RURAL MARKETING (RUMA)

SESSION - 1
PROF. SUPRATIM PRATIHAR
IMIS
RURAL MARKETING
OPPORTUNITIES
PROF. SUPRATIM PRATIHAR, IMIS

THE CALL OF RURAL INDIA

 LEARNING OBJECTIVES

• Definition of ‘Rural’

• Some ‘rural myths‘

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 INTRODUCTION
• Rural India:
– 70 % of India’s population
– 56 % of its income
– 64 % of its expenditure
– 33 % of its savings

• A recent study on rural marketing by the CII points out that

“ The consumption trend in rural areas has shown a shift from
price – driven to quality – driven products “.

• “Marketing a product or service in a rural centre is like sowing

a seed. You have to wait for it to take root.”
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 URBAN – RURAL MISMATCH

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 WHAT IS RURAL?

• Different perspectives for defining the term “Rural” :

– Public administration perspective

– Marketing oriented perspective

– Action oriented perspective

– Sociological perspective

– Industry perspective

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 WHAT IS RURAL?

PUBLIC ADMINISTRATION PERSPECTIVE:

• The census of India (2001) defines rural as that which is not
urban. Urban is defined as:
– All locations within a municipality / corporation or a notified town
area committee.

– All other locations that satisfy the following criteria:

• Minimum population of 5000

• At least 75 percent of the male workforce engaged in non – agricultural activities

• A population density of over 400 persons per sq. km.

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 WHAT IS RURAL?
MARKETING ORIENTED PERSPECTIVE :
• The public administration perspective is not acceptable to
marketers because of the following paradoxes :
– A city may be classified as a mini metro on the basis of its population,
the occupation of its residents, population density. However, some of
its other characteristics maybe that of a rural market even though the
administrative set up may be that of a corporation.
– Similarly, a slum in a metro could have the attributes of a rural market
for some products and the attributes of an urban market for some
others.
– Many towns are actually overgrown villages and are classified as
towns only because they have a municipality. On the other hand,
many administratively defined villages that are surrounded by cities,
are more like urban centers.
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 WHAT IS RURAL?
ACTION ORIENTED PERSPECTIVE :
• IRDA Definition:
– Interestingly, the earlier definition under the IRDA Act defined rural sector as any
area with a population of less than 5,000, density of population less than 400 per
sq km and at least 75% of male working population engaged in agriculture
activities. Now the definition has been amended to bring down the required
stipulated percentage of the population that had to be engaged in agricultural
pursuits to at least 25.

• RBI Definition:
– Rural: population less than 10,000
– Semi-Urban: 10,000 and above and less than 1 lakh
– Urban: 1 lakh and above and less than 10 lakh
– Metropolitan: 10 lakh and above

• Planning Commission:
– Towns with population up to 15,000 are considered rural
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 WHAT IS RURAL?

SOCIOLOGICAL PERSPECTIVE:
• Innovation focused marketers define it from a sociological
point of view:
– Rural is defined as a group of people who are traditionalists in outlook,
rooted in the land and who resist change.

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 WHAT IS RURAL?

INDUSTRY PERSPECTIVE:
• FMCG and Agri-input sector point of view:
– Population up to 20,000.

• Durable goods sector point of view:

– Population below 50,000.

• Sahara point of view:

– Locations with shops / commercial establishments up to 10,000
population.

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 DEFINITIONS OF RURAL
Organization Definition of Rural Limitation

• Several hamlets demarcated by physical

boundaries The term “rural” is
• Towns are urban areas that satisfy: not defined, nor is
Census  Minimum population 5,000 the upper limit of
 Population density > 400 per sq. Km. population for
 75% of the male population engaged in villages
non-agricultural activities

Widening of
• Similar to Census except that the
definition allows a
IRDA percentage for male population in towns is
larger market to be
25% and not 75%
considered as rural

Rural: All locations with a population of up to

10,000 Distinction defined
RBI Semi-urban: All locations with a population only by population
between 10,000 and 100,000

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 DEFINITIONS OF RURAL

Organization Definition of Rural Limitation

Planning Towns with population up to 15,000 are Town characteristics

Commission considered rural not defined

Town or village
Locations with shops/commercial
Sahara characteristics not
establishments up to 10,000 population.
defined

All population centres other than the 7 Population criteria

LG Electronics
metros are considered rural or semi-urban is not considered

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 DEFINITIONS OF RURAL

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 DEFINING RURAL MARKETS

• The Census of India (2001) implies any habitation with a

population of less than 5000, population density of less than
400 per sq. km., where at least 75% of the male working
population is engaged in agriculture and where there exists no
municipality or board, as a rural habitation.

• Thus, the rural population consists of 800 million inhabitants,

accounting for 70% of India’s population.

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 DEFINING RURAL MARKETS
• While defining a market as rural, the following facts and figures
should be considered:

– As per the 2011 census, India has more than 20,000 villages whose
population ranges from 5,000 – 10,000. So any population cut-off criteria
should definitely include these villages as rural areas. The majority of
rural institutions, agricultural markets and rural banks are located in
larger villages and towns, which have a population of up to 10,000. As
the population crosses this figure, characteristics such as occupation,
consumption and buying behavior show a marked change, indicative of
the transition from a rural to an urban / semi – urban setup.

– Many villages, although now notified as towns due to their economic

growth over the last three or four decades, continue to retain their rural
character.

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 RURAL MYTHS
• Rapid Urbanization:

Urban increase rate only 0.75% higher than rural and showing a slowing
trend largely due to the National Rural Employment Guarantee Scheme
(NREGS)

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 RURAL MYTHS
• Rural India is an Agrarian Economy:

– Non-farm activity already 60%; expected to rise to 70% by 2020

– This increases family income and provides a more constant stream of
income to rural households.
– A higher buffer from risks involved in farming

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 THANK YOU
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