development process was long recognized and access to ICTs was
even made one of the targets of the Millennium Development Goal which emphasizes the
benefits of new technologies, especially ICTs in the fight against poverty. ―With 10 percent
increase in high-speed internet connections, economic growth increases by 1.3 percent‖ observed
the recent World Bank report on Information and Communication for Development (World
37. SATYA RURAL MARKETING Page 37
Bank, 2009). The same report also observed ―connectivity – whether the Internet or mobile
phones -- is increasingly bringing market information, financial services, and health services to
remote areas, and is helping to change people's lives in unprecedented ways‖.
Information and communication technologies (ICTs), and particularly the Internet, are
transforming broad areas where information is a central activity, including rural development
and food security. The transformation is based on the opportunities for individuals and
communities to be information producers as well as consumers and which builds on and
integrates the capacities of other media (e.g. radio and television). This enables increasingly low-
cost access and distribution of information and also facilitates interactive participation in the
creation and use of information. In this process there is a priority role for generating and
distributing public information. This in turn is transforming organizations everywhere who
create, manage and distribute information.
ICT Initiatives in Rural Markets,
Emergence of Organized Retailing