DR Dapke 1 Full Paper

Grip The Standard Research ISSN 2278 8123
International Referred Multidisciplinary Online Research Journal

Issue VI,Vol.I,Dec.2012
Rural Marketing Environment in India
Dr.Dapke Vilas G.
Shri A.B.College
Deogaon (R.)
Mob: 9923794275
Introduction :-
Over 76 % of Indias population dwells in six lacks villages. The
rural market of India started showing its inclination towards new
technology in the 1960. The 70s and 80s witnessed its steady
development. And there are crystal clear indications that the 21 st
century is going to see its full blossoming. A survey conducted by the
National Council tor applied Economic Research (NCAER), Indias
premier economic research entity, recently confirmed that rise in rural
income is keeping pace with urban incomes. Increase the purchasing
power of the rural customers. Over 50 % of the National Income income
is generated in rural India and there are opportunities to market latest
goods and gadgets in rural areas and also market agricultural products in
urban areas.
Rural India :-
It is ironic that the census of India defines rural in the context of
all that is not urban considering that there were only villages before the
development of cities and towns. In fact, a mayor part of the country
side still remains steeped in a lifestyle that is rural largely dependent an
agriculture and allied activities with almost three - fourths of the country
living in 6,00,000 villages.
1
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Evolution of Rural Marketing :-

Before the evolution of an urban market for marketing was
undertaken, there seemed little need to differentiate between needs and
wants. With the emergence of urban markets, the very context with in
which marketing Gad to work got redefined. Modern marketing has
involved around meeting demand in urban markets. The urban approach
seems inadequate to understand and address the needs of rural India.
There is a definite needs for a separate set of marketing strategies to tap
rural markets and a need to redefine strategy based on a whole new set
of parameters. A totally different paradigm is required to satisfy a
market that is more a mindset, rather than a geographical and demo
graphic reality.
The term rural marketing which was earlier used as an umbrella
term to rater to all commercial transactions of rural people, acquired a
spate meaning of great significance.
The potential of rural markets was not visible. The existing rural
markets for these products were not sizeable enough to attract
the attention of urban marketers.
Rural markets were not markets were not very accessible. The
poor infrastructure of widely scattered villages made then
unreachable and expensive in terms of logistics.
The growth of urban markets during this period kept marketers
busy.
Consequently, rural markets were conveniently ignored, as they
were seen as extensions of the urban markets. in the 1990
century
2
However, from the 1980s Indias Industrial Sector gained in

strength and maturity. A new service sector emerged, signifying the
transition of an agricultural society into an industrial one. Mean while,
the increased plan outlay of central and state. Governments for rural
development process by introducing competition into the markets. All
these factors resulted in the growth of rural markets for house hold
consumables and durables.
Rural marketing represented the emergent distinct activity of

attracting and servicing rural markets, to fulfill the needs and wants of
persons, households and occupations of rural people.
Rationalization of study :-
In India the environment of rural marketing and covered the

various types of environment i.e. Demographic environment,
educational, household & family, structures physical, economics, social
and cultural, environment in the rural marketing.
The phenomenon of rural marketing environment is the progress

of marketing strategy in the 21th century in the rural India. The rural
India are confirmed the various new trends of marketing are adopted.
And the registered of rural areas name in the development of nation.
Through the technology, skill of market, structures of market.
Objective of study :-
The study planned with the following objectives.

3
To study established facts and figures defines the word rural

thought the rural marketing environment.
To study demographic, physical, economic social, cultural. Political
and technological aspect to provide a holistic view of the
marketing environment.
Research Methodology :-
The present research is mainly exploratory and descriptive nature.

The study is based on secondary data was collected from various
government and non governments department agencies, libraries,
websites and publications and survey reports.
Defining Rural Marketing :-
The study of rural marketing comprises all the operations

and the agencies conducting them, involved in the movement of farms
to farm produced food, raw materials and their derivatives, such as
textiles, from the farms to the final consumers and the effects of such
operations on producers, middlemen and consumers.
Rural Market structure
Demographic Environment
Though the rural proportion has come down moderately over the
years, there has been a considerable increase in absolute numbers of
people living in rural areas.
4
1971 1981 1991 2001

Total population (million) 548.2 683.3 848.3 1026.9
Rural population (million) 524.0 628.8 741.6
Rural population Total 80.1 76.7 74.3 72.2
population(%)
Decadal Variation - 19.8 16.7 15.2
Source : census 2001
At the Rural proportion in population does not mean growing

markets unless these markets have sufficient purchasing power.
Nonetheless, companies that carefully analyse their markets can find
the right opportunities. With the increased working population, the
purchasing power of the rural populace has gone up from 40 % in 1991
to 42 % in 2001.
For marketers, the largest age group shapes the marketing
environment. In the case of rural, it is school going children and young
adults who define the consumption patterns of consumables and life
style products.
Distribution of Population by Age Groups (2001)
Age Groups Rural Urban
0-4 11.5 8.9
5-14 25.7 21.8
15-19 9.5 10.6
20-34 23.1 26.8
35-54 19.7 22.5
55+ 10.5 9.4
Total 100 100
5
Young adults, that is the group between 20 and 35 years of age,

account for almost one fourth of Indias consumption base. The
potential for marketers in the rural sector can be assessed by the fact
that 48 % of the rural population is below the age of 20.
Education and the level of demand
Rural 1981 1991 2001

literacy
% of 36 45 59
literates
Source : census
Lower levels of education in the rural sector (approximately 60 %

of the population lies below the middle education bracket ) lead to little
or low demand for a range of products such as literary books,
magazines, notebooks, pens/pencils, drawing instruments, calculators,
digital diaries computers, etc.
Education in India
Education level Rural Urban
Below Primary 31.7 18
Primary but below Middle 29.5 22.9
Middle but below 16.9 16.3
Matriculation
Matriculation but below 18.4 29.6
Graduate
Graduate and above 3.5 13.2
Source : Census of India,2001
6
But change is taking place because the literacy rate in the rural
sector has risen 23 % over the last twenty years. This has contributed
significantly to an improvement in the socio-economic status of the
people. With this growth, the demand for educational produces has
increased and rural consumers have become more mature in purchase
decisions.
Physical Environment
Rural and Urban life : Distinguishing features
Inhabited villages classified by population size, 1991and 2001
Villages in size group Villages in size group

(1991) (2001)
Number % Number %
Less then 200 103,952 17.9 92,541 15.6
201-500 141,143 24.3 127,054 21.4
501-1000 144,998 25.0 144,817 24.4
1001-2000 114,395 19.7 129,662 21.9
2001-5000 62,195 10.8 80,313 13.5
More than 13,376 2.3 18,758 3.2
5000
Total 580,779 100.00 593,154 100.0
Source : Census of India,1991 and 2001
7
The table of inhabited village provides very rich insights to a marketer:
Villages of less than 500 population generally do not have

any shop, but the number of such villages has decreased by
5 % over the last ten years, 25,000 villages in less than 500
pop category have upgraded to the 500+pop. Category.
Villages in the 2,000+pop strata are the most prosperous.
The number of such villages is increasing very rapidly. Over
the last ten years, almost 23,000 villages have been
upgraded to the 2,000 + pop. Category. These villages have
around 16 shops.
As per the 2001 Census these 17 % villages in the 2,000
+pop. Categories account for50 % of the rural population
and 60 % of rural wealth. A marketer going rural should
target this category first.
Economic environment
Over the last ten years there has been a shift in the distribution of
households from lower-income to higher-income groups. The higher-
income class in rural has grown six times. The middle and upper-middle
classes constitute 14.3 % in 1998-99 against 8.3 % in 1989-90.
8
Distribution of Rural Households by income
Annual Income Income 1989-90 1998-99

(Rs.) Class (% HHs) (%HHs)
At 1998-99 Prices
<=35,000 Low 67.3 47.9
35,001-70,000 Low Middle 23.9 34.8
70,001-1,05,000 Upper Middle 7.1 10.4
1,05,001-1,40,000 High 1.2 3.9
>1,40,000 0.5 3.0
100.0 100.0
Source : NCAER
A transition that marketing companies in white goods and

durables will find extremely interesting as a sign of growth potential.
Annul Per Capita Income, 1999-2000 (in Rs.)
All India Highest Lowest

Urban 19,407 24,509(Chandigarh) 12,257(Uttar
Pradesh)
Rural 9,481 27.256(Chandigarh) 5,704(Orissa)
Urban and 12,128 33,408 7,123(Orissa)
Rural (Chandigarh)
Source : NSSO
Rural per capita income is increasing, which is evident from the

fact that the distribution or households in different income classes is
9
getting thinner at the lower income classes and thicker at the

higher income classes.
Increasing incomes are also changing expenditure patterns.
Changing Rural Consumes Expenditure Pattern
Per capita consumption expenditure in rural has increased four

times over last twenty years.
Per capita consumption expenditure (Rs. per month)
Rural Urban
1983 112 166
1991 281 458
2001 486 855
Source : NSSO
Rural spending in non-food items is increasing; out of a total per

capita spending of Rs. 486, approximately 40 % is spent on non food
items This shows an encouraging trend for consumer durables and non
durables (non-food items)
Saving Pattern
In absolute numbers the 42 million rural HHs availing banking

services far exceeds the 27 million in urban
10
Households availing Banking facilities
Total % of HHs Rural HHs %of Total Urban % of HHs

HHs
Households 192 138 72 54 26
(HHs)
No. of HHs 68 35.5 42 30.1 27 49.5
availing
banking
Services
Source : RBI Bulletin, 2003
Social and Culture Environment
The society and polity across the country varies between regions
and sub-regions and also between different religious, cast and linguistic
groups. Through there are no strict boundaries for identifying cultural
differential common socio-cultural behavior has been mapped as
distinct socio-cultural regions (SCRs) which may be spread across
political / administrative boundaries. While the urban environment
across SCRs reflects degrees of homogeneity, rural is distinctly
different. Marketers use SCRs as a yardstick for market segmentation
and targeting.
Within each SCR, there is a spectrum of rural and urban

communities on the continuum of socio-economic variables. As villages
become important economics destinations they grow and over a period
of time become towns, which may grow into through the villages and
11
towns complement each other for their existence, urban tends to

dominate.
Political Environment
Historically, the panchayat and village pradhan / sarpanch had

been representing rural India Dominated largely by the upper castes,
lorded it over the political scene until the panchayts became part of the
administrative machinery of the Government of India. Under the
Panchayati Raj system, all government department such as education,
health, agriculture rural development, social justice, Livelihoods, etc.
from an integrated approach for the development fo rural areas.
Villages with 5,000 population or a cluster of smaller villages with

5,000 population from a panchayat. The villages are segmented to from
wards, from where members are elected to the panchyat. The ward
members select their leader, who becomes the sarpanch. The sarpanch
represents the village at the tehsil /taluka / block level.
Technological Environment
The period from 1967 to 1978 heralded a technological

thrust into areas aimed at improving food grain production in the
country and hence achieving food self sufficiency.
Crop areas under high-yield varieties required fertilizers

pesticides, fungicides and other inputs. Farm equipment like
tractors with farm implements, diesel pump sets, etc,
12
introduced mechanization into the farm sector for the first
time.
The increasing in farm production also introduced
mechanized processing, spurring growth of the local
manufacturing sector.
The modernization and mechanization of the farm sector
boosted farm productivity triggered industrial growth,
created jobs and initiated a change in the quality of life in
villages.
The formation of produces cooperatives has played a significant

role in institutionalizing milk production and processing. Socio-
economic and demographic factors such as urbanization and changing
food habits and lifestyle have also reinforced the growth in the demand
dairy products (ice cream chocolate, yoghurt butter, flavored milk, etc.)
Milk production has increased from 17 million tones in 1950-51 to 84.6
million tones in 2001-02
The most successful story in diary development has been in

Gujarat, followed by the north Indian followed by the north Indian
states of Punjab, Haryana and western Utter Pradesh. Lately the
Andhra Pradesh milk cooperative has also been a success story.
Size of Rural Market
The total size of the rural market is estimated at Rs 123,000 crore,

which includes FMCGs, durables and agro products.
Estimated annual size : Rural Market
FMCG Rs.65000 crore

13
Durables Rs.5000 crore
Agro - inputs (incl. tractors) Rs.45000 crore
2/4 wheelers Rs.8000 crore
Total Rs.1,23,000 crore
Source : Francis Kanoi 2002
FMCG Market
The estimated size of the rural market for FMCGs was Rs 41,500
crore in 1998-99. The rural market has expanded by 30 % between
1992-93 and 1998-99. Though rural households spend less total half of
what is spent by their urban counterparts, they accounted for 53 % of
the total consumption in the country.
Durables Market
Out of 87.4 crore units of durable assets sold in India till 1998-99,
rural markets accounted for 54 % total durable ownership.
In 1998-99, rural ownership was 3.84 durables per household

compared to urban ownership of 8.19.% The decadal growth in rural
was almost 100 % whereas in urban it was only 40 %.
Conclusion
Standing at the cross roads of the evolution of rural marketing it is

important to understand that post 1960, there have been three phases
of the marketing revolution. The doors have been pried open for
progress in rural India from 1990. Today coupled with growth in the
normal sense, is the growth which has been achieved with advent of
the modern technology and breaking down of traditional barriers.
14
Rural marketing has truly come of its own at a pace that is far
more rapid due to demographics and education, the breakdown of
family structure and occupation. The social and cultural environment
too has reflected their change, along with political environment and
rapid coming of technological evolutions.
Rural India, far more than its country cousin, urban India, is
witness to this change rapidly. A change that is breaking down some of
the traditional structures of the past and ringing it the change that is
rapidly making way for the new India what the rural marketing
environment will hold forth in future, is difficult to prophesies. The
only thing which is definite about the times to come is that rural will
rapidly make way for urban. Creating an environment that is rapidly
making way for tomorrow.
What is desirable is an environment, that is within control and

predictable. An environment that results in benefits to society in
general in general.
References :-
1. Amarchand D. and vardharajn B. An introduction to marketing,

Vikas Publishing House , 5th Edition(1973).
2. Ramaswamy V.S Marketing Management 1st Edition .(1990)
3. Rajagopal, Rural Market and Enterpreneurship,
Rawat Publication , Jaipur(1992).
4. Saxena H.M. Rural Markets and development ,
Rawat Publication , Jaipur,1st Edition(1988).
5. S.A.Sherlekar, Morden Marketing,
Himalaya Publishing House (1981).
15
6. Kapoor.M.C profile of Rural Consumer-A study ,Indian

Management Journal
Nov (1976).
7. Dr.W.K.Sarwade Rural marketing in India,
Anjali publication Aurangabad 1st Edition (2000).
16

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Grip The Standard Research ISSN 2278 8123

International Referred Multidisciplinary Online Research Journal

Rural Marketing Environment in India

Evolution of Rural Marketing :-

However, from the 1980s Indias Industrial Sector gained in

Rural marketing represented the emergent distinct activity of

In India the environment of rural marketing and covered the

The phenomenon of rural marketing environment is the progress

The study planned with the following objectives.

To study established facts and figures defines the word rural

The present research is mainly exploratory and descriptive nature.

Defining Rural Marketing :-

The study of rural marketing comprises all the operations

Rural Market structure

1971 1981 1991 2001

At the Rural proportion in population does not mean growing

Young adults, that is the group between 20 and 35 years of age,

Rural 1981 1991 2001

Lower levels of education in the rural sector (approximately 60 %

Rural and Urban life : Distinguishing features

Inhabited villages classified by population size, 1991and 2001

Villages in size group Villages in size group

The table of inhabited village provides very rich insights to a marketer:

Villages of less than 500 population generally do not have

Distribution of Rural Households by income

Annual Income Income 1989-90 1998-99

A transition that marketing companies in white goods and

Annul Per Capita Income, 1999-2000 (in Rs.)

All India Highest Lowest

Rural per capita income is increasing, which is evident from the

getting thinner at the lower income classes and thicker at the

Increasing incomes are also changing expenditure patterns.

Changing Rural Consumes Expenditure Pattern

Per capita consumption expenditure in rural has increased four

Per capita consumption expenditure (Rs. per month)

Rural spending in non-food items is increasing; out of a total per

In absolute numbers the 42 million rural HHs availing banking

Households availing Banking facilities

Total % of HHs Rural HHs %of Total Urban % of HHs

Social and Culture Environment

Within each SCR, there is a spectrum of rural and urban

towns complement each other for their existence, urban tends to

Historically, the panchayat and village pradhan / sarpanch had

Villages with 5,000 population or a cluster of smaller villages with

The period from 1967 to 1978 heralded a technological

Crop areas under high-yield varieties required fertilizers

The formation of produces cooperatives has played a significant

The most successful story in diary development has been in

Size of Rural Market

The total size of the rural market is estimated at Rs 123,000 crore,

Estimated annual size : Rural Market

FMCG Rs.65000 crore

In 1998-99, rural ownership was 3.84 durables per household

Standing at the cross roads of the evolution of rural marketing it is

What is desirable is an environment, that is within control and

1. Amarchand D. and vardharajn B. An introduction to marketing,

6. Kapoor.M.C profile of Rural Consumer-A study ,Indian

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