SURYA GROUP OF INSTITUTIONS 1-st SESSIONAL EXAMINATION 2013 PGDM/ MBA -IV SEM Faculty: PREETI SHARMA SUBJECT:

RURAL MANAGEMENT CODE: MK-3/ OP-04 MM:50 DURATION:2 Hrs

Attempt any five question . Each question carry 10 marks. Ans.1-Until a few years ago, rural management was considered to be little more than a poor cousin to the MBA degree. Not any more. Rural management today is being touted as an area that is truly recession proof as an increasing number of corporates start looking at rural markets in a new light. Most people who have pursued a degree in rural management have so far been restricted to working in non-governmental organizations, social organizations, the development sector or even joining a dairy development board. The rural financing sector where a student had the opportunity to pursue micro financing or micro credit management was also a coveted option for several rural management graduates. But today, with recession playing havoc worldwide, there has been a literal change in the outlook of corporates and big companies, who are experiencing a dire need for rural management professionals. The rural business sector, which includes FMCG companies, telecom companies or bigger companies in other sectors, is now open to graduates from the rural management background. In fact, the corporate sectors interest in the rural segment is evident at the time of campus recruitments, when companies and consultants like Reliance, Deloitte and Tata Tele services collect at rural management institutions. Institutions have witnessed alumni achieve success in diverse professional arenas, including the corporate sector. Thankfully this pattern has not changed much despite the downturn, and since the rural sector is growing increasingly prominent on the radar of a number of corporate initiatives. One can expect corporate interest in rural management graduates to grow rapidly in the coming years. So what can this sudden corporate focus on rural management graduates be attributed to? The primary reason is the shift in the outlook of such corporates in their marketing interest. Due to the saturation in the urban market, there is a special focus on the rural areas. Also, while companies need to spend more money per unit on their products/services to attract an urban customer, many rural areas have considerable power, with almost no penetration of a number of consumer goods. Companies are now looking towards the rural sector for the same reason that the Government is focusing more on rural areas. Basically there is ready and available cash in the rural sector and there is a lot of money to be spent.

Add to this, realities like farm loan waivers, employment guarantee schemes, and a massive rise in the support price of a number of crops, and its no wonder that more corporates are looking at the countryside than the off targeted urban markets. Rural management students have a clean knowledge of the livelihood and lifestyle of villagers, and are thus, the best people to devise the right methodologies to tap the rural market. According to corporate insiders, hiring rural management graduates can translate to a large customer base in rural markets. Our students have a clear understanding of rural customers, and are hence, able to devise successful strategies for companies that intend to expand their business in the agro areas of the country. Candidates can consider a postgraduate program in rural management or a doctoral level program titled Fellow Program in Rural Management. There are also undergraduate courses on offer at some of the institutes which require different eligibility criteria. For a postgraduate degree, candidates must have a bachelors degree in any stream or its equivalent qualification, with a minimum of 50 per cent in aggregate. Final year students pursuing their bachelors degree may also apply for rural management programs. PG Programs in Rural Management need graduates with a minimum aggregate of 50 percent. Selection procedure consists of a written test, GD and PI. With corporate jobs available readily the number of students applying to rural management institutes is also going up. Of late, some big marketing companies like Reliance and Tata Tele services have also recruited some students. Theres always some amount of market in the agro sector, and the government would, anyway, spend money in this sector, given schemes like the National Rural Employment Guarantee scheme. Theres also international funding in this sector. But though we are terming this sector as recession free it could be affected in the long run. Most institutes make a conscious effort to place their graduates in jobs, where they can make a direct impact at the grassroots level, to address the needs of the rural poor and the organizations that serve them. IRMAs participants should go not where they are best paid, but where they are most needed. The rural orientation opens up our participants to the ground realities of Indias burgeoning economy, the challenges ahead and the solutions that they need to work out in the real world. These skills prepare tem for careers in the development sectors, for jobs with peoples organizations, NGOs, cooperatives etc. However, graduates are just as well prepared for jobs in the financial sector or in agribusiness. Many have gone into business entrepreneurship or journalism, and some have displayed a preference for academic careers.

more at http://www.citeman.com/7045-rural-management.html#ixzz2PwUL6zWW Ans 2- Marketing of Consumer Products in Rural Areas of India Abstract

This paper provides a summary of research work titled Marketing of Consumer Products in Rural Areas of India. This is a summary of paper providing the significance of rural marketing strategies for the companies. This research will investigate reasons for failure of consumer products in rural areas and seeks explanations for different problems faced by companies in marketing their products in rural areas, along with the appropriate solutions to those problems. The research will be carried out using both qualitative and quantitative analysis research methods Marketing of Consumer Products in the Rural Areas of India Marketing is considered as a superficial art which can be used to sell products and goods. Several definitions have been provided by scholars on what marketing is. For example, Kotler posits that marketing is considered as a process which includes different types of steps such as production, transportation, storage, logistics, distributing and delivering different types of products or else goods. Marketing is also considered to be a social process in which entities and groups will achieve basics by designing and presenting different types of goods and products. According to the American Marketing Aassociation, marketing is a process which includes planning and implementing, pricing, advertising, the goods and services which satisfy and fulfill the customer and achieve goals of the company. Rosumberg, states that marketing process is a mix that speaks to different aspects of the products and services themselves as well as advertising, costing and supply, which are meant to fulfill the needs of customers in a restricted culture. From the definitions above, it can be deduced that the actual function of marketing process is to specify the needs of the customers and identify appropriate ways to satisfy them. Marketing process may be carried out for financial profits, or else for social benefits of the company. In financial terms, marketing will produce more profit and will connect the people with company. Marketing is referred to as the process of identifying and predicting needs of customers, classifying and managing entire resources of company in order to satisfy the requisites of customers. Customer satisfaction is basic foundation to any type of company or organization. There is a necessity for minimum knowledge of consumer behavior in order to achieve the goals of company. Understanding the consumer behavior will allow the company to design and plan marketing strategies in an appropriate way. Rural marketing is a term which has been utilized as an umbrella term for the purpose of individuals who are dealing with people within rural areas in many different ways. The term rural marketing has gained more significance after the economic revaluation of India in the year 1990. Rural Marketing

A careful analysis of Indian market reveals the dramatic changes that occurred since 1990s resulting in rapid increase in the purchase of consumer durable products. The various changes that transformed the Indian market for consumer goods in the last one decade (1991- 2001)are presented below: According to Jha (1998), rural marketing is a typical process and contribution of rural and marketing is being used in different ways that have gained more and more importance in the available markets. Generally rural marketing means different types of things to different types of the people. Rural marketing plays a significant role within the development of economic standards, especially in India. There are many definitions of the concept known as rural marketing. Ramkeshen, show that rural marketing is a process which includes development, price, promotion and supply of goods and services that are being exchanged among urban as well as rural markets to satisfy the wants and needs of the customers and achieve goals of the companies or organizations. Krishnamacharyula & Ramakrishnan (2002, p. 60- 62), posit that rural market has improved and developed for home products along with Durables. According to Agadi & Paramashivaiah, rural marketing gained more importance in India because of the following factors.

The rapid increase of population in the country, especially in rural areas in the year 1971, rural population was 43.80 crores, and in 1981 it was 52.50 crores, in 1994 it was 72 crores, and in the recent times it has increased even more. The increase and development of market within rural areas was because of success of the agricultural processes. More investments for the purpose of developing of rural areas by government and the other sources The development of communication network between rural and urban people. Development of literacy and educational standards in rural areas of India. For this reason they wish to lead a stylish life and they are showing more interest in using foreign products. The rapid change in occupancy system in India lead to many structural changes within the ownership model, as well as continuous changes in the buying behavior of them

Rural Marketing as seen before 1960: Rural marketing means promotion of companys products in rural market by using strategies which differ from those of urban markets. Rural market in this period is similar to the agricultural market. Some of the products related to agriculture such as grains, cotton, sugarcane, oil seeds and many more were given importance within this period. The secondary consideration is activities of companies related to supply chain. This business was entirely unplanned and uncontrolled and it was influenced and dominated by the banias as well as mahajans within the market.

Rural Marketing in India from 1960 to 1990: This was considered as one of the significant eras within rural marketing. Green revolution entirely affected scientific farming which has moved poor villages into commercial and rich business centers. For this reason demand for important agricultural products such as wheat as well as paddy has increased. The entire scenario of rural areas has changed because of irrigation services, soil testing, and utilization of different types of seed, fertilizers and pesticides along with the exploitation of machinery products such as powder tillers, harvesters and threshers. Because of these reasons marketing of agricultural efforts has gained more and more significance. The two individual activities, marketing of agricultural products as well as predictable agricultural marketing, came into existence. In this period, marketing of rural products became more significant within usual marketing frame work. Businesses within villages have increased the flow of products such as handicrafts, handloom textiles, safety matches, crackers, as well as soaps which have entered the urban market on a large scale from rural areas. Rural Marketing and after mouth of the mid - 1990s: Marketing of household products to rural market is one of the key aspects that came into existence during the mid - 90s. In general each and every individual within the country was having a negative feeling that people in rural areas were not capable of buying these products. The other reason is that Indian companies have never allowed foreign companies to market their products in Indian market. The urban market was given more importance than rural market because of economic issues. In the year 1990, most of consumer product companies tried to balance industrial companies as well as the agricultural companies in order to give equal weight to urban and rural areas. This led to severe competition among the companies such as Tata, Birlas and Goenkas to market their products in rural areas. So companies started marketing household product in rural areas. In this period, definition of rural marketing meant managing and controlling all of the activities which included evaluating, motivating as well as exchanging power of purchasing into an efficient demand for particular products and services in order to satisfy wants of the customers in rural areas. Durable Products Durable products can be used for long term usage. They cannot get damaged quickly. The consumption of durable products will change according to market standards. Durable products are even known as indestructible and permanent goods as they are used slowly over the long term period. The best examples of durable products are

Television

Refrigerator Fans Bicycles Microwave Ovens Wrist watches

Non-Durable Products Non-durable products are the types of goods that are used by customers within time span of three years or less. Non- durable products are also referred to as soft goods because they can be used immediately. Examples of non-durable products include the following:

Bath soaps and detergents Tea and coffee Shampoos Different types of food products Clothing Beverages Shoes Gasoline

Ans3-A rural area is an open swath of land that has few homes or other buildings, and not very many
people. A rural areas population density is very low. Many people live in a city, or urban area. Their homes and businesses are located very close to one another. In a rural area, there are fewer people, and their homes and businesses are located far away from one another. Agriculture is the primary industry in most rural areas. Most people live or work on farms or ranches. Hamlets, villages, towns, and other small settlements are in or surrounded by rural areas. Wildlife is more frequently found in rural areas than in cities because of the absence of people and buildings. In fact, rural areas are often called the country because residents can see and interact with the countrys native wildlife. Throughout the world, more people live in rural areas than in urban areas. This has been changing rapidly, however. Urbanization is happening all over the world. In Asia, for example, the United Nations estimates that the urban population will increase by almost 2 billion by 2050. Shift to Cities People are migrating to urban areas for many reasons, including agricultural technology, industrial technology, and the hope of changing ones economic circumstances. Agricultural technology has decreased the need for agricultural workers. Improved transportation, tools, fertilizer, and genetically modified crops mean fewer farmworkers harvest more food. This decreased need for farm employment drives many farmworkers into cities in search of jobs.

Industrial technology has created many jobs unique to urban areas. Developing countries often have resource-based economies, meaning most people make their living from agriculture, timber, mining, or other harvesting of natural resources. These natural resources are most often located in rural areas. As developing countries expand the use of industrial technology, they often shift their focus to a servicebased economy. Service-based economies use industrial technology to provide finished goods and services to people inside and outside their countries. India, for instance, is a country where many people practice agriculture in rural areas. As the Indian economy develops, however, more people migrate to urban areas like Bangalore to work in the technology industry. Instead of providing the raw materials (metals) for computer chips to nations like the United States, Indian companies now manufacture the computer chips themselves. Centers of learning, such as universities, hospitals, and regional government, are usually located in urban areas. Many rural residents travel to cities to take advantage of economic opportunities there. The cost of living in urban areas is usually much higher than in rural areas. It costs more to rent a house, buy food, and use transportation. For this reason, wages are usually higher in urban areas. The search for higher wages is another reason people migrate from rural areas. In the United States, rural areas take up about 98 percent of the country but are home to only 25 percent of the population. In Ethiopia, a less-developed country where agricultural jobs are much more common, 87 percent of the people live in rural areas.

Ans5

- Department of Rural Development

The Department of Rural Development is implementing a number of programmes in rural areas through the state Governments for poverty reduction, employment generation, rural infrastructure habitant development, provision of basic minimum services. Keeping in view the fact that Rural Roads are vital to economic growth and measures for poverty alleviation in the village, Government have launched a 100% Centrally Sponsored Scheme called the Pradhan Mantri Gram Sadak Yojana (PMGSY). The Programme seeks to provide connectivity to all unconnected habitations in the rural areas with a population of more than 500 persons through good All-weather roads by the end of the Tenth Plan Period. In respect of the Hill States (North-East, Sikkim, Himachal Pradesh, Jammu & Kashmir, Uttaranchal) and the Desert Areas, the objective would be to connect habitations with a population of 250 persons and above. Ans6- Approach Rural and Go Rural India are the rural communications and marketing division of Approach Communications. Rural marketing has witnessed a phenomenal growth in the last few years as the urban markets are already saturated with an overdose of brands. Approach Rural is Indias Leading Rural Marketing and Communications firm offering cutting edge services in Rural Advertising, Media, Promotions,

Communications, NGO Engagement, Brand Management, Rural Research, Rural Distribution Management, Manpower and other integrated services. Rural consumers are more aware or curious about branded products. With a significant chunk of population living in rural areas, the marketers cannot afford to ignore them. Approach Communications, a vigorous rural marketing and PR agency in India, provides end-to-end rural marketing services. Anticipating the critical need for companies to approach rural markets, we created expertise in rural marketing well before other companies even thought about it. Methods for rural marketing are different from those for the urban customers. With our highly developed rural knowledge base and resource centre, Approach Communications stands out as a leading rural communications agency in India. One of our specialties at Approach Communications is Rural Marketing Communications and rural public relations, and we are proud to say that we are one of the leading rural marketing consultancies in India today. Recently we have launched Approach Rural and Go Rural India, which focuses on rural communications and public relations. Our services range from managing and maintaining rural public relations, hosting and managing rural events, handling rural promotions professionally, getting involved in rural brand management, conducting rural advertising and marketing communications and supervising rural CSR activity. In addition, we at Approach Rural also concentrate on creating and promoting rural healthcare development communications. The need of the hour is to create a positive brand image for our clients, especially through corporate socially responsible projects. Our expert team will focus on the multi-pronged approach necessary for rural marketing activities. It is of great importance that in any rural marketing activity, the marketing strategy and the dynamics of the communication methods is redefined to suit the rural market. One of the first steps in rural marketing communications is to research the rural audience, and find out how much of their thinking is being influenced by local and rural traditions and customs. The next step is to understand these traditions, so that rural promotion exercises such as rural events, wall paintings, community programs, video on wheels, street plays, fairs or advertising in targeted publications or TV Channels can be built around them. The rural brand building and rural public relations at Approach Consulting will therefore be based on what the rural audience wants and identifies with, and tailored specifically to suit the needs of the rural audience. We understand that there is a great difference between an urban and a rural audience, and all our rural promotions, rural advertising and rural marketing communications will be based on this concept. At Approach Rural, all our rural promotions and the rural communications for Rural India are designed to make sure that our client gains the benefit of our expertise and know-how. Ans7-Consumer Behaviour: Rural Vs Urban Customer

Abstract People, whether located in city or village, buy products and consume them. They are all consumers. However, the locale has influence on their buying behaviour and some dissimilarities have been noticed in their purchase, decision making process and use of the products. This article dwells on the differences between the rural and the city customers. Irrespective of the kind, the customers are of equal importance to the marketers and it is imperative that one understands the differences between the two categories of customers to serve them well and for the effective use of the resources. Introduction It is obvious that a customer from a rural area is called a rural customer. What is not clear is the term rural. The term rural is defined differently by different people. Government of India has defined rural area as that which is not urban and urban area is defined as:

*All locations within a municipality/corporation, cantonment board or a notified town area committee,

*All other locations satisfying all of the following criteria:

Minimum population of 5,000, At least 75% of male workforce engaged in non-agricultural activities, and a population density of over 400 persons per sq.km

However, this definition of rural area does not meet the requirements of marketers. Most of the companies have their own interpretation of what is rural. Companies, depending on the products they sell, have classified places ranging from below 20,000 to 50,000 population as rural. There is yet another classification of India, as Urban, Rural and Rurban (Jha, 2003) in a continuum from urban and rural. With the rapid strides in economy, technology and population, a large number of settlements have grown larger to be a typical rural area. However, they are not yet urban. These areas which have a population of more than 5,000 are now called as Rurban areas. Rurban is an area which rural in nature and has some urban amenities. It may have basic sewerage, drainage, health care unit, water supply and transport facilities. It might have more people involved in non-agricultural activities. In a marketing sense, they neither behave like a rural market or an urban market.

Marketers who have been long ignoring the uneducated, dhoti clad poor, have now realized that The real India lives in the villages. (Zia Haq, 2008). As described by Adi Godrej, Chairman of Godrej Group, The rural consumer is discerning and the rural market is vibrant. At the current rate of growth, it will soon outstrip the urban market. The rural market is no longer sleeping. We are. The silent metamorphosis that the Indian countryside is undergoing has not gone unnoticed by the marketers. They have realized the importance of understanding the rural consumers and their behaviour.

The Differences

The economic growth experienced in India may have reduced the absolute number of poor (depending on which report one refers to) and lifted millions out of poverty, however, income disparities and regional imbalances persist. The variations in the level of development in a region have resulted in tremendous heterogeneity. The success of marketing lies in understanding these differences.

1. Although there are more literate people in rural India (49.3 crore) than in urban India (28.54 crore), the rural literacy level is only 68.9% compared to 85% in urban area[1]. A rural customer may not be very educated but has lot of common sense. He is as intelligent if not more and sharper in many ways than his urban counterpart. This is bought out by an incident where in an aggressive farmer held out a cut section of a tyre in his hand and complained to the tyre company executive that though the tyre companies claimed that the tyres had 8 plys and he could see only 4 plys in the tyre. The executive had to explain in detail about the process of tyre making to convince the farmer that not all the 8 layers used in making the 8 ply can be seen[2].

2. A rural customer is very conscious of value for money, and may not always go for cheap products or premium or image products[3]. As he may not afford high price, he does not fancy products with features that do not enhance the basic functions of the product.

3. Rural customers do not trust the outsiders easily. It is not very easy to convenience a rural customer. It is a challenge to introduce anything new to rural customers.

4. Rural customers are more brand loyal than urban customers. However, as the literacy level is low they recognize the brand more through colour, symbol and logo.

5. The rural customers involvement in purchase of any product is high. In some cases such as buying TV, he consults a number of people. Both rural and urban consumers experience significant influence of their families for buying the select products. However the rural consumers experience greater influence of their families as compared to their urban counterparts. (Singh, 2012)

6. Another important difference is that the rural customers life is highly routinised and laid back. Sunday is not a holiday in the village and the he cannot be made to hurry through.

7. The rural income mostly depends on the agriculture and hence income and purchase reaches greater heights after harvest time. Hence, the disposable income varies across the nation depending on the area, crop, weather etc. Consequently, the buying patterns vary with urban buying patterns.

8. Traditional values, customs and perceptions have a stronger hold on the rural customers than urban customers. This impacts developing common communication programme for entire country.

Keeping the differences between the two class of customers in mind, Hindustan Unilevers started a unique multi-brand rural marketing programme called Khushiyon Ki Doli in 2010 in three states namely Uttar Pradesh, Andhra Pradesh and Maharashtra. Through this initiative more than one crore consumers were contacted directly in more than 28,000 villages across these three states in 2010. Through this initiative about 1,70,000 retailers were also contacted in these villages in 2010. This programme, which turned out to be a success, is being extended to other parts of India.

Another marketing giant ITC, is coming out with an advanced version of e-Choupal. Distribution of FMCG products in rural markets through the e-Choupal network gained traction with throughput during the year 2009-10 recording an increase of 44%, said S Sivakumar, ITCs chief executive (agri-business). ITC has recently come out with Choupal Pradarshan Khet, in order to help the small and marginal farmers.

Godrej, very innovatively and bravely introduced a nano refrigerator Chotu Kool especially for the rural market. It was priced at Rs. 3,200 and was designed to withstand the erratic power supplies in the rural areas. This too has proved to be a success.

Conclusion The rural market (68.84%) is larger than urban market (31.16%) and the marketers cannot afford to ignore studying the rural consumer behavior. Dipanker Gupta writes, in an insightful article. The Changing Villager in Seminar. Clearly the village is not what it used to be. When one reads accounts of rural India of the 1950s and 1960s, it appears as if we are describing another country. Where are all those landlords? Those bonded laborers? They are difficult to find even in Bihar or east UP. But this should not be startling. If 80% of the landholdings are below 5 acres, where is the scope to hire workers on the farm? In fact, there is an excess of family labor in most agrarian households. This is why villagers hope to send as many of their boys as they can to the city. This is reflected in the increased level of urbanization from 27.81% in 2001 Census to 31.16% in 2011 Census. With so much of changes

happening in the major part of market with the fortune lying at the bottom of pyramid it is vital that the marketers understand the rural customers well.